For our September Webinar, John Shulman, CEO at Alignor, explored strategies for communicating differentiation that help sales teams successfully navigate customer price pressure objections. After the session, he answered questions from the webinar audience. In this blog, we share his live answers.
Do customers that truly understand your solutions’ value tend to push back on price less?
The answer generally is yes, but there’s a huge caveat: it depends on the stakeholders you’re dealing with, and it often changes at various times. So a lot of what we see with our large clients is they have huge accounts, they have a variety of relationships, and some of the stakeholders they deal with, whether it’s operations or others, that they are very close to see the value prop and see the value delivered and do not want to change and are comfortable and are not pushing as hard on the pricing.
At the same time, what I have seen, especially with large enterprises. I’ve worked on that side of it as well on the purchasing supply chain side, is they do go through these cycles where they may have a new chief procurement officer, they may have just a new person on the account, and what they are doing is they are pushing an initiative to drive cost savings across the organization. They’re going to go after you, even though many people in their organization believe in you, they see the value prop and they do not want to change; they’re still going to go after you.
So again, it depends on where the pendulum is in these organizations and who is calling the shots, and you have to understand that, and you have to dig deep and try to get information about where this is coming from. One thing I will say is if you’re hearing from some person in procurement you’ve never heard from before, you don’t know who they are, look ’em up on LinkedIn, ask people about them, try to find out is this person, do they legitimately have the power to influence various stakeholders on their side or is this more of a generic just kind of attempt to squeeze all suppliers?
It matters to dig in and get that kind of information because, ultimately, you’re going to need to work through the people with whom you do have relationships so that they can tell your value story internally, which is again what that game was starting to explore. You’ve got to empower them to tell your story, which means they need the data that you can share with them to tell the story effectively because there are a variety of different stakeholders internally on the account side who will be pushing in different directions.
And by the way, on their account side, they’re battling often internally over who gets credit for cost savings for total cost of ownership, et cetera. They literally negotiate that stuff internally on the account side.
Which company other than Big Co would disclose their added value of $100k achieved by using your product versus the competitor’s product? And if they do that, are they saying you sell it too cheap?
So, to be very clear, Brian was really helpful in his demo on this, and we are making assumptions about what we believe the cost savings are for them now. They are our assumptions. In the course of working with them over the past year, we’ve learned about their operation in delivering our solution. We’re learning a lot, but they are our assumptions about the value we offer.
So this is not information that BigCo provides, and we expect that we’re going to end up in a data-driven conversation, which is, I believe, what Brian was getting into there is that we’re going to share our assumptions, and they’re going to push back. The key, though, is that it’s a good conversation for us to have. It’s a lot better than our costs being out of whack and our pricing being out of whack.
Instead of that, what we’re saying is let’s talk about the value we’ve delivered. We’re making assumptions based on our understanding of your operation, the industry, and how we deliver more effectively than our competition. Now, we expect a hundred percent pushback, but that pushback again is a data-driven conversation about the value we’ve delivered and whether that value is $100k; maybe they come back and say it’s $80k. Well, we’re still ahead of the game.
We are not expecting BigCo to give us their data. We are not expecting BigCo to provide us with straight answers either, and they don’t want to have that conversation with us if they’re trying to get us focused on cost reductions and telling us our costs are out of line. But we are pivoting the conversation to the differentiated value we delivered.
And again, remember we’re trying to do it through our champions who already believe in our solution so they can have the conversation internally. And we may never hear the exact truth of what they talked about internally. It may get skewed and fed back to us in a way that could be more accurate and that suits them, but we know when the temperature goes down, they stop pushing as hard to get us to reduce prices that were being effective. But that’s the conversation that we want to facilitate internally for our champions on the account side.
What should we do when the competitor is just as good and presents the same value proposition when, historically, we’ve found price to be the deal breaker?
So there are a couple of things there. Number one that requires some challenging internal conversations about our competitive position and whether our pricing is sustainable. And I want to surface that and get it raised internally at high levels because we want to see across several different accounts. We may be more robust in specific niches than others, or there may be certain aspects of value that we are better at than the competition.
I want to go deeper on that second point. One of the things is not in any way to suggest that we don’t want to calculate the value in the ways that Brian was sharing and leverage Point does well. We must do that where possible because those numbers will always be relevant in various conversations.
But there’s more to value than just what can be calculated. What I mean by that is the account stakeholders, the different people in the account, have various ways of measuring value. Some of it is quantified in spreadsheets, and others are not. Let me give you an example: risk. How, if your operations, do you quantify the risk of switching to another solution that might be just as good, but there will be some transition? You could call it cost, but there’s also a risk, including how we’ll change some things. They’re going into an unknown place. If given the opportunity in that situation, most people would’ve preferred to avoid that risk. So, there are a lot of different aspects of value that may be challenging to quantify. However, we must still be aware of, capture, and communicate differentiated value to the right stakeholders.
So it goes down to that a lot of the work we do is developing the right and high-level talking points for each stakeholder in the account because it turns out that the messaging may be slightly different depending on their role and where they see value. Again, remember differentiated value is a value that each stakeholder sees as satisfying their interests, and they all have slightly different interests within the account organization.
I’ll give one example. There’s one super high-performing account manager selling a high-tech solution, and everybody wondered how she was so good; she was perfect in an urban environment at something else she loved, which was how to handle interior decoration and organization. And she would advise every account she went to of little things they could do in an urban environment to make the most out of their space. Nobody ever really worried about switching solutions because they were happy with the solution, the technology solution, but what they loved about the differentiation was the little advice she gave them. And that’s just an example of how we can deliver value in many different ways for those relationships.
