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Value-Added Selling

Is it the correct go-to-market strategy for your company?

Today’s sales and marketing executives, along with business owners, face unparalleled challenges. They are staring into the abyss of a domestic economy that is reeling from the effects of the worst recession since the Great Depression, relentless global competition that seems hell-bent on selling cheaper goods, the commoditization of products and services, ongoing pressure to fully leverage all of their resources, and customers that demand more for less.

The strategic forces that challenge today’s sales and marketing executives are reflected in the tactical responses from their salespeople:

  • According to a study in Sales and Marketing Management magazine, two-thirds of sales managers claim that selling value is the most perplexing problem facing salespeople today.
  • Several studies have shown that more than half of all salespeople rely on price as their primary selling strategy.
  • Two independent studies reported that more than half of all salespeople fail to differentiate their solution from the competition.

These trends and tactical re-sponses have sales and marketing executives second-guessing their go-to-market strategies: Which is the best channel for us—direct or distribution? Should we innovate or imitate? Should we compete on all that we offer or adopt a low-price strategy? Can we even compete with a value-added strategy?

The value-added go-to-market strategy is one of several ways companies compete in an industry. This presumes that the value-added philosophy is firmly entrenched in the organizational culture: Do more of that which adds value and less of that which adds little or no value. This philosophy challenges its proponents with tough questions: Do we really add value? How do we know? How do we measure it? Whose notion of value—ours or the customer’s—do we sell? Can we be compensated equitably for this value? Is our value unique? How well do we communicate our value in our customer messaging?

Will You Commit to Engagement?
To do more of something implies action. A company cannot engage if its culture is passive or static. It cannot reach up if it is stuck in a comfort zone. A company cannot rest on its laurels and live the value-added philosophy. The value-added philosophy represents a dynamic and expansive flow of energy. Companies operate either in expansion or contraction mode. In expansion mode, they are growing, evolving and emerging. Their energy and efforts are on the offensive. When contracting, they are cutting back, retreating and playing not to lose. Their energy and efforts are on the defensive.

Will You Commit to Excellence?
A passion for excellence reveals itself in the positive addiction to doing all things well. Value-added companies make habitual what others consider a hassle. Committing to excellence means challenging the status quo: Does this policy, procedure or process really add value to what we do? Excellence demands the best from people: Is this the best and the most we can do with the resources we have available to us, or can we reach higher? This maximum performance commitment leaves no doubt about potential. A commitment to excellence and relentless curiosity about potential drive companies to demand more from their employees. A company cannot get better unless it first admits it can get better. Contrast this to the organizational arrogance that offends so many customers.

Will You Commit to Effectiveness?
Effectiveness is pursuing the right things. This power of discernment—knowing what to do and, more important, what not to do—guides the efforts of those who pursue a value-added path. Effectiveness commands disciplined effort. It means locking in on high-value priorities and locking out distractions along the way. This economy of effort ensures no wasted energy on low-value activities. These value-added proponents invest their resources in areas that create value for them. At the field level, this means salespeople chase the right business—business that will give them the return they seek from their efforts.

Will You Commit to Equity?
Value is in the eye of the beholder. Value is the outcome of one’s efforts and energy. It is the return on investment. Value is generally expressed as a ratio of outcome to input. When someone gets as good as he or she gives, it is a good value. Something acquired cheaply is not value if it produces nothing meaningful for the person who acquires it. In fact, the lack of return makes it a terrible value. Value implies equity. Is there an equitable exchange for the time, energy and resources someone sacrifices to acquire something else? When two people are involved in the exchange, equity demands a win-win outcome. Both must benefit in measure to what they give. If one sacrifices and the other gains, it is not win-win. One winner implies one loser. Nothing is gained from a relationship based on loss.

Those who are willing to engage actively, commit to excellence in all that they do and work effectively on equitable outcomes find that the value-added philosophy is right for them.

The Value-Added Selling Strategy
A company that chooses to compete on its added value must have a selling strategy that is a natural extension of its operating philosophy; otherwise, a cultural dissonance confuses customers and frustrates salespeople. Value-added selling is a strategic response to the market forces that demand more and more for less and less.

Value-added selling is a philosophy of doing business. It is proactively seeking ways to enhance, augment or enlarge one’s solution—the three dimensions of value—to meet the dynamic needs of the customer. It is contributing maximum value to and extracting value from customer relationships. It is selling to the customer’s needs, not necessarily against the competition. It is promising a lot and delivering more. It is achieving a win-win outcome by pursuing equitable relationships.

Because value-added selling is a proactive philosophy, salespeople do not wait for customers to reject the salesperson’s price or for the competition to imitate one’s solution to begin the selling process. Value-added salespeople constantly strive to create more value for their customers. They seek ways to enhance their value proposition with innovation and streamlining.

Value-added salespeople sell more than a naked product. They provide three-dimensional solutions to satisfy the customer’s needs. This includes the product, the company and the salesperson. The same product from the same company from two different salespeople is two different solutions. In our study of top-achieving salespeople, we discovered how customers weigh each of these three variables. We asked buyers, “How much of your buying is based on the product, the company and the salesperson?” They said 57 percent of the buying decision is because of the product, 18 percent is because of the company and 25 percent is because of the salesperson.

Four Components of
Value-Added Selling

Engagement
Excellence
Effectiveness
Equity

Value-added selling is a process, not an event. Because it flows naturally from a culture of growth and development, value-added selling is a blend of two dynamic forces—offensive and defensive selling. Offensive selling is the pursuit and acquisition of new business; defensive selling is the retention and growth of existing business. To execute the value-added selling strategy, salespeople must:

  • Focus strategically by identifying high-value target accounts, fully penetrating these accounts (from the shop floor to the top floor) and thoroughly understanding the buyer’s needs.
  • Persuade buyers with positioning, differentiating and presenting compelling reasons for why the buyer should choose the salesperson’s total value.
  • Support customers by making it painless for the customer to buy and by building personal and professional relationships with customers.
  • Sell deeper after the initial sale by seeking ways to re-create value, getting credit for their value-added and fully leveraging existing customer relationships.

When salespeople embrace the value-added selling philosophy, adopt its attitudes and execute its strategies and tactics, they compete aggressively and profitably in their markets.

The value-added strategy is right for some companies. Companies that have meaningful added value to offer and who want to compete based on how effectively they execute for customers can wield significant competitive advantage with this strategy. Value-added selling uniquely integrates sales and operations in a go-to-market strategy. The sales force may sell the first experience with the customer, but it is the total experience with a supplier that brings customers back.

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CONVENTION SPEAKER
Tom Reilly

Meet the Author
Tom Reilly is a sales coach, author and speaker located in Chesterfield, Missouri, and on the Web at www.TomReillyTraining.com.

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