Falcon Performance

One of the most common concerns voiced by participants in our workshops is how to overcome their customers’ apparent fixation on price as the major competitive differentiator. Although there is no magic formula that will make the price issue disappear entirely, here are a few tactical and strategic ideas which can make it much easier to handle.

At the tactical level, your primary goal is to shift or expand your customer’s focus. Your offering contains a number of characteristics or features which set it apart from alternatives. Price is simply one of those features, and if you are not the lowest priced offering, you must redefine the terms of the debate to shift the focus onto the other features where you can demonstrate a distinct advantage. There are three ways to redefine the debate in your favor: product scope, time and impact.

Product scope deals with the entire range of characteristics of the customer’s ownership experience. Don’t define your product or service merely in terms of what it does when it is actually being used. Every aspect of your transaction or relationship with the customer, including the quality of the selling and service experience, delivery, implementation, payment terms, packaging, convenience, guarantees, application advice, and many others, represents an area where you can demonstrate an advantage over the competition.

The time dimension is important because when customers have problems they are not solved immediately upon calling a supplier, nor does the solution last forever. Every step along the entire buying and ownership experience is another point where you may be able to differentiate yourself, and difference is the key to premium pricing. To accomplish this you must examine the entire life cycle of the buyer’s experience and list the elements of value you can provide at each stage:

Pre-purchase and implementation—includes time, effort and cost to search for and evaluate alternatives, purchase, delivery, implementation, training, adapting their current operations and processes, etc.
Operations—the actual usage of your product or service and the business and personal results they realize from it.
Support and growth—maintaining and repairing, continuing to realize the benefits, and upgrading the benefits in the future.

These first two dimensions will give you material for the first column in the Solution Value Worksheet—the benefits. The next step is to move to the second and third columns by redefining them in terms of their impact on the customer’s business. Obviously, the price they pay has an immediate impact on their business, but expanding from there takes us to:

Cost of ownership —besides the price, cost includes any additional expenditures to get the product to where it is delivering its expected benefits, time required to enjoy the business benefits, disruptions to existing business processes, etc.
Effect on operating costs —how does your solution help your client lower their total operating costs, by reducing expenditures and time in various business processes, or by enabling them to squeeze more productivity out of existing assets?
Effect on total profits —what effect does your solution have on the top line of the profit wedge? How does it help your customer increase volume and or selling price?

As you can see just from the quick review we’ve taken here, there are literally dozens of points of differentiation which can be enlisted in your struggle against the price objection. The key is to take the time to have a complete inventory of your advantages before you get in front of the customer, so that you can position your advantages correctly. This brings us to the strategic approach to avoiding price objections rather than simply dealing with them as they arise.

Once you have a clear idea of the value you can deliver to the customer, use the solution value worksheet to identify the problem owners for your strongest advantages, and then target your selling campaign to them. (Don’t forget that by asking quality questions you can get them to reinforce your impact and value columns.) These business problem owners are measured by far more than their ability to squeeze vendors, so you must get to them early in the selling cycle to frame the terms of the debate. That way, even if you still must deal through purchasing, the requirements have been specified in such a way that your alternative is best positioned to win.

Moving Beyond Price

Pre-purchase and implementation—includes time, effort and cost to search for and evaluate alternatives, purchase, delivery, implementation, training, adapting their current operations and processes, etc.

Operations—the actual usage of your product or service and the business and personal results they realize from it.

Support and growth—maintaining and repairing, continuing to realize the benefits, and upgrading the benefits in the future.

Cost of ownership —besides the price, cost includes any additional expenditures to get the product to where it is delivering its expected benefits, time required to enjoy the business benefits, disruptions to existing business processes, etc.

Effect on operating costs —how does your solution help your client lower their total operating costs, by reducing expenditures and time in various business processes, or by enabling them to squeeze more productivity out of existing assets?

Effect on total profits —what effect does your solution have on the top line of the profit wedge? How does it help your customer increase volume and or selling price?

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