We need to do our homework...

During a conversation with a Sales leader from a reputable company yesterday, he was justifying his recent order loss by allocating that loss solely to customer’s focus on the lowest price rather than any consideration to the "additional safety", " value” provided by their product. The difference here being more than 2x. He was doubting the customer's ability to understand the additional system safety that his product seemingly provided and in doing so he deliberately broad brushed a segment of people.

This took me back down the memory lane of a customer meeting in Thailand.

• Not convinced by the efforts of the region team, HQ had sent in a very high-level delegation consisting of a technology guru and couple of senior VP’s to convince the client on the inherent values of our solutions and thus negate their request of price reduction.
• In the morning session, the visiting team presented the value proposition of our solutions and derived that the customer is getting the solutions at a big discount if one were to add the sum of all the quantified value proposition of our solution to the price on the table.  
• The Thailand customer quietly sat and diligently took notes through the session. In the evening session, customers went through a solid, quantified, and justifiable rebuttal of each point presented earlier. By the end of their presentation, they had managed to turn our depicted value upside down and showcased even a bigger gap in our price compared to their evaluation benchmark.   
• It was our team’s turn to sit through the presentation silently, taking notes, and nodding our glum faces.
• I cannot forget the scene during the ride back to hotels; the visiting team was justifying, requesting, and begging for a massive price reduction with the CEO & CFO on a hastily put together conference call.

Since that day and moment, I have worked very hard on myself against doubting customer’s intelligence and evaluation process. I have come to believe that most of the customers have a very clear, definitive and their own clear understanding of the “value” and the “benefits” that each different product and OEM brings to the table but surely they may have a different “perceived premium” or interpretation on the impact of that value as they have a more composite picture of the operating financials and the project.

Price does matter a lot however, most customers are likely to be agreeable to some level of premium as long it is aligned against the actual value perceived and allocated by them towards it. It is not good salesmanship to blame lost orders on "the customer is buying lower grade quality or unsafe systems or inefficient solutions, just for the sake of lower price".

The trick for the salesperson to identify that premium allotment and make the best use of it and stop undermining customer's intelligence. We need to be doing our homework better.

#Valueproposition #Price #negotiations