Revenue leaders may know the four trends across all distribution markets that can potentially threaten distributor growth. But do they understand how to reverse these trends and reinvigorate sales growth? Savvy distributors reevaluate and preemptively adjust their go-to-customer models in strategic ways, such as adjusting disintermediation and evolving omni-channel sales models. Another strategy for sales organizations seeking consistent profitable growth is to empower sellers with accurate, tailored and impactful value propositions.
During a recent engagement with a distributor client, the topic of value propositions came up. The head of sales claimed that customers buy from the company because “they get products from us faster and cheaper than from anybody else.” The industrial sales leader disagreed. While visiting one of their largest warehouses, she placed two identical orders–one from the very same warehouse she was visiting, and another from Amazon. The order from Amazon (for goods that were in stock at the client’s warehouse) came a full two days earlier (and cost less) than the order from the same facility.
The story above illustrates one key shortcoming with value propositions: If they cannot be backed up with evidence, they absolutely will not lead to measureable differentiation. Best-in-class value propositions are the product of a sound process and share three key traits: accuracy (backed up by evidence), specificity (tailored to resonate with unique buyer segments), and impact (move the customer or prospect to action).
Well-managed value proposition creation processes follow a specific progression. First, organizations collect voice of customer inputs in a frequent and consistent manner. Valid methods include web surveys (e.g., net promoter score with additional qualitative feedback), focus groups (e.g., customer councils), or face-to-face discussions between customers and sales leadership or executives. Second, distributors map key customer needs (e.g., acquiring new customer of their own) to their own specific strengths. Lastly, sales or sales operations leaders have a mechanism to disseminate messages (e.g., playbook) and measure their efficacy.
Stakeholders differ from distributor to distributor, but three teams are almost always involved in creating impactful messages: sales (understands the customer needs), marketing (understands strengths and weaknesses across competitors) and product management (knowledgeable on features and benefits). The combination of these three teams can align the tactical benefits of products we sell to the needs of the customer and present data that show how and why we are the best at solving specific customer needs.
Traits of Powerful Value Propositions
For value propositions to answer the question “Why buy from us?”, they must satisfy three criteria:
Accuracy–One of the hardest things to do for a distributor leadership team is to admit when they don’t stack up well against competitors in areas long considered strengths. When distributors are losing on price (according to voice of customer) they ought to consider new segment-specific pricing strategies. When they are losing on delivery time, an ops review may be in order. When interactions from the sales force are not frequent or high-quality, there might be opportunity improvements needed in the go-to-customer model or sales talent. In any case, before sales leaders develop value messages in sales playbooks, they must verify the evidence and pressure test it with trusted customers.
Specificity–Are value messages based on price, specs, or availability inherently bad? Certainly not. However, transactional value propositions often fall flat when used with customers who value higher level sales motions (ROI, risk mitigation, value co-creation). Segmentation models that dictate customer coverage must also influence the types of value messages. Total cost of ownership, new market planning and minimization of field resource downtime are all higher level value propositions that distributors can solve through products, services and people.
Impact–Any worthy value proposition should move customers to a decision, preferably a buying decision. The “so what?” of a value proposition should include a concise business case as to why a partnership with your distributor team is best. Data-backed messages tend to resonate best of all.
Next generation value propositions are a necessity in today’s ultra-competitive market. Distributors who follow a healthy process and craft messages that move customers along the buying continuum will flourish.
Interested in learning more about value propositions that drive profitable growth? The Alexander Group can help. Contact a Distribution practice leader for more information about how we help clients design the processes that produce messages that differentiate them in a crowded marketplace.