Measured Value

 

Knockout Heavyweight Price Competitors with a Measurable Value Uppercut

by Jeffrey Hansler, CSP

 

In a competitive B2B sales environment, price packs a powerful punch in the decision-making process. If you offer products and services at a higher price, you can’t go toe-to-toe with low-price competitors and win. You must find your value strength and do the brain and foot work to get into position to deliver the knockout uppercut.

During the last three years, we have been consulting in the construction industry for a client that was never the ‘low’ price option. And before we came on the scene, they had lost so many jobs to the ‘low’ bidder; even their sales team and executive management were convinced it was all about price.

They were convinced their prior success was due to their relationships with their customers, and the change in the economy had reduced everything to price – hard bids. They readily offered proof to their belief with examples showing they and their customers previously had 85% of the business before the economic drop without bidding. Now they had to bid everything and lost every time to a low priced bidder.

As part of our service to them, we showed them how to deliver an uppercut by selling measurable value to beat out the low-priced bidders. You can do the same for your organization in three steps.

As you progress through these three steps, you will discover the necessity for change in many areas of your organization and the relationships you create and maintain with your customers.

Note: While the process can be listed in only three simple steps, it is the act of moving through this process that yields fantastic results for the organization. The act of moving through this process is not easy and requires focused determination. Hard as the process might be, the results for your organization include: discovering the hidden opportunities within your organization, developing content that engages others, creating the situations for discussions with your potential customers, and persuading them to decide on the more complex concept of value over the easy and quick to understand concept of low price.

Step One: Identify and commit to delivering a measurable value which supersedes price. The three measurable values you can potentially bring to your customers are:

  • Reduce Risk

  • Reduce Net Costs

  • Increase Revenue

While you logically only need to overcome the difference in cost, the reality is you will need to deliver a value in at least one of these areas which is greater than the difference between the low price and your price. It is wise in the beginning to pick ONLY one of these to compete against price. Attempting to do all three at first is a waste of time and resources.

Step Two: Educate your customers on the ‘value’ you bring and provide specific examples. You need to be specific of the conditions that surround your successes and claims. Your consideration of formal authority (what was /will be in your control) and informal authority (what was / will not be in your control) influences is critical to ongoing success.

You will need to supply potential customers with either examples of prior success or specific futures for them. Be specific when defining the actions and methods that will reduce risk, increase revenue, or lower net costs. Be specific with your targets and the factors that will affect those results.

Step Three: Deliver on your promise. Keep communication channels wide open and deal with the hard issues affecting actions and results. Such issues include challenges to positions, beliefs, and organizational culture.

Example: The following example has been simplified and the ‘numbers’ changed to protect the interests of the client.

 For our B2B client, which made all sales through their customers, which were the ones faced with hard bid situations, we focused on A Lower Net Cost.

Our client’s customers price out their services at $38 hr., while their competitors priced theirs at $21 hr. The competition was nearly half the price. The challenge: Achieve a lower net cost with a higher priced service.

Our client had been promoting the greater skill level of their technicians, because of their extensive apprenticeship training program. This argument fell on deaf ears because the focus was on price and training was not part of the hard bid process.

We turned the focus to the lower net cost achieved through guaranteed productivity: Prove that our technicians were twice as productive as their technicians, and the net cost for our technicians would be $4 less an hour. This could then be reflected in the hard bid to their customer.

The challenges to achieve this:

First, we had to convince our customer this was the issue and the solution: Productivity superseded hourly rate and this had to be guaranteed. This was completely counter to their 125 years of ingrained culture.

Second, we had to help them prove they were twice as productive.

Third, we had to teach our client how to develop new relationships with their customers so their customers would engage in these conversations and risk a hard bid on the new information. Their customers we equally ingrained against engaging in these discussions and considerations.

Fourth, we had to create the material to communicate and show proof of increased productivity to their customers so that when we had them in discussions everyone would be on the same page.

Fifth, we had to convince our client’s technicians that their productivity had to be a guarantee on every job every time. This was accomplished by engaging the technicians in dialogue regarding the situation and by asking for their input on ways to guarantee productivity.

The result: As an example of the results achieved, one of their customers won a major retailer’s contract business. Without telling you all the specific players involved, you could say the retailer really ‘targets’ its customers.

 

While your products, services, market, and situation are different, the concept of value superseding price still applies. If you can move through the process with any one of the three measurable values, you can knockout a heavyweight low-priced competitor every time just like a fighter in the ring setting up to deliver an uppercut.

As you so often hear, ‘It is all about the relationship’. This is what our client thought brought them the business in the past: Some intangible and immeasurable good-old boy network. They also thought the market erased the value of relationship in the equation of doing business.

The business definition of relationship is ‘All about what you bring to the relationship to address one of the three measurable values’. The only reason you are doing business with someone is because you supply either the best price or address one of these three measurable values. And if you don’t understand what you are delivering, then you are at risk of a low price knock-out and a 10 count.

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Jeffrey Hansler, CSP: Partner

Jeffrey is an expert at organizational development, leadership, and persuasive communication which includes skills of influence, negotiation, sales, body language, micro-expressions, and authority.

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