If you think your product or service defines your value to customers, think again. Your value is what your customer believes it to be and nothing else. Even if you're selling the fastest, smartest, most efficient or effective, if you're not reinforcing what your customers value, or worse yet, you don't know why they keep buying from you, you're not selling value.
Of course, if they don't see your value they'll be more easily lured away by the competition, and that's expensive. According to the research of industries spanning financial services to retailing, it can cost five to ten times more to replace a customer than to retain one. The opportunity costs are enormous, too. According to Bain & Co., an international consultancy, a mere 5% increase in customer retention can increase a company's profitability by 75%.
What's so tragic is that you may already be giving customers the value they crave, but if they don't realize it, you may as well be doing nothing. Consider one of our clients, a Fortune 500 manufacturer. Their contracts promised regular, preventive maintenance, and they even guaranteed repairs would be made onsite within two hours. The manufacturer was highly conscientious in satisfying the contract, so, naturally, they thought they were satisfying their customers.
But here's the rub: the manufacturer's staff never told their customers when they had visited or what they did while there to service the account. They missed a critical opportunity to reinforce what the customer valued most: peace of mind. And peace of mind is what the manufacturer was delivering by regularly and promptly visiting sites to keep systems running smoothly. But the customers didn't know that and, consequently, didn't value the manufacturer nearly as much as they should have.
Don't let this happen to you.
Reliably providing your customers with the value they seek - and making them aware that you're doing so -- isn't necessarily easy, but it isn't complicated either. You have to:
- Understand what they value,
- Sell that value,
- Deliver it, and
- Reinforce it.
Understanding What Your Customers Value
Chances are, you have a strong grasp of the intrinsic value your product and services provide -- it's usually measured as payback in hard dollars, internal rate of return or net present value. However, what customers genuinely value may be more circumspect. So we strongly suggest that you follow the lead of another client of ours, a global commercial HVAC sales and service organization. Every six to nine months, their sales professionals do face-to-face interviews with key accounts. They ask 12 to 14 questions that unveil:
- Why their customers bought from them.
- How they're using and applying their solution.
- What they value most about their solution and their company.
These in-person relationship reviews are significantly more effective than written surveys, which may only elicit yes/no responses or, at most, a simple sentence or two. They approach their interviews like an investigation, listening carefully and asking clarifying questions.
By the way, if you're ready to expand in your marketplace or want to lure a customer away from a competitor, take the same approach. If you find out what a prospect values most about your competitor, you can show that your solution will do an even better job of responding.
Sell Your Value
In today's challenging sales environment, it's critical that the art of sales -- persuasiveness, fluency, and charm -- meets the science of sales -- analysis and investigation. Selling value effectively utilizes both to:
- Understand who influences the buying decisions.
- Investigate what these decision-makers care about most.
- Align solutions to respond.
This effort requires a deeper knowledge of your customer's business direction and needs. Leverage the insight you gain to drive more powerful marketing and sales messages.
Deliver Your Value
As you commence the delivery or installation of your solution, ensure that all team members involved are well acquainted with the original value proposition. Establish a plan to monitor the customer's use of your solution and track the value they derive from it.
As illustrated in the case of the manufacturer who met their contractual obligations but failed to deliver value -- close doesn't count in this venue.
Reinforce Your Value
Within days of delivery, your offering's visibility begins to recede. In fact, the better you are in meeting your obligation to your customer, the more invisible you become. You continue to do a great job, but in six months your own employees are likely the only people who are aware of the quality of product or high levels of service you provide. That's why you need to understand how your customer measures your performance. A regularly scheduled relationship review with your customer can ensure this happens.
The Process Repeats
Understanding and delivering value to customers is never ending, but with today's economy, doing so has never been more important. After all, holding your own in a downturn may be all you need to significantly improve your market share.
Don Gray and Todd Hendries are Principals of Sales Engineering Group, which provides sales and marketing leadership, management, consulting, and training to global Fortune 1000 organizations such as Qualcomm, Symantec, Intel, and Motorola. www.salesengineeringgroup.com