In a world where many salespeople feel obligated to tell customers to name their price, value-adding salespeople subvert price objections by defining their value.

by Paul Markgraff

The term value-add can sometimes render disturbing images in a sales manager’s head. Many sales managers think value-add means free. But adding value means so much more than simply offering free products or services to a customer, which by the way is tantamount to lowering price.

In our Oct. 17 issue of V-Mail, we posed several questions to readers, asking for their definitions of selling value. We asked for methods they use to demonstrate value to customers besides cutting price. We received two very interesting and edifying responses.

Michael Obermeyer, operations manager for metalworking solutions provider US Tool Group, says Fitzpatrick needs to help his salespeople first understand the somewhat counterintuitive nature of selling value.

He reverts to an old selling question. If they had a choice, which would they prefer: $500,000 in hand or 1 cent, doubled every day for 30 days?  Many people would choose the cash in hand, but if you look closely at the other proposition and do the math, you would find you get $5.3 million.

“In other words, nothing is as it seems,” says Obermeyer.

Similarly, you could ask them which is less expensive: a $90 carbide drill that gives the customer 50 holes or a $130 carbide drill that proves 75 holes. On a large number of holes, the cost per hole for the $130 drill becomes less than the $90 drill, without considering the reduction in labor cost attributed to changing out the drill.

“Once they see this, selling value will be the only way they sell,” he says.

The real deal
George Kucera, general manager of Ohio-based distributor Industrial Supplies Co., says when he first joined the company, price-based selling was a key obstacle to improving sales growth.  Kucera offered a comprehensive method for building a value-added sales philosophy.

First, inside sales, outside sales and management must all be on the same page when addressing price-break issues. If one of those groups is out of sync, a solution to the problem will be non-existent, he says. Management must make it clear to all sales personnel that cutting prices to get orders will only result in a continuous drop in gross profit, which will cut into sales commissions.

Inventory is also one of the key elements involved when discussing value with customers, says Kucera. Having the inventory available when the customer needs it is valuable to all customers in today’s marketplace.

“But, customers need to understand that this service comes with a price,” he says. “Discussing the costs of keeping inventory on the shelf can be the beginning of a relationship that will help to end the constant discussion of cutting prices.”

Kucera says that salespeople need to talk to the customers as well as listen to them. Instead of going for the one-time sale on price, ask customers abut their annual usage on the product. Salespeople may be surprised to learn that the 20 pieces they need at a low cost is actually 2,000 pieces on an annual basis.

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