Q...I hear a lot about value added selling and everyone seems to have a different definition for the term. What is value added selling?

A...There are two ways to sell: value added selling and commodity selling. Commodity selling is built on the premise that all products and services are equal and that the buying decision will be based on price. Value added selling is built on the premise that every product and every service can be differentiated in the customer's mind to the point where the customer will pay whatever the salesperson is asking for the product or the service.

Commodity selling is easier and it can result in higher turns for the selling organization. It requires a less sophisticated and experienced salesperson so the cost of sales can remain relatively low. After all, how hard is it to sell when you have the lowest price in the market? The buyer who believes that a broom is a broom, tape is tape, will be a commodity buyer, and they will buy on price. They believe the product is a commodity and they buy accordingly. Unfortunately, there are salespeople who will agree with the buyer and sell their products and services as a commodity.

There are some serious downsides to selling on price. First of all, margins will be poor to nonexistent. Too many companies who sell on price find out, often too late, that their margins were too small to sustain their businesses. The other problem is Chuckism #37: Whatever we use to close a sale will be used to take it away from us. If we close it on price, we will lose it on price and someone always has a better price.

More and more companies, large, medium and small, are turning to value added selling to keep their companies financially healthy. Interestingly, as they sell at higher prices they are actually finding that their volumes increase.

The myth is that if we raise our prices our volumes will decline. That is true if we arbitrarily raise our prices and make no attempt to show the customer our value. However, if we can demonstrate, maybe even quantify, the true value of our product or service and do it in such a way that the customer perceives the value to be there, then the customer will buy at a higher price. Those organizations that have raised their prices have learned to sell around the price objection. They learn quickly that they can use this new found knowledge to sell all of their lines and all of their customers using the value added approach rather than the price approach.

So what are the techniques involved in selling on value? Here is the short version. In subsequent columns we will be covering these in greater detail.

1. Position yourself with the right person the right way. When we are positioned with the purchasing agent, we better have the absolute best price or our chances for success are limited. If we don't have the lowest price, we should consider being positioned with someone else in the company. So we ask questions like, Who else in the customer's organization will be directly affected by my product or service? Then we position ourselves with those people.

That may sound difficult. However, if we target the right individual or department we will typically find a way to meet with them. We begin with the question, Why is it in that person's best interest that they talk to me? We already know why we want to talk with them, we need to find a reason why they would want to talk to us. Once we answer that question our minds will figure out a way to get in to see them.

2. Listen to what your customers really want. Listening is a function of asking. Asking questions will bring us the information we need, doing our spiel only sends information to the other side of the desk. Here is the problem with trying to learn the customer's true buying criteria: most customers don't know what they want.

You may be responding to the most detailed RFP you have ever received. The customer may have been very specific in their requirements. Still, they may not know what they want. Customers ask for quotes based on their understanding of our products and services. In other words, they are asking for the best of what they currently know about your products or services. Could they be missing something?

You spend your time learning more and more about what you sell. You study the features and benefits. You learn new applications based on how your other customers are using your products and services. So, you know the capabilities of what you sell better than any customer. Why settle for what the customer thinks they know about how your product or service could help them?

The single most important function of sales is to teach. It is in our best interest and the customer's that we educate them about our capabilities. When the customer knows what you can do for them and they can understand the value, price becomes less and less important in making their decision.

Send me your questions. Do you have a sale that you cannot close? Are you dealing with the customer from hell? Is your competitor doing something that you cannot respond to? Write us here at Maintenance Supplies and watch for a discussion of your issue in this column.

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Q...How do I get to the person who makes the decision if that person has surrounded themselves with people who have been instructed to keep salespeople away? When we go in, these people say, Leave your material; if we're interested we'll get back to you. What can we do?

A... There are all types of gatekeepers. Some are more difficult than others. The Self Appointed Gatekeeper can usually be moved aside by creating a level of uncertainty in their minds. For instance, a question that forces the gatekeeper to wonder what would happen if your idea, product or service was not used in their company can be effective. They will let you in to make sure they didn't cause their company to miss an opportunity. Rather than risk taking all the responsibility for blocking a potentially good idea, they will usually involve someone else.

What you have described is a Knighted Gatekeeper. They have been ordained by the King (manager) to stand guard at the gate and block the entry of all sales intruders. They must do this at all costs while still gaining enough information from you to insure that you don't have something their competitor might also use.

There are several approaches you might want to consider, depending on the personalities involved. The first is to develop a leave behind presentation that will knock their socks off. You can use printed material, video or audio tapesanything. You could inundate them with information that gives them hundreds of reasons to call you back. There are several reasons why I don't like this one: it's expensive, time consuming and the reasons we give the customer for calling us back are usually ineffective.

The second method is to pique the customer's interest without giving them all of the information. This tease will work as long as we have addressed a significant customer issue or have given some initial value in our request for the appointment. For instance, an approach that begins with, We have had some significant successes helping our customers with their energy automation systems and I'd like to see if there are problems at ACME Widgets that we could solve, will work for the client who recognizes they have an energy automation problem. This statement shows that we understand their problem and that we have a track record for solving such problems.

If we begin our sales call with, I've got something you're gonna' love!, few customers will respond positively. If we say, A PC-based energy control system with ABC software will solve your problems, we have already encouraged the customer to seek alternative sources for the solution. We want to present ourselves as people who can identify, quantify and solve customer problems.

My favorite idea for selling around the Knighted Gatekeeper is to address the most important issue for the king. When you talk about the most important topic of the most important person in the organization, sooner or later your words will reach the decision maker. Whenever possible, leave a question behind that will be of interest to the king and one which only you can answer.

One of our clients wanted to make a presentation to the Bob Evans Farms company, the one with the white rural mailbox as a logo. Mr. Evans did not have time to talk to my client because they had issued a new stock offering and they were heavily focusing on increasing their earnings per share.

Their reluctance disappeared the day Mr. Evans received my client's presentation. An overnight courier placed a large box on Mr. Evans' desk. Inside was a white rural mailbox with the Bob Evans' logo professionally painted on the side. Inside was an audio tape player and tape which explained how my client's products would positively impact their earnings per share. The numbers needed to make this presentation were easily found in their annual report. Within minutes of opening the box the folks at Bob Evans wanted to meet with my client.

Any time you want to get in to see anyone, first answer this question: Why is it in their best interest that they meet with me? Once you can answer that question, you will know how to proceed.

Action

1. Find out what is most important to the king. Annual reports, research on line or at the library, interviews with employees are good sources.

2. Determine how your product or service will positively impact what the king is trying to accomplish.

3. Quantify the value of your offering. Know what you are worth to the customer's organization and be prepared to sell it.

4. Call to set an appointment and include this information. If the appointment is with the gatekeeper, mention that you have some ideas that will positively affect their manager's goals. Suggest that the manager be included in the call or perhaps a short visit to the manager's office could be included.