To avoid the pitfalls of competing on price, salespeople are often told they need to "sell the value." Another strategy is to "value-add," by offering the customer extra services or product features without charge.
Although those strategies can be effective in the short term, neither approach produces a sustainable advantage. Selling the value assumes either that the salesperson understands what the customer values or that the value offered is perceived as significantly different from competing offerings. All too often, neither is the case.
Moreover, a value-add strategy has its own drawbacks. Though it may sometimes win a sale, it produces customer expectations of "free-stuff," erodes margins, and may be easy for the competitor to match.
Salespeople rely on those strategies, ineffective as they often are, because they find it difficult to achieve genuine differentiation based on something the customer values and is hard for the competition to replicate.
But suppose a salesperson were able to create a highly differentiated offering that provides real value that competitors can't copy—because it is unique to the customer?
The secret lies in going beyond features and services that are easily commoditized, and developing what marketing scholar Ted Levitt calls "the potential offering" in his book The Marketing Imagination.
Salespeople can achieve that kind of differentiation by looking beyond their product to all aspects of the customer's experience across the whole process of buying and using a product or service.
The customer lifecycle, as it is sometimes called, provides a lens for understanding the experience at four critical phases. Each phase offers an opportunity for an innovative salesperson to find sources of differentiation.
The Customer Lifecycle
The following four phases are typical of a customer's experience with a product or solution:
- Shopping—identifying the right solution and vendor options, establishing buying criteria, making initial screening decisions
- Buying—bringing a product or service through the process of contracting, financing, and paying, and receiving supplies and equipment
- Using—installing and using the solution
- Disposing—upgrading, recycling, discarding, replacing
By looking at each area from the customer's perspective, salespeople can identify opportunities to expand the offering. That may involve providing additional services or add-ons as part of the solution, or offering options that add value and generate benefits the customer can't get elsewhere.
In the Shopping phase, for example, there is great variability in how efficiently companies go about sourcing suppliers and alternative solutions, and how clearly and accurately they are able to define their search criteria.
Suppliers can help by making their services and products easy to find and understand, and providing tools and expertise to help the decision-makers clarify technology and other requirements, as well as criteria for selecting a vendor.
The Buying phase is usually overlooked by salespeople, who focus on their own companies' policies regarding contracts and agreements rather than on customers' needs.
By better understanding how a customer buys, a sales organization can help the customer solve problems—offering leasing and financing options, for example, or helping with elements of the purchase such as taking delivery of equipment or supplies.
Example: A salesperson selling janitorial and sanitation products to a group of hospitals came up with the idea of using a system similar to the one used for reordering pharmaceuticals to automatically reorder the janitorial products as they were being depleted.
Although the Using phase and implementation are where most companies consciously add value to an offering, few look beyond initial installation and conventional service contracts. This is an area where innovation and in-depth understanding of the customer's priorities and business processes can produce creative ideas for offering benefits unique to the customer.
Example: A salesperson working with a large distribution company helped increase the efficiency of the company's warehouse operations by bringing in an expert from her own company to change the way products were being coded.
Depending on the product or service, the salesperson may be long gone by the time customers reach the Dispose phase of the lifecycle. Today, there are many new opportunities to differentiate at this point.
Companies are beginning to emphasize recycling and reusing, as "going green" becomes a corporate value and goal. Salespeople can look for ways to help companies that must discard equipment or byproducts and provide options for recycling or reuse of part or all of the product or equipment.
Example: A salesperson for a company that sells paper products developed an innovative way for his company's customers to help their customers recycle used office paper, helping increase sales and customer loyalty. Another company provided a way for its customers to dispose of empty containers for one of its products, which came in the form of an aerosol spray.
In a world where it is easy for competitors to quickly duplicate even unique product features, it is still possible for a supplier to differentiate its offerings via individualized customer value that competitors can't easily provide.
To help ensure your salespeople are expanding your offering to full potential value for each customer, ask yourself whether they are looking in the right places, across the full range of the customer's experience with your company, products, and services.
Quiz Yourself
Is your company reaching "full potential" value for its customers? Answer yes or no to the following six questions:
- We make it easy for prospective customers to find us and understand our products and services.
- We have the capability to offer expertise, tools, and other assistance to help customers determine their criteria for a good solution and which solutions best fit their situation.
- We offer various approaches for customers to acquire our products and services, such as different payment options, leasing, financing, etc.
- We can and do help customers with logistics and other issues related to receiving our products and services.
- We provide flexible options for support and assistance to customers in installing, implementing and using our products and services.
- We have a range of options available to help customers recycle, reuse, reduce waste, upgrade, and dispose of our products at the end of a product's useful life.
If you answered yes to all six questions, congratulations on meeting the criteria for creating a differentiated offering for your customers. You may, however, want to ask yourself whether all your salespeople are consciously applying a lifecycle strategy and are maximizing the potential for every customer.
If you answered no to all or most of the questions, you might want to raise your sales team's awareness of the possibilities offered by a lifecycle analysis and ask them to explore how to better differentiate their offerings by finding opportunities at each lifecycle stage.
If your answers were half and half, analyze the questions to which you answered no, and identify where you may be missing additional opportunities at some stages of the customer's lifecycle. Explore possibilities with your team, and raise their awareness of the value of looking across all four phases for differentiation opportunities.
