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Deal Value or Buyer Value?

By: Dave Brock

 

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A few years ago, a client called me very frustrated. He was the CEO of a large company; he’d been traveling in the field, visiting customers and sales people. He told me of a ride-along with a sales person in Boston. Proudly, the sales person was talking about a large system he had just sold. When my client asked him, “What did you sell if for?” The quick response was, “For $7.5 million!”

Some of you may be scratching your heads wondering, “Why is the CEO upset, sounds like a great deal?” What upset the CEO was this: he wanted to understand what the customer bought the system for, not what they were paying. He wanted to understand what problem they were solving and the value they would achieve from the solution.
All of us tend to make that mistake. We talk about deals every day. In talking about them, we focus on deal value—what are we getting out of the deal. In virtually every review I participate in, it’s one of the first 3 questions managers ask about a deal, or one of the top 3 points the sales person mentions.
Don’t get me wrong, I get it—deal value is important to us. The problem is it’s meaningless to our customers. They care about the value they get; buyer value is what’s important to them.
So why make the distinction?
Focusing on deal value colors our strategies and focus. However subtly, everything becomes “what we get from the deal.” But we get nothing unless the buyer gets superior value from our solution and chooses it. So deal value is meaningless unless we understand buyer value.
So what do we do about this—how do we change our mindset?
For Managers
In every deal review, a key part of the review has to focus on Buyer Value:

1. What is the customer trying to achieve?
2. What value do we create in helping the customer achieve their goals? This has to be specific. If the sales person starts talking about features and functions of our product, she’s on the wrong tack. It can’t be general: “We improve productivity, we reduce costs, we reduce errors, etc.” Every element of the value must be quantified in terms meaningful to the customer.
3. How is our value differentiated and superior to the alternatives the customer is considering?
4. How does our value contribute to the corporate strategic goals and priorities?
5. What value are we creating in the customer’s buying process? Do they recognize and value this?
6. How are we communicating the value to the customer—that means everyone involved in the decision-making process?
7. Does the customer “buy” our value?

The magic about focusing on Buyer Value, in the review process, is that we focus our deal strategies and next steps on things critical to the customer, instead of focusing on ourselves. This always resonates with customers. Focusing on the Buyer Value improves our positioning and the probability that we will win! Focusing on Buyer Value has the potential of reducing the sales/buying cycle—the sooner they make a decision, the sooner they can start to achieve results. Focusing on Buyer Value makes our price less important. It’s just an element of the total business justification. If we focus on Deal Value and focus our customers on Deal Value, the focus becomes price. We know what happens next.
For Sales People
In developing and executing your deal strategies, can you answer all the questions outlined above? If you can’t, then you aren’t focusing on the things most critical to the customer. If you can’t, you are putting your ability to win the deal at greater risk.
Deal value is important, but it’s a meaningless part of the discussion. We know what the deal value is—after all it’s in our CRM system.
To win the deal, focus on Buyer Value. It will provide more insight on what you need to do to win.
Published: May 10, 2013
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Dave Brock

Dave Brock is the founder of Partners in EXCELLENCE, a consulting and services company helping to improve the effectiveness of business professionals with strategy development, organizational planning, and implementation. Dave has spent his career working for and with high performance organizations, ranging from the Fortune 25 to startups, including companies such as IBM, HP, Nokia, AT&T, Microsoft, General Electric, and many, many more. The work Dave does with business strategies is closely tied to personal effectiveness of the people in the organization. As a result, Dave is deeply involved in the development of a number of training and coaching programs.

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