Value-Added Selling

How to Sell More Profitably, Confidently, and Professionally by Competing on Value―Not Price

              


About the Authors
Tom Reilly, the author of 16 books, is a columnist for multiple business publications and a professional speaker.

Paul Reilly is president of Tom Reilly Training, which trains sales organizations.

_Summary

Value-Added Selling

For many buyers, value translates as “cheap.” Successful salespeople must get buyers to shift their thinking. Buyers need to understand that they gain value across the long term when they buy quality products or services. Value does not reside in purchase price. Instead, value is a relatively simple. It’s what the seller “gives up” and what the buyer “gets in return.” Salespeople may be glad to know that research indicates that “only one-in-six shoppers is a true price shopper — someone who considers only price.” This means that 83% of shoppers are willing to consider a value-added pitch.

“The strong appeal of value-added selling has always been and remains its connection to foundational values and virtues like equity, honesty, synergy, excellence and humility.”

Your job as a salesperson is to convince this 83% of buyers that your offerings provide their best value and that your merchandise is the ideal solution to their problems. Salespeople must communicate value to buyers persuasively by using “Value-Added Selling,” a philosophy that rests on “equity, honesty” and “excellence.”

In value-added selling, you deliver maximum value to your customers and receive maximum value from them. Value-added selling is a win-win for customers and salespeople. In value-added selling, the salesperson always offers three things for sale: the product or service, the company, and the salesperson himself or herself. These are the “three dimensions of value.”

“Buyers who obsess on price must be educated to think in terms of return on investment.”

Value-added salespeople “promise a lot and deliver more.” They “sell to the customer’s needs, not against the competition.” Value-added sellers serve their buyers, fix their problems and satisfy their needs. One of value-added selling’s most basic principles is that when you establish and sell value according to your customers’ perspective, those customers will pay more. By contrast, when you establish and sell value according to the sellers’ perspective, you may end up with steep discounts on what you’re selling.
This creates a devilish problem for salespeople: If you start discounting your offerings, buyers will expect – and soon demand – even more discounts. Once discounting begins, it never ends. Just ask any automobile dealer

“Salespeople who expect price resistance generally find it. If you begin the sales call by anticipating a price objection, you unwittingly create one.”

Traditional Selling

Value selling sharply contrasts with traditional selling. There, the focus is on getting as many potential sales in the pipeline and closing as much of this business as possible. In traditional selling, salespeople and their needs count most. Value-added selling is a completely different “dynamic philosophy.” Its essential precept is that a company’s ultimate purpose is not to employ people or build products or earn profits; it is to deliver value to buyers.

Traditional salespeople are in the business of constantly building new business. Value-added salespeople see a much wider vista: They want to build new business and provide current customers with “satisfaction, logistics support, applications, expediting, disposal, transitions…training,” and more.

“A culture of cheapness exacerbates price pressure.”

Salespeople need to understand that buyers assign notable value to what individual salespeople bring to the table. Buyers attribute 25% of their decision to buy products or services to salespeople. This compares to 57% weight for the product or service, and 18% that attaches to companies. The value-added salesperson starts out as a diagnostician, becomes an influencer, moves to expediter and finishes up as “customer satisfaction specialist.”

“Critical Buying Path”

Every buyer in the market for a product or service journeys down the critical buying path (CBP). Buyers take this series of steps to move from “need to satisfaction”:

1. “Presale planning” – Buyers become aware of their need for a particular product or service. The salesperson discovers this need and takes action to affect the buyer’s decision-making process. The salesperson operates in an “offensive-selling mode” and works overtime to secure new business. The buyer’s primary need is reliable information. The salesperson must supply it.

“Your time is limited by the buyer’s attention span. Be tight with your presentation.”

2.  “Acquisition/transition” – Buyers prepare to use the product or service and make their purchase. The salesperson’s goal is to ensure the buyer’s easy and effortless transition. The salesperson operates in a “defensive-selling mode” and focuses on retaining the customer.

3. “Post-sale usage” – Buyers use the product or service. Two factors matter at this stage: “performance and economy.” The salesperson operates in a “defensive-selling mode”.

To journey productively down their own critical sales path, value-added salespeople must figure out each buyer’s path and add value at every juncture. For value-added selling to work, salespeople must develop a comprehensive understanding of what matters to their buyers – what customers want and need. With this knowledge, a salesperson can move beyond value-added to the customer to “value received” by the customer. Traditional selling rests on chasing new leads. Value-added selling relies on guaranteeing a smooth transition after the sale and on making sure buyers feel satisfied with their purchases. Only then can salespeople leverage their relationships with buyers.

“Buyers value their time...Successful people use time effectively. Your...efficient use of time communicates the image that you respect this valuable resource.”

It’s not enough for salespeople to adopt a value-added orientation; their firms must do so as well. The value-added philosophy must become integral to the company’s corporate culture so it can become a “Value-Added Organization.” All employees must buy into this philosophy. This is particularly true for the departments that back up salespeople, including operations, customer service, technical support, maintenance, and so on.

“Approximately three in-four customers feel that salespeople do not understand their needs or buying process...only one-in-five salespeople truly understand the customer’s needs.”

“Small-Wins Selling”

The selling process often becomes lengthy and complex. This can overwhelm many salespeople. To manage any complex undertakings, break the process down into a series of small components. In sales, those components are small wins. Psychologist Karl Weick described them in his American Psychologist article “Small Wins: Redefining the Scale of Social Problems.” He wrote that a small win is a “concrete, completed outcome of moderate importance.” Examples of small wins in sales include concluding a meeting with a manager of operations, having the firm’s engineers agree to give your product a trial, or persuading the head engineer to write your product solution into a primary specification. A small win is “outcome-based, not effort-based.” Requesting a meeting with an important decision maker isn’t a small win. The small win is actually meeting with that decision maker.

“Value-Added Selling Tactics”

Value-added selling involves “offensive and defensive selling strategies.” Combining them distinguishes value-added selling from traditional selling. The critical sales path outlines the steps to take to implement these 11 strategies:

1.   “High-value target account selection” – In The Effective Executive, Peter Drucker states that it’s not enough to know “what to do.” You must “know what not to do.” Salespeople must be discerning about the best prospects to pursue. Ask this strategy question: “Am I chasing the right business?”

2.   “Target account penetration” – Move in early to learn what buyers need and to influence their specs, move in deep to “create pull for your ideas” and move in high to secure proper funding. Ask this strategy question: “Am I talking to all the right people?”

3.   “Customer-izing” – Learn everything you can about your buyers. Try to think as they think. Ask this strategy question: “Do I understand my customer’s needs, wants and fears?”Amazon dominates online sales because of the remarkable degree of attention it pays to every customer. Learn from its impressive example. Close and personal relationships with your buyers will enable you to outperform Amazon when it comes to value-added services.

4. “Positioning” – Persuasion is a process, not a discrete, time-limited activity. Persuade in everything you say and do. Ask this strategy question: “Am I projecting the image of a value-added supplier?”

5. “Differentiating” – Buyers need to understand how your firm differs from the competition in “definable and defendable” ways. Ask this lead strategy question: “Have I differentiated our status as a value-added supplier?”

6. “Presenting” – The more personal and personable your presentations are, the more successful they (and you) will be. Ask this strategy question: “How compelling is my argument for our solution?”

7. “Supporting” – At this point in the selling process, move “from offensive to defensive selling.” Ask this strategy question: “How painless have we made it for the customer to implement our solution?”

8. “Relationship building” – Buyers love brands, but they’re loyal to people. Develop strong relationships with your buyers. Ask this strategy question: “How is my personal and professional relationship with the customer?”

9. “Tinkering” – Your customers are viable prospects for your competitors. Keep creating new value for buyers after the initial sale. This is tinkering. Ask: “Are we working as hard to keep the business as we did to secure the business?”

10.“Value reinforcement” – You successfully sold your buyers and they use your offering to positive effect. Now, secure credit for your good work. “Brag…every chance you get.” Ask this strategy question: “Are we getting credit for all of our value added?”

11.“Leveraging” – Don’t try to secure new business only from new customers. Work also to secure new business from old customers. Ask this strategy question: “Are we maximizing our value?”

An Aerial View

Implement 11 individual strategies that, combined, provide an “aerial view of the sales process.” To put them into action, use these value-added sales tactics:

1.    “Filling your pipeline” – “Existing customers and referrals” are your best bet.

2.    “Precall planning” – Ninety-five percent of top sales producers “plan their sales calls.”

3.    “Opening the sales call” – First impressions count in sales. Always look good, particularly during sales calls.

4.    “The needs-analysis stage” – Top sales producers devote 60% of their available time to listening to customers. That’s how they learn what buyers want and need.

5.    “The presentation stage” – Make your presentation compelling, convincing and direct.

6.    “Closing” – Never attempt to close until the “buyer is ready to buy.” Ask for an opinion about your proposal. If it’s positive, ask for a commitment.

7.    “Handling objections” – Have rebuttals ready. Memorize your rebuttals. Practice them in advance.

8.    “Postcall activities” – Buyers regard seller follow-up as important. Always ask permission to follow up after sales.

9.    “Managing multiple decision makers” – To sell to multiple decision makers, figure out the dynamics of the group – how much members feel they must conform and whether they are unified or divided. When you ascertain individual needs among the members, discuss them in private.

10.“Value-added inside sales” – Encourage members of your inside-sales team to ask buyers sufficient questions to learn their particular wants and needs. Develop special new sales opportunities to pursue.

As you sell, remain aware of the three basic principles of value-added selling:

1.    “Life is bigger than I am” – To deliver for customers, put buyers ahead of yourself. Focus on your buyers and what they need.

2.    “My mission is to add value, not cost” – This is the essence of value-added selling.

“Price shoppers demonstrate predictable attitudes” – Price shoppers think short term. Value-added sellers must help them reorient their thinking toward the “total solution” that the right products or services make possible.