Want to sell value to your customers? If you do, you had better make sure you have a rock-solid reputation in the markets you serve. Value-based selling in enterprise software and services sales is critical. Companies deciding about enterprise software know the benefits and consequences of their purchasing decisions. Partners and vendors selling to these companies know how important their reputation is. In fact, the good ones know a good reputation is essential to their survival. They also know that finding the value with the customer allows them to charge a premium. Many buyers can justify paying a premium. When? If they are creating value with a trusted partner with a strong reputation.
While there are many reasons why a sale can fail, the three most important legs of the value stool are:
· The Business Case
· Pricing and,
All three require that your company receive high marks from your customers and your prospects. If one leg fails, you will lose your sale and hurt your reputation as well. Rebounding from a poor reputation is not impossible, but it is hard. Think of Johnson & Johnson and their Tylenol brand back in 1982. It controlled 37% of its market. Several people died taking Extra Strength Tylenol that year. The product seal was compromised, and poison added by someone who would never be found. The result was Tylenol’s market share fell 30%. Over time, the drug maker regained 100% of their market share. It cost J&J money and time, two killers of business productivity. The case is a best practice in crisis management. Everyone knows the Apple story and how Steve Jobs brought the company back from the brink. It is now one of our most valued and envied corporations. These are extreme cases that illustrate how hard it is to rebuild a reputation.
In enterprise software, the software services the needs of the organization. The desires of individual users take a back seat to the business.
The needs of the organization are the most important that the company has. If the company is public, enterprise software supports those that drive shareholder value. Buying the right tools is essential. Many buyers use a business case to help construct the argument for a decision maker or team. The case should include quantitative and qualitative data. When summed up, the result is an overwhelming reason to launch a project or make a buying decision. No matter how good your business case is, if it is coming from a selling company with a weak reputation, it will be less convincing.
Pricing is one of the most important activities for your Product and Marketing teams. It is also a critical part of the business case. It should be fair, reasonable and justified. Sellers must be able to explain any premium to market prices. If you are launching a new product, you have some flexibility. It is a challenge to try to pick a point that will sell and maintain the desired profit for your company. Your price is an exchange rate for the sum of your business intelligence. It is the combination of your products, services, support, and research. Pricing is at the heart of where your reputation makes a difference. If your company has weak stature, your assumptions will face extra scrutiny from buyers. They may assume that if your firm has a questionable status, you are pricing to make up for other issues. That may not be the case, but the reputation of your business can reap undesirable consequences.
Delivering and supporting a company’s products and services is difficult. It involves the staff who implement and maintain what you have sold to your customers. They make the software work and ensure that the value you and your client agreed to is realized, day in and day out. The effort ebbs and flows as new business problems, bugs, and design failures surface. Customers expect there to be some amount of issues tied to supporting enterprise software. What they want is a partner that is attentive to the problems and that takes a proactive approach. If your company has a bad reputation with customers, it is likely that delivery will be a source of the dissatisfaction. These staff are responsible for fixing the issues and they are often maligned for being the problem. Rarely do they get complements for a job well done. If you have substandard delivery your reputation issue just got worse. It will become much harder to turn around marketplace perceptions.
Like your personal reputation and integrity, your corporate reputation is all you have. If you are trying to sell value at a premium price, a poor reputation will make your job that much harder. Your prospects will question you on every assumption. The sales process will become longer. Customers will demand discounts and doubt your ability to deliver.
If you are working in a company with a poor reputation, it is imperative that your senior management makes improving it a top priority. If you do not, they risk the long-term health and security of the business.
My best, Chris