Don’t Let Price Become Your Differentiator

by David Stelzl

Published on this site: April 29th, 2005 - See more articles from this month...

When was the last time you were delegated to the purchasing officer while trying to close a technology sale? This is a common complaint among technology value added resellers (VARs), and a growing problem as technology continues to commoditize. Let’s face it, computers, networks, and common software applications are no longer viewed as high-involvement purchases. Price has become the differentiator. But how can you reposition yourself to avoid this delegation process?

Michael Bosworth, in his book Customer Centric Selling, says that, “We are delegated to the people we sound like”. In other words, delegation is a symptom of a greater problem in the VAR organization. If you are selling commodity product, then it makes sense that price will become the determining factor when the purchase is made. If you sound like a product salesperson, you are bound to get pushed to the product purchasing group. What happens when you reposition your product? Take the area of network security as an example. A buyer can purchase any number of firewalls on the market today. Some sold through companies like yours, while others are carried by discount computer stores. To the average end-user, both provide the same benefit; they keep unauthorized users out. But you can reposition this product by uncovering the value and sensitivity of a customer’s data and asking the question, “Can my client detect and stop an intrusion before their digital assets are compromised”? I would argue that very few of them can. If you can prove that people are attempting to access systems using spyware, Trojan horses, or other types of malicious code, you can demonstrate a need to look further than a hardware firewall. In fact, with today’s assessment tools, in a matter of minutes you should be able to show a customer that they need a greater level of data protection. This is not likely to get delegated to purchasing.

Taking this approach, there is a small percentage of buyers that have identified a need and are looking to buy technology. There is a much larger group of potential buyers that don’t really understand the need I just identified. In just about every case, the first buyer is also working with a provider to solve the issue. The remaining potential buyers don't understand that they have a need simply because no one has been able to show them the problem. This is where your value proposition replaces price as the point of differentiation. In my example I pointed out that most companies lack the ability to detect and respond to an attack against their data. This same group of companies is largely unaware of what threats are real, and what measures should be taken to prevent a compromise to their data. Every one of these companies represents a potential buyer.

Value proposition is an over used phrase; however, this is where the majority of VARs are losing opportunities. With tight budgets and a focus on getting the business done, VARs cannot be order takers; they have to become consultants. This means having enough understanding to show an economic buyer their need and having the ability to guide that buyer through the process of implementing the solution. This is intellectual capital and it is the only margin sustaining product a VAR can offer. If you are stuck in the purchasing office, you are not positioned with the right value proposition and you have not demonstrated that you have intellectual capital worth paying for. The first step is restructuring your sales approach around the business problem you are trying to solve. Once you have a solution that addresses a real business need, you can then demonstrate business value to your prospective client. Equipped with the right solution, VARs can stay away from the purchasing department.

David Stelzl, CISSP is the owner and founder of Stelzl Visionary Learning Concepts, Inc. providing keynotes, workshops, and professional coaching to technology resellers. We work with executive managers, sales people, and practice managers who are seeking to become market leaders in technology areas that include Information Security, Managed Services, Storage and Systems solutions, and Networking. Contact us at mailto:[email protected] or visit: http://www.stelzl.us to find out more.