In this post on bnet.com, Geoffrey James outlines a strategy for selling on value rather than price. This is one of these “easier said than done” strategies but it’s worth implementing. What’s key is that he advocates a full blown marketing and sales strategy that communicates this value not only to customers but also within an organization.

The strategy also puts you in the shoes of customers which helps to form a more convincing argument that price really isn’t an issue. Yes, customer want to save money and reduce costs. But this doesn’t necessarily mean that you have to offer cheap products.

Think about how people buy cars. They spend more money for the sake of fuel economy, reliability, resale value, and, yes, prestige. For most businesses, prestige isn’t an issue, but value certainly is.

From the post:

Customers are smart. They want you and your competitors to get into a price war so that they can spend as little as possible to get their problems solved. They want everyone to compete for their business, so they try to blur the differences or “differentiators” (as they’re sometimes called) that might justify a higher price.

That’s what’s happening here. To promote their own interests, your customers are pretending that your product is just like everyone else’s. They even have some evidence of this, in that one of your competitors actually copied your software. Your challenge is to make the customer realize that those differences have value so that they not only won’t mind paying a higher price.

The key to doing that is making certain that the customer — not your product or firm — is the core of all your sales messages, and making sure that there are financial proof-points.

Step #1: Realize that price isn’t the issue. Research reveals that even with fully commoditized products (where there’s no differentiation at all between competitive offerings), low price is the dominant factor in the buying decision only 15 percent of the time. In the majority of cases, other factors (convenience, location, brand familiarity, personality of the sales rep, etc.) are either more important or just as important. So even if your offering didn’t have differentiators, you could still command a higher price, as long as that price is not wildly out of line with the competition. (See: “How to Sell Overpriced Services.”)

Step #2: Determine the value of your differentiators to the customer. Don’t accept your customers’ pretended opinion that price trumps everything. Instead, estimate the financial impact of your product differentiators on the customer. Example: If your system uniquely uses the web to retrieve information on average gas prices in your region, estimate the impact that feature might have on the customer. Thinking about financial impact forces you to consider the problem/solution from the customer’s perspective, rather than your own, internal, technical perspective.

Step #3: Express those differences from the customer’s viewpoint. Stop talking about your product or your firm. Instead, craft a set of sales messages that use the second person (e.g. “YOU” in English) rather than the first person (e.g. “WE” or “I” in English) to tell a story that’s meaningful to the customer. For example, rather than saying something like: “We have a leading-edge, early warning system” say something like: “You will be warned when the average gas price spikes, so that you can reprice quickly — at an average saving of $1,000 per station, per day.”

Step #4: Retrain your sales team. Now that you’ve recrafted your messages, retrain your sales team to sell your solution as it’s seen from the customer’s viewpoint. Make sure that the sales team can eloquently express the financial impact on the customer as a proof point that more than justifies the higher price. (Please note that this will probably mean throwing out most of your marketing materials, if they’re anything like the wretched stuff that U.S. software firms produce.) Important: Also train your team to NEVER discount, because discounting undercuts the value of your uniqueness.

Read the full post here: Link