Value is in the Eye of the Beholder

Money from around the worldAsk any salesperson why they lost the order and you will often hear ‘price’ cited as the main reason. Research by University of Southern California, summarised in this blog post, indicate that “there is acceptable price range that the prospect is willing to pay and this can be anywhere from ten to twenty-five percent higher than the lowest proposal (depending upon industry and products being purchased).”

The summary also says that “winners were better able to prove their value as a business partner who had the expertise to solve the customer’s problem.”

The trick to overcome here is that the definition of ‘value’ will differ for the various people within the decision making group. What is valuable to the end user will be different from what is valuable to the purchaser and different again from what is valuable to the fundholder.

For example, I used to sell measurement systems for the steel industry and, in round numbers they cost £100,000 each.

This is not a huge amount of money to a steel company but nor is it ‘peanuts’. Consequently, the purchase of a system was considered by a number of people within the customer. On one occasion, in India, three of us on our side of the table were faced with over 20 people on the other side. There was the rolling mill manager and representatives from six other departments, all with their own opinions on what was important to them.

Call me peculiar but there is something life-affirming about having questions fired at you from left, right and centre and in answering them to the satisfaction of all involved. I felt pretty good about myself as we walked out of that meeting and even got praised by my boss for the way I handled it.

Whilst meetings like this were not the norm, it was usual to talk to at least three or four different functional groups within any given customer.

Differing Values

The Electrical guys wanted to know about cabling, power and interface requirements, Plant Ops wanted to know the maintenance requirements, I.T. wanted to know about computer hardware and software, Legal wanted to agree commercial terms and conditions, Purchasing needed to know about pricing and delivery schedules, Management want ‘the bigger picture’ and so on.

Whilst the cost of the systems was important, each functional department valued something different about the equipment. The price was really only considered by Purchasing and, to a lesser extent, Management.

Ah, but it’s different for me. I only deal with one person in my prospective customer.

Really? Then your job is more difficult.

When you are engaging with multiple people in multiple departments, you can clearly articulate the value of your product to each of those people.

When you are engaging with one person, all of those other people are still in the decision-making process but you can’t influence them directly. You have to take on a coaching role in order to help your contact articulate and/or pass on the relevant value proposition to the relevant person.

In either set of circumstances, you shouldn’t create a single value proposition which encompasses all requirements. It just becomes unwieldy and difficult to understand. We wrote here about creating unique value propositions for different customers. This takes it a stage further in that you are now creating unique value propositions for the same customer. These should be moulded around core information which is relevant to everyone but then modified with specific statements to show the appropriate value to the relevant person.

Yes, it’s harder than turning out a ‘boilerplate’ offer but no-one ever said sales in an easy job! One of the keys to success is differentiation. If you are creating different value propositions for different functions within the same customer, you are certainly differentiating yourself from the majority of your competitors. Let us know how you get on.

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