The probability that you will earn a customer’s business increases significantly when you’ve discovered why their stated need is important to them. Does your proposal resolve a problem that helps the customer grow sales or reduce cost?
These two alternative goals are really the fundamental choices faced by every business. Whether you provide a product or a service, its value to your customer depends on their goals, and their strategies to achieve them.
So what does your customer value more, and why?
Solutions that reduce the customer’s cost are easily identified and validated; they directly impact net profit. But cost reduction solutions sustain the customer’s focus on the short term, on its core, mature business and its current pain. They produce minimal sustained strategic value for the customer – next year, the emphasis will remain on cutting costs rather than on growing, which means you will face increased price pressure. You will be an expense to control rather than an investment in the future.
Cost reduction proposals make you more vulnerable to traditional competitors and to a customer assessment process that evaluates which supplier is cheaper or faster. Focusing only on cost reduction hinders your ability to position your solution for the long term, as a strategic value generator that drives your customer’s growth.
On the other hand, solutions that increase the customer’s sales or productivity produce more enduring strategic value. These solutions can be positioned as investments supporting the customer’s growth goals, its opportunities and its future. The financial benefits produced by your growth-based solution are more sustainable and cumulative over time, reducing your competitive vulnerability and strengthening your perception as partner. Because only the senior executives are responsible for delivering the future for their business, these solutions attract their attention, and deliver the opportunity to earn their preference.
So if your customer’s business was your business, would a cost reduction solution or a growth oriented solution be more valuable for your business?
How can you improve your ability to discover why a customer’s need is important?
How could you present your solutions as investments in the customer’s growth?
