As Warren Buffett is credited as saying, “Price is what you pay. Value is what you get.”
If I had a penny for every time a salesperson told me that their customers only ever buy on price, well I’d have a pile of pennies. And yet, the evidence points elsewhere. Here’s just a few examples from the last two weeks – all are true and all have been anonymised to protect the
Car breakdown recovery
Like many car-owners, it’s nice to know that if my car breaks down, I can call a number and someone will come and fix it. So normally, when the renewal letter drops through the letterbox, I’m happy to buy it for another year. Even though I’ve never had to use the cover. This year though, the renewal figure didn’t feel like it represented good value.
A long story cut short: when I called the breakdown company (known by the first letters of it’s name), the friendly agent who took my call couldn’t understand this concept of value. Even after I’d clarified, they told me I was cancelling the policy because of price! No. I. Wasn’t! Let’s not even get into the under-the-desk price they were then going to offer, or the dismissive comments made about the competition!
Engineering company #1
“You see, it’s a very competitive sector and our customers only ever buy on price. They will always – even for a few pence – seek out the cheapest price and go with that.”
I had to ask this affable and highly experienced salesperson if their own company was or ever had been the cheapest provider in their sector.
“No. Never have.”
And yet they had customers and attracted new customers too?
“Yes, of course.”
It’s not aligned, is it?
Engineering company #2
The salesperson was trying to convince me that they personally bought on price and cited their car as an example. Which might have been convincing if it hadn’t been a brand new car from a well known German group.
“Mike, I’d like you listen to the call I’m going to make: this client could benefit from this new service but I know they’re going to say that the price is an issue.”
The call starts really well. Then, just after the customer has made some unconvinced sounds, the Account Manager says to their client, “It’s the price, isn’t it?” The “P” word had never been used or even hinted at! In fact, the reason the client didn’t want it is because, operationally, there was no value to the business!
Upshot of all of this? We need to understand that value and price are very different beasts. Salespeople need to stop projecting their pricing preconceptions on their clients. Instead, learn where the value is in what they have to offer (from their client’s perspective).
And if you want a good way to do this, imagine that your prices have all been increased times 10. Now ask your salespeople how they’ll prove that it still delivers value at the new price. We did just this exercise with a client at the end of March and as a result, both they and their clients are enjoying the rewards.