How value-add destroys value in sales

Are you convinced that what you do is a lot more important, a lot more complex and interesting, and a heck of a lot more valuable than your customers think it is?

Despite this, do you feel compelled to offer customers a huge amount of extra stuff you think they might want, just to get a sale over the line?

If so, you’re definitely not alone.

Commoditisation – where customers drive down a purchase to its lowest common denominator, its price – is a huge problem for service-based businesses when it comes to sales.

When you’ve become commoditised, it means that customers perceive an almost total lack of meaningful differentiation between you and everyone else you are competing with.

Ten years ago, Uday Karmarkar, writing in the Harvard Business Review, predicted the “huge wave of change” bearing down on the services industry, one result of which has been commoditisation.

And the sales impact of commoditisation on service-based businesses has been profound.

Essentially, the objective of a sale is to get customers to value what you do and pay a fair price for it.

If value is the inherent worth of everything that your core offering delivers, “value-add” is all the extra stuff; the bells and whistles that you throw in to get a customer over the line. Value is the cake, and value-add is the icing.

Over the last several years, I’ve noticed that more and more businesses are focusing their sales pitch on value-add, instead of value.

What's driving this trend is a lack of confidence that stems from years and years of being commoditised by buyers; being asked to give them a price before we talk about anything else, being forced to fill in tenders like we’re applying for a job, and competing on attributes that we know do not define the value of what we do.

Unfortunately, piling on “value-add” does you no favours, because it distracts buyers from the true value of what you do.

So it’s time to get back to the cake, and stop getting a headache from all that icing.

Knowing the true value of what you do and offer will help you to:

  • Stop losing work to less qualified competitors
  • Speed up your sales cycle so you can spend more time doing the work, and less time selling the work
  • Improve your margins
  • Avoid pressure to discount or drop your prices, and
  • Stop being frustrated about sales

Come along to my public workshop in Melbourne on Friday 10 February and learn how to build a killer pitch. Friday 27th Jan is the last chance to book, so get in fast.

Or, if you’re after some more targeted help, download the white paper for my Value Labs program and drop me a line or give me a call.