Introduction

I like writing articles that can make my clients more profitable. From that perspective, this month's issue is a real jewel.

One of our core business philosophies at Success Force is that customers are buying more than the mere product or service being offered for sale. They are buying value. And, if you understand the value that you bring to your customers, you can charge them not only for the product or service, but also for the value that they are getting from it.

I will admit that every time I put this concept forward in workshops, seminars or presentations, there are a number of seasoned business owners who want to challenge me. "You don't know how competitive my market it." "If I tried to do that, my customers would run to my competitors." "It would be nice if it worked, but none of my competitors do it and so I can't either." "We tried something like that. It doesn't work." Despite their experience, most of them appreciate the impact that selling value can have on their profitability enough to consider the possibility. Here is what I tell them...

Ideas

Selling value, while not a novel concept, is one that the vast majority of businesses, large or small, have not done well. I would suggest that this true because:

* They assume that what they are selling is what the customer is buying

*They believe that they know their customers better than they do

*They see the customer as part of their process rather than seeing themselves as part of the customer's process

Let's take them one at a time:

Understanding What Your Customer Is Buying

Your customer has a need - that is why they are requesting your product or service. It might be subtle, it might be a desire, it might be a necessity. But they want something that you can provide. It does not matter what it is. [I refer you to eBay's TV advertisement about selling 'it'. It doesn't matter what 'it' is to eBay and it does not matter here.] There are at least three aspects of your product or service that are important to them. I call them the QRS of Value: Quality, Reliability, Speed.

Quality means that your product or service solves their problem or meets their need. Reliability means that it does it every time. Speed relates to your ability to deliver 'it' faster than anyone else. I claim that these are value aspects of every product or service. I guarantee that to the degree that you can provide better quality, greater reliability and/or speedier availability, you will absolutely be able to charge more for it. The best part of this is that, assuming you have developed a stable process to support the delivery of your product or service, between 80-100% of the increased price goes directly to the bottom line.

I help business owners double or triple their profits without a corresponding increase in expenses or sales volume. How is this possible? One key way is to sell value. And, while QRS are elements of almost every product or service, they are seldom the only aspects of value that is purchased by the customer.

I submit for your consideration one of my favorite examples. Why is it that when someone goes to the grocery store to buy ice cream, they cringe at the high priced brands that sell for (say) $6.99/half gallon? And yet, after a special event (baseball game, recital, etc), they go to an ice cream stand and readily pay $14.00 for a fraction of the ice cream in the carton at home? Why not go home for the less expensive stuff if price were the only factor? What was different? The experience of going out was better than just going home. In a word, value.

Understanding Value from the Customers' Perspective

Why don't more business owners position their product or service to sell value? Most often I found that they do not realize what value they are providing and they do not understand how they provide it. In fact, it is not unusual that they will give their value away!

For example, most business owners have a very strong work ethic. They strive every day to give their customers their best. And they do; they just fail to charge for it. This most often happens with 'speed'. It is not unusual to hear of situations where the business moved 'heaven and earth' to get something done for a customer in need. And then just charged the normal price or only increased the price to cover expenses related to the fast delivery. Probably every reader has done this for a customer. And while they believe that the customer appreciated their effort (which is not true as often as one might think) the truth is, the customer would have paid more - sometimes much more - to have that product or service in the shorter timeframe.

Often owners tell me that they think that this is 'taking advantage' of the situation. With all due respect - hogwash! The difference between the customers feeling taken advantage of instead of having a feeling of gratitude when paying more for value, is that they must know about the increased cost BEFORE they have the need. In this way, they know how much it will cost BEFORE they make the buying decision and are often grateful to have the option.

There are many other ways that products or services provide value. Most owners don't know what their customers are buying for one simple reason... they never asked. This takes more thought than it might seem. You can't just go up to a customer and ask them, "What value are you buying?" You have to think about what you want to know and what the best questions are to ask to get an understanding of how your customers make buying decisions. One way to do that is to change your perspective about how (not what) your customer thinks about you in general.

Whose Process Is It, Anyway?

This leads us to the final thought of this topic: Are your customers part of your process or are you part of theirs? OK... no secret here - it's both. But, if you want to understand value - from their perspective, you'd better understand how you fit into their process. What need do they have? How do they make the decision to come to you? What problems does the way you do business create for them? Under what circumstances do they choose a competitor? With these few sample questions, you get the idea.

John Guaspari wrote a book twenty years ago that was entitled, I know it when I see it. It was one of those great 45 minute reads about quality. The essence of it was that customers can't tell you what quality means, but... they know it when they see it. I have found this to be true about value in general. Customers cannot always tell you what they want, but they return time and time again because they get it from you... whatever it is. Once you find out what 'it' is, you can charge for it. And the increased revenue drops right to the bottom line.

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Being in business is hard work.

Why not maximize your results?

Questions to Consider

As you read this short discussion, consider how your company stacks up:

• Can you define exactly what value your customers most appreciate in your product or service?
• Do you know how and when you provide it?
• Are you clear with your customers about what value you can offer and how much it will cost?
• Have you had any good conversations with your customers lately?
• Can you say for sure you understand their process and how your process supports and interacts with theirs?

Next month: An Introduction to Control Point Management

Until then, go out and make some money!

John P. Gaulin
President, Success Force, Inc

For more information regarding SFI Business Growth programs:

Call Success Force, Inc. at 716.681.4434

or Email us at info@success-force.com