Squeezing the Satsuma (part 2), by Ewan Pearson

Christmas is a ‘fruity’ time, and so it’s appropriate to squeeze the rest of the juice out of this story, to crack a few nuts and to get the core of the meaty content. For those unfamiliar with our last Journal, Edition 57, it is the hot story of the age: how to win business by being different in an undifferentiated world.

The exposition: Last time, I described a bow tie and some plumbing, then drew you a couple of pyramids. It was the exciting tale that any one of you could set off down the road from your own Nazareth to the land of promise – with the reward of lots of new business wins, a bonus and a nice big celebration.

To do that you had to get inside the minds of your clients, customers, and buyers. You needed to know what type of client buyer they are, what their options are, and what criteria they use for selection, or what we call the “Decision Level Criteria”.

The rising action: This time I want to take you further down that road, to pass other fellow travellers (your competitors) and to gain a clear advantage so as to be the only one to arrive at the promised land of plenty – a set of business wins!

It is clear to us that this road has boulders in the way (aka Cold Buttons) that can cause the buyers to eliminate you. There are also accelerators (aka Hot Buttons) that can gain you an advantage that can be almost unsurpassable.

The first road block that determines advance or fail is the required service level test. We call it the “Client Rights Act 2015”. We list 15 things that all clients are entitled to. They include “listen to me fully”, “give me time to think”, “don’t mess around with the team you give me”, “treat me like a person” and “be available at all times”.

There are those who think that stating they supply these requirements wins them the business. It doesn’t; it merely helps clients to do some eliminations at an early stage.

The next road blocks occur when offering value-based propositions that meet or exceed the client’s needs. Yes, that’s what I said, road blocks, not wins.

A Value Proposition is quite hard to define, but it’s a bit like a currency, it’s not a win maximiser, but a language that businesses speak. Here’s a quickie go at a definition:

It is “a set of actions, products or solutions (or a combination) that fully meet the needs of the buying clients”.

These Value Propositions are required but are not sufficient to win the business.

How so? Simples. If you offer a Value-Based Proposition, and your competitors offer the same or even similar Value, then you are both considered the same by the buying clients. The client is then perfectly entitled to choose the cheapest – i.e. they make their decision on price not value, as your value was not sufficiently differentiated.

We have an equation to help understand this: V = Q/P, where V is Value for money,

Q is the perceived Quality of your Value Proposition, and P is the price for your product, service, or combination.

Let’s say you think your proposition is 20% better than your competitors, so you decide to price it 20% higher. Your equation has 120/120, so V =1.0. Your competitors have 100/100 so their V =1.0 too. Your V is the same as your competitors so you leave your client with an even choice. You are in a sense both the same, at least in terms of value for money.

If your competitors pull the same trick then it becomes a price minimising competition, and you end up with several rounds of negotiations where your clients make hay whilst you and your competitors beat each other up.

A great example of this was the UK Government’s auction of 3G mobile phone licences, which concluded in April 2000 with the UK Government £22.5bn better off, and several of the phone companies on the verge of going bust. Great example of Game Theory, that one.

Almost all service firms say they want to compete primarily on value, but their actions sometimes suggest they often can’t seem to find that extra value, and instead they go for a price drop.

The Climax: and so to the ‘main course’ of this story. The way to win is to have a Value Proposition Quality that adds much more value than any of your competitors (or the other options the clients have such as DIY or do something else). i.e. a greater difference in quality than you do in price, so your result for V is say 1.2 or even 1.5 whereas your competitors can only manage V=1.0.

That’s dead easy to type, but it seems very hard to do. Let’s have a go at this: it will require good relationships building so as to gain trust and access to valuable information; good probing questioning skills, deep listening skills (see Lynda’s article below) so as to get inside their minds to find out what is truly valued by them as people, not just as corporates, and then the ability to assimilate all this intel and match it to a sweet spot in what you can offer. Note that understanding which types of decision-level criteria are personal or corporate is a key to understand. Personal criteria usually control decisions, although corporate criteria are used to justify them.

So, here are some areas where we think you should go looking for wins:

  1. Service. If products do what they are supposed to do (be they an audit, a drug, a mobile phone, an aeroplane, or a vendor due diligence report), once these products meet the needs, then everything else is service. If the Christmas meal is the product, then everything that’s not on the plate is service. In pitches, your service could be perceived to add more value than others, but note it should not include unvalued extras as that can become a negative. So you always have to check that they’re wanted, or better put, really valued by the client.
  2. Uniqueness. Everyone loves their USPs, but they often fail our two tests of (a) uniqueness and (b) being selling points -i.e. things the client really values. It’s great to be able to say that “we are the only firm that can…” but firstly it must be true, secondly it must be relevant, and thirdly it must be really valued. It’s not sufficient to have a USP, as again a competitor could have one too (albeit a different one, so again we’re back to those boulders and having to check if your USP adds more value than theirs.
  3. Differentiators. If you aren’t alone in having a cookie cutter, is yours a better one? If so, describe really well (clearly, briefly and simply) how it is better, ensuring…you’ve guessed it… how does it add more value than your competitor’s cookie cutter?
  4. Benefits. This is an easier one. Most sellers describe what their product, service or action does. This often packs out pitch presentations to the gunnels, leaving no room for anything worth talking about! We try to sort that mess out, removing the crud, and adding messaging about exactly how the features of what’s on offer provide benefits for the buyers. Our repeated questions “So What?” and “Why you?” are the bedrock of our coaching input here.

The Falling action: You know I’m right don’t you (wrote the smug consultant from the top of his Christmas pudding). But what are you going to do about it? Well, you could hire us, or you could do it yourself, or some combination. That’s the point.   We would prefer a partnership, as that gets the best result, and that’s one thing that makes us more valuable to our clients than some of our competitors.

Boxe : Retro - Mohamed Ali - 12.01.2012 -

 

Muhammed Ali winning in his business

 

 

 

 

 

The dénouement: There is a professional process to winning more business, and I mean more professional than you had before and/or more than the competition. Get it right and you can claim to be like Muhammed Ali “the greatest of all time” by winning all the business you pitch for.

By Ewan Pearson.


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