The difference between value and price: Successful Selling

By Sam Allman

Let’s suppose that you are retiring and being honored at a company dinner for your many years of service and selling. The invited guests include many of your loyal and long-time customers. All are invited to stand and say a few words about you and your selling skills. What would you like them to say? How would you like to be remembered as a salesperson?

I can hear it now: “Oh, Sam Allman—for a salesman, he was tall.” Is that how I want to be remembered by my former customers? Of course not. But if my actions and impressions as a salesperson are not memorable enough for my customers to remember, that may be all they can think of to say.

In modern society we have countless interactions with people and things every day. A mind can hold only so much, and we tend to remember only the things that are truly memorable. The rest fades into oblivion. That’s the struggle that marketing and advertising share—how to make an impression and get the attention of potential customers. It’s the fight for a place in the customer’s mind. Marketing guru Jack Trout calls it “positioning,” and defines it as a mental image of you and your product or service. So if you hear, “You deserve a break today” or “Stay thirsty, my friends” or “Let’s build something together,” and you know which product or company it refers to, then the positioning was a success.

For a salesperson, positioning is a master selling skill. Some salespeople focus on commodity selling, where the lowest price always wins. Customers like commodities; it makes their decision-making process easier. It doesn’t take a salesperson to lower prices—anybody can do that—but it takes a master salesperson to sell at prices higher than the competition.

Since customers are smart, selling at prices higher than the competition starts with positioning for uniqueness. For a service or product to be memorable, it must be unique or different enough from the competition to get people’s attention. As Jack Trout says, “Differentiate or die.”

COMPETITION FROM BOXES AND CATEGORY KILLERS
For the last few decades the independent flooring retailer has been taking a beating. The home centers and category killers have been taking marketshare by creating an environment of lower prices and commodity selling. The independent flooring merchants were easy prey. They were doing business as they had done for years, investing little of their profits back into their businesses, and in general had grown complacent.

Lately, some independent flooring retailers have started working hard to compete with these relatively new retailers, brightening up their stores, inside and out, with paint and lighting; replacing old, dingy floorcoverings; updating their bathrooms; improving lighting and signage; beautifying their showrooms; and at the same time making them easier to shop. Apparently, some have found that refurbishing stores is not enough. This week I received an email from a friend who complained that his store made some customers feel that his prices were too high because of the elegance of his showroom. He said, ”You can’t win for losing.”

The problem, of course, is that flooring products are commodities—wood is wood, fuzz is fuzz, and vinyl is vinyl. Yes, some manufacturers will make unique products, but the good ones are soon copied and duplicated by other manufacturers. Most flooring retailers do their best not to sell what their local competitors or the big boxes sell. They private label their products (or get the manufacturers to), join marketing groups, buy specials, buy in volume and use creative pricing strategies in order to remain competitive, maintain margins and make a profit.

However, a beautiful showroom and private label strategies are not enough to escape the commodity selling game. And joining that game is risky business for smaller independent retailers. In recent years, as many as 12% to 20% of flooring retailers have failed, and the number one cause is declining gross margins. Independent flooring retailers that focus their strategy to compete on price will likely end up as another statistic.

In my seminars, many have bragged that they can match home center prices. I always wonder, why would anyone brag about that? Trying to compete with the mass merchants head-to-head is business suicide. Even with advertising rates five to ten times higher than those of independent retailers, mass merchants and home centers have far lower operating expenses. As Thom Winninger said in his book, Price Wars, “The biggest danger from a mass merchant is not that it will put you out of business. The danger is that you will run yourself out of business by competing on their terms—low prices.”

WINNING BY CHANGING THE GAME
So how is an independent flooring retailer to compete if matching prices consistently is not an option? According to Winninger, “The easiest way to compete with a price merchant is not to compete on price.” Since customers like to compare apples to apples and oranges to oranges and make every purchase a commodity, independent retailers can’t let that happen. And it’s not enough to update their stores. The customer experience has to be unique, memorable and different from what they experience at the home center. Customers won’t pay more unless they perceive that the value of the offering is better.

Customers judge value by what they get in return for the dollars they pay, and it all starts with how salespeople decide to position their offering. And it’s worth remembering that even if a salesperson is not consciously positioning their product and service, they’re still doing it anyway. What the customers see, hear and experience creates an image or position within their minds, one that will either stay or fade into oblivion.

Positioning actually starts with marketing and advertising, before the customer even enters the store, but in terms of the salesperson it starts the moment the customer walks in the door. Is the customer greeted with a smile? Is the customer acknowledged within thirty seconds of entering? Is the salesperson able to initiate a conversation without saying, “May I help you?” Is the salesperson able to build trust and rapport so that the customer feels secure? Does the salesperson show interest in the customer as an individual? In general, none of the above happens in a home center.

Since customers ultimately buy for value and not price, salespeople can position themselves differently by leveraging their role as flooring experts and patiently finding out what’s most important to the customer. If the customer asks whether a product she’s looking at is good, a master salesperson would say, “Yes, everything we sell is good as long as it is installed in the right place. Before I can tell you if it’s a good product for you, I need to know more; where you are going to put it, what kind of traffic you have, etc.”

Positioning uniquely starts immediately when the customer enters the store, but it’s how the salesperson articulates value, price, features, advantages and benefits that matters most. Without denigrating the competition, salespeople must point out the differences between shopping with them and going to a home center, and these must be differences the customer values. For instance, salespeople might emphasize that they only use certified and bonded installers or that they offer a lifetime installation warranty. There is value in communicating that all the salespeople in the store are product knowledge experts who will ensure that they are sold the right product for their needs. And there’s value in saying, “We’ll give you a free in-home estimate—without requiring you to buy from us in order to make it free.”

What a salesperson says makes a huge impact when it matches with what’s important to the customer. That requires asking good questions (a salesperson’s most important sales tool) and then using the answers to uniquely position the products and services to what the customer values. It makes no sense to tell a customer about an important benefit if it is not important to her. That creates confusion and makes her feel that the salesperson is overselling. And that brings up an important rule of thumb: only tell the customer what she needs to know in order to make a decision.

The first rule in selling at higher prices is to never, ever admit “sameness.” If the customer’s perception is that an independent retailer’s product and service is the same as that of the mass merchant down the street, the retailer’s positioning has failed. That’s why positioning is a master selling skill. Without it, retailers will stay stuck in commodity selling, neither a fun nor a profitable place to be.