Tired of defending your price? Upset with having to lower your price to get the order but pricing the product or service so low you are not making a decent profit? Maybe you need to start looking at this the other way around.
Even though rising costs are driving your prices higher, you cannot focus on price alone. If you do, your customer will too. Instead, rethink your entire sales approach. Draw attention to the quality of your equipment, your service department and the value-added offerings that your organization can provide that set you apart from your competition.
Staying realistic in today’s world
I realize competition is fierce and everyone is concerned about cost. But do make every effort to move your customer away from being concerned about cost to recognizing the intrinsic value that only your company can impart through your equipment and service departments.
The reality is that customers are also very interested in the quality and longevity of the products they purchase and the higher level of service your company can provide. That’s true regardless of price. In fact, some of the healthiest segments of the market today are in the high-end (high price associated with quality) product arenas.
The real approach to value-added selling
The answer is a renewed commitment to value-added selling. This is not new and it is not simple. In fact, if asked, most companies would say that they are already a value-added selling organization. The truth of the matter is that those same companies often pay lip service to the concept of added value. Just because they say it doesn’t mean they actually do it.
According to noted author and sales trainer Tom Reilly, who was one of the early advocates of the concept two decades ago, “Value-added selling is a philosophy and a process; it is strategic and tactical…it is more than a fad, it is a mindset, an attitude, and a paradigm deeply rooted in your psyche and demonstrated daily in your behavior.”
In today’s environment, where so many products are viewed as commodities and where there is intense competitive rivalry, adding value is not optional. It is critical to long-term success. Smart dealers and their sales teams continuously look at how they serve their customers. They determine how to add value to what they sell or offer to separate themselves from their competitors.
Value added is the best way to differentiate
Every product and every service can be differentiated in the customer’s mind. Even in today’s world, the customer is often willing to buy based on the value they believe is inherent in the product or service, even if it is at a slightly higher price. To set yourself apart, determine the appropriate value criteria and then communicate them loud and clear. Which benefits do your customers value the most? Reliability, dependability, workmanship, fast service and reduced downtime.
Listen to your customer to determine value drivers
It is what the customer wants – not what you think the customer wants – that determines value. Before you can identify how to add value or be able communicate it, first identify value drivers for each customer.
Listening to customers is certainly not a new idea. However, many companies rely on market research instead of going directly to the source. And although the most successful dealers routinely make customer visits, they often focus on the largest ones. Consequently, their conversations simply do not go far enough to thoroughly understand the customers’ concerns and problems at all levels. The wise company knows that all customers, regardless of size, are important.
Asking great questions will give you the information you need to get started. They should be imaginative and probing to help you internalize the customer’s problems, issues, concerns, and disappointments, as well as their successes. Phone and visit as many customers as possible. Conduct focus groups and do formal surveys as well. If you are a manufacturer who sells through distributors, talk to your customers’ customers as well.
In addition to talking to customers, your sales staff, based on what they hear in the field, should be able to identify at least ten things that your customers want. Ask your sales team the same questions you ask your customers. Talk to your service reps and learn what they are hearing as well. By viewing the situation from many different angles, you will be able to find out what is most important to customers.
▶ “How do you think our company is viewed in the industry?”
▶ “What can we do to improve our level of service?”
▶ “How can we increase the value of our services?”
▶ “What can we do to make it easier for others to do business with us?”
▶ “What would make you say “Wow?”
▶ “What questions would you like to ask us?”
▶ “Are there any questions I haven’t asked that I should be asking?”
Determine how your equipment and service departments will positively impact your customers’ business. Involve your office manager and service manager in determining ways in which the customer experience can be enhanced.
Consider using a value management objective process
Some companies use the VMO (value management objective) process in which performance criteria are set and evaluated by the customers themselves. Businesses and customers reach agreement on priorities, action, and outcomes. Then they take action!
Below are just a few examples of how businesses have learned to provide value:
▶ Speed of service or delivery
One way to add value and differentiate your business is to guarantee on-time delivery or even faster turnaround than your competition.
Industrial distributors are well aware of the importance of speed. For example, a crucial part of the service that buyers are seeking is speed in getting replies to questions and confirmation of shipments.
Construction equipment dealers also know that when a machine goes down on a job site, their ability to get a service tech on-site fast is the critical factor in preventing loss of time and money on the project. They offer 24/7 tech service, since many construction companies work outside the basic nine-to-five time frame. In addition, manufacturers are now offering live chat and instant messaging to help technicians and users obtain technical information quickly.
▶ Education and service above and beyond the competition
Another example comes from a construction equipment distributor that has a value-added service practice that few others have. When a machine is to be delivered, they instruct the buyer to block out three to four hours for the “delivery presentation.” During this period, the salesperson and a service technician educate the buyer. Usually, the construction company president, the equipment operator, and the mechanic are included, and lunch is provided.
The salesperson and the tech make a thorough one-hour presentation on the machine’s features and benefits. The next hour is spent on critical safety aspects and procedures, and the next hour on maintenance. They allow the last hour for Q&A. A few hours after leaving, the salesperson makes a follow-up call to ask if there are any further questions. The salesperson and the service tech call again two days later to ask if they can be of further service. This is a great example of a value-added practice. In addition, it helps to build profitable relationships.
▶ Free shipping, delivery or installation
Imagine a customer asking what the charge will be and being told there will be no charge, it is just part of the service. This is how you delight the customer. This is value added.
Keep in mind that if you are going to go the extra mile for customers, it does cost. Make sure not to do anything without sufficient ROI.
▶ Unique and desirable product features
Even though identification and prioritization of new features is a critical and daunting task, it can determine the success or failure of your product. Product managers, in particular, love to add features. Below are four basic questions you should ask to ensure that the added features will make a difference in sales:
1. Will your feature solve a particular problem for the customer?
2. Is the feature one that others have failed to add?
3. Will you be first to market the feature?
4. If the customer has a choice between your product and a competitor’s, will this feature make the difference in the sale?
5. What features provide real benefits?
▶ Sales training
If you are a manufacturer who sells through distributors, you can add value and increase your sales if you provide sales training. Most companies offer extensive product training, including presentation of features and benefits. Often, however, they do not provide sales training, especially on value-added selling skills and consultative selling. The most important area is often left to sheer instinct and personal style. Training is the key to success.
▶ Frequent fliers, frequent buyers
The concept is simple. The more often someone brings their equipment in or buys parts from you, the more service, benefits, better pricing, and related perks they should receive. It’s the same idea as frequent flyer miles with an airline. If you have a rental business, you can give price reductions for long-term rentals, or even provide rent-to-own options. Any business can do it—and it is good for business!
▶ Security of supply
Peace of mind and risk avoidance are value-added components. Keeping abreast of market conditions and continual communication with the customer will help provide a level of buyer comfort that is really appreciated these days.
▶ Longer warranties, after-sale service, and superior service policies
If you are a manufacturer, one of the most important value-added services is the provision of warranties that extend to the life of the equipment. This is still a major draw for buyers.
A material handling and construction equipment distributor who is known for world class service has a “no questions asked” policy. If anything goes wrong with the new equipment in the first couple of months after purchase and their tech cannot fix the problem, they ship a brand new machine to the job site; this practice costs money, but provides enormous peace of mind to a construction company owner. It also breeds extremely high levels of customer loyalty, and is, indeed, value-added.
▶ Value-added conversations
Customers ask for quotes or prices based on their understanding of your products or services. They do not necessarily consider your “value-added” options.
The most important job you have is to educate the customer, not only on features and benefits, but also on the additional benefits that make buying your product or service the best decision.
▶ Little things make the difference
There are so many simple ways that dealers can add value.
Businesses don’t do business. People do business!
It’s all in the relationship. This holds true for every business.
The critical underpinning of all selling situations, especially value-added ones, is the relationship between buyer and seller. This is true in remote buying situations where the relationship is established through brand loyalty, and in situations where the buyer and seller sit face-to-face and develop a strong personal bond.
Loyal customers become loyal because of having a relationship with someone they can trust. This is as high a priority as fair price.
Value-added salespeople work hard and use many techniques to enhance their business relationships. If you are in sales, listen more than your competitors. You will never listen yourself out of a customer. Become a true master of your product or service and your industry. Strive to provide more knowledge, more expertise, and a higher level of service than your competitors.
Position yourself as the “go-to” person for your customers and potential customers. Help your existing and potential customers – even when there’s nothing in it for you. These are all value-added contributions to your customers. They help to build long-term relationships, increase your ability to obtain quality referrals, and increase word-of-mouth advertising.
The bottom line
Based on my experience working with some of the most successful manufacturers and dealers, adding value and providing a superior level of service is not optional; it is critical to the success of your business. Develop an obsession to deliver the highest level of service with every customer, every day.
Now is the time to communicate your value-added offerings and not to lower your price to where you barely make a profit. Instead, partner with your customers and work with them so that the price is fair and affordable to both. Help them more than they ever dreamed possible. The advantages are many and there is absolutely no downside. Most important is the opportunity to create and sustain a competitive advantage in today’s changing times.