Are you really adding value?

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 best chance of breaking away from relentless pricing pressure and a highly competitive sales environment.

Many have thrown enormous sums of money at trying to move up the solution value chain without successfully changing a sales culture that is still rooted in selling simple product offerings and lacks the experience or credibility to deal with the buying processes that are associated with evaluating complex solutions.

Value-added - or cost-added?

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 only serve to further depress the profitability of the organisation without actually moving the dial when it comes to sales win rates?

In my experience, most of these initiatives make no attempt to confirm that their 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.

It's what the prospect is prepared to pay for...

I propose the following test of value added: “that which a well-qualified 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 your prospect’s decision making 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.

Are your "value-added" efforts wasted?

Take a look at your sales and marketing actions?  Can you identify where and how they add value to your prospect's decision-making process?  And if not, how much more effective could your organisation be if you saved that money and effort or re-purposed it to a better cause?