The Personal MBA

Master the Art of Business

A world-class business education in a single volume. Learn the universal principles behind every successful business, then use these ideas to make more money, get more done, and have more fun in your life and work.

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What Is 'Value-Based Selling'?

Value-Based Selling is the process of understanding and reinforcing the reasons why your offer is valuable to the purchaser.

Though Value-Based Selling, you increase the likelihood of a transaction as well as the price the purchaser is willing to pay.

Always sell based on the value your offer provides, not the cost.

Josh Kaufman Explains 'Value-Based Selling'

Imagine that you provide an ongoing service to a Fortune 500 corporation that increases their annual revenues by $100 million dollars. Is your service worth $10 million a year? Sure - after all, what company would give up $90 million dollars in ongoing revenue?

Does it matter if providing this valuable service doesn't cost you much money? Absolutely not-even if it only costs you a hundred dollars a year to provide the service, you're providing a huge amount of value, which supports the comparatively high price.

Does it matter if most business-to-business services cost $10,000 or less? Absolutely not-you're providing much more value than other services in the market, which completely justifies a higher price.

Value-Based Selling is the process of understanding and reinforcing the reasons why your offer is valuable to the purchaser.

In the 4 Pricing Methods, we discussed how the Value Comparison method is often the best way to support a high price on your offer. Value-Based Selling is how you support that price. By understanding and reinforcing the Reason Why a transaction will be valuable to the customer, you simultaneously increase the likelihood of a transaction as well as the price the buyer will be willing to pay.

Value-Based Selling is not about talking-it's about listening. When most people think of sales, they imagine a pushy, smooth-talking shyster whose sole priority is to "close the deal."

Emulating shady used car dealers is the fastest way to destroy trust and give your potential customers the impression that you care more about your bottom line than about what they want.

In reality, the best salespeople are the ones who can listen intently for the things the customer really wants.

Asking good questions is the best way to identify what your offer is worth to your prospect. In the classic sales book SPIN Selling, Neil Rackham describes the four phases of successful selling:

  1. Understanding the situation;
  2. Defining the problem;
  3. Clarifying the short-term and long-term implications of that problem;
  4. Quantifying the "need-payoff,"" or the financial and emotional benefits the customer would experience after the resolution of their problem.

Instead of barging in with a premature, boilerplate hard-sell, successful salespeople focus on asking specific questions to get to the root of what the prospect actually wants.

By encouraging your prospects to tell you more about what they need, you reap two major benefits.

First, it increases the prospect's confidence in your understanding of the situation, increasing their Trust in your ability to deliver a solution.

Second, you'll discover information that will help you emphasize just how valuable your offer is in relation to what they're doing, which helps in Framing the price of your offer versus the value it will provide.

If you discover why, how, and how much your offer will benefit the customer, you'll be able to explain that value in terms they'll understand and appreciate. Understanding the value you can provide your customers is the golden path to a profitable sale.

Questions About 'Value-Based Selling'


"Price is what you pay. Value is what you get."

Warren Buffett, renowned investor


From Chapter 3:

Sales


https://personalmba.com/value-based-selling/



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The Personal MBA

Master the Art of Business

A world-class business education in a single volume. Learn the universal principles behind every successful business, then use these ideas to make more money, get more done, and have more fun in your life and work.

Buy the book:


About Josh Kaufman

Josh Kaufman is an acclaimed business, learning, and skill acquisition expert. He is the author of two international bestsellers: The Personal MBA and The First 20 Hours. Josh's research and writing have helped millions of people worldwide learn the fundamentals of modern business.

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