It’s a fundamental principle of value-based selling that whenever a prospective customer is unable to establish any meaningful difference between the options open to them, they are likely to choose what they perceive to be the cheapest or safest option.
If we are neither of these, our chances of winning their business are dramatically reduced, and so if we are determined to compete on value rather than price, we need to differentiate our offering in a way that is perceived to be significant by our potential customer.
Unfortunately, many technology-based businesses fall into the trap of believing that they need to take a “value-added” approach when positioning their products or services – but then do so in a way that is often irrelevant or unattractive to their prospects…
Like “hope”, “value-added” is one of the terms that ought to be eliminated from the sales and marketing lexicon. It is almost always thought of from a product-centric perspective and used to attempt to explain why the presence of certain features or functions justifies the vendor charging a premium price.
Here’s the problem: this is almost always done from a vendor-product rather than a prospect-problem perspective. Features end up being promoted that turn out to be irrelevant to accomplishing the prospect’s core needs.
The presence of those unnecessary features may even make the operation of the solution appear to be more complex than it needs to be. And even if they do not serve to over-complicate the solution, then it’s hard to persuade the customer that they ought to pay for capabilities they don’t currently need.
In fact, any intelligent customer will probably use the presence of these irrelevant “value added” features to negotiate the price of the solution down – after all, what’s the point of paying for something they don’t need today and may never need in the future?
Differentiating our approach and our solution is key to establishing competitive advantage. But naïve value-added feature-led strategies are weak and fragile ways of achieving this objective.
There are two far more effective and complementary approaches to achieving the holy grail of meaningful differentiation: we first need to help our customer to recognise that they need to solve a different and more significant business problem or opportunity than they might have initially thought, and then we need to convince them that the business outcomes they will achieve will be meaningfully different and better if they adopt our approach.
When we think in terms of business problems or opportunities and business outcomes, our presentation of differentiating features is (as it should be) relegated to being part of the supporting cast rather than the primary reason to select our company’s solution.
Business problem/opportunity differentiation
If our customer is already “in the market” they will probably already have some sense of the problem they are trying to solve or the opportunity they are trying to seize. If we engage early enough, we may even be able to trigger their search for a solution.
Either way, we would do well to acknowledge Forrester Research’s finding that three-quarters of all considered purchase decisions are made in the favour of the organisation that did the most to shape the prospective customer’s vision of a solution.
Our chances of achieving this are significantly enhanced if we are able to help our prospective customer see their business problem or opportunity from a fresh perspective by introducing previously unconsidered needs and implications.
And having successfully helped them to recognise that there is greater value to be had from addressing the problem or opportunity than they might have previously thought (and thereby increasing their motivation to take action) we can then turn our attention to convincing them that we can enable them to achieve more valuable outcomes.
Business outcome differentiation
In helping them to redefine their business problem or opportunity, we need to lead towards, rather than with, our solution. The same mindset applies in helping them to redefine the business outcomes they can reasonably expect from implementing their solution.
Our features and functions form the supporting cast, rather than the primary reason to choose our product or service. Our capabilities need to be positioned in terms of the specific business outcomes they enable.
This is likely to mean that our overall approach to enabling them to achieve their objectives is recognised as being more important than the fine detail of our deliverables. It gives us the opportunity to show how our methodology is intentionally designed to eliminate potential implementation risks and to achieve tangible business outcomes.
Whenever we are selling to business executives, focusing on outcome-based differentiation is likely to be far more convincing than focusing on feature differentiation. Which leaves one important question: who is responsible for establishing your organisation’s differentiation?
If it’s the product marketing function, and unless they are primarily focused on solving customer problems rather than promoting product features (few are), then your ability to establish truly meaningful and value-justifying differentiation in the eyes of your customers will inevitably be limited.