Something to prove

Entrepreneur, March, 1999 by Ron Karr

Are you giving customers something your competitors can't? Pushing your extra value could put you on top.

We live in a world in which technological or product innovations can vanish in a heartbeat. Differentiation from the competition in today's marketplace doesn't happen solely by means of advanced products and services. In the computer industry not so many years ago, if you came up with a huge technological advance, you had a marketing advantage for, say, 18 months. Now, most high-tech players realize they have only a few weeks or months (sometimes days!) to rely on a technological advance. Before long, someone else is offering essentially the same product or service.

When prospects and customers perceive competing products and services as roughly equal in value, entrepreneurs face a challenge. How can they differentiate themselves and add the value that will clinch the sale?

The magic lies in learning which element is of greatest importance to given prospects and customers - which of your strengths you should emphasize or de-emphasize. You must then focus with intensity on your company's strengths in each of the appropriate value areas. Send the message that you can increase profits, increase productivity, reduce costs, and/or increase competitive advantage for your prospect.

How can you deliver on one or more of those objectives? Let's look at six value areas in detail, with an eye toward how you can deliver a better value proposition than your competition.

INFORMATION

This value area has to do with the experts in your organization and industry whom you can bring to bear in helping your prospects address critical problems.

It may sound strange, but it's true: Salespeople often give customers too much credit. We assume they are deeply educated in their industries; we underestimate our own important role in bringing critical information to the customers' attention.

Your contacts want solutions; they're looking for information, not just invoices. So stop fixating on products and services! Make a list of all the intellectual resources your organization offers. Find ways you can offer value to selected customers by supplying nonconfidential information. Consider for instance, the newsletter. All kinds of companies are now sending key customers and prospects newsletters that discuss what's new, forecast trends and provide valuable information on their industries.

Some companies turn their newsletters into brochures and sales announcements, transforming them into part of a direct-mail campaign - not a great way for companies to position themselves as resources. If you're preparing a newsletter, make sure it contains information your customers will find valuable and newsworthy. It's OK to mix in a couple items on your new products and sales, but keep that content to 25 percent or less of your overall publication. Newsletters should provide impartial, user-friendly information to your customers that helps them do their jobs. You'll have trouble establishing usefulness if your newsletter looks and feels like a sales vehicle.

You can also establish value by passing along key referrals. Suppose a customer mentions a problem in an area your company doesn't handle. You know the problem has been addressed successfully by another customer of yours who works in a different industry. Pass along the person's telephone number. When you have the facts someone needs, you're no longer considered "just a salesperson." You're a resource to your customers!

DISTRIBUTION

This value area has to do with the way you ship your products and deliver your services. Your prospects will be eager to hear how you can help them get products delivered against a tight deadline or ship items for less money. Accordingly, you need to know what kinds of strengths your organization will bring to the relationship when it comes to distribution.

Can you promise and deliver on an aggressive delivery schedule? Can you reduce the charges your prospect or customer is used 'to paying in this area? Do you know how your distribution costs and completion schedules match up with those of your competitors? Helping your customers beat their competitors to the punch is a great way to help them attain competitive advantage and add value to your products and services. Lowering shipping costs for a customer may be as simple as consolidating multiple shipments for maximum cost efficiency. Is your organization making this happen?

Look at order verification and tracking as part of the distribution value. Do you provide instant updates on where particular orders stand? Customers need up-to-date information to make good decisions.

What is the biggest potential obstacle for companies when it comes to distribution value? Missed deliveries! Not keeping your promises represents a body blow to the trust you've worked hard to develop. Yes, setbacks happen unexpectedly, and yes, there may be times when you can't deliver as promised. When this situation arises, you must at least call the customer so appropriate adjustments can be made. Don't leave your customers hanging. Accept full accountability, and do whatever it takes to minimize the negative impact of a missed delivery.