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<\/p>\nI remember speaking at a sales conference for a major industrial company a number of years ago \u2013 in Copenhagen coincidentally. I arrived the evening before and had dinner with the client. Almost everyone I spoke to told me that they delivered \u201cgreat value\u201d to their customers. In fact, I was told this so often that I decided further investigation was required. The following morning, at the start of my session, I asked the various groups to define value. There were probably around 10 tables of 12 people. The result was 10 different definitions, one of which is now the definition of value that we use (you\u2019ll need to be at the conference to find out what it is!) It became apparent that not only couldn\u2019t they define value, but that they had no real idea of the constituent elements of value \u2013 what we call The Value Triad\u00a9.<\/p>\n
On many of the workshops I run I\u2019m regularly told how wonderful the company\u2019s products or services are and what great value they deliver. Despite that, their prices are frequently the same as, or less than, the competition. When asked why, there are usually a variety of answers including \u201cIf we put our prices up we\u2019d lose the business\u201d to \u201cour customers only care about price\u201d. But there is one reason they rarely give us \u2013 that they don\u2019t understand value and how to quantify it in monetary terms.<\/p>\n
Conversely, there are companies that tell us that their products are commodities and that their only real differentiation is price. Frequently they turn out to have a larger market share than their competitors \u2013 suggesting they are delivering something over and above competitors that their customers value.<\/p>\n
The problem that many sales people face is that they simply don\u2019t understand value in enough depth to feel truly confident and discussing it with customers. Without that understanding it is all too easy to revert to price as the primary differentiator. This is what I call the \u201cdiscount default\u201d. When any pressure is applied the first response is to offer a discount. Buyers know this, so whether you really are too expensive or not, most buyers will tell you that you are \u2013 in the almost certain knowledge that they will get a discount.<\/p>\n
The role of the sales force in delivering pricing excellence cannot be underestimated. They are one of the key points at which your business and the customer\u2019s business truly meet. As a result you need people who feel comfortable exploring and identifying customer\u2019s key challenges and issues, communicating those back to your business, and then effectively communicating your differentiated solutions to the customer. And capturing some of that shared value through effective pricing.<\/p>\n
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