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Rule No 4 "Clarify and Understand your own Value Before you start"


“Value is the extent to which a product or service is perceived by the other party to meet his or her needs or desires, measured by their willingness to pay for it. It commonly depends more on their perception of the worth of the product than its intrinsic value.”

So… if we “deliver value” we’ve satisfied a need or desire of someone at a price they were willing to pay. We’ve provided someone with a benefit for a reasonable cost – value for money. That sounds straight forward enough. So, why then is value one of the most talked about aspects of Sales, Purchasing and Negotiation? Most talked about, but least well understood, implemented or used. Why? Because it takes time, effort and emotional intelligence to understand the other party’s perception, drivers and motivation, and is therefore difficult.

Understanding Value

he secret to understanding these issues is to prepare and plan carefully (See Rule No. 2) and to be able to listen and hear and use your emotional intelligence! Because most negotiators only consider the other party rationally, their research focuses on purely rational issues. However, the key to utilising value effectively is understanding the difference between what people say they want - their EXPLICIT wants, such as lower prices - and what they are IMPLICITLY asking for, which could be recognition that they’re important, want genuine dialogue and feel the need to be taken seriously. Emotional understanding goes beyond the obvious explicit requests. Only by asking intelligent open questions about the other party’s challenges, needs and desires and really letting them answer, can we get under the skin of their real drivers.

Three different aspects of value to the other party:

  1. Financial value. The real financial benefit to the other party.
  2. Operational or Business value. Such as efficiencies in terms of time and resources, or competitive advantage (all of which have a financial value too).
  3. Personal value. Often, the most important. Addressing personal value is what makes a value proposition really attract an individual’s attention.

It gets more complicated. Big decisions are rarely made by one individual – it is more common that they are made by committee with a host of influencers and advisors. Now, our definition of benefit or value includes the term “…the other party”. But, we have different stakeholders with different goals and needs, and they all have their individual definition and view of value. So, we have some work to do.

Defining Value

It might sound crazy, but busy decision makers don't care about what you're selling – the features of your product or service. They only care about what it does for them (“what’s in it for me” – WIIFM). That's why a value proposition is so important today. It's a clear statement about the benefits (value) they get from using your product, service or solution. Now have a look at your web-site, your marketing materials and your proposition – feature rich or benefit rich?

The most effective value propositions target the two issues customers care about most:

  • What’s in it for them? Customers focus on their own pain points and aspirations – what they are trying to fix, accomplish or avoid. Value propositions that focus on solutions to those points really resonate with customers.
  • Why you? What cuts you out from the competition is called differentiation:

Points of Relevant and Irrelevant Parity (POPs)

These are the features and benefits you offer that are important to your prospects that you also share with your competitors. Think of them as the basic entry requirements to the game. Your prospects need to know that you offer the POPs, but emphasizing them won’t impress anyone.

Points of Irrelevance (POIs)

All the other features that you offer, but aren’t interesting to your prospects are Points of Irrelevance (POIs).

Points of Differentiation (PODs)

Here’s where you can win the game. These are the features and benefits that are important to your prospects and not available from your competitors.

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