You’re the go-to guy for specification responses, the most-wanted for customer meetings, and one-stop-shopping for product development status. There’s nothing about the product that you don’t know. Specifications, configurations, history, installed base, cost, pricing, roadmap, and production schedule are all known by you.
The marketing materials you’ve provided the sales force are exquisite. Every key feature and benefit is artfully presented with plenty of data to back them up. You listen closely to customers when they tell you what features are most important to them and make sure that they find a home on your product roadmaps.
You’ve taken the title Product Manager to heart and have committed yourself to becoming the ultimate product expert. You’ve used that talent to equip the sales force and drive product strategy.
But there’s a big problem. You’re salespeople are getting killed during price negotiations. You’re CEO is all over you for poor margins and keeps harping “You’re not selling value!”
You’re frustrated, but can’t figure out what’s wrong.
Roadmap to Selling Value
Solving this problem starts with understanding how to arrive at the wonderful place where value can be sold. It’s a four step process.
- Understand Value
- Create Value
- Market Value
- Sell Value
Understanding value is pretty straightforward in the capital equipment world. Here, your customers’ only buy from you because they believe that by buying your product they will make more money than if they didn’t. The degree to which your product’s make more money for your customers is your value. Value in our context is a financial expression.
Creating value is turning that understanding into products that will produce more financial return or value for your customers than those of your competitors. Once you have that product, the next step is market it. You need to create demand based on the product’s unique value at a price that compensates you for the extra profit your customer will earn by owning it.
Once you have the first three steps done, selling value is easy. You have the product. You have a cold-cash value proposition to defend pricing. All that is left to do is to hold your ground when the negotiations begin.
It seems simple enough. So what’s the problem?
The Secret to Selling Value
The secret to successfully executing the four steps on the value selling roadmap is having the same level of expertise about your customers and competitors as you do about your own products.
Understanding exactly how your product produces profit for your customer requires intimate knowledge of their business. Making sure that your product truly produces more value than the competition means knowing their products as well as those rolling off your own shipping dock. Without this intimate knowledge of your customers and competitors, you risk creating products that don’t produce value for your customers and taking market positions that get blown out of the water the moment the competition attacks.
What to Do
The product manager that is the unquestioned guru on his own products but only has superficial understanding of his customers and competitors is not ready to sell value.
To succeed at value selling, product managers have to change the emphasis on how they fulfill their role. Their attention needs to turn outward. They need to think of themselves as “customer” and “competitor” managers as well as product managers.
It’s not easy. Your product information is usually at arm’s reach. Not so for the same level of detail about your customers and competitors. It’s going to take some deliberate detective work and discipline to divine specific details that you need about cost, performance, process flows, specifications, and technology. You need to:
- Determine exactly what information you need to know and write it down
- For each piece of needed information, decide on the specific tactics to get it.
- Execute the tactics.
Now before you call the steps above “too basic,” ask yourself, “Have I at least taken these basic steps?”
If you haven’t, start now if you ever want to be able to sell value.
Similarly, capital equipment buyers are much more interested in their problem, than they are about the detailed features of your product. Your marketing messages must first demonstrate that you understand the customer’s problem. Then, they must go on to establish your product as the best solution to that problem.