How to define value: It’s not how much you offer, but how well it fits

If you do not define the value that your products or services generate, your customers will do it for you. And they will use the easiest yardstick they can find – for example, lowest price or quickest delivery – or a definition that your competitors will happily provide.

Some salespeople think value is defined by features and benefits.

The logic goes like this: More features equal more benefits. More benefits equal more value. More value equals more sales.

How customers see it
Customers do the math differently.

When they hear a salesperson reel off a laundry list of features and benefits, they think:

• “You don’t understand my goals well enough to tell me what I really need.”
• “You don’t understand your own products well enough to know how they’ll add value for me.”
• “You’re trying to sell me stuff I don’t need and don’t want to pay for.”

How does your solution fit?
Customers don’t measure value by how much they’re getting. They measure value by how well your solution fits with their goals. The closer the fit, the higher the value.

If you describe too many features and benefits, you can undermine this value. Anything that doesn’t fit distracts the buyer and dilutes the key benefit.

Of course it’s important to understand all the ways your product or service can help customers. But not so you can bludgeon them with benefits. Know these benefits inside and out so that you can identify the ones that match your customer’s goals most closely. When you sell, focus only on these value-defining benefits and save the extras for later.

Feature mumbo-jumbo
Here’s an example: You’re shopping for a CD player for your car. Your goal is to buy one that holds 10 CDs so you don’t have to change disks while you’re driving. The first salesperson you meet shows you a 10-play CD player and rambles on about features like random play, sequence order and mix-and-match functionality.

When he gets to the price, you say, “Thanks, but $200 is a lot of money and it’s not what I want.”

Instead, let’s say the salesperson shows you only the features related to your goal. She shows how easy it is to load the CDs and how you never have to take your eyes off the road while you’re driving. “It’s just what I’m looking for,” you say, writing a check for $300.

Once you get home and thumb through the manual, you discover all sorts of extras like random play and sequence order. “Wow, I got even more than I bargained for,” you say.

Defining unique strength
The second part of your value definition is your unique strength – what you offer that your competitors can’t.

When you show how your unique strengths connect to your customer’s goals, you create a high barrier against competitors. Even if the customer shows them your proposal, they can’t match it.

To identify a unique strength, ask:

• Do my customers (not just my engineering or marketing department) consider it unique?
• Does it help achieve customers’ goals?
• Does it produce measurable value?
• Does it build barriers to competition?

Also ask these questions about key competitors to know what you’re selling against.

Note: Not all products or services have unique strengths. If yours don’t, accent unique strengths of your company. These might include warranties, quality, ease of ordering and/or location.

photo credit: candidlee

Bonus: I’m happy to be featured as a guest blogger today on The Sales Hunter. You can check out my post about the 7 rules for written sales proposals here. Let me know what you think, and thanks to Mark for the opportunity to contribute.