Defining Value in the Sales Process

What will the customer pay for?

The concept of value is central both to selling and to lean methods. But what is it? So, if we’re going to think about applying lean methods to selling, we must first begin with a tight definition.

One excellent definition of value comes from Michael Webb’s excellent book, Sales and Marketing the Six Sigma Way. Webb tells us that value is,

“…that which the customer will take action to get.”

This definition reminds us that the only person who can define value is the customer. So many product brochures seek to define value by product features, yet with many products, customers use only a small percentage of their features. Sometimes, vendors don’t even know why customers buy their solution. Do you? Do you understand exactly how they employ it in their daily work processes? Do you know how it prevents problems, reduces risk, or improves quality, efficiency and effectiveness? Do you know how they might be able to get more value if they use it differently?

These questions apply at the end-result level, of course: you know the customer accepts your value proposition if they buy your solution. But that’s like saying you know your team won because they outscored the opponent. The real power that this definition has to improve your sales effectiveness comes from applying it at the process level. Look at each step in your sales process and decide if it adds value. If it does not, eliminate it, change it or improve it. Here’s an example: Let’s take those difficult questions in the previous paragraph and ask them at the process level. Do you know why some customers return your calls and some do not? Do you know why the decision maker will agree (or not) to meet with you? Do you know what value audience members get from your presentation? Do you know what value this next sales call will add to the customer?

When you start getting better answers to these questions, you will find that the sales process gets easier, because customers who see the value in taking the next step will be more proactive in asking you to take these steps, or at least more willing to take the next step.

The other part of the definition that adds power is that it provides an operational and measurable definition of progress through the sales cycle. Movement through the funnel is only possible when the customer takes action. It transfers the focus from activities to actions. The difference between those two words is the difference between inputs and outputs. “Met the decision maker” is input; “Gained agreement from the decision maker on cost of the problem” is output. “Conducted trial” is input; “Gained agreement from technical staff that our solution meets specifications” is output.

I’ve seen too many sales forces measure activities, because they’re easy to count. It’s easy to count how many sales calls an account manager made today. But you can’t answer how many productive sales calls did the account manager make today unless you define productive in terms of actions the customer took.

If it’s true that you get what you measure, then defining value by whether the customer acts to get it, will force salespeople to focus on defining the value that the customer gets from taking each necessary step in the sales process.

So, by using Webb’s definition, you can gain clearer and more accurate view of your sales process, measure it against customer standards, and provide a framework for improvement.  These are excellent benefits, but there is one shortcoming. Can you spot it?

Some of the things the customer will take action to get are not in your best interest as a salesperson. They may waste your time, because they don’t add value to you. For example, they send out an RFP just so they can show due diligence even though they’ve already decided on a competitive solution. Responding to the RFP takes a lot of time which won’t be repaid—that’s waste to you, although the potential customer gets value from it.

The other missing ingredient from Webb’s definition is that the customer is not always the best judge of what constitutes value. French premier Georges Clemenceau once said, “War is too important to be left to the generals.” Although it may sound arrogant, sometimes it makes sense to say: “Buying decisions are too important to be left to the customers.” They may have incomplete or incorrect information; they may not be aware of potential risks in their decision; they may not be familiar with latest technologies, etc.

So, I would like to propose a different definition of value in the sales process. It’s not intended to replace Webb’s excellent definition, but to complement it:

“Value in the sales process is anything that improves the customer’s outcomes from this purchasing decision.”

In my next post on this topic, I will show how this definition can be applied to analyze and improve your selling process—and still keep it aligned with the customer’s buying process. Stay tuned.