Episode #182: How to Have a Value Conversation

Why is it so hard to have the value conversation? Two reasons: 1) Professionals are solutionists (Mahan Khalsa's great word), i.e., they jump to the solution, which is the antithesis of the value conversation; and 2) Professionals are afraid there is “no value,” what they offer is a “commodity.”

Yet holding a value conversation shouldn’t be difficult since both sides want to maximize value!

Ron confesses his early mistake in 1989: I did pricing in a vacuum. I didn’t have a value conversation. I fell in the trap explained by Karl Albrecht, "The longer you’ve been in business, the greater the probability you do not really understand what’s going on in the minds of your customers."

Resources

Ed’s blog post: “Without the Conversation, There is no Value Pricing.”

Ed’s presentation in South Africa on the value conversation.

Mahan Khalsa’s Book: Let’s Get Real or Let’s Not Play

Backward Bicycle Video

The four steps to move off the solution

  1. Listen
  2. Assuage
  3. Move
  4. Close

The Five Golden Questions—Getting to Value

First, recognize a “measurable” word:

  • Revenue
  • Cost
  • Customer Satisfaction
  • Quality
  • Performance
  • Productivity
  • Et al.

Second, ask Mahan Khalsa’s Five Golden Questions

  1. How do you measure it?
  2. What is it now?
  3. What do you want it to be?
  4. What is the value of the difference?
  5. Over time (usually one year)?

The Art of Questioning

Language was invented to ask questions. Answers may be given by grunts and gestures, but questions must be spoken. Humanness came of age when man asked the first question.
Social stagnation results not from a lack of answers but from the absence of the impulse to ask questions.
––Eric Hoffer, Reflections on the Human Condition

Naïve listening

Calvin Coolidge, said to be one of the country’s most laconic Presidents. When his successor as Governor of Massachusetts met him in the White House he is said to have asked the President how it was that he sometimes stays in the Governor’s office until 11:00 p.m. working and meeting with his designated appointments.

Yet, his aides inform him that when Coolidge was Governor he used to leave the office each day no later than 5:00 p.m. The successor asked Coolidge, “What’s the difference?” Coolidge responded: “You talk back.”

Listening is hard since we think faster than people talk. Talkers may dominate a conversation, but listeners control it.

Our favorite opening for the value conversation: Mr. or Mrs. Customer, we will only undertake this engagement if we can agree, to our mutual satisfaction, that the value we are creating is at least three (to ten) times the price we are charging you. Is that acceptable?

Sample Summary of Findings Report

Click here to access the sample.

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Ed Kless

Ed Kless joined Sage in July of 2003 and is currently the senior director of partner development and strategy. He develops and delivers curriculum for Sage business partners on the art and practice of small business consulting. Courses include: Sage Consulting Academy, Business Strategy and Customer Experience Workshops. Ed is the author of The Soul of Enterprise: Dialogues on Business in the Knowledge Economy, a compendium of a few of the episodes of his VoiceAmerica talk-show The Soul of Enterprise: Business in the Knowledge Economy with Ron Baker, founder of the VeraSage Institute where Ed is also a senior fellow.