Selling on price, or selling on value?

September 21st, 2012

  • It’s all about price these days – how are we supposed to compete?
  • We’d sell more if only we could match our competitors on price.
  • They loved our product and service but we lost out on price.

Sound familiar?  For many businesses, the easiest explanation for lost sales opportunities is price.  But is price playing the role of scapegoat, the simple solution to a much more complex problem?

The Price Issue in Perspective

Price is generally only a real issue if you are simply not competitive.  If all your customers really are telling you you’re too expensive there might well be a problem.  If it’s just your sales people telling you, you might want to think carefully before reacting!  Even so, do you really have to be the lowest price to be winning business?  Do you really want to be the cheapest?

If you do want to be the cheapest, what are you going to do when someone comes along who is cheaper than you are?  If you are going to be a solutions provider, how are you going to establish your reputation and competitive edge?

And what about the Sales Team?

Wherever you choose to be, does your sales team have the knowledge, skills and capabilities to support your strategic intent?  As your strategy moves away from a pure price platform, do they have the ability to identify and then communicate your value proposition, tailored to individual needs?  Can they sell on value rather than just price?

Selling on Value

To sell on value effectively requires sales people who are not only highly skilled in a consultative/strategic sales approach, but sales people who are playing at the top of their game.  Potentially, a large part of your value proposition will be embodied in them.  Does your sales team currently add value to your customer relationships?

Emerging Sales Competencies

Recent research has highlighted the competencies that your customers are beginning to increasingly value.  These are seen as potential relationship differentiators and value enhancers and are becoming essential for today’s professional, value adding seller:

  • Aligning customer/supplier strategic objectives by identifying opportunities that add value to the relationship from both parties points of view
  • Listening beyond product needs and seeing value adding opportunities  along the supply/value chain
  • Understanding the impact of financial decisions from both parties points of view and being able to quantify these
  • Orchestrating organisational resources and co-ordinating and encouraging the development of collaborative, customer-focussed business relationships
  • Consultative problem solving by understanding the customer, and the customer’s business, in depth and bringing creative and innovative product and service solutions that add real value to the business
  • Establishing a vision of a committed customer/supplier relationship by identifying value-adding products, processes and service
  • Engaging in self appraisal and continuous learning in order to constantly stay ahead of the game

Source: MOHR Inc research project – 21st Century Sales Competencies

 

This is not to say that the traditional competencies are now unimportant.  They are the foundations of this new 21st Century approach.

What is needed?

To be able to sell on value effectively requires three key elements to be in place:

  1. An effective, consultative/strategic sales process not just in place, but implemented across the business
  2. An understanding of value – what is it?  What are the customers needs?  What are the underlying issues for each of these needs? How does this customer perceive value? What are the value drivers for them?
  3. A sales force with the skills and competencies in place that allows them to utilise the sales process and to understand and communicate value to their customers in a highly professional and persuasive manner.

It is no longer enough to simply reinforce existing skills and capabilities.  Success in the future will be increasingly dependent upon the development and practice of new competencies and the ability to understand and communicate customer focused value propositions.

 

Pricing at the Village Fete

August 28th, 2012

Mmmmmm delicious! Can you resist it?

Here in the UK summer is the time for village fetes.  Sadly,  perhaps,  not quite so much this year as so many have been cancelled because of bad weather.  But our local fete was alive and well last weekend.  Usually the fete sets out to raise money for a suitable local cause.  Things like raising money for repairs to the church roof (replacing the lead that some local entrepreneur has charmingly removed), funding the local scouts or girl guides, that sort of thing.

A committee is established and discussions held as to what sort of stalls to have, games to play, food to eat and prices to charge. (No pricing committee or pricing manager, no spreadsheet calculations here!)  And so it was that a friend of mine visited our local fete.  Being something of a gourmand, he inevitably found himself lurking by the BBQ area taking in the aromas of a variety of burnt offerings.

A quick perusal of the menu board provided him with prices for burgers and sausages, but of the one thing that had caught his eye, corn on the cob, there was no sign.  Simmering gently on the BBQ it most certainly was, but on the menu board it certainly was not.  The worry was that this omission might just be because of the inordinately high price of corn on the cob, but this seemed unlikely.  The question now going through his mind was “how much am I prepared to pay?”  “At what point is this going to be just too expensive?”

The sight and aroma were having a devastating effect on his gastric juices by this time.    Temptation – the one thing he couldn’t resist – was beginning to get the better of him.  Finally he determined that £1.50 was a good price and he would be happy to pay that.  So he walked up to the lady looking after corn on the cob sales and asked her how much they were.  “£1.00” she replied.  You can imagine his joy!

Now, the local fete is hardly a major commercial enterprise, but it does have the job of maximising its income so that local good causes can benefit as much as possible.  My friend had stumbled upon a classic example of what we call FITA pricing – finger in the air. A little bit of market research might well have revealed that corn on the cob pricing was relatively inelastic and £1.50 would have helped to maximise income.  In fact, that market research could have been done on the day.  No price board?

“How much is your corn on the cob?”

“How much would you be prepared to pay?”

“£1.50”

“It’s £1.50!”

Willingness to pay. Do you know?

20 Lessons from the Olympics

August 13th, 2012

It may be poo to you….but it’s Olmpic poo! (see 14)

So what valuable lessons can be learned from the most successful Olympic Games in a generation?

Here comes The Queen!

  1. Words create worlds. Think of Seb Coe’s visionary language that helped win the Olympics in the first place and has since galvanised politicians, the public, athletes and coaches. “Inspire a generation!”…………..three words that create worlds that we can see, feel and hear. So how clear is the vision that you want your people to buy into?
  2. The power of dreams. In front of the camera, many athletes have commented on their lifelong dream of winning a gold medal. Dreams are powerful. What is the dream for your life? What is the dream for your business? Ask yourself tomorrow……….. “What have I done today that has taken me closer to my dreams?”
  3. Olympic coaches do not pursue massive improvements in performance – they strive for “marginal improvements” i.e. 100 things that can be done 1% better.
  4. Dave Brailsford, the Performance Director of the UK cycling world put together a “Talent Team” some years ago to identify and develop potential high-performers. Many of its early recruits had never cycled competitively before, but the Talent Team knew exactly what it was looking for in the way of knowledge, attitudes, skills and behaviour. Do you have a talent team? What does it look for? Where does it look – e.g. do you look for future sales people currently working in non-sales departments?
  5. Results on their own are not what matters. Results with the right behaviour matters i.e. behaviour in alignment with clear and meaningful values and beliefs. The Chinese badminton players did nothing wrong, according to the rules, but the Olympic movement’s values were strong enough to act as a clear referee on their behaviour and they were quickly shown the door.
  6. Winners do not feel pain, although they have put themselves through the same (or more) stresses and strains as fellow competitors who fail to win medals. Do you have a winning culture within your organisation? How do you celebrate success?
  7. Motivational job titles work. Thousands of volunteers were re-branded as “Games Makers” so what did they do…………..they made the Games! ………and with great skill, awareness, sensitivity and humour.
  8. Generally speaking, women have dealt with failure better than men. As I see it, women have been able to “re-calibrate it”, learn from it, keep things in perspective and look forward to their next opportunity. Men have tended to treat second place as “failure”, they have hung their heads, apologised to the Nation and looked forward to a lot of gloomy and painful soul-searching.
  9. Success breeds success. Getting into the habit of winning breeds a success culture with very high expectations. We “own” rowing and cycling now and that will rub off on the next generation of athletes. The success of the Games will also, I’m sure, run off on the Nation. To quote Seb Coe, “the Games have provided an oasis of sanity and unity for the country to move forward in the future!”
  10. The roar of the crowd has helped our athletes’ performance. In many cases, it has been the difference between fourth and third, second and first. I wonder if the people working in our organisations sense the roar of the crowd or are they unsung heroes, working in an environment that lacks recognition and praise?
  11. Succession planning is key! In many team events, athletes who were successful in Beijing have been joined by the “new kids on the block.” For example, in one of the rowing fours, it was two plus two. The two experienced athletes inducted the newcomers, explained how the team culture worked and helped the new boys become successful medallists in the new team.
  12. The power of the mind is clearly evident. “If you think you can etc etc……..” The athletes’ thoughts became ideas which became actions which became the habits that determined their destiny. During the last four years, even in times of adversity it would appear that the best athletes were able to stay focused and positive.
  13. Athletes concentrate on their strengths and develop coping strategies for their “weaknesses”. They don’t spend months trying to change something that they are not good at – they further enhance their strengths. Usain Bolt’s form, in recent months, had been hit and miss but following a good talking-to from his coach he didn’t worry about his slow start. He focused on the second half of the race………his main strength.
  14. People will carry out menial tasks for a meaningful goal. One of the Games Maker volunteers found himself shoveling horse poo at the stables used for the range of equestrian events. When asked by a TV reporter “So have you been down here for the whole duration of the Games…….. doing this!?” The Games Maker smiled and said “It may be poo to you, but it is Olympic poo to me!!”
  15. If you are going to launch an event, do it in style.  A reference to the opening ceremony, of course, and a timely reminder to re-examine the quality of our product launches, external customer and internal team events. Do they start with a bang?
  16. Focus on your own game. The successful athletes have not dwelt on, or been haunted by, their main competitor’s strengths and weaknesses. They have got on with their own game and decided to become the best they can possibly be. “I haven’t got time to look at their boat, I’m too busy looking at my own!”
  17. Proactively recruiting the right talent. One of the Performance Directors explained that he had gone out of his way to find the right people for his sport and attract people to it. Think of your business …………what are you doing to proactively recruit the right young people to your “sport”?
  18. Sharing best practice. Four years ago, the rowing and cycling teams were recognised as being the home of best practice. Since then, 20 + Performance Directors have worked together to understand and replicate best practice across the whole spectrum of events. (……so how is best practice shared in your organization?”)
  19. The home advantage. We have known for years that football teams playing at home tend to win more than those playing away. The home-based Olympics has just illustrated this psychological phenomenon too. Think of your sales presentations and major business pitches – how many more would you win if you were playing at home and invited the customer/prospect to your premises?
  20. Managing the cultural legacy. Lord Coe, the undoubted real star of the Games, is now installed to manage and maintain the legacy going forward. So who is responsible for managing and maintaining the cultural legacy in your organization? Are your company’s values lived ……….or laminated?

With many thanks to Phil Jesson (http://bit.ly/Tym8gC) for coming up with this great list, and adding to it with a little help from his friends!

You won’t beat this price!

August 10th, 2012

“You have no chance of beating our current price!”  So said the buyer to one of our clients’ sales team.

Taking a look at the price they were paying, he could only agree.  The price was significantly – very significantly – lower than anything he could get close to. “Not only can’t I get close to the price you’re paying right now, I really wouldn’t want to.  What I would like to do though, is take a look at how you’re using the product and see if there is any way we might be able to help”.

It soon became apparent that despite – or perhaps because of – the low buying price, costs were actually higher, not lower, than they could have been.  From the buyers point of view things looked good.  A tightly negotiated, low price deal and job done.  But there was a failure to fully understand the implications of this low priced solution on the business.  A little investigation soon identified a number of opportunities to significantly reduce the customers’ costs as well as improve the quality of the finished product.  This provided an opportunity for the customer to premium price and improve their own margins.

Plugging some of the numbers into a Value Calculator (built around the three Value Triad© elements of Cost Reduction, Revenue Gain and Emotional Contribution), our client was able to demonstrate such significant savings to the customer that they are now paying THREE TIMES more than they were previously.

Low Prices DO NOT mean Low Cost

A simple, but powerful demonstration of the fact that low prices do not mean low costs.  All too often the two are confused.  Focus on delivering value, not low prices!

The Seven Challenges of Value

July 13th, 2012

Challenge #6:  Capturing your value through price. 

What is Value Based Pricing?

“A value based price is designed and communicated such that all parties understand, recognize and accept the distinctive worth of products and services purchased in the transaction and participate optimally in the gains created by their use”.

You’ll find much more where that came from in our book Value Based Pricing!

That’s easy for you to say….

Whilst as a definition it might not exactly trip off the tongue, the message is clear.  Value Pricing is basing your price on the value you deliver to your customer.  If you deliver no value, you don’t get paid (or bought!), the more value you deliver, the greater your rewards.  That, at least, is the plan.

However, if you don’t understand or can’t articulate your value, or you are dealing with a customer who can’t or won’t understand it, then you cannot sell or price on the basis of value.  (See Challenge # 3) In those circumstances you fall back on price – you’ll get the business if you’re the cheapest. (Which, I’m assuming, is not part of the plan)?

Who said it was easy?

Value pricing is far from an easy option.  You must have accepted – and met – the previous five challenges in order to be in a position to even consider doing so.  And there is a huge amount of difference between wanting to value price and actually being in a position to do so.  The other challenge is that implementation is an organisational issue.  In our research for the book, Value Based Pricing, it became clear that basing prices on value means that the organisation as a whole must have a focus on creating real value for the customer.  “This is a real leadership challenge.  Top and senior management must be actively engaged and supportive….”  We introduce a seven part implementation framework in the book:

R1 – Recognise that change is necessary and why

R2 – Review current methods and readiness to change

R3 – Research and characterise customer value

R4 – realign your company around value

R5 – Resolve opposition and reconcile genuine dissenters

R6 – Remove obstacles and roadblocks

R7 – Reward success

It is easy to assume that value pricing is the answer to all pricing problems.  It isn’t. It involves much hard work and the selection of the appropriate customers with whom to work.  You cannot value sell and price to customers who are not prepared to have open discussions with you about the value they are looking for.  Value customers are partnership customers.  Similarly, you cannot have those discussions if those involved with dealing with your customers don’t understand and/or cannot articulate the value you deliver. And finally, as we have seen, understanding and delivering value is an organisational issue – as we will see in Challenge #7.

However, we would make a clear distinction between Value Based Pricing and Value Selling.

Our definition of Value Based Selling:

“Value Based Selling is an approach to selling that aims to quantify the value that your solution delivers to a customer in economic terms, highlighting your advantages when compared with competing products or services”.

Many of our clients operate on the basis of published list prices.  They cannot simply ditch them and change their entire pricing approach overnight.  And an all out VBP approach is highly unlikely to be appropriate.  What the development of a highly skilled, value selling trained team is designed to do is to help justify your pricing on the basis of the value you deliver.  The inducement to buy becomes value delivered rather than just a discounting battle to see who cracks first.

At Axia Value Solutions we help our clients defend and grow their margins and build profitability.  We do this by helping them to reach a deeper understanding of the value of the solutions they deliver to their customers and through that understanding enable them to differentiate, price and communicate their offer increasingly effectively.

Axia Value Solutions – Value through Understanding

For more information you can contact Mike and Harry at info@axiavalue.com or click on the “Let’s Talk” link on the website www.axiavalue.com

The Seven Challenges of Value

July 9th, 2012

Challenge #5:  Communicating your Value. 

Wouldn’t it be a shame to spend time understanding the things your customer really values, speaking to the right people and creating a real differentiation, only to then fail to communicate your value effectively?   Being different in ways your customer truly values isn’t enough if the customer doesn’t know about it.  This is where a really powerful and persuasive Value Proposition is crucial.

It’s not an advertising strap line…

An advertising strap line is not a VP.  “Saving our customers money”; “Delivering value everyday”

Neither is it a bland statement like “Our solution will save you money”.  This is little more than a vague expression of hope that most customers are likely to view with some scepticism – especially since many of their other suppliers are likely to be saying the same things!  Most of what passes for VP’s are high on proposition and low on value.

Your VP should be powerful and persuasive, clearly answering a key question for the customer:

“Why should I choose you rather than one of your competitors?”

So where does it come from? 

There are four main sources:

1. Your prospective customer – this is your customer as a business.  What are the key issues this customer faces, and what are the impacts on their business of these issues?

2. Your prospective customer – as individuals.  Businesses don’t make decisions, people do.  What are the individual interests and motivations of each of the people who will be involved in making the decision?

3. Your company – Given your understanding of your customer, as a business and as individuals, the issues they face and the opportunities they have available, what can your company do to help?  Particularly, what can your company do better than anyone else to add real value to the customer?

4. The competition – whether we like it or not, it is unusual for there to be no competition.  Sometimes the competition is the “do nothing option”, or perhaps for the prospective customer to decide to do things internally. Don’t forget the question – why should the customer choose you rather than doing nothing, or doing things internally?  How would they be better off choosing you?

Powerful VP’s are clear and to the point and clearly identify that you have understood the key issues and can deliver a demonstrable value.

“Our solution will save you money” – everyone tells me that!

“Our solution will save you $250k in the first year of operation by managing inventory and shelf life more effectively, and $200k a year in subsequent years”

When can you start?

 

At Axia Value Solutions we help our clients defend and grow their margins and build profitability.  We do this by helping them to reach a deeper understanding of the value of the solutions they deliver to their customers and through that understanding enable them to differentiate, price and communicate their offer increasingly effectively.

Axia Value Solutions – Value through Understanding

For more information you can contact Mike and Harry at info@axiavalue.com or click on the “Let’s Talk” link on the website www.axiavalue.com

The 7 Challenges of Value

July 5th, 2012

Challenge #4:  Differentiating. 

The first thing to know about differentiation is that being different isn’t necessarily differentiation.  I have a silver coloured car.  I could have had the same car but in white. That’s different – it’s not silver!  But I didn’t want a white car.  The difference was of no value to me because I didn’t really care one way or the other.  What I did care about was fuel economy and that was a difference to which I did attach a value.  So a car that could do significantly greater mpg would have a difference that I valued (all other things being equal).   That’s differentiation – being different in ways that your customer truly values.  So you need to understand value) and you need to understand your customers.

Get out of the commoditisation straightjacket…

In many ways, the opposite of differentiation is commoditisation – something becomes commoditised when one offering is nearly indistinguishable from another. Buyers frequently try to persuade us that our product or service is identical to a competitor’s, therefore the only thing we need to talk about is price.  More worryingly, many sales people come to believe it! In our experience, very few companies actually sell commodities; there is always room for some differentiation – service levels, relationships, payment terms, stockholdings etc. But remember, any of these is only a differentiation if our customer sees it that way – in other words, sees the value. (Check Challenge # 1 – just what is value? Check Challenge #3 – you need to be talking to those people who appreciate your value!)

Create an approach to differentiation

So we need to create a differentiation strategy which has a number of strands:

  1. Really understanding the things that our customers value (back to Challenge #1).  If you have segmented your market, you can look for differentiators firstly at a segment level, and then tailor these to the specific needs of individual customers within the segment. The more you can develop and communicate a differentiation that your customer really values, the less inclined they are likely to be to investigate competitive alternatives.
  2. Understanding the strengths and weaknesses of our competitors (what do we need to know about our competitors? Everything!) Inevitably there will be some things that your competitors do that they might do better than you, and vice versa.  Your job is to make sure that the things you do best are the things the customer values the most!
  3. Recognising our capabilities and focussing on those areas where we can develop a real edge – what can we do better than our competitors and that is highly valued by our customers? In understanding our customers value drivers in detail we can ensure that we stress our strengths around those areas that add the greatest value.
  4. Developing a way of effectively communicating our differentiation (see Challenge # 5)
  5. Capturing a share of the value of our differentiation through price (see Challenge # 6)

At Axia Value Solutions we help our clients defend and grow their margins and build profitability.  We do this by helping them to reach a deeper understanding of the value of the solutions they deliver to their customers and through that understanding enable them to differentiate, price and communicate their offer increasingly effectively.

Axia Value Solutions – Value through Understanding

For more information you can contact Mike and Harry at info@axiavalue.com or click on the “Let’s Talk” link on the website www.axiavalue.com

The 7 Challenges of Value

July 3rd, 2012

Challenge #3:  Identifying the people who care about value. 

Want to talk price? Talk to procurement.  Want to talk value? Well maybe procurement are not quite the people you should be talking with. They don’t really care about value, they care about getting the best deal, and that usually means a focus on price.  (OK, if you’re in procurement you might well disagree – if you’re in sales that’s just how it feels!) The solution is to find people in the business who care about value (but you’ll need to understand what value is before you can really do this!  See Challenge #1)

Making sure you’re talking to the right people when you want to communicate and sell on the basis of your value is key.  A real life example makes the point.

Talk to the Right People!

One of our clients is a large provider of Business Information (BI) software.  Historically they had sold, or tried to sell, their sophisticated software to the logical buyers in their target customers, the IT department.  Results were not encouraging.  Not only were they struggling to get buy-in to the solution they provided, they found themselves outside the IT departments budget too!

We asked them what they were selling – the answer was software.  We then asked them what their customers, the real customers, the people who actually benefited from what they did, were buying.  The answer?  – The ability to make top level business decisions on the basis of accurate and timely information.  So where did the IT department fit in? Other than as the people who would manage the service, they didn’t.  The people who would benefit were top level managers and board members.  Once they started talking to these people and they began to appreciate how much the software and access to great BI could help them, budgets become more readily available and orders began to flow!

Talk to the people who will benefit from your value….

In looking at gaining access to any new or existing client, the goal should be to talk to those people who will actually appreciate the benefits, and the value, of the solution you provide.  Sales people constantly discuss how high up in an organisation they should try to gain access.  A good starting point is to ask yourself, “Who benefits from the real value our solution could deliver?” and start there.

Talk to us!……………..

At Axia Value Solutions we help our clients defend and grow their margins and build profitability.  We do this by helping them to reach a deeper understanding of the value of the solutions they deliver to their customers and through that understanding enable them to differentiate, price and communicate their offer increasingly effectively.

Axia Value Solutions – Value through Understanding

For more information you can contact Mike and Harry at  info@axiavalue.com or click on the “Let’s Talk” link on the website www.axiavalue.com

The 7 Challenges of Value

June 29th, 2012

Challenge # 2: Recognising that people’s perceptions of value are constantly changing.

Would you believe it? You find out in one meeting what the customer appears to value only to find out at the next one that it’s all change! What is going on? The problem is that people’s perceptions of value change depending on location, situation, timing, state of mind, priorities etc. If they didn’t why would anyone pay £2.50 (and the rest!) for a Coke in an hotel when it’s only 40 or 50p in a store? In a word – or two …location and situation. It’s amazing how the mind works. I’ll resent paying £1 or more for a bottle in a motorway garage but not worry about paying £2.50 in a nice bar – at least not worry too much.

The Price of a Watch – Changing Perceptions in Action!

When my daughter left university she went to work at a high class jewellery store as she thought about what she really wanted to do (she’s still thinking!) I gave her a call after her first day to find out how she had got on. “The prices are disgraceful”, she told me. “The cheapest watch in the building is £250 and we stock watches up to £10,000. £250 for a watch is a disgrace at any time, never mind when times are hard”.

A month later she was at our house for dinner. During the evening she turned to me and said “Whatever you do, make sure I don’t buy a watch from my store”. I suggested that that seemed unlikely given her views about how extortionate the prices were. “Well, to be honest”, she said “I did think that £250 was a lot for a watch to start with, but now I realise it’s actually very cheap!”

So it’s cheap now is it??

“What? – How come they were extortionately priced a month ago, but now they’re cheap?”

The answer, of course, is changing perceptions. When she first started, she compared the £250 watch with the watch that she was wearing – a very cheap, functional student watch costing a few pounds. Compared with that, the £250 watch was expensive. A month later on and she’s now comparing the £250 watch, not with her cheap watch, but with the £10,000 watches she also sells – compared with them £250 is cheap! So when you – or your customers – compare your prices, are you comparing them with the student watch or a top of the range £10,000 version? It makes all the difference to their perceptions!

At Axia Value Solutions we help our clients defend and grow their margins and build profitability. We do this by helping them to reach a deeper understanding of the value of the solutions they deliver to their customers and through that understanding enable them to differentiate, price and communicate their offer increasingly effectively.

Axia Value Solutions – Value through Understanding

For more information you can contact Mike and Harry at info@axiavalue.com or click on the “Let’s Talk” link on the website www.axiavalue.com

The Seven Challenges of Value

June 26th, 2012

Challenge # 1: Understanding just what value is.

Value from whose perspective?

This always seemed to me to be such a simple thing – a bit like defining quality!  Most people define quality – and value – from their own perspective.  I know what great value looks like to me, but it is personal.  My partner finds some of the things I value very strange indeed!  Customers are just the same.  They define value from their perspective too.

So there you have it.  We define value from our own point of view and our customers define it from theirs.  So what do you think the chances are of both definitions being the same?  That’s it.  Zero.  Zilch and pretty much next to none.  And when you try to sell your view of value to people who take a somewhat different view the end result is confusion.  Especially if your customer isn’t quite sure what value is either.

So your customers understand value do they?

It’s all very well selling on the basis of value, but what happens if your customer has only ever really thought of value in terms of low price?  Time for some education.  And to do that you need to be able to calculate just what sort of an impact your solution might have on the customers’ business and put together a compelling case.

The Value Triad©

To help, we have developed The Value Triad© as a means of understanding value.  It has two functional, tangible elements – revenue gain and cost reduction, and one intangible, but extremely important element which we call Emotional Contribution.

The first two are, relatively, easy to understand.  How much additional revenue, or cost reduction will your solution deliver to the customer when compared to the alternatives the customer has available.  For example, if your solution can be installed and up and running a month ahead of your competitors, what’s that worth to the customer – in additional revenue or cost reduction terms.

Emotional contribution is something else.  Much more difficult to put a number on but no less important.  In fact, sometimes more important.  Much more.  It’s to do with the difficult to measure stuff like trust, confidence, risk reduction, brand image, feeling like you’re the people they want to do business with.  Not easy to measure, but all too easy to forget.  So why do you sometimes pay more for things than you have to? Or buy from one store when the store down the road does the same stuff for less? Because the store is nicer, the staff are better informed, they treat you like a real person not an interruption to their day, you recognise the name over the door and it says good things to you.  And guess what?  B2B is really no different. No matter what they try to tell you!

So what now?

What now? Get out there and ask your customers what they really value.  Ask your existing customers why they buy from you. Really. You will be amazed at what they tell you, and often the answers are very different from what you would expect – but then that’s you defining value from your point of view and your customers defining it from theirs.

Ask your target customers what value looks like from their point of view.  That way you’ll be providing solutions that deliver the value the customer wants, not the value you think the customer wants.

At Axia Value Solutions we help our clients defend and grow their margins and build profitability.  We do this by helping them to reach a deeper understanding of the value of the solutions they deliver to their customers and through that understanding enable them to differentiate, price and communicate their offer increasingly effectively.

Axia Value Solutions – Value through Understanding

For more information contact Mike and Harry at  info@axiavalue.com or click on the “Let’s Talk” link on the website www.axiavalue.com

 

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