What If Your Product Doesn t Have Any Unique Strengths?

What If Your Product Doesn't Have Any Unique Strengths?

Some products do not have any unique strengths. Customers view them as commodities, and price and speed of delivery become the main purchasing considerations. You offset this situation by accentuating the unique strengths of your company. These can be warranty policies, quality-assurance programs, turnaround times, stocking levels, number of distribution centers, ease of ordering, payment terms, size , number of documented successes or geographical locations. Again, apply the same litmus test to a company's unique strengths as you do to those of products. Think of a company's unique strengths as universal features that come standard on every proposal as long as they connect to customers' goals.

You can also win sales by making your sales approach a unique strength. When competitors use sales methods that depend on perceived value, it is difficult for them to connect their features to customers' goals. With your measurable value approach, customers can see how your features (even regular ones) achieve their goals quantifiably better than competitors .

The Power of Packaging Products Together

You probably sell your products mainly on an individual basis. Yet, if you group different products together and sell them as a single entity, you create "new" products. You usually do not need engineering or manufacturing to help you create them, just marketing. The major advantage of packaging is that you transform products without unique strengths into products with unique strengths.

Example

Home Depot sells assorted toolboxes and tools on an individual basis. Occasionally, they package selected tools with a toolbox as a new Handyman special product. The tool and toolbox selection will vary with the level of expertise of the targeted customer ( weekend warrior or professional). The price of the package is less than if you purchased the tools and toolbox separately.

Home Depot made a competitive product with unique strengths out of commodity items.

How Product Options Affect Your Selling Efforts

Options are product accessories. They are the features offered to customers in the format of: "Would you be interested in ... ?" If you need to ask your customers about options, it might indicate that many purchasing requirements remain unknown to you. If you fully understood their goals, you would not have to ask customers if this option or that one interests them. You would already know. You especially do not want to guess whether your unique strength makes sense for customers.

Of course, options benefit you when they are merely a matter of a customer's personal preferences, such as whether to order the telephone's leather case in brown or black.

Note

If you are not careful, a major pitfall with options lurks ahead. You might end up with the syndrome of "one from Column A, two from Column B." You spend all your time explaining to customers why one feature or product from "Column A" costs this much while two from "Column B" cost this much. Your product's value becomes how individual features stack up against each other or those of competitors . How your features achieve customers' goals gets lost in the shuffle. You can even end up competing with yourself, never a good situation.

Feature Value Rating

Fundamental to the principle of "you can only manage what you can measure," you assign features a numerical value. To represent their significant difference in value, unique strengths get a 5; regular features receive a 1. In Chapter 7's Connecting Value sheet, you select the features that produce the measurable benefits of customers' goals, and then calculate their value rating. You compare this rating to a value-neutral rating, which would mean all the features were a 1 because your products had no unique strengths that connect to customers' measurable benefits.

For example, if you selected five features that matched a customer's goal, their competitive neutral rating would be a 5 (5 × 1). If two features were unique strengths, and three were not, you multiply the two unique strengths by 5 and the three features by 1 for a total value rating of 13 (5 × 2 + 3 × 1). Your value rating would be 8 more than value neutral (13 - 5). What is the significance of this number?

A lot when you tie it into the gross margins (sell price minus material and labor costs) of your proposals. In future sales, you use past results to determine if you are receiving the margins you deserve for the value (numerical score of your proposals) you are providing. Use these ratings to measure the value your proposals produce for customers, how they compare numerically to competitors ' proposals, and their relationships to historical gross profit margins.

For example, a value rating of 12 might coincide with a 40 percent gross margin while a rating of 8 might coincide with a 30 percent gross margin. If your proposals with similar value ratings have significantly lower gross margins, you are not receiving compensation for the value provided. You need to find out why not.

You can also assign a competitive value rating by filling out a Competitor Product Profile sheet. You only fill in competitors' unique strengths because all their other features would be the same as yours. You then compare the number of unique strengths you have with those of competitors that match up to customers' goals. This connection is critical to outvaluing competitors. For example, if you have two unique strengths while a competitor has only one, your competitive value rating would be plus 5 over theirs.

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What If Your Product Doesn t Have Any Unique Strengths?