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.