By Richard Ilsley, Managing Partner for the Key Account Management Group
Every supplier, every sales person, every Account Manager claims to offer the customer value. But value is one of those things which we all talk about but sometimes struggle to define.
So let’s start with a question – Do you provide your customer with value?
I’ve asked this question to sales managers many times and I’ve found that most of us will almost instinctively respond with yes – of course we deliver value – that is why the customer buys from us. But here is the problem – when I ask those same customers – Do your current suppliers provide added value to you? Well I get a different view.
As an extreme example, during a recent industry sector survey we found that less than one quarter of customers viewed their primary suppliers as delivering added value. Notice these are the primary suppliers - not suppliers in general.
So the supplier thinks it is adding value yet the customer more times than not disagrees. Is that a problem? Well yes it is because we can also see that those suppliers which are seen as providing added value also enjoy much better commercial returns from those customers – higher share, margin and longevity of relationship.
How do you know if you are delivering value? When you think you have lost business due to price. Why? Because either you are offering things the customer does not value (so will not pay for) or you look just like your competitors and so price has become the only differentiator for the customer.
Here are four test questions to ask yourself:
- Can I define value for the customer?
- why specifically will the customer give me the business?
If this is tough then ask yourself:
- Can I present the situation from the customer’s point of view?
- Can I show that I have the right information and understanding?
Why would that be? Often because the account manager is only talking to the buyer and the buyer is primarily focused on cost.
- Can I show how I will manage the competitive threat?
If we are not aware of the likely competitive activity and most importantly its impact upon our customer then we will not know how to exploit the competitive weaknesses or defend against their strengths and probable moves.
So finally try this:
- When my customer thinks about value – what exactly does he or she mean?
- How exactly will I deliver it?