SKILL
How to Quantify Value GEOFFREY JAMES
No, the value proposition is not something on a ballot in the next California election; it’s what you offer to prospects and customers that justifies their investment in what you’re selling.
Sometimes it’s called ROI – return on investment. Before customers buy, they almost always demand a cred- ible, accurate estimate of the return they will earn on their investment. A sales consultant in the tech industry cites the example from one survey that over 80 percent of IT buyers expect vendors to quantify the value proposition. According to one sales consultant, however, the problem is that few salespeople are prepared to deliver those estimates.
He finds this inability to quantify val- ue for customers manifesting itself in various forms – long sales cycles, sales lost to competitors, customer indeci- sion, and the demand for discount- ing, which plagues so many sales organizations. “Most salespeople don’t realize the cost of discounting,” he says. “If you are in a $15 million company and the average discount is 30 percent, you are leaving millions on the table. That’s huge.”
VALUE VERSUS COST In today’s new game, you need hard figures that specify the revenues customers can expect to gain or the costs they will eliminate or avoid. Value quantification is also a potent weapon in the battle against what he calls “cost justification.” He says, “If you have to cost justify, you’ve prob- ably lost. When you go in at the end of a sale and say, ‘Okay, here is the price,’ and then need to cost justify, you have probably lost. If you start with value and sell value throughout the process, there is no reason to cost justify – because the value justi- fies the cost.”
Most salespeople, however, are entering customer engagements without the right table stakes. “[Salespeople] are intimidated by the
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