How To Leverage Value To Win-And Keep-Profitable Customers.
It’s no longer enough to offer a value-added product.
You must leverage your value all the way through to your customers’ customers.
Is your salesforce stuck in the wrong era? It sounds like a strange question. But if they find themselves forced to compete on price to sell value-added products or services-or even if they’re trying to sell solutions to problems that customers know they have-the answer is probably yes. The business and the sales profession at large have evolved tremendously during the past 50 years. Problem is, the highest percentage of sales organizations haven’t kept pace with the evolution.
Many people who sell for a living are relying on methods that worked just fine in, say, the 80s, and even the 90s. But the world has advanced substantially. Products and services have grown increasingly complex, as have the business issues and problems they address. Customers have many problems to solve, many options available to solve them and are having great difficulty sorting it all out. The more complex problems and solutions become, the more similar they begin to look. We’re living and working in a time called the third era’ of professional selling-but too many sales organizations are still operating in an outdated mindset. The following is a brief synopsis of the three Eras:
So how does your salesforce begin to operate in Era 3? The answer begins and ends with the V-word: value. Obviously, your products themselves must have inherent value, but that’s not enough. Not nearly enough, in fact. The value that you provide must be leveraged across a full spectrum of your customer’s business that includes the business processes your product or service is used in and the performance outcomes those processes are designed to affect as your customer delivers value to their customers-it must enable your customer to have a unique competitive advantage and your salespeople must be able to measure the financial impact of that value.
The following are tips on providing Era 3 value to your customers:
– Level 1 – PRODUCT: Operating in Level 1, Georgia-Pacific would provide their product, a high quality resin, one that is consistent in its composition, is free of contamination, delivered on time, invoiced accurately, etc. In other words, at Level 1, the value is related to the characteristics of the product and the transaction of acquiring the product. Level 1 value is well understood by the customer and difficult to differentiate competitively. In fact, frequently it is considered a “starting point” for value, and the pricing is highly competitive. The customer perceives that the value derived from the product is simply “table stakes” and available from multiple suppliers. The customer is focusing on reductions to the price of the product to reduce their cost of goods sold (COGS). Receiving a price reduction on the product will yield a relatively small impact on the customer’s overall COGS. At Level 1 the salesperson is primarily interacting with purchasing, and perhaps operations regarding the pricing and characteristics of the product.
– Level 2 – PROCESS: Value provided at Level 2 relates to your ability to impact the process that your product is used in. When Georgia-Pacific operates in Level 2, they analyze and advise their customer on how to adjust their manufacturing process. They will change the resin to allow the customer to adjust their manufacturing process. For example, they might be able to adjust the resin so that the customer’s equipment could operate at a lower temperature, thus reducing energy costs. Since energy can be a significant variable cost, the value of the new resin, allowing lower energy usage, can be greater to the customer than a reduced price for the resin itself. When the salesperson is operating at Level 2, the focus is on the process their product is involved in and the salesperson interacts at the department level. They are working with operations, quality, environmental compliance, safety and a host of other departments that are impacted by the efficiency of the manufacturing process.
– Level 3: PERFORMANCE: Value provided at Level 3 relates to your ability to impact the business performance of your customer’s product or service when it reaches the hands of their customer. In turn, they are impacting the high-level business drivers of their customer. By creating a resin that will change the characteristics of the customer’s product, or even create a new product, they can enable their customer to open new markets or expand their margins by creating enhanced products. At Level 3, the focus is on the performance of the customer’s company. They are working at the enterprise level as a strategic partner. This interaction is directed at giving the customer a competitive advantage. Add that to the productivity increase it gained at Level 2, and Georgia-Pacific has had a significant positive impact on its customer’s overall business performance, an impact that is measurably beyond what can be done by offering the customer a lower price on their product.
As you might imagine, operating in Era 3-truly taking on the mindset of your customer-is hard work. It’s much deeper and more complex a process than many salespeople are accustomed to. But it’s the only way to gain and keep a solid foothold in a time when your customers have an endless supply of choices, one often indistinguishable from the next. And in the long run, the resources required to acquire and retain profitable business are far less than a Level 1 approach.
In Era 3, your company must serve as a secret weapon for its customer. You must think for your customers, creating revenue-building solutions that they don’t have the time or the wherewithal to come up with and/or implement for themselves. And because the salesperson is the face of your company, he or she must be in the thick of the action, tirelessly working on behalf of those customers. This brave new world is a challenge for the professional salesperson, sure, but it’s also a treasure trove of opportunity. So take good care of your sales team, support them and teach them well . . . they literally hold the future of your company in their hands.
Jeff Thull (tool), the President and CEO of Prime Resource Group, a strategy and performance-consulting firm, has gained the reputation for being an expert in the arena of sales and marketing strategies for companies involved in complex sales.
For more information contact: Prime Resource Group, 3655 Plymouth Blvd, Suite 110, Plymouth, MN 55446, support@primeresource.com, http://www.primeresource.com, 1.800.876.0378 or 763.473.7529, Fax: 763.473.0792
