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Understand What Customers Value

When I say that sales leaders should deliver high-value solutions to customers, what do I mean? While it might be intuitively obvious, let's not leave this distinction to chance.

Value is what the customer determines it to be compared with available alternatives. It can be objective, subjective, or both. Objective measurements of value can be developed from cost savings or from revenue or profit increases. Determining exact amounts, even in these specific areas, can be difficult because relationships between revenue or profit increases and particular causes can be indistinct. And this process requires running tests, which aren't always practical. Absent exact amounts, estimates are better than no data.

What about subjective measurements of value? How much does the customer value the guarantee, for example? Or an extra level of service that you deliver? Or exclusivity? How does the customer prioritize or rate these?

If you can measure the value that customers derive from the products or services you sell, then you can reinforce the benefits of the particular products or services you sold them and gain insights that you can use to better sell high-value solutions to other customers.

Once you make a sale, if you reinforce the value of what you sold to the customer, you get three benefits. First, you increase the chances of retaining the customer and establish credibility with the customer that will likely generate repeat sales. Second, you find other areas in which you can help the customer. Third, you will be better able to find and sell to other customers who are looking for similar value.

In an article in the November-December 1998 issue of Harvard Business Review, James C. Anderson and James A. Narus advised that understanding what customers value is the most effective way to deliver the greatest possible value to customers. They suggest that an offering has two elements: its price and its value. Raising the price doesn't change the value. It changes the customer's incentive to purchase. Suppliers can demonstrate value by providing a case study to the customer after the solution has been implemented, relating the value realized to the solution proposed. Then they can draw on these case studies when making proposals to new customers. Knowing how customers value the elements of the product or service will also allow you to eliminate value "drains," as Anderson and Narus call them—services that cost you more to provide than they are worth to the customer.

For example, in a restaurant, most people want their server to pay attention to them without annoying them. Achieving the right balance is key, and eliminating some degree of communication would work to the server's advantage. The customer is the best one to tell you how often and in what form he or she prefers communication.


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