Ep25: Liz Heiman – Why Pricing Should Focus on Sales Processes
Mark Stiving, Ph.D.
"Tap into unrealized customer value" | Founder @ Impact Pricing | Author, Speaker, Pricing Expert
Liz Heiman is the Chief Strategy Officer and Sales Leadership Coach at Alice Heiman, LLC wherein they help B2B companies grow rapidly by developing strategies that drive revenue and sales organizations to support it.
In this episode, Liz will give us an in-depth understanding of how pricing and sales process are very closely tied and how these areas will substantially help the salespeople understand pricing through their sales process.
Why you have to check out today’s podcast:
- Learn how pricing and sales process are connected
- Discover what sales team needs from the product or marketing team to help them sell value
- Know who in charge in prospecting
"Every time we drop the price in a negotiation, we're dropping profit way more than the percentage of the product. So we want salespeople to do everything possible to not negotiate on price."
- Liz Heiman
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Topics Covered:
03:20 – Liz explains how capturing prices help salespeople understand the value of products
06:52 – What a salesperson needs in terms of the value proposition
10:38 – What sales team needs from the product or marketing team to help them sell value
11:59 – Importance of collaboration in crafting the value proposition between the marketing and the design team
14:21 – Building products that solve problems in the marketplace: Don't just start a business, solve a problem
17:01 – Product-Market Fit: Two examples of creating a solution but it wasn’t a problem people wanted to be addressed
21:10 – Dealing with the psychological aspects of pricing
23:24 – Talking about prospecting and identifying whose job is it
26:13 – Pricing advice from Liz: “Make sure your salespeople understand when they negotiate on price and drop that price, they set an expectation in the future, and we do not want to do that.
Key Takeaways:
“I don't think that sales or marketing ever stands alone in any solution. If we're not bridging the gap between sales and marketing. If they're not partnering in solutions, then you have a problem.”
– Liz Heiman
“Not only do people have a problem, but they're willing to spend the money to solve the problem before you go out and spend a lot of money creating a solution.” – Liz Heiman
“In a lot of ways, a salesperson has to deal with all of these emotions and overcome them. And sometimes look at a situation and go. There's no way this guy, we talk about certain kinds of basic objections that you can't overcome.” – Liz Heiman
“What's important when you're prospecting is to have a very clear definition about ideal customer profile and also a qualified lead. So, what marketing identifies as a qualified lead, and what sales identify as qualified lead may be very different. What we want to do is merge those two things.” – Liz Heiman
Connect with Liz Heiman:
Connect with Mark Stiving
Full Interview Transcript
(Note: This transcript was created using Temi, an AI transcription service. Please forgive any transcription or grammatical errors. We probably sounded better in real life.)
Liz Heiman: Part of what I consider the core sales process has to do with creating value propositions that your sales team can use as part of their everyday sales process. So value proposition. It is, it starts with what is your customer's problem from their perspective.
Mark Stiving: Welcome to Impact Pricing, the podcast where we discuss pricing, value and the amazing relationship between them. I'm Mark Stiving and today our guest is Liz Heiman. Here are three things you want to know about Liz before we start. She grew up talking about sales at the dinner table. In fact, her dad, Steve Heiman, was the founder of Miller Heiman, so she obviously knows sales and she was even an instructor for them for quite a while. As she was recently made the chair of the board of Entrepreneurs Assembly, an organization that helps entrepreneurs succeed and they're based here in Reno, Nevada. And finally, she's passionate about and has been working on a product to help companies implement sales processes. This goes way beyond simple sales training. Welcome, Liz.
Liz Heiman: Hi. Thanks, Mark. Thanks for having me on.
Mark Stiving: Oh, it is my pleasure. My pleasure. Now, a quick story to show you how much I trust Liz. You know that I've got this new product that I put together, the subscription pricing and value, and we've got the webpage ready, the product ready and, and a little over a week ago I sat down and said, okay, today I'm going to start selling. And I had absolutely no idea what to do. So what I did was I picked up the phone and called Liz and she came over and helped me out. She's amazing. Absolutely brilliant. So Liz, although this podcast is about pricing, the sales and sales process, have anything to do with pricing?
Liz Heiman: Oh, absolutely, it does. It does. Because if we just throw out a price arbitrarily without understanding how all of the different pieces fit together and help the salespeople understand why the pricing is that and how they're going to include that in the way that they go through their sales process, the way they close their sale, then-then they're lost. So yes, pricing and sales process are very closely tied.
Mark Stiving: You and I had many, many conversations. So I know that we think almost identically in so many different ways. How is it that we could help salespeople understand the value of our products? Cause that's really what's important when it comes to capturing prices.
Liz Heiman: Yes. So part of what I consider the core sales process has to do with creating value propositions that your sales team can use as part of their everyday sales process. So value proposition is, and I know Mark, you love this, this concept, but it is, it starts with what is your customer's problem from their perspective. Now, what is your customer's problem from my perspective? So we're really pushing the envelope here. So what we're asking salespeople do, and more importantly, what we're asking the founders and the marketing team to do is really think about who are your buyers and what sincerely are their problems? What problem are they trying to solve before they ever call you or before you ever reach out to them? So that's the beginning. And the second part of a value proposition is, how can I solve that problem? And the third part is, why is that better for you? Because if we focus on... You and I've talked about ideal customer profile, if we focus only on those customers that are ideal, then our solution should be ideal for them, where it may not be ideal for someone else. So, so if you want people to sell value, if you want your salespeople to sell value, if you want them to get the best price, they first need to understand what problem are they solving? Not what product are they selling?
Mark Stiving: Well, doesn't that make so much sense? I often tell marketing people, look, nobody cares about your product. The only…
Liz Heiman: Oh absolutely. In fact, you know, the other day I was trying to figure how, how do you tell, how do you get people to get this? And so, so I was thinking about it and, and I came up with this, you have to hear the story. So I am sitting in front of a group of people and I'm trying to help them understand exactly why people buy something. And I said to him, I said, hey, have you ever been out walking along the street? And all of a sudden you thought, oh my gosh, I want a three quarter inch bolt. Nothing. Nothing would make me happier than to have a three quarter inch bolt. You know, I hear you laughing but it's really true. People don't want the product. So I, you know, hey, three quarter inch bolt is cool. You can put it in your pocket, you can put it in the little dish on the table. You could put it in your junk drawer and save it for when you need it, right? I mean, who cares about a three quarter inch bolt? However, if you're sitting with me and we're looking at something that is not working, and you say to me, you know, Liz, I know what would fix that. It's a three quarter inch bolt. You know what? The most important thing to me in the world right then it's a three quarter inch bolt, right? Because you're solving my problem.
Mark Stiving: Absolutely. Fabulous story, fabulous example. And so now if I were, if I were in sales selling three quarter inch bolts, not that a salesperson would ever sell a three quarter inch bolts because I'm having a direct sales person selling something that inexpensive seems a little ridiculous. But if I were a salesperson selling a three quarter inch bolt, what would I need in terms of a value proposition? What would we hope to get? What would they hope to have gotten from the marketing team or the product team that says, here's how to go sell this.
Liz Heiman: Okay, so let's be honest, there are companies that are selling all kinds of bolts and knots and stuff. You know, those kinds of pieces... Parts... Whatever one calls them. But knots and bolts.
Mark Stiving: I think it's called... Yeah, knots and bolts works. I was going to say hardware. But I think knots & bolts work so well.
Liz Heiman: Okay, so if you are a salesperson in the world of knots and bolts and that's what you're selling, now you need to understand who are you selling it to. You are not selling nuts and bolts to the end user, if you're a B2B salesperson, which you know business to business salesperson, you're selling it to a company that is going to sell them or use them in the production of something. So the story that you'll be telling has to do with the person that you're selling to. So if you're selling to purchasing, which is where a lot of salespeople get stuck, they're interested in one thing. I was told to buy 75,003 quarter inch bolts, what's the best price you can get me and when can you get them to me? And that is the only conversation you're going to have with purchasing because purchasing's job is to get the thing that is wanted at the quality that's wanted for the best price possible. So if that's the only person you're talking to, that's the only conversation you can have, and their goal... their job is to beat you down on price. So you need to know that going in.
Mark Stiving: By the way, they are amazingly well trained on how to do exactly that. A salesperson has close to zero training compared to what a purchasing person has.
Liz Heiman: Did I ever tell you the story about the, Oh, I probably shouldn't say this out loud, but…
Mark Stiving: Oh, go ahead. We want to hear it now.
Liz Heiman: Back in the 90s when the Walmart model became the model for purchasing, there was a company that went out and started doing training for purchasing agents. So that company, that was doing this training for purchasing agents, was starting their training with things like it is okay to lie. That was the first sentence in the training. It is okay to tell your vendor that their competitor offered you a lower price than they really did. It is okay... You know, so that there's this long list of things that are okay in this model, but that to most normal human beings, that's not okay behavior as a story in place for a relationship. So…
Mark Stiving: I know a lot of purchasing people who, okay, let me not say a lot. I know some purchasing people who I would consider to be very ethical and caring and they're trying to do the right thing, but I know tons of them who think it's just totally okay to lie. And I'm sure they would never do that in normal life. It just happens to be okay on their job, so they think.
Liz Heiman: Right. And part of it has to do with the culture of the company. So when we talk about an ideal customer, if the company's culture is that, that is how the purchasing agent is supposed to behave, then we don't want to be working with a company like that because we will never be able to sell on value because they're not a company that buys on value. So, but I think you're right, there are some purchasing agents who really believe that their job is to do the very best they can for their team. And there are others that think their job is to be the gatekeeper and get the lowest prices. And so…
Mark Stiving: Let's move away from purchasing and say that somebody else had to make the decision, oh we're going to buy this product. And so now it's, it's probably a complex sale, right? It's probably, we're talking to a whole bunch of people and we have a chance to sell value because we're trying to sell solutions to problems.
Liz Heiman: Right? And so...
Mark Stiving: What do the sales need from the product team or the marketing team to help them do that?
Liz Heiman: Well. So I need to understand, so probably one of the people that I'm going to be having an interaction with is a design team or one of the groups of people. So I need to understand what kinds of things design people think about and worry about and what I can do to help solve the problems that a design team has. You know, maybe they think they need a three quarter inch bolt, but I really should be selling them a, I don't know, centimeter, you know, centimeters instead of, I don't know. But, but it's about understanding that team. What are they trying to achieve and what help could I provide, aside from just delivering bolts on time?
Mark Stiving: Yes. And, and so, uh, I'm thrilled that you said that because it got me thinking someone has to know the design team well. Now I think that most marketing people think it's sales job to know the design team well. And yet how can marketing people give the right value proposition if they don't know the design team?
Liz Heiman: So, and that's a really good question because I don't think that sales or marketing ever stands alone in any solution. If we're not bridging the gap between sales and marketing. If, if, if they're not partnering in Solutions, then you really have a problem. But marketing's job is to know their client and sales job is to know their clients. So together, marketing needs to do research. Their team needs to do market research, call, ask questions, understand, do all of that kind of work. But sales are confronted with them every day. So sales and marketing need to figure out how to develop the list of questions that the sales team needs to ask to understand what problem the design team is having so that this and helped prepare answers for what they think those problems are going to be. So a value proposition one could evolve over time. And two, you might have three or four value propositions for different kinds of people. So you might have them for different buyers in the organization, but even within an organization. So let's say you have a value proposition for a CEO, but maybe there are different kinds of CEOs that might have different kinds of concerns. So I know that's very broad, but together you've got to solve it.
Mark Stiving: Yes. So think nonprofit versus profit thing, government versus commercial right there, it's very possible that different CEOs have very different concerns that we need to address.
Liz Heiman: Or think about, think about a really rapidly growing company versus a company that's stuck. Those two CEOs may be having really different thinking,
Mark Stiving: Very different problems. Things that they care about. Absolutely. Someone who's losing money versus somebody who's not losing money. A very different set of thought processes.
Liz Heiman: Yup. How tight are their margins? There are all kinds of things that could be involved in it. Yeah.
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Mark Stiving: I love the fact that you say marketing and sales should work together as a team and by the way, I agree with that 100% they absolutely should. I don't see it happen very often. Not surprisingly, and, and both of those are really needed to communicate value to our customers, to our marketplace. I think the other thing that, that we haven't touched on yet is before we ever build a product, shouldn't we build products that actually solve problems in the marketplace?
Liz Heiman: Well, we should. And I think, I think that most founders think that they're doing that. So they don't always do the market research. Sometimes they're wrong, but a lot of times they, they are building something because they think that there's a problem. And what I'll also say is sometimes the people who have the problem don't know that they have the problem. For instance, you and I have talked about this with what we do, right? So I may be talking to a founder who has no idea that what he or she needs to understand their sales organization and manage its sales organization is process and systems. They may not know that's what's missing. So now in order for me to sell to them, I need to help first understand what isn't working and then to help them understand why this would be a solution to a problem they didn't even realize they had.
Mark Stiving: Yeah, you absolutely have that issue today that says, I don't know that I have this problem. Right? And, and so people have to realize they have the problem. Probably my favorite example, I give you a couple of really fun examples of that, but one is, um, do you remember when the iPhone phone first came out? The iPhone first came out, there was an advertisement on TV for what's called visual voicemail, right? So you could look and see what voicemails you had and click on one and listen to it. You know, before that came out, asked me if I had a problem with my voicemail, I didn't have a problem with my voice. Would I ever go back to the old way? Heck No. Right. That's ridiculous. So I think that's just a great example of people don't know they have problems and yet we can still find them and solve them. And they're a really important and interesting problem.
Liz Heiman: Yeah. So, but I think that that, there's two things there. So one is the founders that have, you know, I've created a product for a founder that doesn't know they have a problem. That's one kind of thing. The other is I've created a product that no one really wants because I didn't do my research. And there's an example and I don't want to or market secrets, but there's an example of a company that I was working with and they, or that I had met, and they, they had found a way to identify a problem in a manufacturing process. And what they realized is... it was a really cool thing. They couldn't sell it because the people in charge of the manufacturing process had such huge egos. They didn't want anyone to know if there was a problem in their manufacturing process. So although they created something that solved a problem, it wasn't a problem people wanted to be solved.
Mark Stiving: Fascinating. Fascinating. So, so I'm not sure how you get around that?
Liz Heiman: Market research.
Mark Stiving: Yeah. I'm not even sure market research solves that one.
Liz Heiman: Well if we talk to who we think our buyers are, you know what, what's the, one of the conversations we had the other day when we were chatting was, you know, you're like, well, I'm going to pick up the phone and call people and ask some questions. So I'm really sure about how they define their problems. So if I want to sell something before I spend millions of dollars creating a product, I need to call the people that I think would possibly buy it and find out is it something that they see value in and how much value do they see in it? So this is another problem. You know, I, I spent yesterday or the day before talking to a startup and they're telling me this is all they think people will pay for their product. And I'm like, okay, but you can't afford to run your company and pay a salesperson if that's all people will pay for your product. And you know, the shock on her face when I said that, you know, you've got to know that not only do people have a problem, but they're willing to spend the money to solve the problem before you go out and spend a lot of money creating a solution.
Mark Stiving: Yeah, absolutely. And I think in the B2B space, we have a much better time, a much easier time because we should be able to take us, I say we because I work mostly in that space, not because you do. Okay, well that's where salespeople hang out mostly. Yeah. But we have the ability to take almost any product or any feature and translate that into dollars to the bottom line to our customers. And so we should be able to get a portion of that. And that says to us, yeah, this is worthwhile. In the B2C, it's much harder to do that because hey, there are no dollars in B. It's personal taste or personal preference.
Liz Heiman: So, so in the B2B... And I don't do a lot of work in the B2C world, but in the B2C world, we're selling to emotion 90% of the time, right? I got to have a new iPhone. Everybody else has a new iPhone, I'm so embarrassed. I'm walking around with this old iPhone.
Mark Stiving: You should be.
Liz Heiman: But when we're selling B t B, interestingly enough, we tend to think that there aren't emotions in there, but there really are. Every person, when they make a buying decision, no matter how practical and how emotional they're trying to be, their emotions are still involved. If my ego is going to be damaged by the fact that you're going to find out that there's a problem in my processing, there's a lot of emotion there that needs to be addressed. So we tend to think that there is no emotion in B2B, but there is, and we... not that we want to hander to that, but we do need to be aware of it and address it because sometimes that negative emotion can undermine our sale and diminish our value.
Mark Stiving: Okay. So now as a pricing guy, I will pretend that emotion is irrelevant. However, I depend amazingly, to massive quantities on salespeople to be able to overcome that issue cause I have no way to deal with it. Right? I, I deal with numbers and data and now I guess there are those psychological aspects of pricing we think about a lot, but salespeople have to deal with much harder emotions than that.
Liz Heiman: Oh yeah. In everything they do. And, and think about a complex sale. So you have a complex sale. We used to say a complex sale had, you know, five to seven people. And in this modern selling environment, a complex sale can often have as many as 15 people or more. And so whether we want to think about it or not? Every single one of those people has a variety of motion emotions that they're dealing with. Some people are sitting there thinking, if they don't buy this thing to make my life better, I'm quitting tomorrow. You know, I'm going to walk out of this meeting and hand in my resignation. And somebody else may be thinking, I want this other thing and this is a waste of money. The other thing is what I really want, and I'm going to do everything I can to stop this from happening. So there's wants and needs and fears and all of these things. And as a salesperson, if all you ever do is sit in front of a group of people and have a conversation, you will never hear all of those concerns and worries and fears and personally emotional things that are going on. So, yeah, in a lot of ways a salesperson has to deal with all of these emotions and overcome them and sometimes look at a situation and go, there's no way this guy, you know, we talk about certain kinds of basic objections that you can't overcome. My son in law works for the competitor and my daughter and needs a down payment for a house. Walk away because you're never going to sell, right? There's all of these things, these emotions. What my dad would see behind them would call personal wins and personal loses, right? And as a salesperson, if you want the best price, if you want to get the best price for what you're selling, you have to understand who all those people are and what all those emotions, fears, worries, desires are.
Mark Stiving: I couldn't agree more, right? I mean that's absolutely a true statement. Let me, we, we don't have much time left, but let me just jump into a concept of prospecting for a second. So first off, who's job is it? The prospect? Is that sales or marketing?
Liz Heiman: Well, you know that's so funny cause it used to be sales' job and marketing's job was to send stuff out to get interested. But really it's merged. So the line between where marketing's job ends and sales jobs starts is very unclear. What's really important when you're prospecting is to have a very clear definition about ideal customer profile and also a qualified lead. So what marketing identifies as a qualified lead and what sales identify as a qualified lead may be very different. So what we want to do is merge those two things. And in an ideal world we're doing, you know, this account based marketing or account based lead Gen activity where sales and marketing are actually working together on how they will touch each of the critical buying influences and in their sales process so that they're both building recognition and relationships.
Mark Stiving: So if I get to choose the most important part out of what you just said, I would say it's the ideal customer profile. Because as a pricing person, I think we could identify what types of people are willing to pay us more and what types of people are not, and we ought to be focused on the people willing to pay us more. That helps us win higher prices.
Liz Heiman: Absolutely. So I have a client I was working with that had a product that has some really super neat features for international corporations that are working in multiple languages. And when they were selling to them, they could get the highest value for what they were selling. But when they were selling to smaller companies that didn't have international components, they were really struggling on price and having to negotiate and try and prove their value. And the fact of the matter was they didn't have the same value to that client because they weren't ideal. And as long as they were selling and marketing to that client, they were always going to be bickering about money. Whereas when they sold to their ideal customer, there was no, there was no discussion of money. There was only, oh my goodness, finally, someone solves this problem for me. So that ideal customer profile is critical. I, you know, it's that how much could you sell a Honda motorcycle to a Harley rider four. And the answer is you couldn't sell it. Right? They're not going to buy it if you gave it to them for a penny, unless they want it to turn around and sell it to somebody else, they're not going to buy it. So you have to understand who you're selling to.
Mark Stiving: That's absolutely perfect. Okay. I've not asked this question, so I'm going to ask you anyway, Liz, even though you're not a pricing person. Last question. What one piece of pricing advice you would give our listeners that you think could have a big impact on their business.
Liz Heiman: Well, I think the biggest thing is to make sure your salespeople understand that when they negotiate on price, when they, when they set the expectation that they're going to negotiate on price and drop that price, they set an expectation for the future. And they don't want to do that. Every time we drop the price in a negotiation, we're dropping profit way more than the percentage of the product. So we want salespeople to do everything possible to not negotiate on price.
Mark Stiving: Okay, fantastic answer. And I haven't ever heard that stated so clearly. What you're really saying is if a salesperson negotiates one deal down, other salespeople are going to see that and know that they're allowed to, other channels are going to see that and say they're allowed to. We've essentially just lowered our price in the marketplace pretty dramatically. Boy, that was an expensive discount.
Liz Heiman: Yeah, and our, and we set our customers up to expect it. One of the things that we do, as companies, is we could be desperate at the end of the year, cause we haven't hit our numbers. So what do we do? We drop our price. So what do our customers learn if I hold out till the end of the year, they'll drop their price. You set the expectation with your customer. You don't want to do that.
Mark Stiving: We're just training them. That's all. Liz, thank you so much for your time today. If anybody wants to contact you, how can they do that?
Liz Heiman: They can look me up on LinkedIn. Liz Heiman. H-E-I-M-A-N.I think I'm the only one, and you could also email me [email protected]
Mark Stiving: Perfect. There went episode 25 that was half of a hundred. Not bad, huh? I find Liz absolutely fascinating. What was your favorite part of the episode today? Please let us know in the comments or wherever you download and listen to the podcast. While you're at it, would you please give us a 5-star review? We would hugely appreciate it. If you have any questions or comments about the podcast or about pricing, feel free to email me [email protected]. Now, go make an impact.