For years I've been telling people that value calculators are used for marketing and lead generation and ROI tools are used by sales to close deals.
Until now, that is.
I was recently interviewed by my longtime friend and colleague, Bruce Scheer, CEO of SalesConversation.com. It was great fun being part of Bruce’s podcast series, which covers a broad range of topics that can help sellers be more successful. Before I summarize what we discussed, consider subscribing to The Sales Conversation Podcast on iTunes and listening to the entire podcast on Bruce’s website.
Grant Thornton’s 2018 CFO Insights on New Technologies research study reveals that “CFOs are playing an increasingly important role in influencing decisions related to technology.” At the same time the study found that “only 12% of executives strongly agree that they have an effective system of measuring financial key performance indicators associated with the implementation of technology.“
Our recent blog post, "How to Boost Sales Results with Business Value Conversations" includes some telling statistics about achieving sales success by presenting and discussing your solution’s value proposition with your customers. More importantly though, how do you define the value your organization can expect to receive from adopting a value selling approach?
About four years ago, we published a blog post titled Why Value Based Selling is So Successful, written by Jim Heffernan, an associate and business partner. To this day, it is our most popular blog post. It opens by providing the value based selling definition as an approach “built on quantifying the impact the service makes on the customer’s financial performance,” based on a reference from Sequeira Consulting’s website.
Our series on value pricing continues with a detailed look at how to set prices that benefit both you and your customers. Now that you understand the risks of other pricing models and how value pricing leverages the value your offering creates for customers to maximize earnings for your company, let’s look at one way to actually calculate the optimal price and the data you would need to populate the formula.
As we discussed in the first post in this series, Value Pricing: What to Avoid at All Cost, there are many different ways to set the price of your offering, including cost-based, psychological-based, and market-based pricing. Now let’s look at value based pricing and why it is the most effective way to maximize return on investment from your offering.