Change the conversation

Yesterday, a sales colleague of mine was complaining about price (and consequently margin) pressure from competition on a product maintenance deal. Although our company is an industry leader with a best in class products and services portfolio, some industry players tend to systematically undermine business by lowering their prices to an unrealistic level, resulting in customers expecting us to “drop our pants” as well.

But from the same chat I also learned that this sales team was almost exclusively talking to our customers’ purchasing and procurement departments. No wonder that most of their meetings were only dealing with terms & conditions, volume and pricing issues. So I gave my co-worker one single piece of advice: CHANGE THE CONVERSATION!

I told him the story of Harvey’s, a small commodity hardware store that manages to obtain a revenue per square meter almost four times higher than its large-scale competitors. An inspiring example that I already made reference to in a earlier blog post about “the perceived value of value”.

Nuts-Bolts

And though high-tech hardware, software and services are certainly a different sell than nuts and bolts, these are the 3 tips I gave him to change the conversation with his customers:

  • Change the audience: different parts of an organization may have different business objectives. As such it’s obvious that your customer’s purchasing and procurement departments will try to negotiate the lowest price for the products or services you are offering them. So, if you want to change the context from cost to value, then you’d better start talking with some other stakeholders, who might better appreciate your business proposal (in the case of the maintenance proposition: the operations and customer service people.)
  • Change the vocabulary: in everyday language, “cost”, “price”, “worth” and “value” are often interchangeable, but emotionally (as well as economically) they have completely different connotations. So carefully consider the words you use when presenting to and discussing with customers and business partners.
    Mind that not only words like cost and price may have a specific undertone, but also many business and technology terms have a specialized (and predetermined) meaning. Therefore, we decided to start a dialogue with our customers about providing an “Extended Life” for their infrastructure, and not simply discuss the delivery of “maintenance” services – emphasizing the fact that we are helping them to optimize their assets and save money, rather than being a burden on their budget.
  • Change the perimeter: price-wars are seldom good battles to fight, and you can better engage into a value than into a cost discussion. For the opportunity mentioned above, this meant turning a debate about the cost of outsourcing maintenance activities into an enumeration of the benefits of getting  the right services, people and practices on board.
    And, very often, one business opportunity may also hide another one. As such, product life-cycle (including maintenance) discussions are often linked to a strategic exercise about infrastructure evolution or business transformation. So don’t limit the conversation topic to this one single product or service you absolutely want to sell, and start addressing the big picture – you never know what pleasant surprises may come out…

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