How to Avoid Transactional Results in a High-Value World

We live and work in a service economy, but too much of our sales training is based on peddling transactions: When a customer has a need, we source the solution, assess our cost, add profit, and offer a price. In order to differentiate, we include “value-added” services, which may be as rudimentary as being pleasant up to the extreme customer service models that so few can afford. The fundamental problem with this simplistic view of how we make money is that our customers are far more complicated than that. Customer complexity is actually a good thing, if you learn how to assess and respond to it.

A transactional result is one in which you price the product but don’t assess its worth to the buyer.

As someone that travels a lot, I get to compare notes with other frequent fliers. Most folks that travel on business don’t have the option to purchase first or business class tickets and therefore rely on their frequent flier status for upgrades. Do you want to locate the grumpiest person on any flight? It’s the executive that didn’t get his upgrade and has to fly in coach. For years, airlines overpriced their best seats and sold less than 20% of them. The rest were given away as upgrades. Many years ago this made sense because fliers had many, many choices for flights and airlines used upgrades to buy loyalty. Today there are fewer routes, almost no empty seats, and airline loyalty is waning as fliers seek better prices. In the past couple of years, airlines have finally dropped the price of first class seats and now sell more than half, increasing the net revenue on the first class section. The losers are the frequent fliers that get fewer free upgrades. Why is this important to understand in a discussion about transactional pricing?

The fewer free upgrades awarded, the more first class seats sold. And…what is the worth of a better seat to a frequent traveler? That my friends, is the right question. Airlines had the pricing wrong for years. Now they have optimized the value of the premium seat by tapping into the frequent traveler’s pain: worrying about getting an upgrade.

What’s important to your customer? What is their pain? What is the need that goes beyond the deliverables of your product or service? We live in a high-value world. Whatever it is you do or sell, someone else can match your specification and there is always someone that can and will beat your price. Every transaction you attempt is at risk of a reasonable substitute – reasonable to the buyer, at least. Your job as the seller is to tap into their true needs before setting a price.

Your product or service is infinitely valuable: It is worth somewhere from zero to priceless depending on the buyer.

Which brings us to our problem. If we want to avoid transactional results, we need to focus on the value our customers seek – not the just the worth we want to portray. This is what airlines figured out: their pricing was contributing to their problem. The economic landscape changed as airlines consolidated and routes were decreased. In the meantime, travel security had made travel even more costly in terms of time. Customer pain for the frequent traveler moved from price and availability to comfort and timeliness.

If your sales team is telling you that customers are still buying on price, then listen more closely to what your customers are really saying you about their needs. Price may be one factor, but solve their real pain and watch how quickly they are willing to pay a higher price.


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