Selling in a Recession - Sell on Price, Not Value?
Does the current economy dictate that we return to a price driven commodity sale?
Back in September, I asked a question about disengaging from the consultative process and looking at a commodity sales method.
The feedback I received can be found here:
http://salesdirection.wordpress.com/2009/01/20/more-thoughts-on-the-commodity-sale/
... along with some return thoughts on this idea.
What do you think?
Clarification added 10 months ago:
Thanks for the great discussion so far - let me be clear... I am not suggesting that we sell on making something "cheap", or that we do not discuss value, but perhaps we should begin to deal with the elephant in the room and discuss price early(er) in the process.
None of this is to suggest that we abandon anything - but refocus where we begin.
Answers (13)
Bryan C W
Seeking a marketing, sales management or senior sales role in a technology-based company. http://twitter.com/BryanCWebb
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Carson...
My sense is that value-based selling is more important than ever. Prove value and they will buy from you, a reliable partner. Price is important but it is never the only criteria (unless your buying a common commodity).
Anybody can have the low sales price today BUT does that provide value?
Consider which deal is the best value:
- I buy a car for $20,000 and is worth only $5,000 after 2 years
- I buy a car for $25,000 that I can sell after 2 years for $15,000
Which was the better deal?
I think it's more important than ever to sell on value and not price. With tight budgets across many companies these days, only a product seen as valuable for that company will get them opening their pockets.
Cheaper doesn't mean better.
Sandra P
People Development Manager
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People - and companies of course - buy something because they believe it adds value.
Who has ever bought something purely because it costs only 59.99?
Some products have or create value - like a Picasso Painting - other products have no intrinsic value so the "value" is created by other means - for example having a celebrity endorse it. But even that IS value because value is in the eye of the beholder. Not everyone thinks a fragrance MUST smell great if launched by a celebrity, but many do.
Possibly this recession may hit some of these artificial values but a Picasso will not be worth less.
Last but not least - why are you asking this question? Real value? Artificial value? Do you have your own opinion on this?
If you ask me why I'm answering it :-) it comes right after gettting a number of calls from key clients asking to join our workshop on How To Build a Value-Added Proposition. And it matches a question I have open right now.
Hope that answers your question. :-D
John R
L&D/Training Manager, Certified Project Manager, S.F.E./Sales Performance Coach & Business Process Improvement advocate!
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As Oscar Wilde said in the play Lord Darlington, Act lll - "What is a cynic? A man who knows the price of everything and the value of nothing"!
As those in sales know, Price and Value occupy very different positions in a triumvirate of Selling Strategies and will often appeal to very different customers, depending upon their intangible needs - the things that truly drive them to make a buying decision.
The best example of the "Price War" selling strategy is seen in the way supermarkets in the UK constantly vie for position over who has the cheapest shopping trolley. In the current harsh economic climate buying and selling on the basis of price has been reinvented as a prime virtue, even though budget brand supermarkets have known this for years! Until the current economic slump we have been seduced into believing it is virtuous to pay premium prices for food, by adverts for so called high class, high price food using slogans such as Marks & Spencer’s "this isn't just food, it's Marks & Spencer food". Currently we are more likely to hear the budget brand supermarkets like ALDI proclaim, "don't change your lifestyle, change your supermarket" or "Spend a little, live a lot"- in other words, you don't have to spend lots to eat well.
This is a more complex issue than it would first appear and companies spend vast amounts of money on market research to try to understand what motivates shoppers to part with their hard-earned money. TESCO use the power of their loyalty card to get a comprehensive view on who-buys-what. But in essence, people have always shopped according to their own personal drivers – those intangible needs. People who are driven by “ego, power and status” will usually shop at the higher end of the market and their groceries will often be bought from M&S, Waitrose or Simsbury’s. These shoppers wouldn’t dream of having “knock-down/short date” purchases in their trolley! Conversely, those shoppers who are driven more by price have always been happy to shop at ASDA, Tesco, LIDL and ALDI – even filling their trolleys with own-brand goods – packaged with simple, stripey “bar-code brand” labels as our kids call them – or those short-date/knocked-down bargains!
Some shoppers simply want a deal and for them the price is everything. Others want value and will be prepared to pay more for what they perceive “superior/higher value” goods or services. Those brands position themselves at the higher end of the market using strap lines like “reassuringly expensive” – in other words, you get what you pay for! It is ironic that having your brand become associated with very downmarket behaviour, as in the case of one lager, can almost overnight destroy a position built over time by clever marketing and by spending lots of advertising dollars.
So is it better to sell on the basis of price or value? It depends on who you are selling to and that depends on knowing your customers well. In general terms, whatever you sell and at whatever price, you can’t break the basic marketing premise that when you launch a product the best “guarantee” of success is:
a) Be first to the marketplace
b) Be BETTER than the first to the marketplace
c) Be CHEAPER than the first to the marketplace
If you are later than third into the marketplace your strategy will inevitably rely on positioning against the competition – OR PRICE!
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Brian D. M
Training and Education Executive - 15 years experience
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Carson,
Anyone can sell on price. This is not selling, this is desperation. Selling the value of a solution right now is more important than ever. Having a competitive, but not drop dead price will help the endeavor, but keep your eyes on the value that your solution brings to the table. If you believe in it, so will your clients.
Mary L
ReloMary --> Assembling your selling, buying, moving team
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It's about value - absolutely.
A local restaurant has gone to a "recession" menu and the place is packing them in. People are checking it out and the place is packing them in. Not only are people getting a meal at a decent price but the comradery in this pub atmosphere adds to the value they are getting.
Homes - the business I'm in - must be listed right to sell as there is so much to choose from. Value is something that the buyer decides - what is it they are looking for? If a home style is a dime a dozen in the area someone is looking in, seems the price is going to be scrutinzed heavily.
If it's a unique property as in a home with a view - the value will hold. It can't be easily replaced. And therein lies the value that will hold the price.
When it comes right down to it, in a buyers' market - the buyers set the price no matter how much the sellers wish they could.
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Price is always an issue. Some organisations will even buy business by discounting so much that the order to them is a "no brainer" they are looking for a long term relationship and will recoup some of the losses along the way.
Anyone who says " anyone can selll on price" is right so why dont you? If you are confident that your product, service, offering does what it says on the tin then why would you not sell on price? Couldnt you corner the market that way?
You just have to remember that if someone wants a tin of baked beans and your trying to sell them ice cream its unlikely to work unless your price point is so compelling that they will hoard it away for a sunny day! and if you are selling baked beans they need to be what they say they are and what the client expects them to be, not a tin that says beans but contains Kidney beans when the customer wanted baked.
So what Im saying I guess is that yeah lets discuss price at the start, why not, if they dont have the budget for your offering why would you waste the time. In the traditional sales role you will have found out these things way before you visit the client anyway. So Price is always an issue and should be discussed early to make sure neither of you are wasting your time.
In todays climate it is even more so and why shouldnt it be?
For me the same value equation still applies price x quality
Joel
agency:2 The Social Media Agency
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Carson, solution selling, value selling is needed now more than ever. Price encompasses both, without either you are nothing greater than a "me too"
Call me old fashioned, but these two principles have seen me right good times and bad.
Sell on value, not on price.
People buy from people, treat the customer right and they'll look after you.
Works for me...
Martin V
Senior Marketing Manager at HUNTSMAN - world citizen - invites welcome
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If value can't be afforded these days in a recession, sell cost efficiency! ; )
Price transparency is becoming more and more important, moving away from bundled to tailored offers. No commodity in there!
Best wishes,
Martin
Joao Paulo Marques (
Marketing, Sales and Advertising Professional at WWW.QUEIROPLAS.com
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What is your target?
But, it´s good that you bet in quality. I think it´s the only way for you to survive
Ronn I
Consultative Sales Executive
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Carson, If you sell on price alone, you risk many more challenges, including 1. You will lower your profit/sale. That means you have to sell more just to maintain your past margins, 2. You increase the risk that you will lose sales from both existing clients and new prospects to a competitor who will beat you by selling on value.
Do you really want to become known as the lowest price vendor? Once you start down that path, it is very difficult to change course.
