by Todd Youngblood
Take a few minutes and read through all the statements of value on your web site and in your recent proposals. Think about the value propositions you have articulated during customer calls over the last few months. Do they strike you as static statements? Or do they communicate a sense of a living, dynamic, ongoing, integrated, valuable experience?
In articulating value, many of us are hobbled by a limited perception regarding possible sources of value, and focused on me, my product and my company. Even those with a well-developed customer focus usually ignore a wide array of differentiating firepower that is readily available.
It’s high time we started to use a more robust, three dimensional, “living” perspective.
As an example, let’s start with a guy that owns a grove of spruce trees. He needs to make some money, so he goes into the firewood business. Cut down a tree, sell the commodity, compete mainly on price, differentiate based on BTUs produced by burning spruce vs. maple or whatever. Tough, low margin business.
Differentiating wood-for-fuel “A” from wood-for-fuel “B” – or in terms of the diagram below – moving up and to the right is really, really tough. So how about moving in front and/or in back of the page? Partnering with a coal vendor and a kerosene vendor (other commodity providers) enables our entrepreneur to add value by offering a broader line to a wider set of customers.
He can take things a step further when he learns that spruce is the perfect wood for making violins. Suddenly, he can get into the product selling business by adding a boat-load of differentiation to spruce – turning it into a violin – which provides higher margins.
He can repeat the in-front/in-back strategy by partnering with fife and drum makers. AND… He can also partner with new and different commodity vendors. How about a cardboard box maker to protect the instruments during shipping?
Jumping up yet another level, the guy can perform the service of renting an auditorium, promoting a concert and selling tickets. That entails partnering with other service providers, from musicians to clean-up crews; other product suppliers, from providers of additional instruments to providers of commemorative T-shirts; and other commodity vendors, from parking lots to rest room facilities.
Then we have the “Experience” economy. The industrial revolution in the late 18th century launched us beyond the “Commodity” to the product “Manufacturing” economy. The explosion of productivity starting in the 1970s propelled us into the “Service” economy. I’m convinced that a lot of sales professionals still don’t “get” the implications of services and cannot articulate their value. That leaves a lot of wide open space for those who can make the next leap to the experience economy.
Back to our guy, who by the way, gets it… During one of his performances, he realizes that his concert management services are only part of the picture. What he’s really selling is a concert experience. That includes not just the music, but also what each audience member does and senses (i.e., experiences) before, during and after. He decides to partner with a restaurateur who provides fine dining experiences so they can jointly provide a richer, higher margin “gastronomic/musical” experience. That opens the door to more partnerships with cooking and music lesson services, products like songbooks and commodities like foodstuffs.
So, how can a sales rep actually use the “Dynamics of Value” model on a daily basis?
- Establish where you are now – Commodity, Product, Service or Experience
- Establish where your customer is now – Commodity, Product, Service or Experience
- From there, explore front/back, up/down, left/right with your customer and start connecting the dots and realizing the value available by aggressively enabling the packaging of unique experiences in all three dimensions
- Recognize that competition (yours and your customer’s) is relentlessly pushing you both down and left
- Commit – jointly commit - to continuous improvement, to providing ever-better experiences for your mutual customers
Value is created by organizing and making sense out of complexity. Use this model to help your customers navigate through the ever-changing possibilities to discover the combination of factors that produces the most valuable experience today. Then come back and do it again tomorrow… next week …next month…
Think about it…