By Jeff Thull
June 24, 2010
Value is the lifeblood of the business world. Value — in the form of improved efficiency, effectiveness, and ultimately, profit — is the only thing that business-to-business customers are interested in buying. Companies like yours set value strategies in place and seek to create differentiation and profitable growth by investing large amounts of money and time to create these solutions. But you cannot transform solutions into competitive advantage and profitable growth unless the customer truly believes they can improve their business performance with your solution and ultimately buys your solution.
To sustain that growth, your customers must be able to improve their business performance when they implement your solution and have the ability to measure the achievement of the value that has been promised.
With this in mind, I’d like to pose a question: What percentage of the value of the solutions that your company creates and brings to market is diluted before it can be transformed into profitable growth for you and your customers?
I’ve asked this question of senior executives in large and small companies in a wide variety of industries. Invariably, they aren’t entirely sure how to answer it. They understand and believe in their solutions, but they have assumed that because a value capability exists, it can therefore be effectively communicated and enough customers will buy it and be able to achieve it, and ultimately, this value will reach their bottom line.
Determine Where the Value Leakage Occurs
Typically, sales organizations receive the brunt of the blame since it’s at the point of sale where the results of this lost value are most evident. The issue to examine here is this: By the time your business value strategy reaches the sales organization, salespeople are left with little value to sell. The fact is, this is not only a sales issue, it is an organizational issue and the CEO must take charge to ensure that there is clarity throughout the organization – beginning with the conception of a high value solution all the way through the customer’s achievement of measured value.
In order to achieve this goal, the leadership team must develop a comprehensive understanding of the quantitative and qualitative value that their company’s solutions provide to customers. This initial value clarity analysis must be conducted from the customer’s perspective, keeping in mind that customers are suffering from ROI and value fatigue: They have been bombarded with generic value propositions and ROI calculators to the point that they no longer consider it credible when salespeople talk about ROI and value.
To clarify the value of solutions, enlist the help of a small set of leaders who are familiar with various aspects of the complete value picture. They must understand how the solution is designed to create value and they must also understand how value is actually achieved within the customer's business. These leaders are usually drawn from several functions within the company, such as R&D, engineering, manufacturing, marketing, and service. Ask this team to describe the value that their solutions are capable of delivering and how that value manifests in the customer’s world. Challenge their thinking, clarify their value descriptions, and identify points of value differentiation by asking questions such as, “How do you know that’s what one of your customers would say?” and “Could your competitor honestly make the same claim?”
The goal of this exercise is two-fold: First, you are seeking to ensure that all of the value of the solutions is accounted for. Second, every facet of value must be connected to the customer segment’s business performance metrics, and the financial impact of the absence of that lack of value on the segment’s bottom line must be quantified.
Assess Your Company’s Value Clarity
Here is a very simple self-assessment based on seven questions to help you test the level of value clarity you have achieved:
1. Have you been able to clarify all the value your solution provides to your customers?
2. Have you been able to connect that value to the various business drivers and performance metrics within your customer’s organization?
3. Have you been able to isolate the performance impacts to specific jobs that are responsible for those metrics?
4. Have you been able to help the customer co-author a dollar amount to the impact your value has with a number that the customer agrees with?
5. Have you been able to identify all the constraints that your customers face in trying to optimize the value they can receive from your solution?
6. Have you provided your customer with the ability to address those constraints and manage the changes they need to make?
7. Are you able to measure the value you have delivered and does your customer agree with the amount you have measured?
If your organization can’t answer each question with a wholehearted “yes,” it is highly likely that a considerable amount of your value strategy is being seriously diluted by the time it reaches your customer.
Jeff Thull is President and CEO of Prime Resource Group, Inc. and author of “Mastering the Complex Sale Second Edition.”