Very interesting subject and something we struggled with for years as more and more “me too” products flooded our market. My “A ha” moment came while reading “The Dollarization Discipline: How Smart Companies Create Customer Value…and Profit from It” by Jeffrey J. Fox and Richard C. Gregory. At its core, all B2B customers and prospects are in business to maximize profit. There are only two ways to do that: reduce costs and/or increase revenues. Most companies, including ours, did not carry their value propositions that deep. They didn’t “Dollarize” their differential competitive advantage by using a “value chain” to show their offerings impact on their customers bottom line.

For example: our products are safety products. Part of our value proposition used to be that they were more comfortable than our competitions. That faded over time as customers started seeing all brands of safety equipment as a commodity. But after applying the “Dollarization” principles, we developed a “value chain” that carried the impact of “comfort” all of the way to the bottom line.

Value chain example: Our products are more comfortable than competition (so what?); workers who are more comfortable will stay on the job longer, produce more with fewer rejects (so what?); that increases productivity and reduces non-productive downtime (so what?) increasing productivity and reducing downtime increases profitability.

So our revamped over-all value proposition is we sell “Profit Enhancement”. Our sales people are trained to walk every feature and benefit down the value chain until it impacts profitability. We talk to our customers about “investing” in (instead of buying) our products and we talk about the ROI being the impact on profitability. We also try to document the increases in productivity and reduction in downtime to offer as proof statements. It has been a very effective strategy.

A prospect may tell you they don’t want or need your product, but few if any will tell you they don’t need or want to reduce cost, increase revenue and enhance profitability.

Several years ago, I returned from a software demo I gave for a prospect and commented to my boss “they really wanted to see point-of-sale, and we were missing some key features that our competitors have.” His response: “Did you show them our ACCOUNTING?”

He was so enamored with the accounting functionality(which WAS good!) that he missed recognizing what really turned prospect on. Would customers have been better advised to consider excellent accounting first? Possibly. But–right or wrong–point-of-sale is what excited them.

A blog I wrote on this same topic “A Sales Force Needs More than ‘High ROI’ and ‘Low TCO’ to Compete describes a similar scenario about how a COO confronted a sales team with a value question they weren’t prepared to answer: http://www.customerthink.com/blog/sales_more_than_high_roi_low_tco

Customers don’t make rational decisons, their decisions are a mix of business and personal reasons. The job of the sales professonal is to understand these and incorporate them into their value proposition. Thanks for your thoughtful comment.

My point is, in the real world, people often buy things from someone because it is at least as good as what the competition offers (so, no COMPELLING value proposition) but because of the attitude of the sales team, because of the willingness of the bid team to be flexible and various such soft factors.

If the customer was always making rational decisions, we should be paranoid about the un-compelling nature of our solutions. If, on the other hand, the customer is actually rationalizing, then we have to tap other levers. I blogged about this recently in my blog (bid-runner dot blogspot dot com).

You make an outstanding point about finding deman-side services that can reinforce, strengthen, or even change your value proposition. Companies tend to focus on their “product” and not a set of surrounding services that complement the product. These are often the most powerful elements in developing and delivering your value. They are the most sustainable differentiators, and the most sustainable in pricing issues.

I really appreciate you taking the time to comment! I also recommend Value Merchants as a great resource. Regards, Dave