Bank Small Business Sales Strategies—Shift From Price to Value

Want to increase your small business sales productivity and differentiate from your competitors? Then stop dwelling on price and start focusing on value.  Here are three ways to get you started.

Salespeople love to whine. Have you heard any of these?

  • It’s hard for us to sell value. Prospects buy on price more now than they used to.
  • We’re not the lowest-priced player in the market, so we lose a lot more business than we should.
  • If management wants us to sell more, they should give us more pricing flexibility.

What’s common in the three statements?  The word “price.” They all refer to price, as in, “prospects look for the lowest price.” Why do salespeople hear these price challenges?

Some of your prospects do buy on price, primarily. Many more will tell you they do, particularly when you’re approaching them for the first time. They’ll say, “Sure, if you can get it for me cheaper, I’ll listen to you.” But, for the most part, it’s because prospects struggle to distinguish one bank from another. So, they go back to price as a major decision variable. As a result, sellers begin to believe that any price is too high and they cringe when they have to quote a price.

Consider the story of a small marketing services business. The owner went to a bank to inquire about a lock box service. The fee was $10 – $15 per check.  When he asked about the service, the bank sales rep said, “Oh, you wouldn’t want that, it’s too expensive.”

On the face of it, $10 – $15 per check might sound like a lot of money per check…. until you consider (1) the length of time incoming checks would sit on the owner’s desk (up to a couple of weeks) until he or his bookkeeper could get to them, (2) the time required to take the incoming checks to the bank, (3) the size and number of checks he received each month, and (4) the time required to post the items in his general ledger. If the bank sales rep had understood the firm’s business process, he would have seen that $10 per item is NOTHING in comparison to the costs he’s already incurring.

While any product can be sold as a commodity at a price, any product can be sold based on value:

Value = Total Benefits – Total Costs… over some period of time.

One of the M O S T  C R I T I C A L requirements for selling based on value is… the seller must understand clients’ business processes, how they will change if the prospect adopts the seller’s products or recommendations, and what opportunities will be lost or costs incurred if no change is made.

To sell this lock box product, the bank’s rep did not need to know, in detail, how a lock box worked. He needed to know, in detail, how small businesses work, and how this particular small business worked. The business owner probably would have paid DOUBLE the quoted fee to have the bank take care of these items for him.

Expressing a Value Proposition to prospects means proposing ideas that increase value, on the left side of the equation by boosting benefits and reducing costs, relative to the prospect’s existing conditions or alternatives.

Here are three steps to help you break out of the “price” trap:

  1. Teach prospects who don’t understand “total benefits – total costs” the difference between price and cost. You can do this through the questions you ask and through case examples of your successful customers.
  2. Help prospects structure their decision processes so that they’re appropriately maximizing value rather than minimizing price. Help your prospects define objective, measurable decision criteria in the “fuzzy” areas like service, convenience, dependability, quality, etc. before they start looking at options. This helps the prospects make their decisions faster PLUS you may be able to influence the criteria in ways favorable to you.TOTAL BENEFITS include:
    • Costs reduced or time saved in your client’s organization or in other parts of the client company.
    • Incremental revenue or cash flow generated due to implementation of your product.
    • Reduced risk, uncertainty, or variability in your client’s operations, which also reduces costs and saves time.

    TOTAL COSTS include:

    • The hassle (cost, time, aggravation, risks) of switching banks.
    • The risks associated with change, for example, internal political issues or the costs of errors while employees learn a new process.
    • Maintenance or compliance costs after implementation.
    • Career risks to the buyer if the implementation goes badly or the buyer’s company doesn’t realize the benefits promised or expected.
    • The possibility that, if your product fails to perform, the company may incur legal risks.
    • The cost or hassle of disrupting personal relationships with the existing supplier.
  3. Pitch your proposals to maximize value rather than to minimize price, even if not requested to do so. By putting your assumptions and experience into your proposal, you’re calling the question, even if your prospect or customer hasn’t.

“But, wait,” comes a voice. “What if we can’t show that we provide more value than other competitors or their existing bank? What if our products and all the value components are the same? How can we get them to switch?”

Fast answer – it’s not likely that “everything is the same;” you and your salespeople need to dig deeper to learn more about your prospects’ requirements and preferences, then look for ways to differentiate your value.  Alternatively, change your offer so that there is, in fact, a clear value advantage to working with you.

Nick Miller is president of Clarity Advantage, Concord, Mass., a firm that helps banks generate more profitable relationships faster with small- and medium-sized companies, their owners, and employees. He can be reached at

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