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Delivering a Value Proposition Is Not Enough--Companies Must Show Their Value Measurement
Organizations need to develop an analytical framework that enables them to input data specific to a prospect and generate customized analysis.
Posted Jul 5, 2004
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It is time to retire the term value proposition. Buyers these days don't say "please propose the value you intend to deliver." What they do say is "I can't even think about buying unless I see a clear ROI and a six-month payback period." Successful companies must evolve beyond value proposition and embrace value measurement. This involves more than just updating buzzwords. Business guru Tom Peters suggests, "If you don't measure it, you probably don't care." If this is true, then what are we saying to prospective customers when we pitch unmeasured, unquantified value propositions? What we are saying is "I don't care enough to measure how much I can impact your business." This is not the message you want to send to potential customers. Value measurement is the discipline of identifying, quantifying, and communicating to customers the business impact they can expect from your offering. Value measurement has two components: Customers Value measurement analytics starts and ends with the customer. It is crucial to speak with customers to understand the high-priority areas of their business your offering is most able to impact. Ask decision-makers and influencers, "What do you have to accomplish this year to be successful? What metrics are you tracking to measure that success?" This enables you to align the value of your offering with your customer's top initiatives, and provides the success metrics required to measure and communicate this value. Numbers Once it becomes clear what customers care about and how your offering can impact their business, it is time to generate numbers. Organizations need to develop an analytical framework that enables them to input data specific to a prospect and generate customized analysis. To be most effective value measurement analytics must represent reality as the prospect sees it, and help the prospect make an intelligent buying decision for their specific business. This explanation oversimplifies the process of developing value measurement capabilities. Many organizations struggle to implement value measurement, not only because it is tough to do, but also because it requires skills that sales and marketing teams typically do not have. While challenges exist, let there be no mistake about the benefits enjoyed by organizations that successfully deploy and embrace value measurement:
Improved customer relationships Customer loyalty and lifetime customer spending are directly correlated to perceived value. The better a company is able to prove delivered value, both during the sales process and beyond, the more valuable and loyal its customers will be. Increased sales effectiveness Measuring customer problems and solutions results in reduced sales cycles, increased success in getting meetings with decision-makers, improved close rates, larger deal sizes, and better qualification of sales leads. Value measurement elevates the skills of the entire sales force, enabling reps to identify and measure customer pain and communicate value. Increased marketing effectiveness Value measurement analytics fuel all marketing activities. It is simply more impactful to prove that you can increase a customer's revenue by 7 percent than to highlight the features of your product. Collateral becomes targeted and compelling, and the Web site and messaging become hard hitting. Companies that thrive will be those capable of identifying, quantifying, and communicating the value they deliver to their customers. The first step in doing so is to develop and implement value measurement processes and tools and use them to communicate with prospects and customers. About the Author Landon Johnson is founder and CEO of Talant, a marketing and sales effectiveness software and consulting company. He has an extensive background in corporate strategy development and management consulting in high-tech industries. Prior to creating Talant, Johnson was the director of business development for Step 9, where he established valuable partnerships to enhance sales channels and deployment capabilities. Prior to Step 9, he was a consultant with Booz, Allen & Hamilton. Johnson has an MBA from the University of Maryland and a BS in Engineering from Michigan State University. Contact his at landon.johnson@talant.com
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