Impact Pricing Podcast

Ep175: Pricing and Value Selling: The Art of Asking Your Clients the Right Questions with Barry Edney

 

Barry Edney started his pricing career in Sposea, a digital pricing and consultancy company aiming to drive profitability by simplifying price data optimization, management and execution. It was in May 2021 when he started his own consulting firm called Burning Issues Consulting, where they help businesses deliver better top-line and margin results by focusing on where change needs to happen quickly – the burning issues.

In this episode, Barry talks about the importance of knowing the right questions to ask the right people so you can sell value the way your customers need it in their business.

Why you have to check out today’s podcast:

  • The importance of asking the right people the right questions in order to know what your clients really value
  • Why you should focus on value selling and avoid benefit selling
  • Why it’s a must for you to make sure that what you’re selling are the products that are giving you the big margin

“Focus on the margin drivers. If you have to be really cautious on your costs, focus on your products that generate your highest margin, and manage the rest of your portfolio for cash.” 

Barry Edney

           

Topics Covered:

01:00 – How Barry got into pricing

03:21 – Considering the cost to serve in relation to delivering value

04:18 – One product, different audiences, and different levels of value

06:44 – Perceived value vs. intrinsic value

08:05 – Not knowing what your customers really value + asking the right questions

13:40 – Examples of open-ended questions

15:31 – Why you should avoid benefit selling

17:48 – Creating, communicating, and capturing value: Thinking about solving problems vs. building features

22:26 – Barry’s piece of pricing advice for the listeners

 

Key Takeaways: 

“When you start measuring the value that you deliver, it is so much easier to articulate it to your clients.” – Barry Edney

“The value has to be presented in a different way. There has to be a different value or a different aspect of the value you can deliver.” – Barry Edney

 

People / Resources Mentioned:

Connect with Barry Edney:

Connect with Mark Stiving:   

Full Interview Transcript

(Note: This transcript was created with an AI transcription service. Please forgive any transcription or grammatical errors. We probably sounded better in real life.)

Barry Edney

Focus on the margin drivers. If you have to be really cautious on your costs, focus on your products that generate your highest margin, and manage the rest of your portfolio for cash.

[Intro]

Mark Stiving

Welcome to Impact Pricing, the podcast where we discuss pricing, value, and the profitable relationship between them. I’m Mark Stiving, and our guest today is Barry Edney. Here are three things you’d want to know about Barry before we start.

He got his pricing chops at a company called Sposea, a consulting firm. He currently runs his own consulting firm called Burning Issues Consulting, and he has lived in six different countries. Oh my gosh.

Welcome, Barry.

Barry Edney

How are you? Thank you for inviting me.

Mark Stiving

Okay. Now, you can tell me. How did you get into pricing?

Barry Edney

Well, our pre-conversation comes back.

I fell into pricing because I complained our pricing wasn’t good enough. So, my boss said, “You fix it, then.” And so, I did. And when the corporate I worked for employed pricing specialists, they decided to run the slider all over our business unit, and went away and said, “Well, we’ve got bigger fish to fry. We’ll let you get on with it.” And I took that as a pat on the back and a compliment, and carried on focusing on the value side of things. I was ostensibly responsible for sales and marketing in Australia and New Zealand at that time, and I was really trying to get the focus on value selling. But without, of course, any real value propositions or clear way of communicating what the value was, or indeed even understanding what it was the customer was trying to get done, so that we could focus the value where it would help them.

Mark Stiving

Okay. Stupid question, what caused you to recognize you weren’t doing pricing well?

Barry Edney

I saw the results coming in and I saw how busy my team were, selling, and I knew intrinsically. I’d come across from another competitor, a UK company that no longer exists, called ICI, and they were very, very good at that practice of not only training their people and educating their people, but also extracting value from businesses. They were probably the highest price, most profitable in any sector they operated in. And that was their approach. And so, I realized that we can just do this better.

Now, we didn’t quite always understand what I could do or how I could do it, but I knew there was a gap. And so, I just read well, read widely. We tried some things that didn’t work. The biggest issue I saw was that our pricing relativities were completely wrong. We had two brands, sub brand. We had product ranges within brands. And the relativity to each other and to competitors was completely wrong. So, I started changing the pricing when the first complaint I got from our sales team was, “Oh, we’re too expensive.” So, my response usually was, “Compared to what?”

Mark Stiving

Yeah. It’s actually pretty fascinating.

I heard you say the word selling value several times in that description, which I love, because that’s the title of my new book. So certainly, I love that. But when you think about it, did you recognize that we’re delivering a lot more value to our clients, our customers than what we’re getting paid for? Is that a driving factor?

Barry Edney

Absolutely, and it wasn’t until I moved to a more regional, a bigger responsibility – when I moved to Singapore, I started taking care of the same things across Asia Pacific: China, Singapore, Japan, India – that I realized, you know, I was doing some more reading started doing my masters at that point as well – and realized that this concept of cost to serve wasn’t being considered. So, it’s only then when I started looking at cost to serve, then I realized just how much value we were delivering. And that, for me, was almost the light bulb moment. When you start measuring the value that you deliver, it is so much easier to articulate it to your clients.

Mark Stiving

Were you selling the same product in New Zealand, Australia, as you were in Asia?

Barry Edney

Yeah. The products are the same. The value you can deliver alongside the product and the benefits it brings are a little different.

Mark Stiving

Tell us. I find that so fascinating that we have one product, multiple different audiences, let’s say, and you’re going to get value or need value differently. So, I’d love to hear this.

Barry Edney

So, for example, let’s take the main product. This was an automotive paint for collision repair. Sold globally. Big operation in the US. And like all mature markets – UK, Europe, Australia, New Zealand, US – labor cost is high. So, you want a paint system that reduces the time it takes to accurately match the color. You want to reduce the time it actually takes to apply and dry, so the energy cost is lower when you dry the paint. And you want the whole process to be efficient to reduce that labor content, that overhead content. In China and India at that time, who cares? It takes longer? We just throw more people at it. The labor was cheaper than the paint content.

So, the value has to be presented in a different way. There has to be a different value or a different aspect of the value you can deliver.

Mark Stiving

I think that is a spectacular example of how different countries are going to need to value essentially the same outcomes, but they’re going to value how they get there very differently.

Barry Edney

And the same can be said on any mature market. If you take, let’s say, for example, mature market like the UK – doesn’t have to be the collision repair market – but so for example, the industrial flooring – I did a project for industrial flooring company a few years ago – and your marketing and product development can assume some delivered value, can develop value propositions for certain scenarios, their client personas, but until the salesman is in front of the customer making the buying decision, not only does he have to decide which persona he’s presenting to; he has to make the final decision and fine tune that final value proposition.

So as a consultant, I got a bit frustrated when I get asked to help with value selling, that the salesmen aren’t selling the value. And my first reaction is, “What help are you giving them? What tools are you giving them? And are you giving them help or obstacles?”

Mark Stiving

Yeah. Probably, my first question would be can you tell me what the value is?

Barry Edney

Yeah, that’s a good question, too.

Mark Stiving

Because what I find is nobody in a company understands the value of the product to the customer.

Barry Edney

And my response to that would be in most customers, it’s perceived differently. And you’ve done quite a few posts the last week or two about perceived value versus intrinsic value. And it’s the perceived value, what I believe to be a really valuable part of that product service package. It might be completely of no interest or no value to one client, but absolutely sought after by another.

Mark Stiving

That’s absolutely right. And in fact, that goes straight back to the China versus the US type product that we’re going to sell. And in the US, what has value is getting labor out, and in China, that has no value.

Barry Edney

In China, it actually has quite a lot of value today. Back then, it had no value. Things change, because markets mature and costs change.

And of course, there are other aspects of a product portfolio. It can be presented differently. You just have to find what it is that that client values more. In China, fortunately, it was productivity. They had more cars to repair than they could manage in their facilities, so it was throughput. So, the quicker I can repair it, the better. So that adds value rather than the labor cost.

Mark Stiving

And so, how do you help companies do this, in essence, figure out which customer needs which product, what they value, and how much they’d pay?

Barry Edney

Well, this comes back to my focus of what we do at Burning Issues, which is really looking at customer products segment combination. So, have we got the right product for the right customer in the right segment at the right price? Now, right price could mean right for who, but it should be right for the customer and right for the business by selling the product.

And so, often, in businesses, particularly in B2B, we’re trying to do one size fits all. It doesn’t have to be a different product. It can be the same product delivered in a different way, with a different support service, with a different pack size, with a different minimum order quantity. It can be a combination.

And we often forget – some of the value doesn’t always come in the product or the service. It may come in the way while we support the delivery. I had one client who invested a lot of money in R&D in their innovation pipeline, only to be told by the client that “No, what we really want is innovation and supply chain. We want Amazon style tracking. We want real time delivery. We want one ton tote bags of chemicals with an RFID chip so the inbound inventory can be managed instantly. That’s what we want; innovation. The product’s fine.”

Mark Stiving

It almost bothers me when I hear someone say the product’s fine, and I say that because, you know, I’ll go back to the comment I made earlier – they don’t understand how their customers perceive value. So, how do they know the product’s fine?

Barry Edney

Well, this is the customer who said the product’s fine. My point is that my client didn’t ask their client the right question. They asked the question; do you value innovation? “Yeah, absolutely. We value innovation. We’re always looking for innovation from our suppliers.” So, they weren’t focused right on innovation in the product they supplied. Rather than asking the logical question: what areas of innovation are particularly of your interest? So, they spent large seven-digit numbers on R&D that the client didn’t value.

Mark Stiving

Yeah, that’s actually quite embarrassing, if we can’t understand it. And once again, I’ll come back to the concept that says people don’t know what our customers value.

Barry Edney

Often, they don’t ask the question. And often if they do, they ask the wrong people within the client business.

So, in that scenario, the question had been asked of the procurement team, not of the people who use the product on the production side. So, when they challenged the production side as to “What innovation do you see?” “Well, we’re happy with the product. We like your product. It’s reliable. It’s less troublesome than your competitor. It’s easy to use. Easier to clean the machines. We have less failures and service. We don’t really want to change.”

Advertisement

Some companies pay $1,000 per hour to talk with me privately about their pricing issues, and yes, they get their money’s worth. Implementing just one suggestion can yield incremental profit much, much larger than that small investment.

However, some companies have found a way to hack my business. They join INSIDERS for just $100 per month. Sure, that gives them access to all of our courses, but many use it just to come to Office Hours.

During that time, I answer all sorts of pricing questions. I’ve reviewed upcoming price increases. I’ve helped price new products. I even helped one INSIDER prep for a job interview for Director of Pricing, and yes, she got the job.

Sometimes, only one person comes to Office Hours, and it’s like they get the value of $1,000 one-on-one private session.

So, if you want to take advantage of me, and in this case, I don’t mind, become an INSIDER. Go to http://insider.impactpricing.com/.

Mark Stiving

I’m sorry. I got to say, Barry; that story just started to make all the sense in the world when you added the two different personas.

Barry Edney

Yes.

Mark Stiving

So, if the product team or the manufacturing team said, “Hey, the product was great. Don’t need anything,” and procurement’s saying, “We need innovation,” what do you think procurement wants innovation in?

Barry Edney

Exactly. So, with that client, how we uncovered this. Your original question to me was how do we help customers identify the value that the customer seek. We actually taught their sales team how to interview, to identify those value questions, those value requirements, those value needs, and we taught them about perspective – that difference between what makes a good car. It’s a perspective thing. Because if you want to get from A to B, it can be a 12-year-old Chevy. If you want to get from A to B very quickly, then you might be better off with a Ferrari.

Mark Stiving

Yep.

Barry Edney

So, it really depends on the what if and the what’s next. We taught them how to ask the right questions, how to start with the open questions, funnel them down, and to think about the perspective on what’s really wanted. What do they really want, and why do they want it?

Mark Stiving

Give us an example of a couple of those questions that you would ask, that you would teach them to ask, and you can just stick with the car example if you want.

Barry Edney

So, we’ll start with, “What are you trying to do? What’s the job you want to get done?” In this case, “We need to put insulating material on the outside of a high-power transmission cables for the power industry.” “Okay, and what specification do you need to have for that?” And they go through a very technical spec. So, then the salesman, true to type, will then follow the product features and benefits of that. So, you got to teach them not to focus on that, but to focus on why do you need that specification? That particular specification that you quoted, why do you need that? Because that’s what the clients quote, and they will not accept anything else. “Do any of any of your competitors supply that specification?” “No, we’re the only one that has it.” “Hallelujah. You don’t need to worry too much about your competitors. But you need to keep the customer happy. What else do they value?”

There’s all sorts of open questions, then. The real focus we had was on asking open questions and not the closed, assumptive, reasoning question.

Mark Stiving

Yeah. It’s actually funny. Back a long time ago, when I was a salesperson, they taught you how to make the assumptive close or the assumptive questions. And nowadays, in our world, we want them to ask these open-ended questions.

Barry Edney

It’s quite alien for salespeople to do that. And even if you run a value selling seminar – which I do, occasionally – you still have to teach the salesman when they’re doing their fact finding at the beginning of their discussion with the client to ask open-ended questions. They still tend to ask questions that they generally know the answer, or can make a good stab at the answer, which doesn’t add a lot of value to their time in front of the customer.

Mark Stiving

Yeah. And what I also find fascinating is even if you can get them to say something like, what problem you’re trying to solve, or what’s the job you’re trying to get done, and they get an answer, they suddenly want to jump into pitch mode. “Oh, we do that really well. Let me tell you how we do that.”

Barry Edney

Yes, they do. When I was taught, my very first sales trainer, very long time ago, because I got quite big right here these days, couple of lifetimes ago, made me laugh, and he called that wheelbarrow selling. And I said, “What do you mean, wheelbarrow selling?” He said, “Well, you’ve walked into the customer with a wheelbarrow full of benefits, and you’ve thrown a benefit at the customer, didn’t like it, and then you throw another one, and the customer didn’t like it, and you throw another one, the customer didn’t like it, then you go, “Oh, no more benefits left in my wheelbarrow.” You’ve got nowhere to go. So, avoid the benefit selling.

Mark Stiving

I have to tell you that early in my career, I was in sales, and I was horrible. I mean, I look back and I’m embarrassed at how bad I was. But as I think about how I used to sell, I would have all these features and benefits all memorized, and I’m be spewing them at the customer, hoping to see some brightness in their eyes to say, “Oh, that one’s exciting to me.” And when you get through the list, and you didn’t get that excitement, you’re like, “Well, now what do I do?”

Barry Edney

Exactly. And I wasn’t the best salesman. I was pretty okay. I was much better at managing. I was much more a successful key account manager, managing large clients when it’s multi relationship and it’s about the conversations about the what next. That’s much more my comfort zone. And then that’s what I moved across into marketing and product management and optimization and sales management. That’s really where I sort of found my feet, and as I say, ended up taking care of pricing.

So, because of that work I did when I ended up in Holland, the corporate head office at that company, started leaving a lot of pricing initiatives and what McKinsey of the day called the commercial excellence, we started looking company-wide at cost to serve margin optimization, those combinations of customer segments and products. And we took huge swathes of products out of the product tail. The money we saved and put back on the bottom line was immense.

Mark Stiving

Barry, I want to ask you a different question. This is something I talk about a lot, and you seem ideally fit to express an opinion on this.

I often say, look, we want to go sell value. Well, how do we sell value? Well, we have to understand value, and then marketing has to communicate value, and then product actually has to build products that have value. And so, I think of this as creating, communicating, and capturing value. And we need to start at what the customer wants, what’s value to a customer, and then how do we get that all the way back to how do we build products. And in your career, you’ve been in that entire chain. You’ve worked your way back from sales to product management. And so, how do you think about what I just said?

Barry Edney

I fully agree. I think in practical terms, if you think about what typically happens in a B2B industrial business, which is my background, what typically happens is people interestingly recognize that you got to keep innovating new products to keep interest in the customer, and stay at least different from your customers, if not ahead of your customers. So, they’re always looking for the next new thing to develop. And the typical route is to ask the salespeople what they want next. Well, all that happens is you get an iteration. You don’t get a new product. There’s no rule in new products. And typical career path in most industrials is technical expert, or engineer. If you support a manufactured product, then you become a product manager, or a salesman, or a salesman that’s product manager, and then probably end up in marketing, usually. So, you should know the whole chain.

But in reality, what happens is sales come back into “Oh, we need a product that does this.” So, the product manager who’s a former engineer says, “Oh, I know,” and he writes a brief for R&D that is actually a work instruction rather than R&D instruction. And this is what I inherited when I took responsibility for the global product portfolio at AkzoNobel; that was my company. So, I killed that dead. I said, “No, absolutely not. I want you to go to R&D and describe the problem you’re trying to solve, and let R&D come up with something new and creative.” And the quality of the products came out of R&D, the number of products reduced by about 40-50%, but the quality of the products improved immensely, and the success of those products doubled overnight.

Mark Stiving

You actually skipped a step in there, because think about this. Customer says, “I really need this feature,” salesperson says to product, “I really need this feature,” product or somebody has to translate ‘what problem are they trying to solve with this feature?’

Barry Edney

With us, in that company, that feedback, the brief is done presenting to R&D and R&D marketing jointly validates it with some sample customers. So, before they even get to a prototype stage, they’ve engaged with identified customers of that type that have described that problem.

Mark Stiving

Nice. That’s perfect.

Barry Edney

So, when we say perfect, it works pretty well.

Mark Stiving

Right. But what we say rarely – and when I say ‘we’ I mean companies everywhere – is step back and think about what are those problems we’re solving for our customers, and instead, we like to build products; we like to build features.

Barry Edney

We do. Yeah. Indeed. “Oh, that will be a nice.” It’s a nice whiz bang improvement, but it’s not really valid.

The division of ICI I was working for got bought by an American company, and I shan’t name names. One of the reasons they bought the division I was working for in Australia was because I had a certain industrial product range. And there was some inventory that had to be used up. So, I said, “I’ll just make more batches.” I filled the warehouse on this product to use up the inventory. And it just sat there, because their view was “Oh, we’re a product company. We’re a technology company. Build it and it’ll be sold.” No thought of who might want to buy it, or where this product is in its lifecycle. Is it still valid? Is it still valued? Is there a demand for it? Can we create a demand for it if there isn’t a demand for it?

There was a big problem there, and they were very much ‘make it and push it out’, not so much of what does the customers really want, what the customers really value.

Mark Stiving

We – not you and I – but most businesses stopped thinking about customers, and they just get into big trouble for that.

Barry Edney

Yeah. The companies get too big and too far away, and they have divisions and units that will lead the idea that they’re going to be close to the customer, but the power of those business units and functions have to influence the outcome is not enough.

Mark Stiving

Yeah.

Barry, we’re going to have to start wrapping this up, but I have to ask the final question.

Barry Edney

Oh, that went quick.

Mark Stiving

I know. What’s one piece of pricing advice you’d give our listeners that you think could have a big impact on their business?

Barry Edney

Particularly these days with underpriced pressure, and your end customers are cutting their cloth accordingly, because they need to cut their expenditure, focus on the margin drivers. If you have to be really cautious on your costs, focus on your products that generate your highest margin, and manage the rest of your portfolio for cash. Just get rid of it, sell it off, and don’t have it on your inventory, because that’s just your cash tied up.

Mark Stiving

Directly to what you’re saying, have you noticed if you go to an appliance store today, you can’t buy inexpensive appliances? They don’t have the bare bones versions available anymore. It’s only the high-end versions.

Barry Edney

I hadn’t noticed that because I haven’t bought an appliance for a while.

Mark Stiving

Is that not exactly what you just said?

Barry Edney

I think so. Yeah. They’re keeping only the high margin products, and those that are making up volume. Why worry about it?

Mark Stiving

Yeah. And if you’ve got limited supply and you can only make so much, you might as well make the ones with high margin.

Barry Edney

Indeed. If you’re forced to buy a bare bones product, you’re probably on a tight budget. So, in this current straighten times, you’re putting on that decision not to replace that item anyway, rather than wait until you can afford to upgrade. That’s the right decision. And I’m seeing that in everything from car parts to decorative paints to flooring.

Mark Stiving

Yeah. That’s good advice. Watch the products that are giving you the big margin. Make sure those are the ones you’re selling.

Barry Edney

Yeah. They’re the ones you need to absolutely keep, make sure you’ve got hold, got inventory off, and you can supply.

Mark Stiving

Nice. Barry, thank you so much for your time today. If anybody wants to contact you, how can they do that?

Barry Edney

Get a hold of me by email: barry.edney@burningissuesconsulting.com, or you can go to the website and fill in an old-fashioned contact form: https://www.burningissuesconsulting.com/

Mark Stiving

I want to do that. Thanks, Barry.

Episode 175 is all done. Thank you so much for listening. If you enjoyed this, would you please leave us a rating and a review?

Speaking of reviews, Oleksandr Musatkin said:

“The Impact Pricing podcast brings so much value [to me]. Each episode is full of insightful information, expert guests share their interesting and practical experiences.”

Thanks, Oleksandr. I’ll let mom know you did what she told you to.

And seriously, reviews and downloads are what help our podcast grow. And for some reason, Apple makes it really hard to figure out where to leave a podcast review. So, if you’re smart enough to figure it out, like Oleksandr, we would be hugely grateful.

Also, please tell your pricing colleagues about this podcast. I was at Professional Pricing Society last month and was shocked to learn there are some pricing professionals who didn’t know our podcast existed. So, please share the knowledge with everybody else.

And finally, if you have any questions or comments about the podcast or pricing in general, feel free to email me: mark@impactpricing.com.

Now, go make an impact.

 

Tags: Accelerate Your Subscription Business, ask a pricing expert, pricing metrics, pricing strategy

Related Podcasts