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Turning Value into Customer Requirements

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Although armed with a carefully crafted list of 10 "unique" benefits to customers, a supplier of sophisticated network security systems learned they had lost a million dollar contract to a competitor with almost exactly the same list of benefits, but a 10 percent lower price.

Another company offering comprehensive Enterprise Resource Planning solutions emphasized their superior ability to promote operating efficiency. After losing a large sale, they were surprised to learn the customer wasn't especially interested in efficiency. Instead, customer executives had bought into a competitor's offer of flexible, modularized SAP solutions--a perfect fit for the firm's strategy of growth by acquisition. By then, it was too late for the original vendor to explain that they could match and even exceed the competitor's flexibility.

These companies were both trying to "sell value" to their customers--an objective shared by nearly every business-to-business supplier. In an audience of sales professionals, we see nods when this subject comes up--"That's exactly what I do," they say. "I sell value."

Despite the overuse and misunderstanding of the "V" word in recent years, selling organizations have received the message: the one and only thing customers really want to know is, "What is the value to me if I buy from you?"

If everyone got the message and the value strategy is in play, why aren't customers responding? At the same time, why are sales cycle times lengthening, the number of "no decisions" increasing, and it's tougher than ever to engage C-level executives?

In some ways, the answer is deceptively simple. Too many salespeople are presenting their "value propositions" in a vacuum and lacking genuine insight into the customer's point of view about real value. Without a consistent method for looking at the offering from the customer's vantage point, we can be blinded by internal perceptions of what we bring to the market and unable to identify and leverage what really provides value to our customers. In reality, we aren't converting value from "interesting" to "required."

Unfortunately, value propositions and common "value messages" are merely a statement of value capability. They are value messages based on one-size-fits-all assumptions, or that emphasize a distinction that doesn't make a difference. After a two-year study of management practices in Europe and the United States, it's not a surprise that James C. Anderson and his colleagues at Harvard discovered it is "exceptionally difficult to find examples of value propositions that resonate with customers."

In our Diagnostic Selling® program, we like to compare the interactions between a salesperson and a customer as similar to those between a doctor and their patient. With that in mind, if we take the prescription drug Lipitor, its "value proposition" is that it will reduce cholesterol. The critical point doctors understand, which we sometimes overlook as salespeople, is that you can only reduce cholesterol if the patient has high cholesterol. If the patient doesn't have high cholesterol, Lipitor is of no value.

Exceptional sales professionals recognize that in order to maximize value, there first must be an absence of value, and the consequences of the absence of that value needs to be significant enough to create the "Incentive to Change," to take action. The first step in a doctor's diagnosis is to check for the presence of symptoms of a disease. If they exist, this would indicate the patient's health is at risk and the doctor's intervention in the form of a prescription drug or surgery would be of value. It certainly would be an incentive to change.

The same holds true for the salesperson. What are the physical symptoms of the "absence of the value" your product/service/solution is capable of providing? If your customer shows those symptoms, their business and/or personal job performance is at risk and your solution will be of value. The next step is to jointly determine the consequences. We need to determine how and by what dollar amount is this individual and this business and their respective performance measurements impacted by the absence of your solution. This will determine the true value of your solution in a tangible manner that the customer can agree with.

The value proposition makes your solution capable, the existence of the symptoms makes your solution's value relevant, and the level of the consequences will create the urgency that will make your solution required.

Jeff Thull is the President and CEO of Prime Resource Group, and a leading-edge strategist and valued advisor for executive teams of major companies worldwide.

Last updated: Nov 7, 2008




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