Value Added? It Depends on Who is Paying

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I’ve lost track of the number of companies who proclaim that they are embracing a “value-added” strategy in order to differentiate themselves in an increasingly commoditised market. They often see it as their way of breaking away from relentless pricing pressure and a highly competitive sales environment.

So why do so many of these “value-added” initiatives manifestly fail to deliver the hoped for results? And why in many – maybe the majority – of cases, do the initiatives turn out to be nothing more than “cost-added” strategies that further depress the profitability of the organisation without materially moving the dial when it comes to win rates?

In my experience, most of these initiatives make no meaningful attempt to confirm that the various so-called “value-added” activities have any meaningful value to the prospective customer, or are likely to positively influence their behaviour. In fact, all-too-often they reflect the misapplied imagination of a product marketing manager about what matters to customers they have spent all-too-little time trying to really understand.

I’ll propose the following test of value added: “that which a prospective customer proves by their behaviour they are willing to invest their time or money in, which materially advances their buying cycle, or increases the chances of them making a positive buying decision”. In other words, we shouldn’t be doing anything that a prospect isn’t prepared to pay for with their time or money.

Of course, there is a big problem implementing this thinking in an environment which is focused primarily around a vendor’s sales process. But when you turn the telescope around and look at matters from the perspective of the buying process, and what it takes to persuade the buying team to move forward from stage to stage, you can much more easily identify where the real value added lies … and where all the potential sources of wasted effort might sit.

6 COMMENTS

  1. “…we shouldn’t be doing anything that a prospect isn’t prepared to pay for with their time or money.”

    If the person is not prepared to pay for with his/her time or money, then that person isn’t even a prospect.

    When the person is classified as a prospect, it’s usually a result of effective STP or AIDA.

    Marketing suggests STP (Segmenting, Targeting, Positioning) before approaching the market. Once the target segment is defined, then the firm should roll out marketing activities (above-the-line and/or below-the-line) in order to AIDA (attract attention, create interest, develop desire, and lead to action).

    Daryl Choy, the founder of Touchpoint eXperience Management, helps firms make a difference at every touchpoint. Choy can be reached at wisdomboom.blogspot.com.

  2. Ahh … and therein lies an issue: in the absence of a clear common definition, jointly crafted between marketing and sales, of what characterises a “qualified prospect”, pipelines tend to contain a disturbing large percentage of junk. In all too many cases, qualification is an art, rather than a science. And that’s bad news.

    The acronyms you refer to you have their place – vendors would be foolish to waste their marketing money without first clearly identifying with their prospects, working out what’s really important to them, and understanding how they can move them from consideration to action.

    My observations – and the experience of my clients – indicate the much of the waste and delay in complex B2B sales stems from a failure to really understand the buying process, and to align marketing and sales resources around addressing the prospect’s buying teams changing priorities during the journey.

    Frameworks like AIDA clearly have value, but they have most impact when considered in the context of the buyer’s journey, and have the objective of systematically helping the buyer – once they have been qualified – to move from one key moment of truth to the next until they reach a positive buying decision.

    More at http://www.inflexion-point.com.

    Bob Apollo | Inflexion-Point
    Building Scalable Businesses

  3. Bob

    It’s all about the definition. Everyone tries to come up with his/her own definition in order to impress others, but the so-called new definition may not really help improve nor add value to the current situation.

    When alignment is absent, confusion arises.

    A prospect is a prospect.

    How many different definitions can anyone come up with this simple word?

    Daryl Choy, the founder of Touchpoint eXperience Management, helps firms make a difference at every touchpoint. Choy can be reached at wisdomboom.blogspot.com.

  4. Bob’s points are well taken. I work with many companies that have neatly confined their sales process to a single PowerPoint slide.

    What’s missing is the buying process “gear” that must mesh with the sales process gear. Some executives recognize that logical gap and address the problem. Many others don’t because they’re enamored with the process jargon they’ve invented and then push out to saucer-eyed salespeople. Sad thing–30% or more of those salespeople are doomed to fail for a variety of reasons, including the fact that their company envisioned its sales process as a single spinning wheel.

    The result: sales funnels that are enormous at the top (thousands of opportunities) with a pinhole-sized opening at the bottom where closed sales drip, drip, drip. This is real-world: it’s marketing failing to segment the universe of prospects into meaningful categories and investing hundred of thousands of dollars “reaching out” to them. Meanwhile, Sales struggles to close these poorly-qualified leads as they bleed out of the sales funnel.

    What’s inherent in the taper of the funnel is risk (compare the size of the opening at the top to the opening at the bottom). And within that risk is cesspool of issues that Bob describes–evidenced by win rates that are shrinking or stagnant. Some companies address that risk holistically, and attempt to change the taper of the funnel toward a utopic cylinder shape. Others never get it and simply flog the sales force harder for greater revenue achievement without improving processes–because that’s all management knows how to do.

    As for the question what constitutes a qualified prospect, the answer is all about risk. A blog I wrote in January on this site explains more: http://www.customerthink.com/blog/no_u_higher_education_qualification.

    Bob–thanks for a thought-provoking blog !

    –AR

  5. Great comments, Andrew! I love the “clapper without the bell” analogy

    The shape of the funnel is a big problem for many high-tech companies. All too often, it bulges towards the bottom. It’s far worse to loose at the end of the sales process than to qualify out intelligently at the start.

    One technique that I’ve used to great effect is an “opportunity quality assessment” which scores potential deals according to the closeness of fit – and then continues to rate the quality of the deal from stage to stage.

    Great salespeople do this instinctively – average sales people often need some help.

    All funnels leak, but if a deal is going to leak, its far better for it to leak early …

    Bob Apollo | Inflexion-Point
    Building Scalable Businesses

  6. Guys, I think we can see a mix of issues and can see that it depends on the product and at what stage an item or solution is along the development process and I see all falls down very early into defining and qualifying the opportunity and where it fits in the scheme of the market…

    Too many organisations push sales teams to fill their sales pipelines or nets with unqualified suspects and junk in the hope that they catch more fish for their set and budgeted efforts, rather than spend any time in the beginning to clean out the obvious dead wood.

    It is a world of quantity rather quality seems to be the order of the day for most of the largest businesses I know of with their sales and marketin processes in todays marketspace, whether it be online or in bricks and mortar business.

    Kissing hundreds of frogs looking for a single prince among the pond is no way to run through lists and spells death for a profitable business.

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