Brian Basilico: The Disconnect Between What You Are Selling and What People Are Buying

You have been there (most of us who have kids know what I’m talking about).

Your family goes to a carnival or fair and your kid wants to play a game and win a prize! After 5 tries and $10 or $20 your kid wins a goldfish… “The Bestest Prize EVER!!!”

You spend the rest of the night lugging it around (and trying not to kill it). Then you get home and find or buy it a bowl. Then a trip to the pet store or department store to get it food, water conditioner and more. All this to keep a $1 fish alive to keep your kid happy. When you add it all up, you can spend $50 without blinking an eye for something that your kid pays no attention to after two days!

The Disconnect

The difference between free and $50 is value.

Some people will say “I paid $50 for a goldfish,” while others will say “That is one of the best $50 lessons I can teach my child!”

You can fill in the blanks on that one, but what matters is the perceived value.

Some prospects will judge you on price, while others will look at what you bring to the table and how far you can take them to make more money. Value is in the eye of the beholder — but it’s your job to prove it!

How do you do that?

By meeting them where they want you to be. Some people want the lowest price while others value knowledge or experience. Which one you chose to compete on is up to you!

The Sale

Here are some of the ways people perceive your products or services. Remember: What matters is what your customer or prospect perceives…

Products – Products are a commodity. There is $1 toilet paper and $5 toilet paper. It depends on whether you value savings, comfort or elegance. What matters to you, matters to you. What matters to your customers or prospects matters to them. If you want to play Wal-Mart with them (the low price leader), you may get lots of business. But if you want to play Nordstrom, Von Maur or Neiman Marcus, then you have to be in touch with what people pay a premium for.

Differentiator – The difference between Wal-Mart and Nordstrom is customer service and quality. If you are not willing to provide a ‘Baker’s Dozen’ or exceptional customer service, then competing on price is your for you!

Time – We all have the same amount of hours in a day, week and year… But some people attach different values to them (for example: the $400-an-hour Lawyer vs. the $13-per-haircut barber). Some people will judge you by your hourly rate.

You can’t compete with workers in China or India and will never make a living making less than them, so you need to change what you compete on. You have to be ready to let people know why you charge $50, $75, $100 an hour or more. Some people will never believe the saying “You get what you pay for,” and chances are you don’t want to work for them.

Avoid the Wal-Mart shoppers and concentrate on people and companies who understand the value of working with people who charge more but ultimately make them very happy. It’s your job to convince them!

Differentiator – There is nothing wrong with charging $15 an hour — especially when that’s all that’s really needed in order to provide a low-level product or service. However, if you can sell your product or service for $30 or $50 instead, then go for it! Just make sure you have a solid value proposition.

Justifying what your time is really worth can be difficult when you’re selling to people who earn much lower hourly wages or salaries. You have to be ready to make a persuasive case about why you are making two to five times what they make.

Knowledge – This is the most valuable and hardest thing to sell. One way to sell your knowledge is to prove that you are experienced. Knowledge often comes from experience, and your goal should be to turn your knowledge into value or return on investment for others. There are millions of consultants out there, so you must be clear about what makes you different. Can you translate your knowledge and/or experience into income or some other benefit for your prospects or clients?

There are many ways to sell knowledge: books, seminars, webinars, coaching, teaching and more.

Differentiator – There is a huge canyon between those giving free speeches and those who earn $10,000 a gig. You have to start somewhere and gauge who your audience truly is and what your value is to them. Always pay it forward and you will never be disappointed!

My personal value proposition is that I want to help others make three times what I charge them. Marketing in my world should never be an expense, but an investment.

Do you have a value proposition, and a way to make it clear to your clients and prospects?

What are your thoughts and ideas?