Value 101 in Sales

Value 101 in Sales

The phrase “value proposition” is often used in business. However, when you ask someone in sales or marketing what the phrase actually means, you will receive answers that vary greatly. While some answers are accurate, others are not. As a general rule, money is spent on products or services that customers perceive to be valuable (price, including the lowest price, is only one factor). Value means the customer has a real or perceived belief that the product or service is worth more than the money they are spending to purchase it. This belief is your value proposition.

For example, if you close an enterprise software contract for $100,000, the customer either believes that the software is worth more than $100,000 or they do not value their $100,000. If the customer does not believe the software is worth more than $100,000, they will invest their funds somewhere else. Generally, customers do not spend money for a product or service that they think is worth the same amount; e.g., $100,000 for $100,000. Again, customers buy products and services when they believe what they are getting is worth more than they are spending.

What can sales and marketing professionals do to enhance their value proposition? First, focus on the problem the customer is trying to solve. What is their primary business driver? Second, demonstrate how your product or service will solve the customer’s problem. What capabilities does the customer need and how does your product or service fulfill them? Third, demonstrate how your product or service is worth more than you are asking for it. How much money will your product or service make the customer or save the customer and by when?

Another term that is often used with value proposition is value-add. A value-add is a real or perceived benefit that differentiates your product or service from the competition and gives the buyer a logical reason to purchase it over other brands. A value-add generally increases sales without costing additional money. For example, after software is installed a value-add would be free onsite training and monthly training thereafter to ensure customer success. Give customers multiple reasons to buy from you based on the value and value-add or your products and services.

All contents copyright © 2013, Josh Lowry. All rights reserved.

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