Valuing Value

Don Peppers, the highly successful US advertising executive, is well known for his famous quote about value. According to Don, “Customers will create value for you at the point where they believe you’re creating the most value for them”. Seems intuitive doesn’t it? But at the same time, it seems a bit mysterious. Don had a practical point, of course. To get it, you have to understand that Don was much more that an artful advertising pitch man. He was a graduate of the US Air Force Academy with a degree in aeronautical engineering as well as an MBA from Princeton. As such, he understood that value is a complex topic that cannot be dissected without huge connectivity to the customer. And while the concept of price holds a popular position as one of the iconic four P’s of Marketing, we’ll stick with Don and keep the focus of this article squarely on value. For calculating price does have its nuances but at the end of the day, the process is not complicated. Determining value, though, has many more layers and has led to a great deal of confusion over time in the sales and customer service spaces.

Let’s start our value discussion with my four favorite words and the four most important words in selling – “It’s not about you”. Applying this epic axiom to value means that there’s only one entity that can determine value. That’s right, just as Don said – the customer. Furthermore, the customer’s perspective of value is not only what determines their buying decisions but it’s what drives which companies they choose to do business with over both the short and long term, making it the fundamental basis of account relationships or the lack thereof. As such, I’d like to share some key factors that determine value, again, in the customer’s perspective. And most critically, your ability to perform in these areas will determine your fate in account relationships. Let’s review fourteen of these critical areas that, in essence, help us understand the thorny concept of valuing value – the “Fourteen Framework”, as it were:

• The most important of all is the account’s belief that you are actually delivering the value that they expect. Miss this one and stop right here. There’s no need to read on.
• The ease of communication with the account. With it, anything is possible. Without it, your life is difficult, to say the least.
• Comprehensive coverage of all key relationships in the account buyer network. The “deep and wide” approach is not just a trite tag line. It’s tremendously meaningful.
• High level relationships. A true partnership is characterized by both sides’ decision makers knowing one another well and communicating freely.
• Your organization’s relevance to the account. Delivering for as many of the account’s departments and business areas is mandatory. If you are a one-off, your stay will be short.
• Delivering a variety of products and services from your portfolio of offerings. It’s that same “deep and wide” strategy but from your available offerings.
• The proportion of eligible business that you win with the account versus that of your competitors. Commanding as much wallet share as possible is a life-or-death indication of how you’re perceived.
• The duration of your contract. Long-term relationships are, of course, typified by long-term contracts. The same applies to short-term relationships and short-term contracts.
• The health of your pipeline opportunities with the account. If all is going well in the relationship, that should be clearly reflected in your tracking of multiple needs for more of your offerings.
• The profitability levels of your business with the account. Strong revenue performance must be mirrored by strong profits. If that’s not the case, maybe value is not your real problem.
• Your delivery success with the account. A track record of effective service and performance is extremely critical in account relationships.
• The account’s satisfaction levels with your organizational performance. If you don’t track this, do so now. And before you do, find out from the account what matters most to them. You’ll learn a lot – count on it.
• The status of the trust levels between the two parties. Healthy levels make everything easier. Unhealthy levels are a death knell.
• The account’s level of dependence on your organization. The greater you are directly connected to their mission, the greater your chances of making your stay a long one.

There it is – The Fourteen Framework. Can there be other factors? Sure. And some matter more in certain business models than in others. And their importance varies from account to account, making it your job to know everything you can about what matters most in each situation. Given this, what should you do to act on actually valuing your value? My suggestion would be to assemble your teams involved in selling to and serving each account. Conduct brainstorming sessions to candidly evaluate your organization’s as-is performance in each of the key areas for each account. But most importantly, once you’ve collaboratively developed honest perspectives for each critical area, build practical action plans to improve your performance in each one. And revisit the process as frequently as reasonably possible. Get started. Now.

Understanding each account’s individual perspective on value is nothing short of a survival skill. Follow the “Fourteen Framework” to improve your performance in each value area and then take action. At the end of the day, there is no more mutually beneficial process than acting to improve your ability to deliver meaningful value. In reality, it’s your obligation. You owe it to your organization, its stakeholders and your colleagues. But most importantly, you owe it to your accounts because there’s nothing they want more than to be served in the way they actually want. Do that well and you’ll be together with your accounts for a very long time.