Different business models have different cost structures. Even competitors in the same industry can have wildly different business models, as they seek to create a differentiated product, service and solution to attract and retain their ideal clients. Your differentiated value is what makes you unique and/or makes you demonstrably better than your competitors in a way that your client’s value. Differentiated Value is only valuable and relevant when your sales team are talking to the right person, who is often indirectly impacted by, but has the most to gain from your specific DV.
If you have invested in a higher cost structure to enable you to create that all-important Differentiated Value, then you must demand a premium to recover and maintain that additional investment.
Key Benefits of Having a Clearly Defined Differentiated Value
- It allows you to both protect and increase your margins
- It enables your team to shorten the sales cycle for new clients
- It protects and maintains valuable existing client relationships
Symptoms of a Differentiated Value perception problem?
This typically shows up in one or a combination of the following symptoms;
- Your team are forced to discount or make other concessions at the last minute especially in a long and/or complex sale situation
- Net margins are being constantly squeezed lower in spite of providing a superior offering
- Last minute competitors entering the negotiation that your team were not aware of
- You are dealing with the wrong person in your client’s organisation who does not value your DV and possibly even has a vested interest in not changing their suppliers
Outcomes from a Differentiated Value (DV) Perception Problem
If your competitor, that has a lower cost structure, can convince your prospective and existing clients that they provide a comparable solution, then one of four things will have to eventually occur;
- Ideally, your team learns how to successfully defend and then leverage your DV and you start to win more often against the lower DV competitors (happy days)
- Despite having higher DV and costs, you are continually forced to compete on price with a reduced margin (the doom of discounting applies – a scary option)
- You are forced to change from your higher DV business model and become a slave to the lowest price wins mentality (and we all know where that leads to)
- You exit the market.
Questions You Should Consider About Your Differentiated Value
- Are you personally crystal clear about your DV or would you like to be?
- How clearly do your team understand how your business model creates your individual differentiated value and what it costs to support it?
- Is everyone in your organisation able to articulate your DV in a meaningful way?
- Are you communicating your DV to the right people in your prospective clients business?
- How aligned are your key marketing messages, your sales management and the front line sales team’s daily behaviours with your DV?
What Can You Do About It?
Firstly, this is a very common problem and one we have helped resolve multiple times so relax, it is usually fixable once correctly diagnosed.
There are multiple ways to leverage your DV and we can teach your team how to do just that. Importantly, the message must come from the business leaders and filter down through every level of the organisation. To arrange a confidential, obligation-free initial consultation, please contact our team.