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SalesLinks Bulletin Archive

Jan 18-31, 1999

Price or Value? Two Roads Diverge in a Yellow Wood

jack carrollby Jack Carroll

In business-to-business selling, it is always important to build and sell value and not allow yourself to compete with the rest of the pack on "low price." Salespeople and sales managers who build value for their customers and sell their product packages with that value "added in" commonly make six figure incomes for their efforts and have a much greater sense of self-fulfillment.

Playing the low price selling game can be painful and frustrating for the following reasons:

  1. When you sell on the lowest price basis, you build little or no customer loyalty. Face it. They are buying from you because you are offering them the lowest price on what they need. Not because they value what you are doing.
  2. Selling for the lowest price means that your margins are razor thin, your profits slim to none, and your commission checks small—a great formula for starving yourself and your company.
  3. When you sell on lowest price instead of best value, you will be dealing with a class of customer that will make your days long and bitter and your nights sleepless.

I don't know about you, but I believe customers should be partners, not adversaries who are trying to squeeze every penny of profit out of my side of the transaction. When I run into one who doesn't want me to make any money on the deal, I shake hands, give them the name of my worst competitor, and wish them well.

In sales, learning how you want to do business and who you want to do business with are the most important lessons of all.

 

Reader Response
  • Posted by Dale Aychman, daychman@stirlingsystems.com

    How many times have we heard that selling isn't about price, that it is about perceived value by the customer.

    I've applied this little tip from Jack & increased our consulting rates over 50% by demonstrating the value we deliver.
  • Posted by Jerry Nickell, eurocom@concentric.net

    I agree with this brief article in every respect. I try to push this issue with my sales people, but I must also face a different reality. I am in the wholesale distribution business. We carry similar quality products as our competitors, we offer the same level of on-demand-delivery service, so there is really only the deciding factor of price. Wholesale distribution is both the easiest sell and the hardest sell.
  • Posted by Jack Carroll, jcarroll@saleslinks.com

    Betcha there are at least 10 key "value adds" that would clearly differentiate you from your competition and help you win enough customer's business to result in a 10 to 30% increase in your sales.  Betcha!

    How do I know this? Because 10 years ago I did a program for a company called Micro D in Santa Ana, CA (now known as Ingram Micro). They were in the thinly margined distribution business and needed to differentiate to succeed. They did—on a fourteen point program of value added services that vaulted them to number one in computer products distribution. Today they are a $20 billion a year in sales company.


    Jack Carroll
    949-388-1720

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Sales Tip and Practice
Look at your account base and evaluate them on the basis of price buyers or value buyers. What can you do to upgrade them based on value? Start with the one you think will be most receptive to a value-based solution and work your plan with them. Ask them how you can best contribute value to them with your products. The good ones will tell you. The bad ones will move on giving you more time to work with better customers. So much the better.

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