by Rick Gregory, R.C. Gregory & Co.
In good economic times and bad, smart companies seek to deliver “value-added” to their customers. But far too few of those companies are adequately rewarded for providing that value. Your company deserves to share in the customer value it creates, but how can this be accomplished?
The price premium and market share advantage a value-creating business can command enables the company to invest in continued innovation and service levels, and to commit resources to generate additional customer value. These strategies drive short- and long-term growth and profitability. Companies that invest in value-added but don’t leverage those advantages in the marketplace are throwing away a critical opportunity.
In sales and marketing, the word “value” takes the form of “value-added” (or more succinctly, value-add), “value chain” and “value proposition.” In concept alone, these are all legitimate business ideas, but these words lack precision and measurability.
In addition, so many companies are using these terms that the buzzwords have become meaningless noise. A simple disconnect is the root of this problem. That disconnect is one of language. When communicating with customers, sales and marketing people tend to speak in words, not numbers. The adjectives and superlatives they toss at customers may be impressive, but do they equip the customer to judge the return on the money they are being asked to invest?
The solution is an approach to sales and marketing that goes beyond articulating features and benefits, but in fact calculates the economic value a customer receives from a product or service, and therefore enables the seller to price the product or service as a true reflection of that value.
This approach is called Dollarization. Every time a company sells something, they must at some point present their price to the customer. Before any transaction, the price is known clearly in dollars and cents. But when it comes to presenting what the customer receives in return for that price, the same seller hurls a list of features, benefits and promises. The seller claims superlatives such as best, fastest, strongest, more robust, more reliable, most experienced and so on. The customer is left to make a financial decision: “What price is worth paying?” by assessing non-financial arguments.
