Horror story! Why do you need Value Selling to protect your position in the Product Lifecycle?

You may be familiar with the concept of the Product Lifecycle…

• Introduction Stage: New propositions by definition are unique. Lack of market acceptance, low recognition, and early reliability issues usually result in adverse sales conditions. Margins are erratic.

• Growth Stage: As the proposition becomes recognised and gains acceptance, market conditions improve, and margins grow stronger.

• Maturity Stage: Over time, whether measured in years or decades, the proposition becomes understood and copied with “me-to” offers. Differentiation becomes difficult. Competitive pressure increases. Sellers become price-takers. Margins are squeezed.

• Decline Stage: The market becomes saturated. Margins are tiny.

Companies with propositions in the Growth and Maturity stages protect themselves from competition with branding, by depending on their technical insight, their sales process, and price points, to demonstrate their uniqueness. This is the world of the complex sale.

When value selling, sellers work with their customers to create a perfect fit between their proposition, and the customer’s problem state. This process helps the customer to recognise how the proposition creates value for them, and the reason for the premium price position. Everyone should be happy.

So I’m coming to the horror story…

In the complex sale, when sellers shortcut the value selling process they are left with a discussion about price alone. They cannot win this discussion (because of their premium price position). Neither can they convince their customer, because they have not shown how and where the proposition generates value. It’s a complete lose-lose scenario.

Worse still…

Sellers who follow this transactional, price led approach, are conditioning the customers in their target market to focus on price alone, converting them from being rational buyers (taking decisions based on benefits minus cost) into commodity buyers making decisions exclusively on the basis of price.

And finally…

Accelerating a proposition through the Product Lifecycle stages reduces the total lifetime achievable margin from the initial proposition, much of which is needed to re-coup and reward the initial investment, not to mention to fund future proposition development.

The one-liner is…

If you are managing sales of a complex proposition in the Growth/Maturity stages, maintain strict pricing models (can you throw away your discount matrix?) and show your sellers how to have deeper customer discussions about value and solution development.

Your customers will like it, you’ll win more sales, and you’ll keep your margins stronger for longer…