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:

  1. Can I define value for the customer?
Easy question to ask but less easy to answer. Why? Because too often we have not defined exactly what the customer expects when it talks about value. We talk in terms of products and services - but products and services are not value. If you have this one right then you should be able to answer this next question:

- why specifically will the customer give me the business?

If this is tough then ask yourself:

  1. Can I present the situation from the customer’s point of view?
A very common issue is that the supplier is primarily focused on life from its own point of view. Now this is quite normal. Most of us have very subjective views of the world and the way it works and we see the same thing happening at the corporate level. The company has its own subjective view and it is unlikely that any one within the company will be challenging this view. The company managers often find it difficult to think like a customer or to see the world through the customer’s eyes. Too many suppliers consider their own situation, needs and objectives without involving the customer. They set sales goals without considering the customer. They use systems which benefit themselves rather than the customer. Customers are seen as organisations to sell to rather than partners to work with.
  1. Can I show that I have the right information and understanding?
Does the customer consider me to be a market expert? How do I know? How often is my opinion sought? Too many account managers struggle simply because they don’t not have enough of the right information. The supplier may not fully understand the market but most typically the supplier lacks depth information about the customer itself and in particular the customer’s objectives, plans, needs and concerns. As the result the account manager is not clear where value lies for the customer.

Why would that be? Often because the account manager is only talking to the buyer and the buyer is primarily focused on cost.

  1. Can I show how I will manage the competitive threat?
A very common issue is that the supplier is not properly assessing its direct and indirect competitors and in particular the threat they pose. When I talk about indirect competitors I mean those companies which do not directly compete against your products and services but do compete for the same resources – perhaps shelf space, budget or focus.

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 what…

So finally try this:

  • When my customer thinks about value – what exactly does he or she mean?
  • How exactly will I deliver it?
If you can answer those two and if the customer agrees then you are well on the way to long term success.