Selling Value vs. Fee
Successful contractors sell value to their customers. Invest the time to dive deep and ascertain how your business is different and what you do better than your competitors (you can also learn where you come up short, but that’s a topic for another day). Once you know where you add value, you can sell that to your clients.
Watch Digging Deeper this week as Dennis explains the importance of having strategic differentiators for your company, how to divine them, and the impact selling value can have on volume and profits.
We look forward to hearing your thoughts.
The next cohort of FBI’s Contractor Business Boot Camp starts in April. Establish your differentiators – develop your future leaders and see the value they bring to your business in the long term. Please contact Charlotte at ckopp@familybusinessinstitute.com for more details.
Good morning, everybody. Thanks for tuning into Digging Deeper. I'm Dennis Engelbrecht with The Family Business
Institute and the CEO of Roundtable Program for Contractors. Today we want to talk about selling value versus fee.
All right, so first the concept: selling value. Basically, when you're selling value, what you're asking your customer to do is
buy your company's services because that's going to be the best thing for them, because you're going to provide more
value than anybody else. Value does have a fee component to it. Value. What you're getting for what you're giving or what
you're paying. But what my point here is to have your customers be focused on the value that you're delivering versus the
fee that you're charging.
To do this successfully, probably the first thing you have to do is understand your own value proposition. What is it that
differentiates you from the company next door, the other people that are bidding on the job, or the other people that are
competing for the job? What exactly is your value proposition? Is it that you are better in pre-construction? Is it that you
deliver on time? Is it that you're better at value engineering, you make the relationship more enjoyable in getting there?
What is it exactly that differentiates you from your competition? If you understand that well, well, then of course you're
in a better position to sell that.
What if you don't find a great deal of differentiation between you and your competitors? Well, then you better work on
developing that. Try to find at least one or two things that you as a company can do better than anybody else. Ask yourself
the question, and this comes from the book, Good to Great, the Hedgehog Principle, at what can we be the very best? Just
find, even if it's a little thing or two, find the one or two things at which you can be the very best, if you don't already know
that or haven't proven that.
Then finally, you have to be able to articulate what that value proposition is and what that differentiator is. Probably the
best way to articulate that is really through questions. Now, that may seem odd, but if you know that, for example, your
pre-construction is better than the other companies, perhaps you're sitting in the meeting with your customer and you
ask them, "What are the main things you'd like to get out of pre-construction?" Get them to articulate themselves what
those things are that you do well. Instead of you having to sell that as being important, get your client to tell you why
that's important.
Again, this may sound like trickery in a sense, but it's really pretty simple. After they tell you what they value in preconstruction, ask them the simple question, "Well, why is that important to you?" This has always been a trick in selling
consulting services. It's one of the things that usually consultants are pretty good at. But by asking somebody why that's
important to them, they sell it to themselves. In trying to articulate this differentiation, you can do that a lot better
sometimes through questions than you can even with the so-called elevator speech, but I would certainly know your
elevator speech as well.
Finally, the last part of this is there are some customers who simply want the low price. Now if you are a high value seller
and you're selling to a client who simply wants the low price, you really have a mismatch, right? You have something that's
very valuable, but he doesn't really care. They want the low price. What you have to do in that case is you simply have to
find customers who appreciate the value that you bring. If you're trying to sell value to a commodity buyer, you're not
really going to be successful. You're going to do a lot of losing because they're going to choose the low fee over the high
value. From a strategic standpoint, make sure you're identifying the markets, and the companies, and the customers who
are going to value the proposition that you bring. As soon as you have that match, you're going to find a lot more success
in your business development activity.
Again, think about that, selling value versus fee. Thanks again for tuning into Digging Deeper.
