Price versus value

It is late in the quarter, and your company’s sales targets are tantalisingly within reach. All you need is that one big deal to get you across the finish line. But as the days tick down to the end of the month, the client stalls.

They need what you have to sell them, but now they are not sure if they really want it. There’s only one thing left to do -- play the price card.

Few IT channel sales people would have gotten far into their careers without encountering pressure to win business by cutting prices.

Even fewer would have resisted. However, it is the ability to sell a deal based on its value that is setting the great salespeople apart from the discounters.

Stuart Dredge has spent a lot of time looking at what sets the great salespeople apart from the rest.

As general manager of the research-based sales process consultancy Chandler McLeod Topline Solutions, Dredge has been working in collaboration with Queensland-based Southern Cross University on a longitudinal study of the relationships between sales process and sales performance. The study has investigated more than 200 large Australian companies.

“The research says that what converts demand today are perceptions of value,” Dredge says. “Those organisations that understand their value proposition, and from that can build a business case and articulate that business case, are outperforming those who can’t.”

“If they can’t argue a business case, there’s only one door left, and it’s the price door. And history has shown over and over and over again that those companies that succumb and give up on price become someone else’s lunch.”

In an industry where products are being commoditised at a rapid rate, building a business based on higher margins can appear to be a risky undertaking. Nonetheless, value-based business underpins many modern channel organisations.

The chief executive officer at the Brisbane-based IT services company Clariti, Bruce McCurdy, says his business has no choice but to offer a value-based proposition.

“We’re selling the same products as everyone else out there,” McCurdy says. “And it really comes down to who’s got the best sales spiel, who’s got the better reputation, or who’s got a team of good engineers. In the infrastructure space everyone is playing a fairly similar game, from small operations up to the big ones.” To combat this, Clariti has developed specific methodologies for project management based around Microsoft and Citrix technology to set it apart from its competition.

This year Clariti commissioned an extensive market research program, including client interviews and mediated focus groups, to determine exactly what customers want. The research showed that the key attributes that customers value are trust, honesty and openness.

“If they can trust the person they are doing business with -- that the price is the honest bottom line and it is a good value proposition -- that is what they are looking for,” McCurdy says. “But what we found through the process is they needed to have a relationship with the company in its entirety, so that when the salesperson left and someone else came in, the relationship continued.”

A similar situation exists even in retail, where maintaining margins is an increasingly difficult proposition, thanks to customers becoming better educated about prices and options.

The general manager for computers and communications at Harvey Norman, John Slack-Smith, maintains his company will never fall back entirely to a price position, because retailers who do so eventually go broke.

“The number one asset that we have, as most companies do, is the name on the front door,” says Slack-Smith.

“We are all about meeting with the customer and finding out what they are looking for and what they want to achieve through purchasing a product. And it is our jobs to ensure that we give to them the information and the products that meet what they are looking to achieve. So we go to extensive lengths with our people to ensure that there is both a constant upgrading of their product knowledge skills, and their interpersonal skills.”

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