Andrew Bailey is a Value Pricing and Price Negotiation Specialist. He is the founder of Commercial Strategy 4. He helps you unleash your pricing power to sell more, more often, and at a higher price to achieve the profits you deserve.
In this episode, Andrew shares strategic ways to communicate your product’s value through value selling.
Podcast: Play in new window | Download
Why you have to check out today’s podcast:
- Learn how to communicate value to your customers so they get what they want, and you protect your own position in terms of profit and margin
- Discover how to strategically negotiate to win a sale at a higher price
- Find out why lowering costs and increasing value doesn’t need to be a trade-off
“The value selling journey is about understanding what the customer perceives as value.”
– Andrew Bailey
Increase Your Pricing Knowledge: Become a Champions of Value INSIDER!
To sign up go to insider.championsofvalue.com.
Topics Covered:
01:27 – How Andrew got into pricing: a discovery: focusing on pricing and margins is a much more powerful way to maintain and grow profits, than starting the year with a big sales gap to fill
02:45 – What keeps him in pricing: taking people through the journey of realization to more fulfillment in their business
04:40 – Expounding on what selling value means: Getting focused on what this looks like, what they really do for people and quantifying that, so they really get a great fix on what drives value for their customers and how they can help their customers by delivering value
05:27 – Andrew’s thoughts about value when creating new products or new features: go back to the pricing term, willingness to pay; what we’ve got to try and do is get the customer in the position where they’re willing to pay for outcomes in a fair way, so we get what we want in return for what we’re going to do for them
06:50 – How Andrew communicates the value selling element of a product to win big deals and prices – what I do is backtrack and cover off some of the fundamentals. And so go back to something around the product and what it’s delivering
08:19 – Most companies don’t know about their products’ value, hence the lack of value perception. Andrew relates further to what it’s like working with clients who have this challenge
09:26 – How can I get my value across to them? Andrew’s idea of a value conversation explained
12:28 – One of the things they developed in the business is what is called a sweet spot type approach, learn how a company can apply this to get better at negotiation
13:56 – When it comes to negotiation, who do the salespeople talk to? Is it the decision-makers alone?
16:04 – Getting all the stakeholders on the customers’ side together for a value conversation is his idea of how a negotiation happens. Because to Andrew, that is easier in order to win a sale at a high price.
22:30 – Andrew believes the only way we really find out what people are interested in is when we ask questions and listen to them.
24:08 – His thoughts on Mark’s negotiation rule number one: Patience wins.
25:03 – Adhering to rule number two: Never let the CEO negotiate.
26:07 – You don’t give anything unless you get something in return. To Andrew, it is important that what you give is valuable to the other person, but that it still preserves your own position.
Key Takeaways:
“Value selling is taking the customer through a journey or a process, just understanding the value of what they do, and the results and the outcomes they can deliver for their customers.” – Andrew Bailey
“Value conversation is a collaborative process that you go through that can uncover more of the value you can deliver, and the value there is for customers to capture, which is ultimately what they want.” – Andrew Bailey
“Negotiating is there to help you secure and protect the value you’re delivering to customers that you’re going to get through your price.” – Andrew Bailey
“In negotiation, people need to just be more open, ask straightforward questions to sit down the first time, and just say, which do you prefer?” – Andrew Bailey
Resources Mentioned:
Connect with Andrew Bailey:
Connect with Mark Stiving:
- Email: [email protected]
Full Interview Transcript
(Note: This transcript was created using Temi, an AI transcription service. Please forgive any transcription or grammatical errors. We probably sounded better in real life.)
Andrew Bailey: Goes back to where we started, understanding what’s really important to your customers, what you can do, and your value to them. And as far as possible quantify that value.
[Intro]
Mark Stiving: Welcome to Impact Pricing, the podcast where we discuss pricing, value, and the negotiated relationship between them. I’m Mark Stiving. Today, our guest is Andrew Bailey. Here are three things you want to learn about Andrew before we start. He started his own consulting firm, and has been running it for 12 years. Of course, it’s about pricing. He wrote a book titled ‘The Seven Biggest Mistakes People Unwittingly Make When Negotiating And How To Avoid Them.’ And we’re about to teach you how to make shorter titles, and his LinkedIn idea is amazing, it is Pricing Mentor. Welcome, Andrew.
Andrew Bailey: Thank you very much, Mark. Great to be on the podcast.
Mark Stiving: No worries. Did you get much hassle over the length of that book title? I just gave you some but…
Andrew Bailey: Yeah, I did. I think I read something that said actually, sometimes long book titles can be really useful, but I guess the jury is still out on that one.
Mark Stiving: Yeah. I just thought it was interesting. So let’s start. How did you get into pricing?
Andrew Bailey: I got into pricing, probably 16, 17 years ago. I was working for a major UK Brewer running a sales team in the Southeast of UK, Southeastern London. And I guess we were you know, we were always under pressure, like all sales teams are to grow, profit, grow brand distributions, sales profit being the main driver, and every year it became more and more difficult to deliver more profit. And we looked at different ways, discovered a bit of a light bulb moment, I guess that actually focusing on pricing and margins will be a much more powerful way for us to maintain and grow our profits rather than starting the year with a big sales gap to fill.
And we have some successful time managing margins, managing pricing, losing a few customers, keeping the good ones, getting new ones, and making more money; and we must be reasonably successful because I was then asked to do a similar job for the company as a whole and that’s really how I got started on my pricing journey.
Mark Stiving: What keeps you into it?
Andrew Bailey: I think what keeps me into it is I work with medium-sized businesses predominantly here in the UK and also I work with small business owners as well. And I think the thing that really keeps me going is just those moments when people realize that, you know, they’re undervaluing what they do. They discover why that frustrates them, why that annoys them, makes them angry.
And then they realize that there are things that they can do about it to improve their position, prove what they do, achieve the prices that they really should for their products and services, which ultimately makes them more fulfilled in their business and more successful. And I think it’s that taking people through that journey of realization to more fulfillment in their business. That’s a really interesting thing.
Mark Stiving: I would have to say, most pricing people I talk to have a very similar story, where they got into it because somebody asked him to do something around pricing. They realized how much power is really there. And then they just said, ‘Hey, I want to keep helping other people do this.’
Andrew Bailey: Yeah, absolutely. It’s just that realization and then you’re off and running, and away you go. Great.
Mark Stiving: Yeah. So I was looking at some of your content. And I think a lot of, like, I often say the words, pricing people or companies exist to create, communicate and capture value. And a lot of what I saw in your content said essentially very similar things.
But let’s jump to the very end where we talk about capturing value. And because I rarely have people that want to talk about this, and let’s split that into selling value, and then the negotiations that go on the other side, but let’s start with selling value. When you think of selling value, what does that mean to you? How do you do that? You teach companies to do that?
Andrew Bailey: Yeah, what that means to me is taking the customer through a journey or a process, or however you want to describe it, just understanding the value of what they do, and the results and the outcomes they can deliver for their customers. So really getting focused on what that looks like and what they really do for people and quantifying that, so they really get a great fix on what drives value for their customers and how they can help their customers deliver that value.
Mark Stiving: If I were to stop you for just a second, though, Andrew, I agree 100%. But don’t you also think that exact same value understanding fits when you’re creating new products or new features for your products?
Andrew Bailey: Absolutely. And increasingly, people need to think about the profit elements, the profit drivers, and pricing margins when they’re looking at new products before they get too far into what the product looks like: the features, the benefits, it’s about what value it delivers for their customers. And what that’s going to do for their customer’s business or their customer’s lives if you like, and then work back from that to focus on the things that really matter to them.
And one of the questions I always posed to the businesses I work with is, what really matters to your customer, what’s going to make a difference to them. And ultimately, it’s probably only two or three things you can do that will make such a big difference to them. But focussing on those areas and how you can deliver value to help them deliver just makes so much difference.
And I think for me, that value selling journey is understanding what the customer perceives as value, what you can do to help them with that. And then it really gets back to that pricing term, willingness to pay, what we’ve got to try and do is get the customer in the position that they’re willing to pay for those outcomes, in a fair way that gives us what we want in return for what we’re going to do for them.
Mark Stiving: Yes, so are you back? Do you very often find customers where you start at the value selling stage, meaning we’re not talking to marketing or product development or anybody else, it’s just, ‘hey, we’ve already got this product now help us win deals at higher prices.’
Andrew Bailey: Some customers would like to start there, what I do is backtrack and cover off some of the fundamentals. And so go back to something around the product and what it’s delivering, thinking about and urging customers’ clients to think about the markets they’re in, the sectors, the customers, making sure they’re dealing with, you know, the most valuable customers that they could do, then begin to take them through that value-based pricing type approach before they get to the point of delving into value-setting, because without the fundamentals and the foundations, it’s just going to be really difficult for them to put all of the pieces in place to be able to have really strong, powerful, compelling value conversations with their customers.
Mark Stiving: Yeah. I find one of the biggest problems that almost every company I deal with has is they don’t understand what value means. They don’t understand how their customers perceive their value. And it sounds like that’s where you start where you say, let’s go figure out what your customers value about your products. Is that accurate?
Andrew Bailey: Yeah, it’s always a great place to start. Because most businesses are the ones that I come across. They’ve got a great product or service. And that’s how the business has grown. Like that’s what they’re passionate about. But the product and the service, you know, it’s great from the company’s perspective, but they really need to ask themselves, what does that do for their customer?
Does it really deliver for them or do parts of it? Now I quite often have discussions with customers to pick apart their product or service, features, benefits, and there’s a lot in products and services that customers just don’t find that important. And you are right: The question with companies, why’d you do it? And the answer being, you know, they rarely sit down with their customers and really try and, you know, delve into the depth of that value perception and understand what is really important to them.
Mark Stiving: Yeah, you used the words value conversation earlier. And to me, that means something really specific, but I’d love to hear your thoughts or definition of what it is. And then I’ll share what mine are.
Andrew Bailey: Yeah, my definition of the value conversation is very much about engaging with the customer. In the first part of it, if you like, it’s a broader sales process. So it’s the conversations that you have with customers around, you know, what issues they have, what problems and what needs they have, what they want to achieve, what their goals and ambitions are, and you take that process all the way through to hopefully a conclusion where you can both work together, and at every point along with that conversation you can focus on value.
So value for me starts before you really engage fully with a potential customer all the way through the selling process and beyond where you’re delivering and reinforcing value. So it’s all about, whenever I’m talking to that customer, how can I be more valuable to them? How can I get my value across to them? So it’s quite a broad area but really focused on all elements of a conversation with a customer-focus on value rather than it being a specific thing that happens at that specific time. I guess.
Mark Stiving: I would say that we agree mostly on that when I think of a value conversation. I actually think there’s a formula to walk through in order to get to how much does somebody or a customer value my product, but my favorite description of a value conversation, and I would guess that you would adopt this as well and that is, as a salesperson, I know my product, but there’s no way I really know how much value it can deliver to any given customer.
And as a customer, I know my company, but I really don’t know how much value I can get from any given product. And this value conversation is really a way for sales and customers to work together to try to figure out what’s the real value of the product if we implement it in that way.
Andrew Bailey: Yeah, yeah, very much so. And it’s that collaborative process that you go through that can uncover more of the value you can deliver and more of the value there is for customers to capture, which is ultimately what they want. They want to get more value from the customers and the markets they’re in.
And we go back to where we started the conversation, Mark, you know, it’s those light bulb moments for customers where they realize what they might have been missing out on. You know, when you’ve discovered that value, and how they can begin to use pricing to unlock more value, then it becomes quite exciting for them.
Mark Stiving: Yes, yeah. Excellent. Let’s shift a little bit into negotiations if you don’t mind. This is a topic that I find fascinating. But when you teach, when you’re thinking of teaching someone about negotiations or helping a company get better at that. What are you thinking, what is that big picture first?
Andrew Bailey: That’s a big subject. I think for me, one of the things that we’ve developed in the business is what we call a sweet spot type approach, which tries to bring together the work that you do around customers and markets with a value-based pricing approach, focused around the value conversation and then negotiating so that you can, get the price-setting bit right, and then the price getting bit around the sales, conversation, value, conversation, and negotiating all come together to give you the best chance of achieving what you want from your value-based approach.
So, for me, the point about negotiating is it’s there to help you secure and protect the value that you’re delivering to customers that you’re going to get through your price. So, we come at it very much from that type of angle in a collaborative way with that customer. So more partnership, focused more on the recognition that negotiating is part of a process that helps you get to where you want to get to.
Mark Stiving: Yes. When you teach salespeople to negotiate, though, are they negotiating with procurement people who weren’t part of the decision process? Or do they tend to negotiate with people who are the decision-makers?
Andrew Bailey: They tend to be more focused on dealing with decision-makers, some of them will be with procurement professional buyers, or we do teach them that it’s about recognizing different stakeholders as well and focusing their approach to the negotiation on the right person, or the right role, what their interests are. So that they can focus more on what they need to for each individual that they might be negotiating with.
Advertisement:
I love teaching pricing and value, but I get a little frustrated. It’s hard to implement what you’ve learned after just one class. There are always nuances to what you learn in a classroom that just aren’t easy to recall when you’re trying to implement them in your own real-world project. To most, pricing feels so risky. To solve this, we’ve come up with our part-time pricing expert programs.
In each program, I learned enough about your business to guide you as you explore and implement new pricing capabilities and new value discovery approaches, we’ve put together three distinct programs to assist with a range of scenarios from a single project, or to help a team within your company improve their decisions to developing your own in-house pricing expertise. I think pricing is fun, and you might too if it wasn’t so scary. If a little guidance, expert counsel and sound advice would be a benefit on your next pricing initiative, please reach out to me at mark@impact pricing.com. We only have room for a few more companies.
Mark Stiving: Okay, so help me out on this one. How do you negotiate with more than one person in an account? By the way, I used to be a salesperson. I would sell the really expensive stuff. And so I dumped lots and lots of different people inside an account. But the negotiation was almost always with one person. And so I’m not picturing what you’re doing here.
Andrew Bailey: Yeah, I think for those larger companies that we’ll be dealing with, I guess a decision-making sort of body if you like, where they’ve got people they need to influence who are going to use products and services, those that are perhaps managing the process, those people that are going to sign off on the payment, perhaps ultimately, the owner of the business as well. So they all might have different roles to play in that negotiation. So we try to teach people to manage those relationships, manage those different conversations they may have, and, you know, be able to cover off those different motivations, different interests as they go through the process. It’s a bit like having a value proposition that there has to be focus on individual stakeholders in a business that has slightly different perceptions of value or needs of the product, and the service so that the ability to not only win that sale but win that sale at a higher price becomes easier to do.
Mark Stiving: Yeah, so maybe I’m using the word differently than you are. So let me put in a system. I agree 100% that when I’m dealing with many different people inside a company, I want to know what’s valuable to that person and communicate value to that person without a doubt. In a negotiation I think there’s somebody in there saying, No, no, we need a 10% discount. We need to pay 10% less. Are you thinking of it differently than that?
Andrew Bailey: No, I think, again, it’s, I guess, understanding the different roles that there might be within that negotiation, if it’s multiple people then yeah, is there an aspect to that negotiation where the individual is driving lower prices as a collective driver for a lower price, or are there ways to perhaps tackle that demand for a lower price by clearly focusing on value, but focusing on value to the people that need that value rather than just whatever comes out of that lower price?
I think unless there’s a collective, the whole price, the whole deal has got to be lower, then it’s possible to leave differences in that negotiating group to begin to protect more of your margin if you can.
Mark Stiving: Yeah, I think that’s the right answer and that there’s somebody there that cares a lot about the value you’re about to deliver, and that they really want to be negotiating with you because do they care about the value.
Andrew Bailey: Yeah. I think there are lots of procurement people that you know, their KPIs are potentially around, cost, discounts, moving them on to more of a total cost of ownership type discussion. Yeah, it is one way of doing that. But I think if you can begin to influence those people through the use of a product or service or the people who see the perceived value slightly differently, then, you know, it’s about trying to secure and protect your price and margin as much as possible and using those different levers to do that.
Mark Stiving: Yes, yes. Okay, when I teach, I don’t teach negotiations at all. I teach pricing a lot. But I have three negotiating rules that I always teach. And before I share mine, I just want to hear: Do you have these little hard and fast negotiation rules that you teach people to say, oh, here, do this?
Andrew Bailey: Well, I think there’s a number of rules, the first thing that I would always say to people is, you know, you’ve got to make sure that your preparation is thorough. And you’ve been through whatever sort of process: I’ve got a process that I teach people to really prepare for the negotiation well, and I think if people do that, then their chances of getting a better result and negotiation for both them and for the other person, the other side, just increases dramatically.
And too often I see people don’t put the time and effort into the preparation. Don’t ask the right questions, uncover the right information. Don’t just take the time to do it really well. So if there was one, absolute rule, it’s just spend the time and do the work and prepare well.
Mark Stiving: Yes. So what’s coming to mind first, is a story, I got to tell the story if I could. I was writing with a mentor of mine. And we were traveling together almost every week and we would go out and we would order chicken wings, I would always eat half the drumsticks and half the knuckles. Right. The knuckles are the ones with the two bones. Yeah. Because I wanted to be fair, and I didn’t want to eat all the drumsticks, you know, it’s like, and we’ve been traveling together for a few months. And I don’t know how the conversation came up. But he said that he liked the knuckles more than the drumsticks. And I like the drumsticks more than the knuckles. Like, oh, oh, we should have had this conversation a long time ago. Now that reminds me of negotiations and what you were just talking about in preparing for negotiations, where we have to know what it is that we think the other person might like, that is easy for us to give up. How do you do that? How do you find those things?
Andrew Bailey: I’m a firm believer in you know, people just asking questions using simple language to be able to do that. And I think lots of people go into negotiations, thinking it can be a bit cloak and dagger, if that’s the right sort of term; it can be a bit secretive, it’s very competitive. People hide information, they can be a bit devious. But I think people need to just be more open, ask straightforward questions. To use your example, Mark, it would be to sit down the first time you have those chicken wings and just say, which do you prefer?
Mark Stiving: Now, the problem is, I assumed that he preferred the ones I liked.
Andrew Bailey: Yeah. And that’s it. We do assume lots of information and the only way that we really find out what people are really interested in is when we ask questions and listen to them. Listen to their answers, you know, and just follow that up and follow that questioning process through, check back with them, check our understanding, just make sure we really understand what it is they need, they want what they’re interested in. That just makes the whole process so much easier and part of that preparation process has got to be about formulating those really good questions that get to what you really want to know about.
Mark Stiving: Yeah, if only we could read their minds, this would be easy.
Andrew Bailey: It would be, wouldn’t it? And it’d be really good if they were, you know, again, really embracing that idea of, if I give lots of information, this person might help me grow some value, let’s do this together. Just be much more open about things and I guess, if you’re asking really good questions, and you’re building rapport with somebody, then you get into developing trust and the whole negotiation process. You know, for me, it becomes less of negotiation than just an exchange of views, and then you quite easily move to an agreement that helps both sides.
Mark Stiving: Yeah, yeah. Okay, let me toss out one of my rules and you can tell me if you like it or don’t like it.
Andrew Bailey: Okay.
Mark Stiving: Rule number one, patience wins.
Andrew Bailey: Okay. Yeah, I think you do. I think you absolutely have to be patient. How would you put it in terms of a process? How would that work, Mark? What would the patience come across as in behavior terms?
Mark Stiving: Not having to answer quickly, waiting a few days before you respond to somebody. They’re small steps in things that you give up.
Andrew Bailey: Yeah, I think there is a tendency in negotiations once you’re in them sometimes people want to get to the end, as you say, too quickly. You know, it’s pressured. So let’s get a result.
Mark Stiving: So one of my favorite rules that is really tightly related to that one is never to let your CEO negotiate.
Andrew Bailey: Yeah, there is a rule about that, absolutely. The higher a person is in the organization, the more you’ll get out of them.
Mark Stiving: Yes. Because they’re less patient and more powerful.
Andrew Bailey: As patience, more powerful, and I think there’s a bit of ego that gets in there as well sometimes, they have to be the person that can do the deal.
Mark Stiving: Yep, the deal will close.
Andrew Bailey: So another person that can do it, and a number of times I’ve seen people look at their senior director CEOs with astonishment of what they’ve agreed to. But yeah, absolutely keep them out of the negotiation till it’s all signed and sealed.
Mark Stiving: Now, it really depends on who you are. Because if you’re the sales guy trying to get the deal closed, and you’re paid on a flat commission rate, you want the CEO involved.
Andrew Bailey: Yeah, yeah. Deals that aren’t the best tend to come back and bite you a bit later on.
Mark Stiving: Yes. Absolutely. And then the other rule that I always teach and I’m sure that you teach this to everybody who does negotiation. But that is, you don’t give anything unless you get something in return.
Andrew Bailey: Absolutely. When you’re doing negotiating courses and you talk to people, that’s the first thing isn’t it, that you have to make sure that you get value back, you protect your value, you begin to condition the other person to expect similar sort of behavior. So one of the things that we talk through with people when we go through that preparation, process, that system is exactly that: you’ve got to map out what you want to get from the other person, what you’re prepared to trade and make sure you do the numbers and work it out. What you give is valuable to the other person, but it still preserves your own position. Really important.
Mark Stiving: Yeah, and I think that whole give and get, trade-off piece is where you figure out who likes the knuckles and who likes the drumsticks?
Andrew Bailey: Yeah, yeah, it’s a real test. When you talk through negotiation, you go through that type of process, that questioning process. How much do you prefer these; a process of elimination, and you’ll get to where you need to get to. So it works.
Mark Stiving: Yep. Andrew, we’re gonna have to wrap this up here in just a minute. But I’ll have to ask the final question, what’s the one piece of pricing advice you would give our listeners that you think could have a big impact on their business?
Andrew Bailey: The one piece of advice and I talk through this with all my clients really early on is it goes back to where we started understanding what’s really important to your customers, what you can do, and your value to them. And as far as possible, quantify that value.
Because as soon as you know that, and you confirm that with your customer and you get that confirmation then the way that you approach it for me, the way that you approach the value conversation, the selling process just gives you so much more confidence too to ask for the prices that you deserve to get, and just makes the whole things so much easier.
It’s all about confidence then, and having the right mindset. And ultimately, and again, I suppose if we can focus on that and make sure we’ve got that in place, actually the negotiating bit shouldn’t happen. Because you’ve discovered that value, your own value that you can deliver for the other person.
You built that perception of value, you build that willingness to pay across that value conversation. So really, they should get it. And I think it’s just that confidence of knowing what you do for people, and what results you get for them. What outcomes you can get for them just makes the whole thing so much easier to go through.
Mark Stiving: So Andrew I ask that question every single episode and I have to agree with you more than I’ve ever agreed with anybody else. The single most important thing that I could think of for companies is to figure out what the heck value means to your customers. I think that was spot on. Andrew, thank you so much for your time today. If anybody wants to contact you, how can they do that?
Andrew Bailey: They can either go to LinkedIn, just put Andrew Bailey in the search. My business is called Commercial Strategy 4 so they’ll be able to spot me on LinkedIn, or my website is www.commercialstrategy with the number four at the end.co.uk. And then all my details are there. They can see me there, that would be great.
Mark Stiving: All right, Episode 73 is all done. Let’s see, my favorite part of today’s podcast. You know the fact that he ended with value is just huge. I love that. What was your favorite part? Please let us know in the comments of wherever you downloaded and listen. While you’re at it, would you please leave us a five-star review? We take these very seriously and they’re hugely helpful to us. Please don’t forget we have a free community where all of my publications are put out. You’ll find that at community.championsofvalue.com. If you have any questions or comments about this podcast or about pricing in general, feel free to email me [email protected]. Now, go make an impact!
Tags: Accelerate Your Subscription Business, ask a pricing expert, pricing metrics, pricing strategy
