Understanding value at Price motors

Ben is a good salesman at Price motors. He’s been in the business for ten years and has been selling electric motors successfully for some time now. The motors are used in various appliances and Ben’s customers typically buys motors by the thousands.

Lately, the competition from some new Asian companies have become increasingly evident. Customers still thinks that Price motors are better, but when faced with the choice of a lower price or a better motor customers tend to choose the cheaper motor. The customers obviously doesn’t seem to understand the true value that Price motors are delivering.

Price motors has two choices. Either they try to compete on price by lowering their margins or alternatively they can try to understand what differentiates their motors from the competitors.

What does Price motor offer that differentiate their offerings? How can Price motors motivate a higher price and how can Ben continue to close deals just like he did five years ago?

Price motors must understand the differences in monetary terms. There are several steps in this process and normally it starts with breaking the product offering apart. 

Some customers value the precise delivery times, others value the know-how when it comes to system integrations and to other customers the energy efficient frequency control is a driving factor. Depending on what customer you ask, the priorities for these features are very different. That means that the monetary value is also very different.

To identify the value drivers is the first step toward customer segmentation. Combining the segment with the value understanding gives Ben the tools he need to avoid the race towards the lowest price.

When Ben can prove – both in theory and by actual customer references – that Price motor delivers the best value for money it will radically change the playfield. When Price motors can provide an offering that will decrease customer costs per unit (compared with the next best alternative) with a total of $20/motor who would then buy the cheaper motor when the price difference is only $115 compared to $110?

Price motors will not to see their product as a commodity. By understanding, explaining and agreeing with the customer on the value delivered they will instead shift the focus. Shift the focus from price to something else. The value delivered by Price motors becomes concrete to the customer and that’s a proven way to eliminate the need for discounts in order to close future deals.

Avoiding the discount race is in this example a net revenue increase of $5 per motor sold. By understanding the superior value Price motors have always delivered Ben can continue for another ten years to successfully sell superior motors.

But he needs to understand the value Price motors delivers and he need to be able to prove it. From a sales perspective, that’s what value selling is all about.