Both suppliers and distributors add a lot of value for their customers. No question.
However, Making Value Mean Something to Customers is a different story, recently studied by Tim Underhill of Strategic Business Solutions. Basically, he fears a slide back to the inability to communicate (or at least the inability to translate) the differences between ‘features’ and ‘benefits.’ I agree.
Fact–based differentiation is a swell idea, but is rarely communicated clearly to customers. This is partially the fault of PowerPoint; how many ‘dueling bullet points’ can anyone really internalize?
I think that there are four critical errors repeated by both supplier and distributor salesmen that severely shortcut the ‘value of our value story’:
- Management Delegates Passion: Sales managers think they can train their people to document value. Real belief shows it can’t be faked or pretended. Managers have to but their absolute belief in the values of product, service or programs in front of both the customer and the field force personally. That is real sales leadership.
- Value is benefit x price not benefit ÷ price: Misguided value focus muddies the water faster than anything. “Eighty percent of what they are documenting is price savings,” according to Underhill. This includes discounts or rebates. But Underhill contends that that may be the wrong message to send to customers. “It makes the customers feel the only value the distributor adds is the lower purchase cost.” In reality, distributors add a lot of value beyond price.
- Try to Detail the ‘Future State’: A precise description of the effects of your product or service in place personalizes and sharpens the benefits of sometimes more ethereal features. This also reduces the tendency to focus on the competition or past practices. No one wants to dwell on the ‘stupidity’ of the current product choice — who do you suppose may have made that purchase decision?
- Timing is Key: Documenting a solution months after the value was provided is generally a wasted effort. Value documentation must be done while the customer‘s pain is still fresh. With the speed of some organizational changes today, you may have to rush to detail your savings while the same customer personnel are in place!
The situation is clear. The balance of power has shifted completely to the customers, who now defined their own individual value propositions.
Today customers are no longer willing to listen to the salesperson’s description of how their marketing department defines value. Customer access to high quality decision-making information, commoditization of products, availability of pricing and inventory (along with expanding worldwide sources of supply) have combined to empower customers.
The role of sales has evolved from communicating a predefined value proposition into working with the customer to create a unique value proposition.
Yet most sales forces have not made this transition. To survive and prosper in this new environment, sales force management and personnel must recognize and accept that the customer — not the marketing department — defines the value proposition.
Sales is no longer about doing a good job of communicating features and benefits. It’s about working with each customer to create value as the customer defines it.
Bill Wade is a partner at Wade & Partners and a heavy-duty aftermarket veteran. He is the author of Aftermarket Innovations. He can be reached at firstname.lastname@example.org.