Without the Conversation, There is no Value Pricing

For over ten years I have been on a quest – along with Ron Baker and the Fellows at the VeraSage Institute – to assist professionals in implementing value pricing in their organizations. In working with firms of all shapes, sizes and sectors, one of the most common challenges I hear about is that of professionals’ ability to engage with a customer or prospect in what we call “The Value Conversation.”

The trouble is that without the ability to have this conversation, value pricing is dead on arrival. This may be obvious, but let me explain why.

We define value pricing as “a price wherein the primary, but not sole determining influence in the development of that price is the perceived value to the customer.” If one accepts this definition, then it is clear that without knowing what the perceived value is, there is no way to use it as the primary influence in the setting of that price. Without the value conversation, there can be NO value pricing.

So why do professionals not engage in the value conversation? The answer is simple – it is difficult to do. There is no question that the value conversation requires a high level of skill, the ability to focus deeply, and lots of practice.

Dan Morris, one of the co-founders of VeraSage – and someone I consider to be at a Jedi Master level in regard to the value conversation – says he does an adequate job only 30 percent to 40 percent of the time. It would seem then that, like a Major League Baseball hitter, a .300 lifetime batting average is grounds for inclusion in the Hall of Fame. Like the .300 hitter, the skill of the value conversation is within reach of all professionals.

To conduct an effective value conversation one has to hone one’s skills in the following three areas: inquiry, moving off the solution, and getting to value. The rest of this article will consider the first two.

Inquiry

First, let me define inquiry as the skill of balancing one’s ability to deeply listen and ask effective questions. It is beyond a mindset. Rather, it is a state of being. One must be relaxed and genuinely curious. One’s motivation must not be about getting the sale, but a true and intense curiosity about the prospect’s or customer’s situation. One’s intention must be to develop questions that will help the person make the best possible decision for them, even if that decision is notto continue the relationship with you.

Deep listening, or what psychoanalysts call active listening, requires an enormous amount of concentration. We must try to dial down our own thinking about what the customer is saying and instead be more attuned to understanding and clarifying what he or she is saying. As both Stephen Covey and St. Francis have said, we should, “seek first to understand before we seek to be understood.”

Value Pricing

The key skill in inquiry is the ability to think about, and process in one’s mind, the best next question to ask as the customer is speaking, instead of allowing ourselves to think about how we will go about solving the customer’s problems at this time.

If you can’t ask good questions, you have nothing to listen to. If you can’t truly listen, you can’t ask good questions.

Move Off the Solution

Second, one must be able to deftly “move off the solution,” as Mahan Khalsa says in his great book, Let’s Get Real or Let’s Not Play: Transforming the Buyer/Seller Relationship. In many cases, this requires professionals to fight their inner desire to talk about and even solve the customer’s problem during the initial conversation about the problem.

The idea of moving off the solution is to gain insight into the true nature, and eventually the perceived value, of the problem. Solutions have no inherent value – instead they derive their value from the problems that they solve. The trouble is, professionals really like to solve problems, even though the problems might have low or no value to the customer. Professionals tend to have the “disease” of solutionism.

Solutionism is very much akin to a substance abuse problem. In fact, the brain function is almost identical. Professionals get a “high” – a rush of the hormones oxytocin and dopamine – when they solve a customer’s problems. We become addicted to it. The trouble is this interferes with our ability to have the value conversation. Like any addiction it comes at a significant price.

Moving off the solution is the antidote to this disease.

Moving off the solution has three elements:

  1. Assuaging – the professional must make the customer feel good about the question that is being asked.
  2. Pivoting – the professional must pivot the conversation away from talking about the solution.
  3. Closing – the professional must ask the customer permission to have a conversation about the problem and not the solution.

This is often done in just a few sentences. For example, a customer emails saying, “We are interested in adding CRM capabilities to our system. How much will that cost?”

A successful move would sound something like this: “Thanks for your email. As you know we have a number of customers using CRM. However, what we have found is that CRM means something a little bit different in every organization. Would it be okay with you if I scheduled a call to talk a little bit about what CRM means to you?”

Notice that all three elements are addressed.

  1. Assuaging – “Thanks for your email. As you know, we do have a number of customers using CRM.”
  2. Pivoting – “However, what we have found is that CRM means something a little bit different in every organization.”
  3. Closing – “Would it be okay with you if I scheduled a call to talk a little bit about what CRM means to you?”

Of these three, I cannot over emphasize the importance of the third, and that it be formed as a closed probe question. A closed probe question is one designed to solicit a “Yes” or “No” answer. Too often, I have heard professionals immediately jump to asking an open probe question such as, “Why do you think you need CRM?”

More often than not the customer feels slighted, at best, or intruded upon at worst. This shuts down even the possibility of a value conversation. The closing is important because the professional is asking permission to not answer the prospect’s question, “How much does it cost?” Please note that we are not doing this to be manipulative, but rather because we truly seek to help the customer make the best possible decision.

What’s Next?

After the successful move off the solution, the professional must then gain an understanding of the perceived value to the customer. The methods needed to do this are beyond the scope of this article, so I will instead recommend again that you read Mahan Khalsa’s Let’s Get Real or Let’s Not Play.

Having the value conversation with a prospect or customer is a non-negotiable step in the path to value pricing. It is not easy to do because if requires us to change our way of thinking about how we listen and what we say in the earliest conversations we have with them.

That said, it is not beyond the ability of any professional to learn these skills. As demonstrated here, they are simple, but they are just not easy. It takes patience with oneself and practice, but once one gets comfortable with these skills, value pricing will be within your reach.

Shut up and eat your french fries: Asking Effective Questions

I suck at marketing. There I said it.

One of the best received sessions I have delivered in the last two years has been one about asking better questions. The trouble was, few people attended. It sounded way to boring. I tried a few different titles:

  • Asking Better Questions
  • Asking Effective Questions
  • How to ask better more effective questions

IMG_3966Then I came across a comedy routine performed by Louis CK about his daughter asking him, as daughters are want to do, over and over again, “Why?” The routine ends with him muttering, “Shut up and eat your french fries.” It is hysterical, but also makes some great points. Inspired, I renamed the session, Shut up and eat your french fries. Voila! People started showing up!

A few months back I had the honor of presenting it at the Los Angeles Accounting and Finance show at the LAX Hilton. Coincidently, my daughter, Éirinn, happened to be in LA at the time and was able to see me deliver this.

Abstract

This session is dedicated to the possibility that professionals can greatly increase the value they provide to their customers if they hone their skills at asking better, more effective questions. Developing an enhancing this skill is not easy because it requires us to rethink the paradigms and prejudices of the past. If you would like to contribute to a conversation about this topic, please join Ed Kless, Sage senior director of partner development and strategy.

Video

Slides

Sage Summit 2015 Session – Changing conversations by asking effective questions

This is the third in a series of three posts I will be doing featuring slides and audio from my sessions at Sage Summit 2015. Sorry that the audio is not quite the best.

Changing conversations by asking better questions

This session is dedicated to the possibility that professionals can greatly increase the value they provide to their customers if they hone their skills at asking better, more effective questions. Developing and enhancing this skill is not easy because it requires us to rethink and relearn conversation habitss. If you would like to learn how this questioning approach can strengthen your customer conversations, join Ed Kless us for this discussion-based session.

Slides

 

Listen

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The colossal misunderstanding of our time is the assumption that insight will work with people who are unmotivated to change. – Edwin Friedman, A Failure of Nerve, p. ix

edwin-friedmanThis quote, with which I often open a speaking engagement, has had a profound impact on my career and, indeed, my life. Its application ubiquitous – to family, to colleagues, to church groups, to political parties, to international relations – and I encounter its effects daily and often multiple times in one day.

The name of this post is, maybe not so obviously, an acronym for this quote. In the past week I have used it, the acronym no less than four times in various on-line conversations. (One person, after just seeing the jumble of letters, asked me if I was alright. I think, perhaps, they thought I was having a stroke.)

Just yesterday I was in a conversation with a colleague about some folks who seemed to be caught up in the past. In a meeting he attended with them, they were unmoved by the mounting evidence he was presenting that the situation was, in fact, changing. This was clearly contrary to their belief and they refused to accept it.

He then asked how I might approach changing their minds. I was, yet again, reminded of Friedman’s great quote. I replied that it is futile to try to change their minds because, well, it is their mind, not his.

I did suggest that in the future when confronted with a similar situation he ask the following question, “Are you willing to admit that there is a possibility that the situation could improve in the future?”

I said that only if he gets an affirmative response to this question should he agree to continue the conversation. Anything other than a “Yes” response would mean it would be futile to continue. If an individual or group is unwilling to recognize this possibility, no amount of data, evidence, anecdotes or emotional appeals will change them. Continuing the conversation will only heighten your anxiety and theirs.

Which reminds me of another famous quote by Robert Heinlein, “Never try to teach a pig to sing; it wastes your time and it annoys the pig.”

What about you? Are you open to the possibility of a better future?

PS – If you are interested in learning more about the work of Edwin Friedman this video provides an good overview.

MOASQ

For the past six months I have been delivering a workshop for Sage partners on developing business strategy in a small business. There is nothing like teaching a subject over a sustained period of time to help you clarify your thoughts.

(By the way, I believe this is the case because of the number of times you are challenged by participants. So to those of you who challenged me, I thank you!)

In my last session in Herndon, VA, I believe I have stumbled across the Mother of All Strategy Questions – MOASQ.

Most strategy sessions begin with the following premise – How much revenue do we need to make (in the time period for the plan) and how are we going to achieve it?

The MOASQ shifts this – How much value are we going to create for our customers (in the period) and how are we going to do that?

Thoughts?

Rethinking Peter Block’s Questions

For a long time I have been an admirer of Peter Block. His works Flawless Consulting, The Answer to How is Yes! and Community have long been on my recommended reading list.

Especially intriguing to me have been the six transformations of questions that he posits in The Answer to How… Here they are as he sees them:

How do you do it? What is the refusal I have been postponing?
How long will it take? What is the commitment I am willing to make?
How much does it cost? What is the price I am willing to pay?
How do you get those people to change? What is my contribution to the problem?
How do you measure it? What is the crossroads at which I find myself?
How have others done it successfully? What do we want to create together?

 

Block’s general thesis is that while the How-based questions are important and need to be answered, the problem is that when they are asked and answered too early in the consulting process they tend to be a defensive  mechanism against change and, therefore, they stifle creativity and innovation. According to Peter Block a great consultant is one who is able to shift the dialogue to the What-based questions first and later return, if needed, to the How-based.

With all of this, I agree. However, after having spent about seven years teaching these as is, I am ready (and perhaps bold enough) to recommend a couple of changes to the What-based questions.

First, in place of “What is the price I am willing to pay?” I suggest the following: “What is the value of it to me?” After much thought, I believe this is the better question because it focuses on the primary idea of perceived value. As we know price is derived from perceived value, so looking at price is incorrect because it presupposes value.

Second, in place of “What is the crossroads at which I find myself?” I suggest, “What is the judgment I need to make?” Unlike the first, I believe I am still completely in alignment with Block on this idea and my change is more in semantics. However, I like this question better because a) it is easier to understand and b) it is in alignment with my mantra much written about on this blog that all measurements are judgments in disguise.

If you find this post confusing, might I suggest that you read The Answer to How… It is truly one of the best books on the subject of consulting ever written.

Help Me Understand?

One of the key devices I use as a consultant is something I call the “Help me understand” question. I use this when there is an apparent contradiction between two statements or behaviors of a person.

The structure is this: Help me understand how A (one behavior or statement) is in alignment with B (the other behavior or statement)?

For example: Help me understand how letting one of your best people get away from your organization is in alignment with your company’s stated goal of attracting and retaining great people?

Sometimes this leads me to some very good insight and a much deeper understanding of the issues. Very often, I am convinced that A and B are, in fact, in alignment and that what was lacking was my deeper understanding.

Other times however, the person I am working with is unable to reconcile the dissonance and adjusts their behavior or statement accordingly.

Still other times I receive no feedback from the question, especially if I pose it in email. I can only assume that they make no adjustment and go on living a contradiction.

Five Questions to Get Answered Early

In my recent readings and work with small businesses I have developed a list of five questions that a consultant should get answers to as early in prospect relationship as possible. Once you are hired (or have invested in a long-term sales cycle relationship) getting these answers provides little to no value.

  1. What is the purpose of their organization?
  2. Are they looking for an expert, a pair of hands, or collaborator?
  3. Are you being hired to potentially blame someone if it goes wrong or to reduce chance of it going wrong?
  4. Do they view this purchase as an expense or an investment?
  5. What is the state of their employee restrooms?

Hat tip to Wayne Schulz for the last question.