The real test is how you maintain the business at a price that is profitable, acceptable and meets your margin objectives.
Can you sell the customer at a higher price when he already has a lower priced quote? Can your salespeople explain the multiple value propositions offered by your company that create a lower cost transaction? You can’t just spout off about world-class service and other trite marketing clichés - you have to demonstrate your ability to walk the talk.
Customers have heard buzz words like “world-class service” a million times and rarely believe it. All they really care about is what’s in it for them. In today’s tough economy, you need to have a strong financially oriented value proposition that speaks to critical issues facing their business in order to break through the economic market turbulence and get their attention. Factual numbers or percentages will get the decision maker’s attention even faster.
A customer once told me that a miniscule 1% reduction in scrap costs would put me at the top of their list of primary suppliers. One percent may seem like a small number, but everything is relative. In this case, a 1% reduction in scrap amounted to annual savings of $600,000.
Every penny of savings goes to the bottom line.
Strong value propositions deliver tangible results such as:
- Increased revenues
- Faster time to market
- Decreased costs
- Improved operational efficiency
- Increased market share
- Decreased employee turnover
- Improved customer retention levels
So how does your value proposition look? Can you describe what you do in terms of tangible results? Being personable and developing relationship equity is not enough to capitalize on the “last look” and maximize sales effectiveness.
Last Look-PlusThe “A” player salesperson focuses more time and creativity on the right customers - helping them do their job better and add money to the bottom line. This incremental profit generation will in turn support “last look-plus,” the ability to get the price your company deserves for the value you provide - once you get the last look.
Market-driven companies spend time and effort influencing the way they are perceived by customers, prospects, and other stakeholders. The quickest way to destroy this process is to remain excessively concerned with how much can be sold to the customer, how difficult the customer is, or how much paperwork is involved. Focus on your value propositions that solve the customer’s problems.
This is not something new, but it may be the most confusing, if not most misunderstood, concept in sales today. If you are not clear on what your value propositions are, get together with your sales force and develop this concept.
Create a Brainstorming SessionReview your marketing and sales material and what you say to customers to try to get their attention. Ask, “So what?” in response to every concept, feature, benefit or core competency that you discuss. Consider each statement about your product or system, your reputation or service from the perspective of: What does that do for the customer?
By repeatedly asking this question you’ll get closer to the real value you bring to customers.
Don't forget to Listen to Your CustomersYour current customers are your best resource to learn your company’s value. Invite customers to share their perspective of your offering. Don’t rely solely on your salespeople’s feedback. Create some customer focus group discussions.
Value propositions come in many shapes and sizes and have various names: unique selling points, elevator speech, positioning statements. What really matters is the perceived value of your company in the mind of your customers.
“Perceived value” drives customer expectations. “Performance value” drives customer satisfaction. The higher you raise the perceived value of your company as a supplier, the closer you come to creating competitive advantage. But be careful not to raise perceived value so high that you can’t perform up to expectations. If you create competitive advantage you should have no problem getting the “last look,” but more importantly, you will be able to get a fair price for the value you provide without having to meet the lowest price of the dumbest competitor.
Value PropositionsThere is more than one value proposition in every company and every transaction.
You must be able to express these value propositions in terms of profit generation or cost reduction in the eyes of the customer. There has to be some form of interest or perceived value on the part of your customer. The value proposition can’t be some mission/vision mumbo jumbo but must validate the value that helps your customer produce more, benefit from, and/or profit from or satisfy a need.
That is the most critical component of your value propositions and yet it is often ignored by sales professionals, even though it creates the most effective engagements with the customer. Your value propositions must include:
- Continuing value after the sale
- A relationship, not a transaction
- A mutually beneficial partnership
- World-class service and support
Value propositions that are created and used properly can eliminate or reduce competition. They create situational proponents that can make you the only choice - first call and last look or “only call.”