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Value is in the Eye of the Beholder: the importance of translating your market offerings into customer value in your written proposals

Article published in the Institute of Sales and Marketing Management "Winning Edge"

Actually, it’s not just in the written proposal that value is important, it’s throughout the entire business development lifecycle. However, whilst value is often covered in sales methodologies, it’s easily forgotten in proposal development especially if the brief from the sales team to the proposal team is scant or non-existent. So, let’s think about what value is, why it’s so important and how you can express it.

 

What is value?

 

Simply put, value is the net result of a purchase. By “net result” I mean the difference between the investment you make - in terms of cost, time, effort, risk and emotion – and what you gain – in terms of tangible or intangible outcomes. As shown in Figure 1, the gain must outweigh the investment.

A tangible outcome can be measured in terms of a clear metric of some sort. In businesses, this will usually be related to improving a financial position, such as increasing revenue/profit or reducing costs, or decreasing risk, for  example  better legal compliance or stronger security. Ideally, these outcomes can be quantified by calculating an actual value like a cash or percentage gain. For consumers, a tangible outcome could be  measured  in the same way, especially when it comes to property and pensions.

An intangible outcome generally relates to feelings or emotions. It may be hard to quantify in metrics. In businesses, think about things like staff satisfaction and morale. For consumers, think about prestige, safety or even just sheer enjoyment.

 

Note, however, that intangible benefits do come with a word of caution. You may find that your direct customer – the business sponsor or user - will take the intangible benefits into account when considering their internal business case, only to have the financial director discount those intangibles when asked to approve the expenditure. Therefore, the stronger the tangible business case is in monetary terms, the better.

 

So, think of value as a business case showing Return on Investment. At the end of the day, no-one – business or consumer – buys anything without a reason. The key to value in the world of sales is to find the reason.

 

Building value

 

Let’s go back to some good old sales 101 theory. Remember “FAB” – Features, Advantages and Benefits? Features are simply facts about your product or service, such as colour, size, weight or other specification:

 

“Our survey system can be used for customer and employee satisfaction surveys and comes with over a thousand pre-defined questions.”

 

Advantages are outcomes that can arise as a result of the feature that may or may not be important to your customer:

 

“The pre-defined questions in our survey system will save you the time of formulating your own questions and are proven to effectively test key aspects of customer and employee satisfaction.”

 

A feature or advantage only becomes a benefit when it addresses a desire or requirement expressed by your customer. For example, a customer that has a long-standing manual survey system with well-established questions may simply want to automate the process and not be interested in pre-defined questions. A customer that has never had a system at all may see pre-defined questions as a benefit.

 

To build value, the first step is to uncover what’s important to your customer and then convert your features and advantages into benefits. The next step is to quantify the benefits.

A good way of determining when you have got to the bottom of the quantification element of the value equation is when you have passed the “so what” test. If you apply this test, you should be able to drill down to a hard metric. You may even distil intangible benefits into tangible ones.

 

Let’s imagine that your customer is showing interest in your survey system for employee satisfaction surveys and you are explaining that by taking action on the results of the survey you should be able to improve staff morale. So what? Staff will be less likely to leave. So what? Recruitment and training costs will go down. So what? You will save £x per annum, which is x% of your annual budget. With that, you have a solid business benefit.

 

On the other side of the value balance, you will also need to understand all the factors the customer will need to invest. As we said earlier, this may include cost, time, effort, risk and emotion. From the start of the business development lifecycle, learning about all these elements will set you in good stead for building the value case in your proposal.

 

Why is value important?

 

If the customer has built his or her own business case for Return on Investment, you may ask why you have to bother worrying about all this. There are two good reasons. First, in order to build confidence and trust in you as a supplier, you need to show your customer you understand their business. Second, you need to show your customer how your offering will satisfy their business need, ideally better than your competitors’ offerings. If you don’t show them, who will? If you leave it to the customer to calculate your value, they may miss something or do it wrong.

 

Here’s a story to illustrate the point. A major automotive company made the safest, most comfortable lorries in the world, but they were also the most expensive. A key customer needed to replace their lorry fleet and commented to the salesman that they were unlikely to choose the same lorries because they needed to save money. Hence, they would be looking for cheaper lorries this time round. The salesman organised research into lorry driver motivation and proved that the make of lorry was an important factor in keeping lorry drivers because they value safety and comfort. The salesman also did research on driver turnover and the cost of recruiting and training lorry drivers. He built up a case that, over a period of years, it would be cheaper to buy the expensive lorries because they would retain their drivers for longer and avoid high replacement costs and all the associated effort and disruption.

 

He won the business. If they had left the value calculation to the customer, he may have lost on price, which is an all too familiar story.

 

Value is specific, not generic

 

Value is in the eye of the beholder. Features and advantages are the stuff of marketing – communicating to the masses with ideas that might just appeal. Benefits and value are specific and for sales to handle. They fit with individual and company motivations and aspirations.

 

Learn about your customer’s business – what do they measure on their corporate dashboard and which of those measures relate to the offering you are hoping to supply? Learn about the individual members of your customer’s buying committee. What are they measured on as individuals and within their departments? And what do they care about personally?

 

If you can gradually build a picture of all these elements and demonstrate how and when your offering will deliver outcomes on all levels – personal, departmental and business, logical and emotional – you have all the ammunition to make a cracking value story in your proposal.  

 

How to express value

 

You should express value throughout your proposal if possible. I say “if possible” because sometimes your proposal will be structured in accordance with a customer’s prescriptive instructions and you may not be able to work value into certain sections or question responses. Whether you have the luxury of designing a fully branded proposal from cover to cover or you are constrained to a strict formula, you should still work out your value and include as much as you can.

 

As I said at the very beginning, value should be built up during the sales stage of the business development lifecycle and given to the proposal team to work into the final document as part of the win strategy – the overall compelling set of reasons for the customer to choose you. If this hasn’t happened, you will need to work with the sales team as early as possible to draw out the value story.

 

Once you have worked out the value story and the structure of your proposal, you must then determine which elements of value you can include in which sections. You may have defined financial, operational and human components of value that you can bring into corresponding commercial, solution and people sections. You should aim to create a high level concluding value statement for your executive summary. You may also include a very detailed breakdown of a Return on Investment model in a key section or as an appendix.

 

You can express value in words and/or graphics (visual representations). When creating written value statement, include payback (quantified outcome), investment and timescale and, of course, the solution:

 

“ABC Company will save £90,000 per annum on current £200,000 recruitment and training costs within 2 years by implementing XYZ’s employee satisfaction survey system for an annual investment of £10,000”. 

Whilst the best value statements are definitive, you may not be able to guarantee such results, so you may wish to soften the “will” to “could”, or preface with wording such as: “Based on average results from our customers over 5 years…"

 

As written statements can become quite complex, by far the best way to express value is in a graphic. For example, a graph, as illustrated in Figure 2

 

Value makes a difference

 

To conclude, by working out your value story and building value statements into your proposal, you will show your customers that you understand them and their business. You can set yourself apart from your competitors by doing this. You will be seen as credible and helpful. This will inspire confidence.

And for those of you who bemoan the fact that your customers, especially your procurement customers, only care about price, that may be true for commodity products, but when buying a complex business solution value definitely matters.

 

Contact i4 for a .pdf version of this article: sarah@i4salesperformance.co.uk

The Government Commitment to SMEs

The UK government aspires to procure 33% of its goods and services from small and medium-sized enterprises (SMEs). 

Sounds good, but it can be daunting for those new to public sector bidding, who do not understand procurement rules and fear the red tape. 

If you need help, contact sarah@i4salesperformance.co.uk

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