Embrace the Tension

Product Marketing

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By now, you can see that your value-based conversation with customers is going to be very different from what you might be used to. You can already feel the knot developing in your stomach as you begin to imagine how uncomfortable this could get. There’s no way you’re going to get away with a “commercial conversation” like the one described in a why-buy presentation without some customer pushback.

You think, “It was much easier when price, claims of customer profitability, and direct references to the competition were left out. With this value-based marketing approach, things could get tense.”

Your Options

Tension exists in every transaction. Parties to any transaction seek to capture as much value as they can for themselves. It’s a contest, and contests create tension. You cannot avoid it. You can, however, choose how to manage it. Your two options are as follows:

  • Option 1: Try to establish value-based pricing during the final negotiations. Avoid all commercial conversations until sales has their face-off with purchasing.
  • Option 2: Connect value proposition, competitive advantages, and pricing in a value-based framework early in the process. Have sales enter final negotiations with value firmly established.

Option 1 is unlikely to produce value-based pricing for the equipment supplier. Most of the participants in the buying process have not been exposed to the connection between price and value. Purchasing doesn’t care. Diving-catch attempts to support price with value claims will appear insincere, and the clock will likely run out on your attempts to substantiate them.

Option 2, on the other hand, sets the table for a value-based price discussion with purchasing. The salesperson can frame the argument just as it’s been framed since the sales cycle began. When purchasing presents your arguments to the rest of their buying team, they are not surprised. In fact, they are armed with data and demonstration results that support your value claims. They can articulate your competitive advantages. They’ve been exposed to the connection between value and equipment price. They can rationalize and support the price differential that you’re asking for.

Option 2 is a much better place to be. The only cost to you is a little tension shifted to earlier parts of the sales process. Embrace that tension. The pushback you are anticipating is actually engagement. The customer is engaging you in the commercial conversation that you’re trying to facilitate. The tension is a sign that it’s working.

The why-buy presentation is one of the tools that you can use to get that conversation started. Customer reactions to such a presentation are sure to include some pushback. Some of the most common are

  • “Those financials are too simple,”
  • “We’ll never pay those prices,”
  • “Your competitor data is wrong,” and
  • “Don’t refer to your competitors.”

Don’t be afraid. You can handle all these.

“Those Financials Are Too Simple”

Comparative financials used in a Why-Buy presentation (like those shown below) factor in only the parameters that are included in your value metric. You do this to keep the conversation focused on only those factors that will affect the buying decision.

A customer may react to that and say, “This is oversimplified and doesn’t account for all the costs associated with owning this piece of equipment.”

To that, you would simply respond with, “Those other costs are essentially the same across all suppliers. We’ll help you get those numbers if you need them for your cost-of-ownership models. Our intent here was to highlight those factors that we thought would be most helpful to you when choosing among equipment suppliers.”

You might even use the customer reaction as an opening for a little more discovery. You might ask, “Have we missed any additional factors that will be significant to your buying decision?”

“We’ll Never Pay Those Prices”

Don’t be thrown by pushback on pricing. You don’t actually expect them to pay the prices shown in an early why-buy presentation, either. You just want them to connect with the idea that they will get more value from you, even if they pay you a higher price than the competition.

Just respond with something like, “A lot of things will affect final pricing. I just wanted to illustrate the added profitability you can expect with our system when compared with alternatives in the market.”

“You’re Competitor Data Is Wrong”

In a why-buy discussion, you’ll make your understanding of the competition’s capability very clear. In doing so, of course, you expose yourself to the potential of being wrong.

But avoiding this part of the conversation precludes you from ever achieving value-based pricing. Value is relative to alternatives in the market. You cannot establish value-based pricing without reference to the competition. This is no time to wimp out. It is better to be wrong and know it than it is to be wrong and not know it.

So, if the customer corrects one of your assumptions about the competition, embrace the new data point. If validation shows that the customer was being straight with you, your competitive intelligence just improved – and so did your chances of achieving value-based pricing.

“Don’t Refer to Your Competitor”

In the capital equipment world, what’s acceptable when it comes to talking about your competition can vary widely. Some equipment buyers strongly object to a supplier making direct references to a competitor, whereas others welcome or even encourage it.

There is a solution. The following are three ways to talk about your competitors. Just select the one that is most appropriate for the customer environment in which you are operating.

Name Them

If you are operating in an environment where naming competitors is acceptable or even encouraged, then do so. It can be your most effective option. It won’t leave any doubt in the customer’s mind whom you are talking about and what your differences are. In this case,  you might produce a slide like the one below to substantiate the source of your “fastest process time” advantage.

Don’t Name Them

In some environments, it’s acceptable to refer to competitors, just not by name. You need to make only a small adjustment to the “name them” approach: substitute the competitor’s actual name with the generic equivalent. See below.

Use “Design Considerations”

In certain environments, your customers may insist that you talk only about your company and your products. This can be the most challenging for the marketer who knows that he must differentiate or die. Have no fear; there’s a solution for this scenario as well. Let’s call it the “design considerations” approach.

Here, instead of referring to the competition in any way, you’d refer to different product-design approaches that you considered. Of course, one of those designs is superior and is the one your company chose, and the other is inferior and just happens to be the one the competition pursued. See below.

Your voice-over for the slide above would start with something like, “We looked at both rhenium and graphite as potential heater-element materials. Rhenium turns out to have twice the current-carrying capacity. That meant we could attach a much larger power supply. The result was process times that are about half that of a graphite-based system.”

It’s this head-to-head comparison that cements your differentiation in the customer’s mind. It makes it clear why the customer should choose your product over the alternative. Now, with these three methods, you can highlight your advantages in virtually any customer environment.

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