Make sure your Value Adds actually add value!

The concept of including additional “Value Adds” in a proposal has come up frequently lately. In the interest of keeping this posting short (as readers have recommended!), I’ll address only one issue around Value Adds at this point: it is important to make sure that your client actually understands the value of what you are including.

This sounds like pretty basic advice; after all the word value is included in the phrase Value Add. But the key is to make sure that you can show what the specific Value Add means to that specific account, and then, to the extent possible, quantify it. I’ve seen many situations where a salesperson fails to do that.

Here’s a recent example: A salesperson for a technology company wanted to improve the overall value of their solution by adding some additional training for the operators. This was to be included in the proposal, as a bullet point under a heading of “Additional Value Adds”. The customer contact with final approval on the proposal, a fairly senior executive at the organisation, would have had very little idea what that meant, let alone the value of it to the organisation.

It turns out that this Value Add was about building new skills in the operators, beyond the skills required to operate the equipment (which were covered under "Training" elsewhere in the proposal). This would be of tremendous interest to the operator community, who view it as an opportunity to advance their skills, and to get involved in more interesting work within the company. If they had those skills, they could be more proactive about working with other parts of the organisation, and improve the workflow within the business. This could result in reduced administration effort, compressed development timelines, less rework, fewer errors, less frustration, etc. So clearly, this Value Add really could add value, but it was in danger of being sidelined.

To make sure that your Value Adds aren’t under-valued make sure you focus on three areas:

1.  1. Identify what the Value Add means. In the example above, there was the very real possibility that the Value Add would be confused with the training required to operate the equipment, thereby eliminating the additional value. Keep your explanations clear, concise and relevant, but if additional description is needed, make sure to include it.  

2.  2. Specify what it means to the specific individual(s) reviewing the offer. It is important to understand what your audience cares about. If the audience is the operators, discussing the opportunity to learn new skills and advance their career would have been extremely relevant. In this case, though, the audience is senior executives, and operators' career paths may be less compelling. We’ll need to translate the Value Add into business metrics that matter to management: improved efficiency, lowered costs, shortened development timelines, etc. Get the impact right for the right audience.

3.  3. Quantify the impact of the Value Add. It can be hard, but the better we are at quantifying the impact, the more compelling the Value Add will be. We could work with operators, and other departments, to possibly identify the savings from improved productivity, or reduction in waste. We might even model the impact of a decrease in employee turnover in the operator community. In this specific case, the salesperson was leveraging privileged relationships to get access to training that would cost thousands of dollars on the open market: another opportunity to quantify the impact!

Following these three steps can significantly improve the perceived value of your Value Adds, and improve your chances of success! Over time, you may even find that you require fewer Value Adds as you ability to show their impact improves...  

RFP processes: Becoming more open?

I’ve recently been writing quite a bit about business-to-business selling in the Post-GFC world, in other words, what has changed in sales since the advent of the economic issues that have plagued us since 2008. But some recent client work has reminded me of an important trend in B2B sales that is still occurring, though it may be obscured by a GFC-driven counter-trend.

For the sake of this discussion, let’s consider the situation where the sales organisation unexpectedly receives a Request for Proposal (RFP), or similar request to submit a proposed solution, from an account or potential account. The fact that the RFP is unexpected means that the selling organisation has not been working with the buyer to uncover and develop the need in this case. (Ideally, of course, a proactive and customer-centric salesforce would have been involved from the start, creating the opportunity and possibly even helping to craft an RFP, if an RFP is required. I’m sure I’ve written on that topic before! But we’re discussing the situation where we get the RFP later.)

In the 1980s and 90s, large organisations saw a huge increase in the number of purchasing decisions that were taken away from the business and given to a professional, formal sales process, often led by a purchasing or procurement group. The logic was clear: the company was more likely to get the best possible price in a competitive situation. Great steps were taken to remove possible bias, to ‘level the playing field’ among competitors. This generally meant that communication to the business during the sales process was cut-off. Any information would come from purchasing, and the conversation flow was uni-directional.

While this process was initially only applied to materials and product purchases, the late 1990s and 2000s saw this trend extend to purchases of services as well. Selling organisations, no matter what they were selling it seems, are now put through a controlled, formal selling process, without significant communication back to the purchasing organisation: proposals were to match against the specifics of the RFP and that was it.

This situation is obviously frustrating to a salesperson. Without access to those who will be using or interacting with the product or service, it can be hard to determine the right solution for the client. Companies that can have a major impact on their clients, but who might not fit the specific details of the request, can have a hard time communicating why they are, nonetheless, the right choice. And no organisation wants to be judged solely on price (well, perhaps one organisation per industry wants to be...). Sellers are forced into a formal, and somewhat blind, process of their own, trying to create a low-cost bid that ticks the right boxes. Or they discard the RFP.

Over the past couple of years, that trend has seemed to increase. Decisions that formerly were made by managers now are made by procurement. Decisions that used to be simple, are now made via a complicated formal process. The GFC’s focus on costs and cost savings has accelerated the above trend, and also has increased the number of third-party specialists in the purchasing process.

But there is another macro trend, operating in the background, one that began before the GFC. While many formal purchasing processes remain locked down and one-directional, we’ve noticed an increasing willingness of purchasers to engage in conversations, even after an RFP is released. A willingness to engage, that is, if the selling team makes the effort.

One of the key drivers in this effect is the buying organisation itself. After years of being told by suppliers that a blind tender process often results in a poor buying decision, many procurement organisations have recognised this fact themselves. The political pain they have felt from decisions that the rest of the business were not behind was certainly part of it. But, more importantly, many procurement organisations continue to become more engaged with the business itself. With more analysis into the past performance of previous purchases, the result is a buying organisation that is more interested in making the *right* decision, not just the cheapest one. So we’ve seen companies very interested in sitting down and discussing the RFP, the underlying need, and the key assumptions with suppliers. They don’t want to waste time, energy, and ultimately money, by making the wrong decision.

This is clearly a good trend for a consultative, customer-focused salesperson. But most salespeople have given up: once they receive an RFP, they immediately shift into Respond Mode, crank out a response at the lowest possible price, and sit back and wait. However, there is still plenty of room to be proactive, and to create value for the customer and the sales organisation.

One recent conversation (one of three or four that sparked writing this article) reminded me of the importance of being proactive in response to an RFP, and trying to initiate conversation. While trying to coach a salesperson towards the idea of going back to the issuer of the RFP to query some of the assumptions, the salesperson, “I suppose I could go and ask them if they would be open to discuss it, but 99 times out of 100, they will say no.”

I questioned his statistic, and asked how many times in recent memory he had done so. It turned out that he hadn’t for a couple of years. In this case, he went back to the customer, and, luckily, the customer was more than happy to open the discussion (I say luckily because, in this case, it makes for a much more interesting article). The discussions are ongoing, but he certainly stands a better chance of coming out ahead now.

For a sales team or manager, the action in response to this trend is quite simple: push back on RFPs that you receive. Ask questions. Request a meeting. Don’t *assume* that they will say no. The worst case scenario is they respond that the information required is in the RFP; you are no worse off than before you acted. Second worse is that any conversation that they have with you, or any answers that they give to your queries, also will be communicated to the other bidding parties. In this case, you’re still better off than before. And finally, the third worst-case scenario, is that the account engages with you, allows you to have a conversation about the issues and the needs, and you’re able to work effectively with the account.

Given the *cost* of pushing back on RFPs – almost zero – why not? Make it your company sales culture to do so, and you’ll be more likely to be successful.