Mastering the Law of Value is a key to success in your business.
By Larry Kendall, author of Ninja Selling and chairman of The Group, Inc.
“Our true worth is determined by how much more we give in value than we receive in payment.” This Law of Value from Bob Burg and John David Mann’s book The Go-Giver serves us well whether we are an owner, manager or sales associate.
Customers seek value. Sales associates seek value. Money flows to value. Mastering the Law of Value is a key to success in your business. Just as important as creating the value is your ability to articulate your value proposition to your customers. The diagram below is a good way to clarify your value difference, sometimes called your value wedge.
As an owner, make a list of the value wedge (difference) you offer compared to other companies. As a manager, what is your value wedge in recruiting sales associates? Can you articulate this difference? As a sales associate, what do you bring to the game that is unique and valuable to a seller? A yard sign, brochure and MLS are viewed as value parity by the seller. What is your value wedge?
If a seller asks you to discount your fee, 85 percent of the time it is because you have not clearly articulated your value proposition. Most people will pay your fee if they see the value. Research shows that 5 percent will not pay for value as they make all buying decisions based strictly on price.
Do your sales associates know their value wedge? Are they trained to articulate their value proposition? Here’s a dialogue that will help your associates. They should rehearse it until they have it down cold.
• Seller: “I’m looking for a discount.”
• Associate: “Tell me more about that.”
• Seller: “I’m seeing homes selling quickly in my neighborhood. You won’t have to spend as much on advertising. I think that is worth a discount.
• Associate: “What is your goal?”
• Seller: “I think it should be worth 1%.”
• Associate: “Do you believe your home will sell for a fixed price, or do you believe there is a range of value based on the marketing and negotiating skill of your Realtor?”
• Seller: “I guess I didn’t think about that. There is probably a range of value.”
• Associate: “My job is to help you get the most value at the top of the range. There are five ways I do this:
1. We’ll walk through your property together, and I’ll show you ways to enhance the value, so you get top dollar for it.
2. I’ll help you with a pricing strategy—not pricing it too high, so you scare buyers away or too low so you leave money on the table.
3. My marketing plan will give you maximum exposure, so we attract more buyers and more contracts. The more buyers and contracts you have; the higher your property will sell.
4. I’ll help you negotiate the best contract. Negotiation is an important skill in any market.
5. I’m your transaction manager. There are a lot of moving parts. My job is to handle those parts, so your contract closes on time.
My fee to deliver this level of value to you is _____.
Articulated this way, 85 percent of sellers will see the value you bring is far greater than the extra 1 percent discount. In fact, if you are in a seller’s market with multiple contracts, you can say this, “In this kind of market, your greatest expense is often the money you don’t make. Great marketing and negotiating will make you money.”
When everyone—owners, managers, sales associates and staff—have the value creation mindset and can articulate that value then you will attract the best talent, the best customers and be highly profitable, as well. You have created a value driven organization.
This article originally appeared in the October 2016 issue of the REAL Trends Newsletter and is reprinted with permission of REAL Trends Inc. Copyright 2016