Dec
12

Let’s continue our tour of sales methods in B2B with  Tom Reilly’s Value-Added Selling. This American speaker and train developed an approach to sales in the 1980s which can be summarised in the slogan “you sell value, not a price!”. This approach crusades against the received wisdom which Tom Reilly encountered throughout his career as a management training coach. According to popular wisdom, the customer would always want the lowest price. In his view, this is wrong, the customer is in search of added value, and it is up to the seller to find it for him. This is a brief glimpse of the book (in its 2003 edition) which I invite you to read in its entirely. In this summary, I aimed to cover the essence of this method which can be immensely effective when coupled with sales technology and business intelligence.

 

This article is part of a series looking at tried and tested sales methods in the digital age:

So let’s look at what this method consists of, at a time when the idea of value is so often raised by assorted sales reps, even if not always correctly.

Value-added Selling: purchasers want a lot more than knock-down prices

What sales rep hasn’t heard the objections “I don’t have the budget for that,” “I can’t spend any more” or “I’ve seen it cheaper elsewhere”? Objection to the price is the main comment which Tom Reilly has heard throughout his career, but when sellers focus too much on this parameter, they lose perspective and tend to forget the aim of a sale: to meet needs by providing a suitable solution in order to bring added value to the customer.

In support of his conclusions, Tom Reilly carried out a study of 10,000 American industrial purchasers and 1,000 B2B sellers (the date when the study was carried out is not given in the book). From this study he got confirmation that 80% of sales reps use price as a sales pitch. Better still, on a scale of 1 to 10, sellers assign an importance of 8.3 to price, whereas purchasers give it an average score of 7.2.

These figures demonstrate that price obsession is present in the seller, although rather less so for the purchaser. In fact, the customer is not buying a solution for the pleasure of negotiating a price, but to resolve a problem. Moreover, this is confirmed by Reilly’s study: purchasers would be prepared to pay 12.2% more for a better quality solution.

Thinking that the customer can systematically demand a discount is therefore absurd: the customer is looking for added value. But in fact, how do you calculate this value?

 

Initial price + costs + impact = value

 

In more detail: the price is the money invested by the company in the solution, the costs represent additional costs, the impact is the total gain associated with the solution and the savings achieved.

If the initial price is effectively associated with the value, this is only the tip of the iceberg. If you talk to the customer about price, the discussion will focus on reducing it. Talk to him about value, and the discussion will focus on the solution. The Value-Added Selling method thus rests on 4 major principles.

The 4 major principles of Value-Added Selling

1- Making a sale is a matter of trust

“The purchaser will undoubtedly have a preference for certain brands, but it is with the seller that he has a relationship of trust,” says Tom Reilly. For him, the sale is above all about the relationship, the understanding and trust between two people. Here are some of the qualities which the seller must develop to establish this relationship of trust with the customer:

 

  • Self-esteem: establishing a relationship of trust means already having confidence in And that is not inaccessible: knowing yourself well, knowing where you excel and where your limits are – these are already major steps towards having greater self-confidence.
  • Empathy: self-esteem does not mean vanity. Knowing how to demonstrate humility, and putting yourself in the customer’s place so that you can understand his needs are essential for bringing added value to the sale.
  • Integrity: “the ultimate benefit of truth is that you don’t have to try and remember your lies”, says Tom Reilly. Integrity is a necessary condition for building up a relationship of trust.
  • Fairness: a sale, as we shall see later, is above all a benefit shared by both parties. Promising a lot and delivering even more than promised is a key success factor in building a fair and durable relationship between customer and seller, and a way of avoiding all questions about cost.

2 – Developing a win/win exchange 

The customer and the seller are more closely connected than you would imagine. The result of the sale in effect is what both parties’ success is based on: if the purchaser thinks he has invested too much relative to the value added, he will not place any more orders with the seller, who will therefore lose a customer. If the seller thinks he has done a bad deal, he risks neglecting his deliverables, and not delivering above the customer’s expectations.
To develop this win/win exchange, the seller will need to put his finger on the customer’s worries and put in place a suitable solution to resolve them: I can only refer you to the article on Solution Selling which I wrote a few weeks ago on this blog.

3 – Placing the customer above everything else

Tom Reilly insists on the fact that sales concern the customer before everything else: “it’s his problem, it’s his money, it’s a solution which he will have to keep for the long term.” This is why the seller must talk in the customer’s own terms using his own language. A customer is not concerned about knowing that he is moving from an RTC network to VOIP. He’s not up on the jargon, which means nothing to him, even if for the seller and his company it is an important offer with a high margin. On the other hand, if the seller talks to the customer in terms of cash management, the accessibility of his teams and informs him (for instance) of the positive correlation between the quality of the call and the number of sales, these are significant for the customer, because they relate to his daily working life and his problems.

4 – Sales in 3D

According to Tom Reilly, every sale is made up of three dimensions: the product (or service), the company and the seller. Each of these three components represents one third of the added value. A solution sold by one sales rep will not therefore be the same as the one sold by another.

According to Tom Reilly’s study, during his purchase decision-making process, the customer places the most importance on the seller. After that in order of importance come the quality of the product, its availability, the simplicity of the solution and technical support. Clearly, as Neil Rackham said in his SPIN Selling method, the product is first and foremost the sales rep.

 

How do you measure and argue for the added value of your solution?

It’s all well and good, but how do you objectively define the qualities of a service which you are offering? What Tom Reilly presents us with is not a miracle recipe, but a simple and effective method of taking into account and optimising the added value provided by the solution, and of pre- and after-sales.

Caption: an ultra-simple, very useful chart provided by Reilly which will enable you to go into the field well-prepared.

What are the components of these three phases:

  • In the initial phase, the added value provided to the customer lies in the analysis of needs, the brainstorming leading to the proposal of a solution;
  • In the second phase, where a solution is negotiated, the added value can be found in inclusion of additional services, for instance training employees affected by the solution;
  • Added value in the third phase, that of after-sales, is found in the follow-up after implementing the solution: checking that the solution is being exploited to the maximum, and changing tack if that’s not the case.

 

“Provide your customer with added value from A to Z”, stresses Tom Reilly. If you always offer a little more at every stage in the solution, the customer will perceive that he is getting added value. The quality of your services will make you an essential partner, and will protect you from competition. So take time to fill in this table, so that you can enrich your sales pitch and move discussions to somewhere other than price.

And what about the technology in all this?

Tom Reilly’s book dates from 2003. He naturally covers the topic of Sales Force Automation (SFA) which was very fashionable at the time, but which has now merged with the broader category of CRM. Reilly, like us,

is taken aback by his sales reps, many in number, who do not wish to climb on the digital bandwagon. “Digital is, however, in the process of changing everything, and there’s no turning back,” he maintains.

You would almost think that Value-Added Selling was made to work with digital solutions.

In the background work on selling by value, the tasks which can be assigned to Sales Intelligence mean more hours saved. The sales rep can therefore spend more time on what makes his offer unique in the eyes of the customer. Why, in fact, spend all this pointless time in browsing through dusty old directories? Instead do your real job, and always bring more value to your customers. They will be grateful to you.

 

Yann Gourvennec
About the Author
Yann Gourvennec is a speaker, blogger, author, founder and CEO of the digital marketing agency Visionary Marketing.

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