Value-Based Selling

Value-Based Selling

A customer enters a pool store with an electrolytic chlorine generator (ECG) cell that is scaled beyond repair. If the customer wants to continue enjoying his/her saltwater pool, the cell would need to be replaced and a better quality pool salt with scale preventatives should be recommended. However, due to fear the customer might balk at the cell’s replacement cost, the dealer finds it easier to recommend the customer converts back to a traditional sanitizing method (e.g. chlorine pucks).

Should this switch be recommended, assuming the customer is not willing to pay for a new cell and/or more expensive saltwater pool products? Or, should the opportunity be seized to recommend effective products, which can ultimately save the customer money and increase satisfaction in the long run?

Here is another scenario. A customer is having problems with staining and scaling and is currently enrolled in a basic pool service program. This includes a weekly vacuum, filter backwash and test for chlorine and pH, in addition to monthly testing for salinity and other water balance factors. However, due to the problems at hand, the customer would benefit from the premium service program, which includes a high-quality, mechanically evaporated salt product, along with treatment products designed specifically for saltwater pools that effectively combats stain and scale.

Should the premium service be recommended to the customer or should the dealer presume the customer does not want to pay more?

Recommending the right product or service is not difficult when using the principles of value-based selling. As the name implies, value-based selling involves uncovering the customer’s unspoken desires and then communicating the benefits of the right product or service that addresses them. This also allows customers to make informed decisions.

Value-based vs. value-added

Value-based selling is different from value-added selling. The latter means differentiating two very similar products, when one of the products has an additional feature that provides a clear benefit. For example, many pool retailers sell heavy bags of commodity salt for saltwater pools. While two brands of salt may be similar, one brand may have special handles on the bag for easier lifting and therefore may charge a slightly higher price.

In contrast, value-based selling goes much further than merely highlighting features. It typically contributes a measurable benefit for retailers and/or their customers in one or more of four areas:

  • Reducing or eliminating costs;
  • Enhancing customer satisfaction;
  • Growing gross sales and earnings (margins); and
  • Improving market share and/or creating competitive advantage.

Retail stores

For instance, certain premium saltwater pool products can benefit both the retailer and the consumer because these products contribute to several of the following value-based categories:

  • They can allow pool owners to reduce or eliminate costs associated with maintaining their pool (e.g. premature replacement of the ECG cell);
  • They can enhance customer satisfaction by addressing many common challenges with saltwater pools (e.g.staining and scale);
  • They can increase gross sales and margin compared with other commodity pool products; and
  • They can allow specialty pool retailers to improve market share and create competitive advantage in the marketplace by differentiating themselves from mass merchants or even other pool stores.

Service companies

Swimming pool service companies can also apply the same principles. For example, signing up a customer for a premium service contract will benefit both the service company and the customer because it contributes to the same value-based categories and delivers the same four benefits mentioned above. Whether it is a pool builder, specialty retailer or a service company, the key point is selling or providing a premium product or service delivers quantifiable benefits in each of these categories.

What’s involved?

What does value-based selling involve and how can pool dealers use the concept successfully? It is a broad topic, but the following are some of the key principles:

Principle 1: Partnering with vendors to build product understanding

If a retailer is going to carry premium products that need to be sold based on the measurable value they create, the company should know them inside out. They also need to know their competitor’s products well. One way to obtain this knowledge is by partnering with vendors and suppliers that provide strong support, including training programs, point-of-sale and educational materials for dealers carrying its product line. Proper training can make a difference in terms of the dealer’s ability to diagnose saltwater pool problems, talk confidently about the right solutions and ultimately increase sales.

Principle 2: Uncover the customer’s needs through appropriate ‘probing’

Pool retailers and service companies can fall into the rut of being ‘order takers.’ This means they assume most customers know what they need and therefore only focus on meeting those needs. Worse yet, they assume they know how much a customer is willing or unwilling to pay for a product or service.

If everyone shopped on price alone, the ‘specialty retail’ category would not exist and most customers would maintain their pools themselves rather than hiring service companies. Customers value expertise and will pay for it.

Retailers who excel at value-based selling do not assume customers know how to solve their problems without help from an expert. Additionally, service companies do not presume customers know how to handle their pool problems themselves or that customers want to maintain their pools themselves until a problem hits. Appropriate probing involves asking the right questions to uncover the customer’s needs and wants, which then allows them to be addressed more effectively.

Open-ended questions are best at drawing out the customer’s true desires. For example, when a customer enters a specialty pool store to purchase chlorine tabs, the retailer may ask how the pool is looking this season, or how the customer is handling maintenance. The customer may be perfectly happy with the appearance of the pool, but he or she may be interested in an alternative to adding chlorine tabs every week.

This opens the door for the retailer to discuss other sanitizers that do not involve transporting, storing, handling and adding chlorine. Had the retailer simply assumed the customer was happy with the usual chlorine tabs, he or she would have missed an opportunity to sell the customer a premium product.

Meeting a customer for the first time provides another opportunity to ask open-ended questions. In this case, a service company might ask a customer the age of the pool’s finish and ECG, followed by how much longer the customer expects the pool finish and equipment to last.

This will open the door for discussing the benefits of a premium service program, which includes products designed to protect pool finishes and equipment, rather than just a basic program, which will keep the pool running during the short term but not over the long term.

Furthermore, a service company might also ask about bather load. For example, if the pool sees a high level of activity during the season, the pool owner might benefit from switching to a premium program that uses the highest grade salt and treatment products that better manage cloudy water and chlorine demand.

Principle 3: Differentiate needs and wants

In these scenarios, the retail customer needs to keep the pool sanitized, but he or she wants to be able to spend less time on maintenance and get away from storing and handling chlorine tabs. On the other hand, the service customer needs to keep the pool water balanced and properly sanitized throughout the season, but he or she wants to do more to protect the longevity of the ECG so it will not have to be repaired or replaced prematurely.

Basic ‘needs’ can be addressed with a variety of commodity products, but ‘wants’ are often better addressed by premium products through value-based selling principles.

Customers will pay a premium

More often than not, customers are willing to pay higher prices to achieve their ‘wants’ along with their ‘needs,’ and these value-based selling principles can help dealers identify these situations.

Value-based selling results in more satisfied customers, as well as increased profitability for dealers through higher margins, repeat sales, differentiation from mass merchants and ultimately, customer loyalty.

This article was written by Bob Harper, and originally appeared on Pool & Spa Marketing [link].