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Value Over Price Preserves Profitability

Written by: Mike LeMaster

Article Overview: One way to add value inside of this business equation is to buy a customer's business by offering the lowest Price. You already know that may get you a short-term sell at the expense of short-term and long-term profitability. But, there are more profitable ways to create Perceived Buyer Value, beyond under-cutting your competitor's price.

Value Over Price Preserves Profitability

The Equation: Perceived Buyer Value = Perceived Buyer Benefits over Price

One way to add value inside of this business equation is to buy a customer's business by offering the lowest Price. You already know that may get you a short-term sell at the expense of short-term and long-term profitability. But, there are more profitable ways to create Perceived Buyer Value, beyond under-cutting your competitor's price.

Improve the Perceived Buyer Benefits. To do this, you need to understand the aspects of your business that impact the buyer's perception of value. Adding significant value to your customers and to your organization will maximize the Perceived Buyer Benefits.

Two key areas of your business are your sales processes and sales interactions. Take a look at both of these areas and see how you can boost your value proposition and your profitability.

Sales Processes - We define sales processes as the multiple aspects of your "selling engine" that are institutional to your organization, such as:

· Comprehensive needs assessment
· Design
· Quotes
· Proposals
· Customer relationship management program
· Pipeline management program
· Solution implementation

These are processes that can be automated or standardized, and part of an integrated approach to drive higher levels of efficiency. And, it is the efficiency of these business functions that will add significant value to the numerator Perceived Buyer Benefits. Conversely, faulty or out-dated sales systems can create tremendous Price pressure due to the diminished Perceived Buyer Benefits.

Sales Interactions - Any time you directly engage your customer or prospect in communication (verbal or written) you are having an interaction. Some refer to these interactions as customer touch points.

Sales meetings, presentations, negotiation and follow-up communication have a tremendous impact on a customer's or prospect's perception of value. The effectiveness of these interactions will add significant value to the numerator Perceived Buyer Benefits, so you don't have to win business by offering the lowest price!

Once you take steps to improve the efficiency of your sales processes and the effectiveness of your sales interactions, you will improve the Perceived Buyer Value.

Perceived Buyer Benefits generate higher levels of Perceived Buyer Value, which in turn results in your company winning highly profitable business. Value over Price Preserves Profitability!

To preserve your margins, institute the right sales processes and sales interactions to profitably win highly complex and competitive business.

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Article Tags: assessment design, business equation, business functions, buyer benefits, competitor, customer relationship management, customer touch points, key areas, management program, needs assessment, negotiation, numerator, perception, pipeline management, program solution, sales meetings, sales processes, solution implementation, term profitability, value proposition



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