The Hidden Cost of Cheap: I Got Tricked by Low-Price

TL;DR

• A frustrating travel experience highlights the difference between price and value in decision-making.

• Salespeople must understand the value they’re offering, as perceived value should exceed price for a successful sale.

• Discovery, a crucial discipline for sales professionals, is more than a CRM stage—it's about understanding a prospect’s true value calculation.

I have been preparing for a seven-day adventure, running three hundred miles through the Arizona desert. 

It has been an enormous investment in physical and emotional energy, time and money. My newsletter has taken a back seat.

Interestingly, there is a direct link between the preparation for this race and my strategy work, which will be the subject of a future newsletter; this one is much more tactical.

I need to travel for this race. I live in Vancouver, and the race is in Arizona. Since I have no airline allegiances, I use online travel agency (OTA) websites to find the cheapest flight.

After two days of frustrating travel, including planes turning around mid-flight, rebookings 24 hours later, and the rebooked flight being delayed due to crew availability, a three-hour flight has turned into a three-day adventure.

My experience on this trip has made me question my OTA strategy and consider the difference between price and value.

Price is the amount paid in exchange for a good or service.

Value is a comparative measure of the worth of that good or service.

While I paid the lowest price I could find, which felt good then, the value I assigned to the experience has been far lower than any price I could have paid. I value my time, and this airline has wasted close to 48 hours.

During my extended travel experience, I listened to a podcast about the history of Rolex. 

A Rolex watch's primary function is to tell the time, a problem solvable for under ten dollars. Yet, there is a multi-year waitlist of people willing to pay tens of thousands for a Rolex.

The price-value equation is such that people assign a value to owning a Rolex far greater than the price they must pay.

Why does the price value equation matter?

If you sell something as part of your job, inevitably, you will be asked the price. Your prospect's reaction to that price will tell you whether you have done an adequate job building value.

A salesperson's role in the discovery process is to figure out what it's worth to the prospect to solve their problem. If the perceived value of solving the problem is greater than the price it costs to solve, you will close the deal.

Remember, your prospect does the value equation. Your job is to help educate your prospect on how to do it.

(side note: discovery is not a stage in your CRM; it's the crucial discipline a professional salesperson uses throughout their relationship with prospects and customers. Curiosity is a vital skill for salespeople. That's the subject of a future fabulous newsletter).

Value is not always strictly monetary, though a financial business case stands up best to scrutiny. 

Understanding how your champion will be perceived if they solve this problem or what the benefits to your customer's customer are essential non-monetary factors to consider in the value calculation.

I will eventually get to Arizona, but I will think twice before booking with this airline again, even if they are the lowest price.

And therein lies the lesson: the good feeling of getting the "lowest price" is fleeting, but a strong sense of value is eternal.