When a customer is faced with a significant buying decision, one in which there are many options of what to buy and who to buy from, there are always at least three different variables they take into consideration. I call these the three major Sources of Value. The first I will call the solution. It is comprised of the actual products or services your customer needs to implement and utilize in order to achieve their desired business results. Second is the company that supplies those products or services. And third are the people who work for that company and who make, sell, and deliver the products or services the company provides.
There are plenty of buying situations today, especially with the advent of online shopping, in which the people element seems almost irrelevant. In the sale of a commodity or a low-risk tangible product, many customers aren’t overly concerned about the quality of the people who are involved, or the stability and longevity of the company they buy from. Until something goes wrong, that is. Then the people and the company make all the difference.
In a complex multimillion-dollar transaction, which will define a long-term partner relationship between two companies for years to come, the caliber of the people and the reputation of the company may well be the most important criteria. There is a continuum then, delineated mostly by the presence of perceived risk, along which solution, company, and people have varying degrees of significance and importance to your customer. Now, we will look at each of these sources of value separately.
1. Your Company
What value do your customers perceive in doing business with your company, as opposed to your toughest competitor? Are there any differences? What do those differences mean to your customer? In our workshops we do a very popular exercise where we ask participants to take a close look at their own company from their customer’s point of view. The question we ask is, ‘What are the things about your company that might be important to a customer?’ We can’t truly know until we ask our customer exactly what matters to them, or what makes us different or better. But we can speculate.
As participants offer up attributes and characteristics of their own company that they think might matter, or that they have heard their customers mention, we capture them on a flip chart. It is amazing how little the list varies from industry to industry and continent to continent. Things like reputation, financial stability, and longevity always top the list, but we almost always hear other key characteristics as well, such as the size of the company, the location of their nearest office, or the breadth of their offerings (i.e., the quantity and variety of the products and services they provide). There seems to be a list of ten to twelve characteristics of a company, that customers typically think about, which is almost universal.
2. Your People
Please finish the following sentence with the first word that comes to mind: ‘People buy from people they ___.’ I’ll bet the word you thought of was either ‘know,’ ‘like,’ or ‘trust.’ Regardless of which word it was, you affirmed perhaps the most enduring truth in selling. People matter. And the more potential risk a customer perceives in a transaction, the more they matter.
There are a couple dozen characteristics or attributes, of the kind of people that customers like to buy from. This list includes honesty, likeability, and trustworthiness. But it also includes business acumen (an understanding of how business works) and domain expertise (industry- or discipline-specific knowledge). So, customers care that you are a nice person, but knowing enough to be able to help them diagnose and solve business problems is very important, too.
Of all the characteristics of people, there is one that deserves special mention. I put it last on the list for a reason: I think it is probably the most important characteristic of all. The most fascinating attribute of any individual you or I might meet-whether or not it is in the context of a sales transaction-quite simply is ‘they care.’
I’ve seen customers buy from a supplier with an inferior product because that supplier demonstrated that they care. I’ve seen customers pay substantially higher prices to a particular vendor over another because the customer believed they care. And I’ve seen buyers take huge risks to go with an unproven partner because they genuinely felt that they cared more about making sure the client achieved their desired goals and objectives. Over the years, I have used this philosophy as a major competitive strategy. The good news is, you can too.
3. Your Product and Services Solutions
The third area your client will consider, when they are deciding what to buy and who to buy it from, is your product and services solutions. Some of the characteristics of your products and services that your customers might take into consideration include quality, functional fit (i.e., does it do what they need it to do), the added services that accompany and add value to your product, and any technical advantages that your products or services might offer that your competitor’s products or services don’t. Your customers will also, no doubt, consider price.
While price almost always matters to some degree, one of the most important takeaways of this discussion is that . . .
Price is but one characteristic of your product and services solutions. And your solution is only one of three major sources of value you bring to the table, and which your customer will consider when deciding what to buy.
There are a variety of ways that your company, your people, and your solutions bring value to your customers besides just ‘a low price.’ In fact, one way to look at this is to imagine your ‘price’ being placed on one side of the Value Equation, and all of the other characteristics and attributes of your company, your people, and your solutions placed on the other side. That’s a lot of value to consider. Many of those things matter much more to your customer than the price, whether they will admit it or not.
You may have noticed here that I started the discussion of these three major sources of value by looking first at your company, then at your people, and last at your product and services solutions. There is a very good reason for this. This is exactly what we should try to do when talking with our clients, too.
For years, I was in the habit of asking the worst question you could possibly ask a prospective customer:
‘On what will you base your final decision?’
Or . . .
‘How will you decide which solution is the right one for you?’
You already know what every customer on the planet is conditioned to say in response, don’t you? ‘Price!’
Then we say, ‘Is price your only concern?’
Then they say, ‘Oh no, we also need to make sure that it is the right functional fit, and that it meets our needs, etc., etc., etc.’
But by then it’s too late. They’ve already driven that stake in the ground around price so they can always come back to it and use it as leverage later. Asking that question also causes your customer to focus primarily on the characteristics and attributes of your solution, as opposed to your company and your people.
Somewhere along the line, I realized that I was asking the wrong question. I discovered that if we can have a discussion about the characteristics of the ideal company our customer likes to work with, and the kind of people they like to do business with, the edge of the price issue is not quite as sharp.
It will take a little practice to start your questioning and positioning around your company instead of your product and services solutions, but once you get the hang of it, you’ll never go back. As you’re getting comfortable with this, you might try framing the discussion by setting the price issue aside on purpose, like this:
‘I’ll assume that you want the best value for your money, and you certainly don’t want to overpay for whatever you decide to buy. Let’s lay that aside for a minute. What are some of the criteria that will influence your decision about the right company to partner with on this project?’
Using this kind of an approach will help you lead the conversation in the direction that you want it to go, and it will help your customer see- and better appreciate-all of the good things other than ‘a low price’ on the other side of the value equation.