Define the product before you price it. It may take time as the process tends to be exploratory, but it’s time worth spent. Trust me; you can thank me later. For now let’s see why this is important. Especially in B2B service selling.
Customers don’t know what they want
Typically, whether selling online payment platforms, hospitality services (e.g. hotels), land, elevators, logistics services or whatever really, companies already have defined products with distinct features and prices. Typical internal sales training treats these as silos and consequently their sales people do. A silo mind-set when selling especially in the B2B space can be a recipe for many lost sales. This is because of a shallow understanding of the buyer’s problem by the seller. He sells and prices a drill, instead of pricing the hole in the wall which is what the customer actually wanted.
You see, what is considered a product or service in-house could be overkill or incompatible with the buyer’s wish. This is because, as I have said before and I repeat, customers don’t know what they want. And truth is, neither do you. The difference is, whereas the customer may not know what he wants, the customer remains king. So when what you present doesn’t work, it will not matter that you have what the customer said in a contract. You, the seller, will be to blame for exposing the king’s nakedness. And going into a ‘he said, she said’ debate will simple worsen the relationship.
Clearly define the product
So what to do? Cleary define and explain the meaning of a product before pricing it. To do this, studiously research and explore the buyer’s hidden need. So in the first few meetings avoid the temptation to rattle out your entire product range. That’s like a doctor who starts by telling you all the medicine that’s on offer, or his entire credentials, before treating you!
Avoid also, going straight to pricing. First, listen, learn and understand the buyer’s business and comprehend how his pain fits into all this. This may not be exhausted in the first meeting; it can easily take 3 meetings before mutual clarity on the scope of work is reached. In the process of discussion, emerging issues tend to manifest. For instance, the buyer may have wanted sales training but in the process you mutually discover that their recruitment (which you also offer) is wanting too. And just like that an opportunity to cross-sell presents itself. Notice how defining the product or service is helping in defining the appropriate pricing, through mutual discovery that creates and deepens the buyer-seller connection.
What is a product or service?
What is considered the best definition of a product or service is what you both mutually arrive at. And even then keep an eye out on it morphing for further opportunities to cross-sell and/or price appropriately. In fact, it is ok to resist the pressure to respond to how much by saying, “I’d like to first understand the need.”
In the event that the package (or product) changes, change the pricing too. It’s easier to do so when you mutually travelled the journey. However, if you led the pitch with price, the journey becomes friction-filled. The customer feels it’s too high (and erects walls), or too low (casting aspersions on quality), or that you are just out for a quick buck. Or, he starts morphing the product to exploit more than you can afford. Take the hotel industry for instance. A buyer negotiates a package with one salesperson and then seeks out another to quote less for the same. In essence you commoditized your services; you stood in line with your product, instead of standing apart with your selling.
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