Recently I touched on the importance of differentiating between your company’s value assertion and its value proposition in business development. Simply put, your assertion is your message to market, one you use to define your company’s value to customers, partners and vendors. In essence, it is your main selling point and it works within the parameters of your company’s operational, sales and customer service capabilities. Your proposition is when your company must go outside its assertion and provide what amounts to a tailor-made solution, one specifically matched to the needs and unique requirements of that all-important customer. We’ll define five essential criteria for success with respect to how your company ensures that its unique offer is universally accepted by your customer.
A Customer’s Unique Requirements
When confronted with a customer’s unique requirements, ones that go beyond your company’s standard operational capabilities, and ones that require you to tweak your service offering, start by defining that customer's specific needs and the value of the business you are pursuing. Going outside your value assertion means that you’ll provide concessions that amount to a service upgrade, an upgrade you likely wouldn’t provide to existing customers. Your willingness to pursue this course of action should immediately signify just how important this particular customer is.
This importance can be measured by the value of their business, or that customer’s strategic importance to your enterprise. Either way, you must define the reason your company is willing to go outside its immediate comfort zone and provide what amounts to a service upgrade. Moving from a value assertion to a value proposition implies that your company must be able to define the value of your unique offer. Therefore, here are the five critical steps to providing a value proposition both you and your customer clearly understand.
The above video is from the post: Your Value Chain Defines Your Value Assertion: B2B Marketing Essentials
1. Define Customer Needs: Focus on identifying why this particular customer requires what would be considered a custom solution. For instance, do they require you to include delivery as a service? Do they require you to manufacture a custom-made or build-to-order product offering? Are they looking to reduce their inventory holding costs through a contractual agreement on supply? It is up to your company to define exactly what the customer needs. While this may seem rather simple and straightforward, it rarely is. The purpose isn’t just to know what these requirements are, but to outline them in such a way as to define what your company is willing to offer this customer.
2. Define Costs of Service Upgrade: It’s essential that you define the costs of the service upgrade. For instance, if your company includes delivery as a value-added service, then how will this affect your gross profit on sales? Conversely, if you move forward with a contractual supply agreement, then how will you cover your own company’s costs of inventory? You must define the costs of providing that service upgrade and its impact on your gross profit on sales.
The above video is from: Supply Chain Management: Running a Better Supply Agreement
3. Define Benefits of Service Upgrade: How will your customer benefit from the concessions your company is willing to grant as part of its value proposition? The second step involves defining the costs of providing additional services. This third step involves defining how your customer will benefit from what you're willing to concede. How much will they save if you include a delivered price to their facility? How much will the customer save in terms of inventory holding costs for every week and month you hold inventory for them? Each of these are examples of how your customer will save money through your tailor-made offer. You must clearly define these benefits.
4. Define Conditions for Concessions: As you move through this process, there are bound to be instances where your company is unable or unwilling to provide certain service upgrades. It may simply be that some of what your customer is asking for is too expensive. In this case, you must define the conditions under which you will grant a concession for a concession. Negotiation in B2B sales is ultimately about matching one of your concessions for a customer’s concession. In this fourth step, be sure to outline what you are willing to offer in return for something you'll ask from your customer.
The above video provides some tips on B2B negotiation. It is from the post: Improve Sales Training & Negotiation Skills with Role Playing
5. Present Value Proposition: Presenting your offer could be something as elaborate as a presentation, or nothing more than a discussion over the phone. Either way, you must use the information gathered through the first four steps to define what your company is willing to offer and the costs of the upgrade you’re providing. Outlining the value of your offer allows you to accentuate the savings to your customer, while setting the stage for asking for a concession in return. Don’t allow your customer to make assumptions about your offer or its value to them. Define that value and dollarize its impacts for your customer. This will speak to how much your company is offering in order to secure their business.
When venturing outside your company’s standard service offering, be willing to define your company’s unique value proposition. While your value assertion may be widely accepted among your existing customer base, your value proposition should be focused on addressing a customer’s unique service requirements. If you find that this particular customer is trying to dictate terms by using their volumes against your enterprise, then pursue those volumes. Use that against your customer. A number of enterprises believe they can intimidate their vendors by exerting control over the offer. However, the final decision on whether to proceed rests entirely with your enterprise.
No matter how important your customer may believe their business is to your enterprise, it is ultimately up to you to decide whether you want to pursue that business. That position is powerful, so use it to your advantage.
To read about those aforementioned inventory holding costs, please read: Sample Inventory Costing Excel Sheet: Graph & Pie-Chart of Expenditures
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