“Value” is a critical concept in everything we do, but particularly when we are engaging customers, hoping to present a solution they will buy. Yet too often, we and our customers misunderstand the elements around “value,” as a result, we fail to leverage value to it’s greatest impact.
Most of the time, we and our customers think of value in terms of the price/cost. We present a solution, we define the price, the customer evaluates it against alternatives and it’s budget, then chooses to go forward or to do something else.
In presenting our value this way, we usually defend it by comparing our price to that offered by competitors. Where we are lower priced, we compete solely on that low price. Where we may be higher priced, we tend to outline the capabilities we have relative to the competition. “We offer 15 functions to the competitor’s 10 functions, yet our price is only 10% greater. You get far more “value” from us. As an aside, when presented with this, my response is, “Oh you are presenting me a cost per feature argument, I only need these 4 features, would you please adjust your price…..”
Even while doing this, we leave it up to the customer to evaluate, “Will paying this much get me the return that I want?” They have to figure things out and find some way of justifying the outlay to management.
But the customer incurs more “cost,” than just what they pay for our product. They have to look at implementation, support, training, and so forth. If we are selling them a piece of capital equipment, there are things like site prep, installation, maintenance, power and so forth. If it’s embedded materials, there are shipping/logistics, warehousing, scrap, quality/warranty issues they take into consideration. If it’s software, SaaS or otherwise, there are likely to be some implementation, customization, integration, support, training, and other costs.
And too often, we leave it to the customer to figure these things out. We figure we’ve done our job in giving them the price.
But, sometimes we go further with our value propositions, stepping beyond the price/cost of our offerings, looking at the results they might produce. “In implementing our solution, you should be able to increase revenue by X…..” We start looking at the business case resulting from implementation of our solution. We move beyond a cost based analysis, looking that the savings or return they get from that investment. They might be revenue increases, cost reduction, quality improvement, productivity/efficiency improvements.
These analyses look at the total return customers might get from the implementation of the solution. Generally, those business cases are presented in terms of ROI, Payback, IRR. In large, complex projects, our customers are always doing this. If we are consultative or value focused, we tend to help the customer do this, or develop these business cases ourselves.
And we present these as our total value proposition.
Should the customer buy and implement our solution, to retain and grow the business, we move our focus to value realization. This focuses on, “did they actually get (realize) the value we committed in the original value proposition and business case?”
All of these connect value to hard dollars and cents. We compete on the basis of offering superior value to the customer, but too often, these views of value are relatively undifferentiated. And most of the time, we tend to focus our value discussions on price/cost. Again, leaving it to the customer to figure everything else out.
But there are elements of value that are, too often, overlooked, and may be the most important elements of value and differentiation to the customer.
How we help the customer in their process of recognizing the need to change; how we help them think about what they are doing and what they might be doing; how we help them navigate the process of deciding to change and what that change represents. Helping them identify the risks–both organizational and individual, developing confidence they are looking at the right issues in the right way. Helping them navigate the information overload and the process of gaining and maintaining confidence through the entire process.
These are all elements of value creation. And in a world where it is difficult to differentiate the value our solutions deliver, these elements of value creation are most valued by customers and create our greatest differentiation.
It turns out, what really stands out to our customers making complex and confusing changes is not the solutions themselves, but how we help them figure it out.
It’s amazing how much “value” we leave unclaimed. We seldom go beyond price and cost elements. Imagine what might happen if we did more.
Leave a Reply