How do Wisdom and Selling go together?
Welcome to Wisdom Selling. So if you are like me, you are always wanting to learn more. Well here is the deal about selling. It is the desire to exchange something you have, for something of more value to you. You may have an idea, a product, a service which people will want to pay for, allowing you to make a profit. You have to seek out people who might want it, and convince them it is worth the price you are charging. Or like me, you may just have a little wisdom, and are looking for someone who values it enough to want to use it. My value received in return is the joy of your feedback. So, I am selling wisdom. The cost to you, your interest. I want to help others as well. Visit the links page and shop for some good deals. Any profits on money you spend there will be used by Wisdom Selling to support non-profit businesses in developing their strategies.
Monday, December 20, 2010
Wisdom Selling enewsletter - Volume 1 Issue 3
Christmas is almost here, and with this holiday comes a time of reflection on a year gone by. More importantly, though, with the emphasis on Christ’s birth, we find ourselves in the midst of a beginning. A renewal so to speak of what is most significant about what we believe. In my case, it is that Christ was born of a virgin, lived a sinless life and died to restore a relationship with God that was broken by sin.
How do we relate this to Wisdom Selling? By your considering this approach to selling, you are in some ways at a renewal – a crossroads in how you are going to position yourself and your company to WIN. Changes will have to be made, and you must believe that the changes will be valuable enough to make them. There will also be a cost to consider in doing something like this, whether the cost is in making the change, or in not making the change and staying where you are.
This is a great place to introduce one of the first concepts of Wisdom Selling. This concept is one that we all inherently know, but in most cases we underutilize if we use it at all. This concept is known as:
The Value Discount.
We will use the term value so many times in our definitions that you may become jaded to the word, but I encourage you to stay with it. You can also visit the website www.wisdomselling.com to find how all of the value words fit together in our Wisdom Selling Diagram. For now, let’s dig into the concept of the Value discount. We all know what a price discount is. We see a price on the product. Then we see that there is a discount of some dollar amount or percentage. We get excited that we are not paying full retail for the product or service, and believe we are getting a better deal. We inherently assign value to the product based on the original price, and as discounts from the price are realized, we think we have received a product worth the original price. The product has not changed, but psychologically we benefit greatly.
This has the amazing impact on some people of causing them to spend more on a product that is discounted than they would for a similar product that is full price but cheaper. Why do you think this is? Is there some sort of valuation that comes from where the price is set? Do your customers believe you have set the price based on a real assessment of what the product is worth? Have you felt this way yourself? Write down in your journal why you felt this way.
There is an amazing personal valuation going on here that we can tap into and help increase the probability of a sale. People want to believe that the value they are getting far exceeds the price they are paying. In the absence of a valid way to accomplish this, people will use relative pricing, as well as relative discounts to make decisions. If two products are of equal value to you, what method are you going to use to make a decision? The cheaper one, or the one that was higher priced but has a discount attached to it? Tough question that retailers deal with every day. As a result, there is often revenue left on the table due to guessing as to how the customer will respond.
Here is a personal example of thinking about this customer psychology. I recently wrote a book called the 70 Percent Solution. This book is an extremely valuable resource for people who want to feel better about themselves, by using service to others. It is a great book for sales professionals as well as people in general who want to be better communicators. I set the price based on what I believed to be the maximum value of the message to my target audience, then added a 15% discount as an incentive to encourage those who have yet to experience the maximum value to try the product. They will realize this value only after reading, and then my price could have been higher and I could have made more revenue. My tradeoff decision was to provide a price discount to benefit from the psychology I discussed earlier. This way I move more units and get my story out faster which is what I believe is most valuable to me in the long run.
Back to Value discount. Based on the discussion above I hope you can see where we are going. Without an alternative method of seeing value, most potential customers use price. This creates significant competitive challenges, particularly against a competitor who has a lower price for what the customer perceives an equal product. We must be able to show the customer the value that has been created in our product. We must be able to do this as quantifiably as possible, but also relationally. Our customers are going to value the economic impact of the products they buy, but they are also going to benefit from the personal feelings attached to the purchase. As an organization, our companies must define the value that has been created by our product development and offering.
Once we have been able to put a value on the product or service and present that value to the customer, we can then discuss our pricing in terms of value discount. In other words, even though our offering has a value of up to some point once you purchase and use, we have discounted the product so that the customer realizes extra benefits above what they pay. As we develop the skills at value discounting, we are able to paint a picture of value that the competition will not be able to duplicate. If we are truthful and transparent on how we calculate the value to the customer, it gives him something to communicate to his or her leadership to show the value of the decision to buy from you, even if there is a price differential.
We will continue to develop this concept as a part of the entire Wisdom Selling™ Solutions so I hope you will visit our site often and ask your questions there. Also, consider allowing Wisdom Selling to assist you in evaluating the Value discount of your product. Visit the website and register for a free analysis on the contact us page.
And Merry Christmas to you!
Now, to last issue’s assignment. I asked you to select a product and conduct an analysis of who had input into the design and development of this product. You were to evaluate how the organization as well as the customer and other influencers impacted the packaging, positioning, pricing and promoting of the product. I hope you took the time to do so. Now that you have this information, consider our discussion this week. How would you say the Value in the product was developed? By your organization, or by the customer? Do you think it matters who is responsible for the defining of value in the product? At Wisdom Selling, we believe the more ownership the customer has in defining and developing the value in a product, the more ownership they are likely to have in the outcome. In a scenario where the customer was involved, the Value discount becomes something they have earned, and it is actually a competitive advantage for you to be able to discount from value when you set the price for this customer. You may be better off to not have a standard price, but start with a total value and discount down to the price that is the best WIN for both organizations.
Here is your Assignment for this week.
As you watch people open the gifts you have purchased for them, watch their reactions. Try to gauge the value that they are putting on each gift. You should be able to observe both an actual benefit to them, as well as the feelings that the gift evokes. I hope especially that if the gift is for your significant other, feelings are maximized.
A few days after Christmas, reflect on these reactions. In your opinion, as a purchaser of that product, did you receive the benefit you were looking for at the price you paid? Was the sum of the benefits and the feelings worth the impact to you of the bills in January?
I believe that if you don’t find the Value to be there in your mind, you should go back and reassess the feelings side of the Christmas experience. There are hidden values in the day, the season, and the act of giving that are part of the total value of the gift. Don’t give up until you have a value in your mind that exceeds the costs! The season is too important not to. Also, by doing so, you may begin to understand just how many aspects of value there can be. Good luck.