I always compete on value. I will not compete on price. If you follow these three basic rules, you can do it too.
There are lots of ways to create value. Value can come from tangible factors, such as the financial return a customer gets from using your product or service, or from intangible ones such as image or brand equity. This holds true if you’re selling a product to a customer, selling equity in your company, or even selling a job to a potential hire. The fundamentals are always the same: Sell value. Don’t compete on price.
1. Make your target customer your best friend. Make your industry your inner circle.
To successfully compete on value, you need to know everything about your target customer and your market. That includes:
- Who will be using your product or service?
- How will they be using it?
- What product or service will you be replacing?
- How does your prospect make buying decisions?
- What pain points does your prospect need addressed?
- What does your prospect think about your competitors and their offerings?
- How does the competition promote, price and sell its product or service?
Here’s how you’ll build this knowledge base:
- Read research recent articles or posts quoting key executives on issues or challenges.
- Read press releases and annual reports from your target customers and others in their market.
- Attend events where your prospects, customers, or other market players are speaking
- Be diligent about recording information, analyzing patterns, and identifing opportunities, so you can discuss them with your customers and prospects
Yes, this is a lot of work. But the payoff can be tremendous.
2. Communicate a compelling promise that is benefit-driven
Everyone in your organization should know the value promise. Notice I say “value promise,” not “value proposition.” Everyone has a value proposition, but no one does anything about it. Making a “value promise” will help focus your thinking and delivery. The promise needs to be consistently communicated in everything your company does, from marketing materials to culture to user experience.
At our company, the research described above led us to develop a simple ZigBee network setup tool. The product we developed came in two parts: A comprehensive Web platform for the network manager and a simple desktop solution that offered clients a virtually automated solution for network setup. Then we changed our messaging. We were no longer selling a comprehensive solution. Instead, we promised a “1-2-3” solution for easy setup.
In making these changes, we built on our brand values of uniqueness and excellence. We established our uniqueness with our products (simple, visual rather than text-heavy, and automated), our vision (a single and standard way to control networks) and even our hiring and retention practices.
3. Deliver what you promise. If you don’t, fix it.
Check in with your customers. Are they getting what you promised? If there are gaps, fix them. In another company I founded, we’d promised that our product would save clients money by reducing missed deadlines and courier costs. One particular Fortune 50 client had deployed the solution globally. They were saving money on deadlines and courier costs – but they had larger IT costs. We showed the client how we could host the software for them, bringing their IT costs back down.