One of the questions I probably get asked most often is "How can I stop my sales team (and/or myself?) from discounting to win business?"  This is one of the most pervasive sales habits and is a sure route to reduced margins, reduced profit and setting the kind of precedent you don't want to be known for!

So why do sales people tend to discount in order to win business?  If you think about it, there are two main options open to a seller when the buyer says you're too expensive or words to that effect:

Option 1: Is to offer a discount.  There are various ways this is done. For example, just dropping the price by a certain percentage. Sadly this is often by a percentage that is easy to calculate.  5 or 10%?  Why not 1.25% or similar?  Why not repackage the solution or rescope the opportunity?

Option 2: Is to explain why, given the value your solution delivers to the customer, you believe the price to be, if anything, a little low.

Of the two options, one is quite easy but rather costly. The other is more difficult but a good deal more cost effective. Unfortunately, the temptation is usually to go for the easy option.

When you've lost a piece of business, how often have you heard your sales team, or yourself, say "If only we'd dropped the price a little more we would have won?" I'm betting it's a lot more times than you've heard "If only I'd explained our value more effectively we would have won that business!"

In the first situation - the drop your price option - the assumption is that the only thing stopping the customer buying from you is your price. But how do you know? Customers simply do not always buy the cheapest thing they can find (thank goodness).  If they did we'd all be driving the cheapest cars and wearing the cheapest watches.  But we're not. That should tell us instantly that price is not the only thing that's important. But that introduces a completely fresh problem - how do we find out what is?  And what is value anyway?

Clearly, a key starting point is to recognise that value means different things to different people at different times and in different circumstances. I believe that there are seven Challenges of Value that businesses need to address if they are to start getting paid what they deserve and move from selling on price to selling on value. One is understanding what value is as a concept first and what it then means to the customer. The second challenge is to recognise that people's perceptions of value are constantly changing, so you need to constantly check your understanding.

So just what is value? I've come across many definitions but none sums it up better than:

"Value is a mystery!" - and our job as a business and as sales people is to solve the value mystery. The key is to understand what is valuable to the customer and then communicate how your product or service can deliver that value.

Don't forget: "It's not how little you pay, it's how much you get."

Get in touch if you want to know the other Challenges of Value - and how you can overcome them. Visit www.axiavalue.com, call +44 (0)7802 702051 or email mw@axiavalue.com