How and Why Your Value Proposition Is Valueless
Whether you call it value-based selling, feature and benefit selling, or value proposition selling, this sales methodology has severe limitations. This classic form of selling that has served companies so well in the past, no longer works. Companies that have long relied on this methodology to differentiate themselves from their competition to translate their value, maintain their margins, and prevent commoditization are now finding that it is backfiring. The commoditization--the very thing they work so hard to prevent--is what they are creating.
Here's a good example of how this plays out: Imagine that you are meeting a prospect for the first time. He asks you, after you've done your proverbial chit chat, to describe what you do, what you sell, what makes you different, and why he should buy from you. Specifically, what would be five things that you'd want to tell him about your company that would leave him with a favorable impression of your capabilities? More than likely you would include:
To take this example one step further, let's imagine that you no longer work for that company. You have landed a plum job with your biggest and strongest competitor. You have a better compensation package, you're on a fast track for management, and you now get two weeks of vacation. Life is good. You're excited to prove yourself. You have your former territory and you now go back to your former contacts.
We'll use the same company and contact from the first part of this example. Your former client is glad to see you. He congratulates you on your new position and begins to ask you about your new company and its capabilities. What can you do to help him? What makes you different? Why should he buy from you? What are five things that you would now want to tell this prospect that will leave him with a favorable impression of your new company? He may prompt you by asking, "Do you know, one of the things we really appreciated and valued about XYZ Co. was their fine quality?" "Do you have good quality?" Your response is, "You bet, it's one of the reasons I moved over to ABC Co." "What about service?" he asks. You tout your company's deep commitment to service and pull out the mission statement to drive your point home. "And how about reliability, expertise, and value?" You pull out all the latest industry reports that rate your company number one in its field for reliability, expertise, and value.
In all your excitement to create this truly unique value proposition, what you really have created is a definitive and complete denigration of your value-add. You rehearse chapter and verse the exact value proposition your competitors tout. Because you've jumped the gun, you have left the prospect with one differentiator, but unfortunately it is the same differentiator by which he will now measure all competitors. You guessed it--price. You are now back problem: You have created commoditization.
Not only have salespeople commoditized their companies' value proposition, they have also commoditized themselves. They look and sound like everyone else, and that is why it is so difficult for them to get new accounts, to get high-level meetings, and to have customers respect their time. And why should they since they don't bring any true value to the table? Because we are in an information economy, customers no longer rely on salespeople for the traditional information they used to value. In today's world this information is instantly available on the Internet and customers are generally more savvy and better informed than they were in the past. To counteract this scenario, companies feverishly bring out new products, add new bells and whistles, get ISO certified, or become 6-sigma only to find out a product is eclipsed and copied within a few months, a few weeks, a few days, or a few hours.
From where the buyer sits, all salespeople and products look frighteningly similar. So, long as we rely on our dog and pony shows, we are setting ourselves up to get the hook. But, prospects are now resistant to your value pitch.
What is the answer? Nothing less than a total retooling of your message and the way in which you approach the marketplace. First, companies must stop believing that they have cornered on the market on quality, reliability, expertise, and value. These characteristics only get you invited to the dance. Why spend time touting a value proposition that ends up being the great equalizer or just a point of parity?
Sales are won and lost in the salesperson's understanding of the value gap that your customer is experiencing. Your job is to get information, not give it. The salesperson who can define the problem most effectively by asking questions that get the customer to talk about the value gap is the salesperson who will consistently outperform the salesperson with the best solutions. You are therefore paid and rewarded for your questions, not your answers.
Your job is to give the prospect the freedom to self-discover his problems, his consequences, his priorities, and his willingness to act upon them. At the same time, you must assess the likelihood of change and balance it with your own investment cost of acquisition. Your job is to be a change agent: someone who takes a nonselling posture to help his customer understand the cost of change.
It becomes more important for your prospect to actually sell himself and, at a more advanced level, to sell you on his motive to buy from you. This is where sales becomes fun. All the traditional pressure is off you and is transferred to the client. The burden of proof lies with the client.
However, if the prospect is resistant to share information about his company's value gap, here are some questions to get him to open up:
You have been using XYZ for two years and you are happy with your service, so, can you help me understand why you want to consider changing?
Since price is your only motive to change, and we are never the lowest, do you still want us to provide you with a quote?
I'm not sure if we can help you specifically or if we are a good fit for your
company. Is it okay if we ask each other some questions and at the end of
our meeting determine if it makes sense for us to proceed? And if it doesn't, would you be comfortable telling me, so that I don't waste any more of your time?
Follow up with additional qualifying questions:
How long has it been a problem?
What have you done to fix it?
In relationship to other important initiatives, how does this stack up against them?
What is at stake for the company?
With or without us, how committed are you to making a change?
To make this change-agent sales methodology work for you, you must transition from a feature and benefit seller to a strategic seller. The objective of your sales call will now be to ask probing questions to understand your customer's value gap, get the customer to open up and disclose why he might consider changing, and, through skillful questioning, have the customer convince you that he has a problem that he needs you to solve. Your role as a change agent is to transition from telling and selling to helping customers identify their problems and better understand their consequences.
About the Author
Rick Farrell is vice president of Selling Dynamics, a national sales and development training company. He can be reached at email@example.com and at 781-404-7915.
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