Tom Nies: Winners sell value, losers sell price

Thomas M. Nies, Founder and CEO, Cincom Systems Inc.

Some time ago, I accompanied one of Cincom’s sales reps on a lunch meeting with a customer. When the conversation turned to our products, I smiled as I reminded the sales rep that he should be sure to focus on all of the value that the customer would be receiving.

Surprisingly, the customer laughed and jokingly put up a fight.

“We know all about value selling, that’s the way we sell everything we offer,” he said. “But, when we buy, we want to talk price.

The conversation continued for some time, focusing on how selling value was an important decision for a business to make. This customer recognized the great advantage of selling value as a feature because doing so helped them be successful at what they do. But, the customer put the mindset in even further relief when he told us, “Losers sell on price. We want to do business with winners.”

Value sellers may not win all the business, but they win all of the nicely profitable business.

Price sellers are bottom fishers. They only catch those that will jump at anything as long as it’s the cheapest option.

Unless a company is extremely large, or has some highly unusual low-cost capability, low-price sellers simply cannot be viable. Their profits, if any, are simply too slim to stay in the game.

Price sellers try to provide as many features, functions, quality and potential benefits as possible, but they also believe that price is considered to be a feature. Because of this, they price their products as low as possible to be advantageous for the customer and for the seller.

Price sellers focus entirely on themselves and their offerings and do not attempt to enter into the value discovery and value delivery process. They leave all of that to a buyer’s discernment and realization and lessen their opportunity to share in the economic value their offerings provide.

In one sense, price sellers underappreciates and undervalues themselves.

That’s why price sellers usually do poorly in the long term while value sellers continue to grow their large profits. The value sellers may not have any better offerings than the price sellers but the value seller gets intimately involved with the potential buyer, and in this way helps the buyer to discover, discern and realize a great deal of additional economic value and utility that might otherwise never be gained or achieved.

When our customer said that he wanted to “talk price” he explained that he didn’t mean he wanted to buy from price sellers. Instead, he meant that he wanted to maximize every possible aspect of the value they would receive from the product.

Value sellers are also better buyers because they are able to recognize the value they will receive from products can far exceed the price they may pay. If they didn’t, they wouldn’t make that buying decision.

Price should never be considered a feature. Low price should not be a favorable feature or an advantage when we try to sell. Instead, we should all commit ourselves to focusing on the value and the very great gains that we can deliver that can dwarf the costs.

Thomas M. Nies is the founder and CEO of Cincom Systems Inc. Since its founding in 1968, Cincom has matured into one of the largest international, independent software companies in the world. Cincom’s client base spans communications, financial services, education, government, manufacturing, retail, healthcare and insurance.