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Close Those Deals With Value Sharing

Written by: Steven Reeves

Article Overview: Most people are finding it just that bit harder to sell business services in today’s tough markets? Not because of competition - but because customers are holding off writing deals. What can we do to get them moving?

Close Those Deals With Value Sharing

Most people are finding it just that bit harder to sell business services in today’s tough markets?

Not because of competition - but because customers are holding off writing deals.

What can we do to get them moving?

In our business we’re turning down offers from people, not because we don’t need their stuff. Because we need our cash more! And our guess is the majority of businesses feel the same way.

Cash is King. Money’s tight for everybody, and businesses are pessimistic about just when things are going to improve.

So is there a strategy that unlocks the customer’s check book?

We think so. It’ll be a fundamental of business strategy in the future. Maybe now is a good time to get our brains around the idea and start structuring business models to fit.

And that strategy is? - “value sharing”!

“Value sharing” works both ways, on the upside as well as the downside.

It works for the customer, because his/her risk is mitigated. If the project doesn’t pay off the supplier has “skin” in the deal. Failure means both parties share the pain.

It works for the vendor, because when the project pays off there’s a bonus related to the value created.

The customer goes along with the idea when his primary motivation is avoiding risk. The vendor goes along when the fee rates don’t properly reward the contribution.

For some services providers selling value sharing can be a bitter pill to swallow. After all they just want their day rates. But what happens when the customer needs the service, and will build value with it, but won’t sign on the dotted line? Everybody loses, in this case.

Doing a value sharing deal unlocks the check book, albeit maybe for a smaller fee, and opens the opportunity for much bigger upside.

But there’s a much bigger win here.

Once they’ve figured a way to value share the parties aren”t customer and supplier anymore. They’re partners, with a common interest in making it work. And the further upside for the services provider is the customer won’t even think about working with anybody else on the next deal.

“Value sharing” unlocks deals, increases revenue and margins, and locks in customers.

Finally, don’t take my word for this - go look at the success of the Business Process Outsourcing industry. Those guys figured out, a long time ago, that mitigating the customer’s risk enabled higher rewards for the supplier.

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Article Tags: bitter pill, bonus, brains, business models, business services, business strategy, cash is king, downside, failure, good time, guess, king money, motivation, project doesn, risk, rsquo, services providers, sign on the dotted line



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