Are you losing B2B sales because of the 'top-10 failures' in your 'Value Proposition'?

It's a damned pity to lose out right at the end of the sales process

It takes enormous time, effort and expense to get yourself on the shortlist for selection by clients for valuable projects and contracts. It's great if you are the winning bidder, but if you've just lost out at this final stage then you have burned a great deal of money for no avail.

If you're losing - what's going wrong?
The primary reasons for losing out are price (you're just too expensive), your sales process is weak or that at the end of the day your 'value proposition' to your clients is just too weak. If you are too expensive then you need to go out and do the hard work to get your cost structure down so that you can realistically compete. If you have a poorly structured sales process (or your sales people don't follow it) then you have a sales management issue to address.

A word of warning on 'cost plus' pricing

If you are using some sort of 'cost plus' basis for pricing then you are walking yourself into a bearpit. Unless you are selling a complete commodity which is available from multiple suppliers including yourself then you should avoid 'cost plus' pricing. There is little logical connection between the value of your service to a purchaser and the internal cost structure of your business. In a 'cost plus' situation its all too easy for internal costs to build up unchecked and the blame for lost revenues and unprofitable contracts is then misplaced onto the sales organisation 

Clients are not dumb – they will buy on price if your value proposition is weak
Procurement departments come in for a lot of criticism from sales organisations. But all they are doing is protecting the interests of their own organisation when its making important purchases. If your 'value proposition' is weak and/ or unconvincing - then it's straightforward for your client's procurement function to make the decision solely on price forcing you to discount heavily and/ or lose business to your competitors.

So your failures to win must relate to your Sales Process and Value Proposition
Assuming you have something of real value to offer clients and your cost structure and pricing strategies are competitive, then the root causes of failing to win profitable contracts are :

• You're unable to articulate added value that you bring
  
• Clients fail to accept your articulation of value
  
• Procurement structure bid comparisons on a ‘commodity’ basis
  

In terms of what needs fixing, this boils down to:

• Fixing a weak sales process
  
• Fixing a weak ‘value proposition’ and/ or supplying convincing evidence to substantiate the claimed ‘value proposition’
  

Fixing a broken 'sales process' deserves a detailed discussion elsewhere. So for today, let's just focus on assessing how robust your 'value proposition' is by examining it against the 'top-10' critical questions it must answer. 

How to diagnose whether you have a ‘value proposition’ issue
To get a useful assessment you could do a rapid 'desk research' job for yourself to get a first cut answer for yourself on whether your ‘value propositions’ stack up. It should only take you 5-10 minutes to analyse a specific business proposal using our Value Proposition diagnostic tool, so you can analyse a representative sample of proposals within 45-60 minutes.

To test how well your sales organisation makes propositions take a look at a sample of five current sales proposals and invite your lead sales person (and their manager) to sit down with you and evaluate each proposal opportunity against these ten questions:

1.Does the proposal demonstrate knowledge of the client’s business?
2.Does it summarise the agreed needs of the client?
3.Does it specify the objectives for making a change?
4.Does it explain how the proposed solution would meet their needs?
5.Does it describe clear and tangible benefits relevant to the expressed needs?
6.Does it provide a financial justification and/ or ROI calculation?
7. What proof/ evidence do you have to support the ROI calculation (and how convincing is it)?
8. Can your client coach who is supporting your bid articulate your 'value proposition' for themselves unaided by your assistance?

9. Can the ultimate decision maker who is making the buying decision for your contract articulate your 'value proposition'?

10. Is your 'value proposition' included as one of the key factors within the client's decision making criteria in their buying process?

Reviewing each proposal against this set of questions should only take around 10 minutes. If it is taking you a long time to be able to answer a specific question that should indicate to you that your proposal is unclear on the particular topic.

Completing your 'Value Proposition' diagnostic scorecard

All you need to do is complete a brief scorecard with the 10 questions and 3 columns (a column for YES, a column for NO and a column for UNSURE. Simply review each question and place a tick in the relevant column. If you don't get 10 ticks in the YES column, you know you need to work on. If you see a consistent pattern across all 5 proposals/ opportunities then you know you have an area of weakness that requires fixing and incorporating within your sales process.

If you want to download a 'Value Proposition' diagnostic template, then just go to:

http://www.closequarter.co.uk/ValuePropositionDiagnostic.pdf.

So what does a strong Value Proposition look like?

First of all your product or service must make a real tangible difference to key performance measures for your client. These should include key financial measures such as:

• Increased revenues
  
• Higher margins
  
• Reduced costs
  
• Increased customer retention
  
• Higher sales per square foot (in retail)
  

These are more convincing when backed by improvements to key operational metrics that drive the financial measures such as:

• Increased customer satisfaction
  
• Increased wallet share
  
• Increased basket value
  
• Higher operational efficiency
  
• Reduced employee turnover
• Increased employee productivity
• Reduced error rates

To make your Value Proposition more convincing you should have case studies and references from similar businesses who have achieved these results working with you in the past. Ideally you should be able to put your prospective clients in touch with existing clients directly so that they can hear at first hand what results you've been able to achieve. 

Compelling Value propositions translate into more business and profits for you

The final challenge is for your clients to be able to articulate the expected impact on their business for themselves. If the client believes passionately in your value proposition then you are in a very strong position to overcome your competitors and win the business.

Good luck in applying the diagnostic, I'm sure you will learn a great deal. And best wishes for the future in winning more contract bids. Happy hunting :-)

Regards John.

How can you sometimes be worst and still come out a winner?

How can you sometimes be worst and still come out a winner?
This week, I learned at first hand a few interesting insights into what makes a really great service – and for the business behind it this has translated into incredible success and profitable growth. The business concerned came from tiny humble beginnings to overtake dominant industry giants and transformed the lives of millions of people across Europe.

Is the best always the best?
So before I get started on my tale, maybe you might reflect on what counts as a great customer experience for you? Perhaps you dream of sipping champagne in the pool of a luxurious 5 star hotel? (For anyone who is addicted to luxury the hotels of Dubai set a hard standard to beat).

I guess for most of us, and for many businesses, we assume that it must entail the very best possible of each and every element of the service we’re consuming. But unless we’re willing to pay the ultimate 5 star price – then the businesses supplying the service are likely to lose a great deal of money.

When you absolutely, positively have to be there on time
Perhaps its time now to share my story. I received an invite on Tuesday to meet a potential client in Dublin the following morning. I was going out with a colleague over from Melbourne but due to fly back home to Australia on Wednesday evening.
There are a lot of airlines to choose from with an enormous difference in pricing. But who should one choose? In the past I’ve enjoyed flying with Aer Lingus who do a delicious Irish breakfast which you can even enjoy with champagne – mind you for the price you could buy a few bottles of champagne and an awful lot of sausages ;-)

It’s a long way to Australia if you miss your flight
We didn’t want to be late for the meeting and Ian didn’t want to miss his flight back home to Australia. So the choice of airline came down to who offered the most reliable on time service. This turned out to be RyanAir, my very first flight on Europe’s leading low-cost airline (sorry Stelios). In terms of price, they were less than half the cost of the normal airlines (despite the majority of the ticket price being taxes). The seats (for those who have never travelled Ryan Air) are basic – they make a London bus seem luxurious. They don’t even have seat backs so they don’t have to empty them when turning around the flight for the next group of passengers.

Let the folks know you’re a winner
Still, most important of all the flights there and back were spot on time. Just to emphasise this, as we landed a bugle sounded to announce another on time arrival each time. We met our hosts and returned home just when we needed to safe and sound – all in all a great day out. Of course, being a management consultant, I took out my note book to put down my thoughts and insights from my experience.

To win: FOCUS, FOCUS, FOCUS
RyanAir have focused on just 3 things in their business:
They keep everything incredibly simple so they can offer the lowest prices
They are number 1 on being on time (and they let you know it)
The planes are safe

In business terms, they have focused on leadership on the 2 decision factors that matter most and then made minimal investment in all the other factors. Investing in the other factors mean their competitors prices are 2 to 3 times higher. This has allowed them to grow from a tiny airline that flew only one route in 1985, flying a 14 seat Embraer turbo-prop, from Waterford to London Gatwick to carrying 42.5 million passengers in FY 2006/07.

And the so what from this tale for you in business and personally?
As a business, what is the most important factor for customers in your market? Are you the best? What would it take for you to be the best?

As an individual, if you want to succeed then you need to have an edge that is specific to you. The edge can mean winning a promotion or payrise, or winning the hearts of those that matter most to you. So on a personal level, what do you want to be known for? How good are you? What would it take for you to be even better?

Get an incredible bargain before anyone else does
Just to finish off on a personal note, we’ve always wanted to visit the beautiful Hanseatic cities in the Baltics. I thought I’d research the fares on RyanAir for a trip later this month – the flight costs were 1 Euro penny each way plus taxes. Log on now before all the seats are taken :-)

Regards John.