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.
