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...  

Fear of Discussing Price

"Just don't mention price. I did it once, but I think I got away with it." - a paraphrasing of Basil Fawlty.

I have been working lately with a few sales teams where the topic of discussing pricing during the sales process has come up. Or rather, the strong desire to avoid discussing price until the very last minute has come up. These teams have pushed back strongly against the idea of introducing pricing – in any format – into the conversation until the customer absolutely demands it.

And, I believe, their sales are suffering because of it.

In a customer-centric sales approach – where we consider what is going on inside the customer’s mind and their needs, not just our own sales process and goals – it is important to recognise that any buying decision is a complex and multi-phased decision. Successfully giving the customer what they need at that point will help advance the sale. But customers’ needs vary at each stage.

In the initial phase, when the client and the supplier (you) may still be working out what a solution might look like, or what the problem really is, the client organisation needs to become convinced that there is a big enough reason to change. The reason might be lost sales, operational inefficiency, poor quality, etc.

(For those of you who follow Imparta’s Creating Client Value approach, you’ll know I’m talking about clients in the Awareness of Needs phase.)

Once key people are onboard with the need to change, there generally needs to be an approval from someone higher in the client organisation, a Centre of Power, for the idea to move ahead. This does not mean that the supplier might be awarded the deal! At this point, the client is merely saying, ‘Yes, this is a big enough opportunity that it makes sense for my team to spend time and energy looking into it, to pick the right supplier and the right approach.‘

As we’ve discussed in previous postings, decisions are being pushed higher and higher in the organisation. But many sales organisations are not recognising this key fact, and their proposals at this point focus on technical specifications, company capability and generic suggestions of business impact. Fees and implementation costs are left out of the discussion; they fear that they will get locked into that price, even as the solution evolves with continuing discussions.

And that’s where these sales organisations lose out.

Clients at this point, in order to make a commitment to moving ahead, need to see clear business logic – a Value Proposal in our parlance. Again, let’s remember that this decision is being made by a more and more senior audience, so their interest in the details of the solution is likely to be much less than the overall impact on the business performance. So a successful salesperson needs to be able to talk about – and show quantified examples of – the business impact. Consider the strategic impacts – sales growth, improved customer retention, etc – as well as more tactical issues such as productivity savings.

This impact, though, MUST be coupled with the costs to get that impact. If you’re saying that your solution can help create $5 million in additional sales, it absolutely matters to the client whether it will cost them $4 million to get that impact or $1 million. And the costs should be complete – if there are implementation costs associated with the solution, then include them. Consider the impact of leaving these additional costs out: eventually your client will realise that they exist, and if you haven’t revealed them your trustability quotient is likely to be hampered.

Senior audiences expect to see Impact and Costs to be able to assess the total Value they’ll be seeing. Doing so will increase the speed of your sales process, and increase the likelihood that an account will commit to the idea and move ahead in their buying process. Lots of our accounts (before we start working with them J) have genuine opportunities that have fallen dormant because of their inability to present this simple Value = Impact minus Costs argument effectively.

I am NOT suggesting that a consultative sales person should pull out a price sheet early and often. The key point here is that price can’t be ignored, but the key corollary is that price must always be discussed with a senior audience in the context of impact. Price on its own shifts the conversation to discounts. When paired with knowledge of how your solution will impact their business, it can become a discussion of how to move forward!  

So, review your opportunities and consider which ones are at this point: key people within the business support your idea or solution, but you can’t get their boss – or their boss’s boss – to buy in. Make sure that the costs are all in there, and that you can show true Value, and you just might move it along!