Value Chain Catapults Sales and Profits
January 7, 2008
Karsten Solheim, the inventor of the Ping Putter told the story about managing a shoe repair store during the Great Depression. When his nearest competitor lowered the price of new heels to 15 cents, Solheim placed a big sign in the front window announcing the same lower price.
“The first customer that came in asked me ‘Are the heels as good as they used to be?’ Of course, I had to say ‘Yes.’ ”
When the next two customers asked the same question, I realized by lowering the price people thought we had lowered the value. I took my sign down and resumed charging 35 cents for heels. It didn’t take long to discover even during hard times, most people are more interested in value than price.”
Installing a replacement comfort system is much more complicated and more demanding than putting new heels on a pair of shoes, but the key elements of value remain the same.
Imagine value as links on a chain connecting a railroad car full of gold bars (profits) to a powerful locomotive (sales). If any link in the chain is missing, your gold won’t move. If a link breaks during the journey, your gold is left behind. When selling comfort, success is determined by the strength you forge into every link of your “value chain.”
PARTNER WITH VALUE-SUPPLIERSThe strength of your chain of value is determined by its weakest link.
One of the most overlooked links in the value chain is the people that stand behind the products you buy. You can’t provide the highest value if your supplier doesn’t provide it before, during, and after every sale. Having the right equipment delivered undamaged to the right place, at the right time, with the right paperwork, parts, and accessories is invaluable.
BE COMFORTABLE SELLNG PREMIUM PRODUCTS“There’s hardly anything in the world that some fool can’t make a little worse or sell a little cheaper.”
- John Ruskin,
19th century author
Value comes from benefits. The best benefits create the best value. No matter how good you are, it’s impossible to produce maximum benefits from minimum solution products.
DISPATCH THE RIGHT PEOPLE“You’re only as good as the people you hire.”
- Ray Kroc, founder
During each sale, it’s the consultant’s responsibility to get buyers excited about the people who will be doing the work. Buyers want to know all the people coming into their home are clean-cut, clean-talking, and trustworthy. They also want to know your team is qualified to do the job, and they want your assurance the job will be done exactly the way it was sold. Additionally, every buyer wants an answer to this question, “How will your people protect my home, my family, and my pets?”
Remember, everyone who has any customer contact influences the buyer’s perception of value, level of customer satisfaction, and the likelihood of future business and referrals.
BUILD MAXIMUM TRUSTTrust is absolute confidence in the honesty and reliability of another person.
People buy relationships before things, and trust people before products. The first step in building a trusting relationship with new customers is to talk about them, not you. The harder you listen to them, the more they like you. Being liked is vital because it’s impossible to trust people we don’t like.
Next, assure them you have the skills and knowledge to do the best job possible. Buyers don’t want to become HVAC experts, they want to deal with HVAC experts they can trust. It’s impossible to trust people who don’t know what they’re doing, but be careful not to cross the line separating trusted advice from arrogant techno-speak.
The last step is your personal commitment. No matter what happens, they want your assurance you will be there to take care of them.
CUSTOMIZE THEIR VALUEValue is what people say it is.
What is valued by one person may be insignificant to another. It’s impossible to sell your value until you determine what they value. The key to customization is simply asking the type of questions that allow people to talk about themselves, their problems, and desires.
Use all your resources to customize the solution that best solves their problems and provides all the benefits they were looking for. Without a customized solution, it’s impossible to provide the best value.
DIFFERENTIATE WITH CRAFTSMANSHIP“The little things are infinitely more important.”
- Sherlock Holmes
One of the most important, yet often overlooked, links in the value chain is the work itself. Unless buyers know different, they assume all installations are created equal. Inform buyers about the special steps your team of professionals takes to assure they will get the best job possible. Help them realize that your attention to detail and quality control is what provides the most comfort, highest energy savings, and greatest peace of mind.
VALUE MUST BE COMMUNICATEDValue not documented in the buyer’s mind doesn’t exist.
Show them the value. Eighty percent of what buyers learn about your value chain comes through their eyes. Show pictures of the equipment that best meets their needs. Explain how special features provide the benefits they want most.
Keep building value with phrases like, “What this means to you is …”, “Here’s why that’s so important”, “This is one of the most important parts.” Remember, value comes from benefits, so never hesitate to review everything that was important to them.
VALUE TRUMPS PRICEThe sale takes place when value outweighs price.
Visualize every sale as a balance beam scale with price on one side and your value chain on the other. The cumulative weight of every link you place on the scale determines the selling price, profit margin, and likelihood of the sale. The only way to grow sales and build profits is to forge a stronger value chain.
FACTS• Value is what your customers are willing to pay to do business with you.
• Your price is allowed to increase with the value you provide.
• It is impossible to provide the greatest value for the lowest price.
• The more desired benefits you provide, the more value you create.
• People are more concerned about the value that comes out than the price that goes in.
• Until they know why it’s important, value doesn’t matter!
Publication date: 01/07/2008