. For example, just think about how quickly themarketing organization will be able to update your sales forceregarding pricing changes. Because of this rapid notificationprocess, your customers will not be claiming that they weren’tnotified about price increases. Moreover, . . .  
Andria: (now she needs to interrupt John) John, how much do youestimate that your solution will cost us?
John: Oh, approximately between $1.3 and $1.5 million, but thevalue you will be getting will more than offset this price. Letme tell you about another benefit of our product that I hadn’tmentioned. . . . (John continues to ramble for another ten minutes.)
Andria: John, as you say, there sounds like there is some valuein your new product, but it doesn’t have that much value tome. Thanks for stopping by.
John: But . . . 
Andria: Good-bye, John!
Salespeople like John think that by communicating information,such as new pricing, new discounts, and product data, they are cre-ating value. Most of the prospect’s and the seller’s time spent dis-pensing information in this way is simply wasted. Salespeople whofocus  on  the  product  or  service  they’re  offering  are  not  learningwhat “value” means to the customer. 
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Here’s  another  example:  The  Dartmouth  Group,  Ltd.,  hasobserved that sales reps who call on physicians tend to function astalking  brochures,  i.e.,  they  give  rather  than  seek  information.Probably  because  they  have  industry  expertise  themselves,  these“doctor reps” spend too many minutes of the sales visit telling thedoctor why his or her patients will benefit from a new product instead ofprobing to uncover the doctor’s needs. Dr. Richard Ruff of SalesMomentum  in  Scottsdale,  Arizona,  says,  “In  general,  salespeopleseem to be able to spend more time with doctors in sales calls whenthey ask really good questions and keep the doctor involved in thedialogue. Asking good questions enable the reps to identify oppor-tunities for them to create value for the doctors.”9
NEW PRODUCT LAUNCHESAnother  opportunity  to  create  value  for  themselves,  their  compa-nies, and their customers that salespeople miss comes about whennew products are introduced or launched. Research has shown thatsalespeople who focus more on their new product aren’t as effectiveas  salespeople  who  focus  more  on  the  customer’s  needs.10Salespeople normally are excited about new products and can’t waitto tell their customers all about them. However, there is a danger.As Neil Rackham, the eminent sales researcher says, “My researchshowed not that skepticism was better or that enthusiasm is bad; justthat  enthusiasm  can  make  the  seller  focus  on  products,  solutions,and answers, rather than on customer problems, needs, and issues.”11Salespeople should not “let enthusiasm get in the way” of focusingon customer concerns.12 This can be very difficult for salespeople inthe beginning. If they offer their demonstrations and solutions laterin  the  sales  cycle,  after  they  have  thoroughly  explored  their  cus-tomer’s  needs  by  asking  more  good  business  questions,  they  aremore likely to make a sale. 
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ACTION POINT➔ Don’t let enthusiasm get in the way of creating value. Focus on cus-tomer needs by asking lots of really smart questions instead of giv-ing information in order to create value.
SALES  TRUTH  11:  Salespeople  need  to  createvalue, not communicate value.
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sales trap 12:You’re Selling Value Versus Price
Have you ever heard any of these comments before?
1. “It’s hard for us to sell value. We’re the high-priced provider.”
2. “We’re the biggest in our industry, so we’re the leader in price.”
3. “Customers buy on price now. We’re not the lowest-priced playerin the market, so we lose a lot more business than we should.”
4. “Why  doesn’t  the  company  wake  up?  It’s  not  ‘the  economy,
stupid!’ it’s ‘the price, stupid!’”
Every one of these comments is based on the price-value fallacy.The  price-value  fallacy  defines  value  in  the  seller’s  terms,  not  thecustomer’s. These comments are based on the faulty inference thatsalespeople have to trade off price and value when they really don’t.Worse yet, comments 2 and 3 are examples of how salespeople lettheir companies define the value for customers. 
VALUE IS IN THE EYE OF THE BEHOLDERValue varies by customer. Companies seem to recognize that someof  their  salespeople  don’t  generate  value  for  their  customers,  butthese same companies often don’t recognize that they may be partlyresponsible for this when they get their sales force hyped up aboutvalue. As the old saying goes, “Beauty is in the eye of the beholder.”Similarly, “Value is in the eye of the customer.”
Perhaps  the  single  biggest  challenge  for  salespeople  is  to  per-suade a prospective customer to pay a premium price for the goodsor  services  they’re  selling.  Most  customers  will  not  pay  a  higherprice for a product unless they perceive that the value outweighs theprice.  Unfortunately,  many  customers  do  not  see  the  added  valuethat justifies the price. 
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Why do some customers see the added value in a particular prod-uct while other customers don’t? Often this difference can be tracedto the behavior of the salesperson. Let’s examine a relatively com-mon sales scenario.
The  buyer  for  ISP  Co.  has  indicated  that  he  needs  aproposal  and  that  it  should  include  the  “best  price”possible. Sally, the salesperson from Router & Switcher,asks  the  buyer  a  few  questions,  then  returns  to  heroffice  to  put  together  her  proposal.  A  few  days  later,Sally delivers the proposal. The buyer tells her he’ll getback to her shortly. She asks the buyer what he thinksof  the  proposal,  and  the  buyer  replies  that  Router  &Switcher’s  price  seems  relatively  competitive.  A  fewdays  later,  Sally  learns  that  a  competitor  has  beenawarded the order. And, sure enough, that competitorhad a lower price. 
The scenario in the preceding example is all too common. Somesalespeople blame their employer in this situation because they don’tfeel their firm’s products are price-competitive. Other salespeoplecomplain that their marketplace is now commodity-driven and thattheir  company’s  products  are  not  different  enough  to  justify  thehigher price tag. Management thinks the problem is that many oftheir salespeople can’t sell very well. They point to the fact that 20percent of their salespeople win more of these competitive situationsthan the remaining 80 percent do. So who’s right? 
Consider another example.
Heather, an office products consultant, has just com-pleted her third sales visit with Jason, the chief finan-cial  officer  of  Omnitech.  During  this  visit,  Heatherlearned that there was only one competitor that had alower price, and that that competitor’s product didn’t
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stack up as well as hers. Heather was feeling relievedand excited—so excited, in fact, that she called her bossand  told  him  that  she  felt  the  company  would  bereceiving  the  $1  million  contract  by  the  end  of  thequarter. He also shared in Heather’s excitement. Whowouldn’t? You can do everything the customer wants.You have the lowest price. It’s in the bag, right?  
Wrong!
A few weeks later, Jason had to inform Heather that shedidn’t receive the business. Jason told her that it cameright  down  to  the  wire.  Although  Heather’s  proposalwas less expensive than that of the company Omnitechhad selected, and although it seemed to Omnitech thatthere were no appreciable differences between Heather’sproposal  and  her  competitor’s,  Omnitech  felt  thatHeather’s implementation process was not as detailed asthat of her competitor. At the end of the day, Omnitechwas  concerned  with  the  risk,  effort,  and  hassle  that  itperceived  might  be  associated  with  implementationissues. These issues ran the gamut from morale, equip-ment  downtime  during  implementation,  and  the  per-sonal concerns of each of the members of the task forcethat it might reflect on them if the implementation didnot go smoothly. 
DISTINGUISHING PRICE AND COSTWhat went wrong? Heather did not distinguish between price andcost. Unfortunately for Heather, her customer did. Customers viewprice as a subset of cost, if not always consciously, then at least sub-consciously.  They  perceive  price  as  only  one factor  of  cost.  Otherfactors are: 
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∆ The  hassle  of  changing  suppliers,  vendors,  or  partnersbecause of the time it will take to get to know all the newpeople on the scene
∆ The  effort  it  will  take  switch  suppliers  in  terms  of  time
demands on the customer
∆ The  risks  associated  with  making  a  change,  such  as  con-tractual conditions or political issues within the account 
“If you think a large, complex sale is going to be too easy, it is morelikely to be too hard,” cautions Mike Navel, a training consultant whoworks  with  a  large  pharmaceutical  company.  And,  sure  enough,Heather lost the business to a competitor whose price was 7 percenthigher than hers. 
PROBING FOR RISKSIn order to avoid the situation Heather found herself in, salespeo-ple should probe for other cost issues. Is the buyer concerned thatyour firm is a new manufacturer? (Risk relating to the reputation orperformance of the seller.) Is the buyer bothered that the productlooks so complicated that it will take too long to learn how to useit?  (Risk  relating  to  the  buyer.)  Is  the  buyer  concerned  that  thebuyer’s staff might never be able to learn how to use it? (Effort andhassle for the buyer’s staff and career risk for the buyer.) 
Other examples of risks are:
∆ Career risks to the client if the decision turns out poorly
∆ Product risks to the company if the product fails to live up
to its claims
∆ Emotional risk associated with poor prior experiences with
a company
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∆ Technology risk that the “new technology” will not be main-
stream two or three years from now
∆ Loyalty risk, in that a customer may feel disloyal if he doesn’t
give the business to his friend
Interestingly,  although  customers  often  say  that  price  was  thereason they went with a competitor, in many cases the real reasonwas some other risk factor.13
PRICE DOESN’T EQUAL COSTWhat could Heather have done differently? She could have recog-nized that toward the end of the decision process, customers beginto weigh risks other than just price against the benefits and value.Heather should have probed for these risks rather than focusing onprice. She could have asked questions such as: 
∆ Are there any particular concerns or issues besides price thatmight factor into your decision that I haven’t addressed oranswered satisfactorily? 
∆ Are you totally comfortable with our implementation strategy?
∆ Do you see any particular political barriers that might pre-
vent us from getting the business? 
∆ Does our new technology raise any concerns in your mind
regarding its effectiveness or its leading-edge benefits?
To summarize, value is your solution’s benefit offset by its totalcost, as defined in the eye of the beholder, the customer. Therefore, sales-people who want to create value would do well to (1) investigate andexplore their customer’s needs thoroughly, and (2) ask about poten-tial risks, other than price, later in the sales cycle. 
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ACTION POINTS➔ Sell value versus total cost, not value versus price. In the value-versus-cost equation, price is a subset of cost. It’s important to determinewhich costs are important to the customer. Ask the customer aboutperceived risks, extra effort, or hassles if the customer moves aheadwith the buy decision. 
➔ Sell the decision criteria. The salesperson should ask the prospect todefine and agree to objective and measurable decision criteria insuch areas as service, reputation, expertise, convenience, depend-ability, quality, image, productivity, responsiveness, flexibility, andrelationship. (For a full discussion, see Sales Trap 10, “Rank Deci-sion Criteria Relative to Competitors.”)
➔ Help customers distinguish between price and cost. Today’s customerslook  at  total  cost,  including  both  direct  and  indirect  costs.  Thecorrect way for salespeople to look at price is to see it as one ofmany factors the customer perceives. Other factors include bene-fits,  savings,  and  solutions  on  one  side,  and  hassle,  risks,  effort,extras, and price on the other.14
SALES  TRUTH  12:  You’re  selling  value  versusperceived total cost.
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sales trap 13:Lower Your Price to Make the Sale
Real estate agents say that value in real estate boils down to location,location, location. Salespeople say value in selling boils down to price,price,  price.  In  reality,  it’s  usually  not  necessary  to  lower  the  price.Unfortunately, salespeople aren’t sure what to do when the customersays, “I can’t buy because your price is too high.” They believe thatthe price is in fact too high, not that they didn’t create enough value,and thereby fall into this sales trap. They lower the price. 
There’s a great temptation to lower the price to close the sale, butthat  leads  to  sellers  losing  value.  Are  salespeople  right  to  lowerprices?  When  customers  say  it’s  price,  is  it  really?  Actually,  no.Research has shown that almost two-thirds of the time the customertells the salesperson that price is the reason for not buying, price isnot the compelling reason.15
Here’s an example: 
Jennifer, an architect for Boards & Lumber, has bid onthe job to design the new corporate offices of ThunderBay  Limited,  to  be  located  in  Vancouver,  BritishColumbia. She is expecting to get the go-ahead fromDavid,  the  senior  vice  president  of  operations  atThunder Bay Limited. 
As Jennifer sits down in David’s office, she is anxiousbut optimistic. But then she hears those dreaded words“Jennifer, I have some bad news. We decided to go withAble & Abler as our architectural partner. It’s nothingpersonal,  you  understand,  just  business.  Their  pricewas 12 percent less than yours,” says David. 
Jennifer  is  almost  speechless.  “David,  if  we  were  toreduce  our  price,  would  you  re-evaluate  your  deci-sion?” she asks.
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“Unfortunately, our decision is made. I know how youmust feel. But everybody’s looking at ways to get bet-ter prices today, so this is just another cost reductiondecision.  I  hope  you  understand.  At  any  rate,  goodluck. As you know, Jennifer, you win some and you losesome.” And, with that said, Jennifer is dismissed with ashake of the hand.
As  you  might  expect,  Jennifer  is  beside  herself.  Shecan’t wait to get back to her office and read the riot actto Lumber’s executive vice president, Vince Carrabba,whom  she  had  warned  that  her  proposal  to  ThunderBay was “too pricey.” 
“Vince, I told you so. You guys wouldn’t listen, wouldyou? David told me that price was the reason we didn’tget the contract. Some days this whole place just makesme mad. I have to take a break.”
Jennifer proceeds to her office and calls Cameron, hercolleague at the firm. She asks him to meet her for lunchso that she can emote. At lunch she says, “Cameron, doyou  realize  that  for  the  last  three  years  I  have  beenearning less money each year because of our prices?”
Cameron,  who  hasn’t  been  losing  much  businessbecause of pricing—who has, in fact, increased his per-sonal  earnings  substantially  year  after  year—asksJennifer,  “Have  you  ever  thought  it  might  be  some-thing that you aren’t doing or should be doing that iscausing you to lose so often on price? Have you con-sidered that the customer may have needs other thanprice that you haven’t explored fully? You can’t alwayscount on people to tell you everything, Jennifer. Youmay want to reevaluate your probing techniques.”
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“Cameron, you’re starting to sound like Vince, so quitit. My customers are just flaky,” she retorts. 
IS PRICE THE PROBLEM?In the above scenario, could Jennifer have been having a value prob-lem? I think so. As Tom O’Neil, president of Office Works (a dis-tributor  for  one  of  the  world’s  premier  office  furniture  manufactur-ers), says, “In today’s business world, our customers are looking forthe best value. If our salespeople cannot create value for their cus-tomers, then why should we expect one of our customers to pay ahigher price for a similar product or service that one of our com-petitors offers?”
I believe that Jennifer probably lost the sale because she did notdistinguish her offering from those of her competitors. Customerswill then take the lowest-price offering when they don’t see any dif-ference between products. Price isn’t the problem. Price is the symp-tom  of  a  deeper  problem.  “Price  is  a  polite  way  of  bringing  upother concerns,” Neil Rackham says. “In the later stages of a com-plex sale, a price objection may signal an unresolved consequencefor the buyer. The salesperson should help the customer identifythose concerns and worries, but can’t solve them. Only the buyercan do that.”16
CONSEQUENCE ISSUESLet’s look at Jennifer’s example again. 
In  Jennifer’s  case,  David’s  unspoken  “consequence”  issue  mayhave  been  that  Jennifer’s  company,  Lumber  &  Board,  was  a  newcompany (only five years old) and its competitor, Able & Abler, wasmuch more established (over thirty-five years old). David may havefeared that Lumber & Board didn’t have the proven track record,experienced  staff,  or  creative  ideas  staff  to  handle  the  demandingproject. Reducing the price will do nothing to resolve any of theseconsequence issues.
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Sometimes the real issue is price. But before you start to negoti-
ate price, follow these three steps first.
STEPS BEFORE NEGOTIATING PRICE1. INVESTIGATE THE CLIENT’S DECISION CRITERIA. Find decision criteria that notonly are important to the client but also can help the client sepa-rate  your  offerings  from  your  competitors’.  Remember,  it’s  notwhat you perceive the criteria and differences to be, but what theclient perceives.
Ask yourself if your customer will be able to measure or determinewhich decision criteria you meet better than, as well as, or worse thanyour competition. Will the decision criteria that the client is usingpermit him or her to distinguish among the options effectively?
For  example,  the  customer  may  feel  that  product  quality  isimportant. Since quality is a subjective characteristic, the salesper-son needs to make sure that the client can determine which of thecompeting product solutions is superior with respect to quality. Howdoes the customer measure the quality difference among the vari-ous options? You may have to provide the client with some quan-tifiable standards used to measure quality. 
Describing the decision criteria in terms of measurable, objectivestandards  is  important  because  customers  are  more  comfortableusing objective criteria. If your definition of quality is better thanyour competitors’, then the customer will be more likely to use yourdefinition.  If  the  customer  can’t  distinguish  between  alternativesbecause a criterion is too subjective, he or she is not likely to use thatcriterion when making the final decision. 
In Jennifer’s case, the client was interested in experience. Jenniferdidn’t explore the definition of experience with David. She acceptedthe definition that experience meant years the company had been inbusiness. Lumber & Board was a new company (only five years old),and its competitor Able & Abler was much more established (overthirty-five  years  old).  But  wouldn’t  David  have  been  interested  to
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know that Jennifer’s executive vice president, Vince, had thirty-threeyears’ experience in drafting corporate center designs and that threeof his designs had won national awards? The dialogue might havegone something like this:
Jennifer: I understand that experience is crucial in your decisionprocess. Just what do you mean by experience?
David: Basically the number of years that a company has beenin business.
Jennifer: Well, that sure makes sense. When you say “numberof years a company has been in business,” does that includeindividuals within the company? 
David: Well, yes.
Jennifer: Wouldn’t you also want to know the experience levelsof the people who will be working on your project? Like howmany years of experience they have, how many corporate cen-ters  they  have  designed,  how  many  awards  for  design  theyhave won?
David: Of course, those are important issues also. 
In this example, Jennifer did two things: 
1. She asked David his definition of experience: “Just what do
you mean by experience?”
2. She inquired if other factors relating to experience were alsoimportant: “Wouldn’t you also want to know the experiencelevels of the people who will be working on your project?Like  how  many  years  of  experience  they  have,  how  manycorporate centers they have designed, how many awards fordesign they have won?” These factors would have helped todifferentiate her company from its competitor. 
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If Jennifer had explored David’s definition of the experience cri-
terion, she might have won the sale.
2. LOOK FOR RISKS OTHER THAN PRICE. The second step is to ask yourself, arethere  other  risks  to  the  customer  besides  price? You  need  to  identify,reduce, or eliminate any risk you can to help keep price out of thediscussion. That will help you avoid lowering the price if you don’thave  to.  While  the  customer  is  comparing  the  various  offeringsagainst his or her decision criteria, ask questions about what he orshe sees the risks to be in choosing your solution. 
If  the  prospect  measures  risk  in  some  quantifiable  way—forexample, in terms of price, penalties, or delivery terms and dates—you may have to enter into negotiations to resolve the customer’sspecific concern. However, before you negotiate, see whether reso-lution of these particular concerns will result in an order. (Again, thisis so you won’t lower the price when it isn’t necessary.)
For example, you might ask the customer, “If it weren’t for ourprice compared to that of our competitor, would you select us?” Inother words, Jennifer should have asked, “David, is price the onlything keeping you from choosing Lumber & Board?” 
The buyer may have other, deeper issues that need to be resolved,
such as:  
∆ A wrong decision could affect my career.
∆ The seller has a history of poor postsale performance.17
Addressing  these  issues  by  lowering  your  price  is  solving  thewrong  problem.  Dr.  Fred  Webster,  author  of  Market-DrivenManagement and professor of marketing at the Amos Tuck School ofBusiness at Dartmouth College, used to say that as businesspeople,the  most  frustrating  business  experience  we  would  ever  encounterwould be the discovery that we had solved the wrong problem.18
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Negotiation of prices should always be the last thing a salesper-
son does in the sales cycle.
3. SEARCH FOR CREATIVE SOLUTIONS. Even when you’ve made sure that theonly remaining obstacle to the sale is price, there are still creativeways to avoid lowering it. If Jennifer’s problem was truly price, per-haps she could have inserted a performance clause into her proposedcontract that would have made David and his staff feel more confi-dent. Other creative examples might include:
∆ Providing additional implementation support
∆ Stretching payments out over a longer time period
∆ Decreasing the up-front retainer money 
Top performers use creative solutions to reduce price concerns.Top performers also have the advantage of experience and knowledgeof what’s possible, especially when it comes to meeting difficult cus-tomer requirements. Of course, there are certain requirements thateven a top performer can’t meet or chooses not to meet. In this case,the salesperson should be candid and honest about saying so.19
ACTION POINTS➔ Identify  and  develop  customer  needs. Ask  yourself,  “Does  the  cus-tomer view his or her problem as sizable enough to solve?” (Fora  fuller  discussion  of  this,  see  Sales  Trap  3,  “It’s  Best  to  OfferSolutions to Problems You See.”)
➔ Identify and develop ways to differentiate your offerings from the com-petition. Customers can’t differentiate among their options unlessthe criteria they’ll use to decide are stated in measurable, quan-tifiable terms. (This is discussed in Sales Trap 10, “Rank DecisionCriteria Relative to Competitors.”)
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➔ Identify and reduce perceived risks. Help customers define the per-
ceived risks. Then help them resolve those perceived risks. 
➔ Negotiate creatively, but only when you have to. Avoid negotiating bycoming  up  with  creative  solutions  that  don’t  have  a  financialimpact on the profitability of the sale. 
SALES TRUTH 13: You can often make the salewithout lowering your price.
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sales trap 14:It’s Possible to Sell Anything to Anybody 
“She can sell ice to Eskimos” is the compliment, meaning that she’sa good salesperson. She can sell anything to anybody is the idea. Thisis a fallacy. A salesperson who persuades and pushes won’t sell any-thing at all. If you believe this fallacy, you aren’t creating value foryour customers. 
This fallacy is echoed in a myriad of books on the market, suchas How to Sell Anything to Anybody by Joe Girard and You Can SellAnything by Telephone! by Gary S. Goodman. In the real world, salesdon’t go through if the salesperson pushes too hard. It doesn’t fol-low  that  if  you  push  harder,  customers  are  going  to  buy  more.There’s a simple reason for this: The buyer has to need the productor service. In a high-ticket sale, prospects will not buy unless theysee value in what you’re offering.
PUSHERS AND PULLERSThis  sales  trap  also  ignores  the  analysis  of  top  sales  experts,  whobelieve  that  salespeople  come  in  two  basic  personality  types.“Salespeople come in two types—‘pushers’ and ‘pullers,’” says salesresearcher Neil Rackham.20 Pushers are defined as those salespeo-ple  who  dump  a  lot  of  information  on  their  customers  (see  SalesTrap 11). Says Rackham, “In the push style, the energy comes fromthe persuader, who ‘tells.’ Because the push style is about telling, it’seasy  to  practice  and  repeat.  You  get  really  good  at  a  presentationwhen you’ve made it 100 times. So push sellers gravitate to a stan-dard pitch that becomes overpracticed and therefore hard to change.The push style requires power, with expertise or knowledge being atype of power.”21
In the pull style, on the other hand, the energy comes from thecustomer through the questions the seller asks. Pullers elicit infor-
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mation from their customers by asking lots of good questions, thencustomize the solutions around what customers say they need. Thepull style takes more time, so it’s less suitable for short sales.22
PUSH STYLE. Which style works better? The push style works in trans-actional sales, characterized by:
∆ Customer perception that the risk of a wrong decision is low
∆ Low purchase price
∆ One visit to secure the order
∆ Maximum customer coverage at minimum cost
In sales of this type, customers have a casual attitude toward thesale and say to themselves, “So what if my decision turns out bad?I won’t lose much money. I won’t have invested a lot of time. Mydecision  has  no  serious  or  lasting  consequences  or  risks  for  me.”Let’s say, for example, that you’re approached by a telemarketer tosubscribe  to  a  magazine.  If  you  say  yes,  what  will  you  have  lost?$19.95?  Five  minutes  of  your  time  on  the  phone?  Let’s  say  youdecide you don’t like the magazine. Usually you can cancel imme-diately without any payment. All in all, your decision is low-risk.People in such situations often buy on impulse—and without need-ing  what  they’re  buying—because  the  buying  decision  is  small-impact,  simple,  and  low-risk.  The  push  style  is  perfect  for  thesesales  because,  although  it  doesn’t  create  value,  this  type  of  saledoesn’t require a lot of value. 
PULL STYLE. The pull style works well when the total perceived costis high. (See Sales Trap 12, “You’re Selling Value Versus Price.”)