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If your customers can't perceive the value you provide, it simply doesn't exist. That's the value gap and it's one of the biggest roadblocks to sustained growth and maximized profitability.
The value gap can often be traced back to cross-functional dysfunction, a term that basically means that individuals or departments are not working together, or even worse, they may be in conflict with each other. Consider these examples: Are new products created that have little connection with your customer's real problems? Is marketing generating leads but not held accountable for their quality? Are salespeople rushing to "present" solutions instead of seeking out relevant information on the customer's real requirements? With confusion and disorder, customers default to what they do understand - price - and there goes the downward spiral to commoditization.
The issue is when various departments or individuals are operating with cross-purposes, a company's value strategy is likely diluted by the time it reaches the customer. The customer perceives, rightly or wrongly, that either the value being offered simply isn't there, it isn't unique compared to alternative solutions, or there are doubts that the value being promised will be delivered -all of which leads to hedging, forcing price comparisons and driving profits down. Sellers ultimately watch their margins erode as price becomes the driving force of the decision.
In order to close the value gap, companies must create "Prime Solutions" - solutions that:
a) deliver optimal results, capable of leveraging value to the highest level of the customer's business,To achieve this goal, a company must end cross-functional dysfunction. It must replace "cost cutting" with "value creation" as a core competency. In other words, creating and selling value must become everyone's responsibility.
So how can you build a culture in which value creation becomes the mantra and your customers see you as an incomparable source of value? Here are some guidelines to start transforming your organization:
Begin with a tangible and compelling customer problem. All too often, we can develop products and services based on faulty assumptions about value. Chances are these assumptions could be inconsistent with the customer's perspective. By the time we discover the disconnects, time, money and market position have been lost. Not only must we look through the eyes of our customer and develop products and services that address our customer's financial well-being, but we must constantly validate our assumptions about value. We must ensure we can convert what we believe is value into value our customers can fully achieve and measure.