Posted on: October 29th, 2018
As businesses compete for capital, be it acquisition financing, bank loans or equity, it’s important to state clearly what the business does, and why it’s different. All businesses have similarities, but lenders want to really know your differentiators, what specialized edge you have separates you from the other 1,000 companies in your market.
This boils down to the classic statement of your value-add wherein you define what benefits your clients capture from the economic relationship with your firm. Presumably, they do business with you because you contribute something of value, and it is more sensible from them to source it from you than do it internally.
Most companies are usually too busy grinding out day to day business to have the proper perspective to answer this question in its truest form. There are the stock answers – we are faster, lower cost, higher quality and then there are the higher-level descriptions such as product line breadth, one stop shop, customization and mission criticality.
All of these are reasonable attempts for the busy company who sees this type of self-reflection as a somewhat annoying process that is required to play the financing game successfully. What these answers all have in common is that they are the company’s own view of what they do well and different, that customers value.
Surprisingly, when customers are asked to give their view of value add, it can shine a whole new light and create higher level self-awareness as to the real value add. For example, we have worked with many companies at Attract Capital who give their customers more than just the surface level benefits of good product at a good price.
For example, they might give their client’s peace of mind, knowing that whatever issue they might have, the supplier will always do the right thing. They might make their client’s smarter through sharing knowledge or information outside of the routine sales relationship, that helps the company think at a higher level.
They might like the fact that the company is run by good hearted individuals who they can trust to always be there for them. They might like the level of respect and loyalty they get from the supplier, which makes them feel special.
Whether it is doing the right thing, making people smarter, or treating them special, these are the real differentiators that undergird the more generic ones and build the connective tissue between the companies.
There measures of value add, while less statistically measurable, are infinitely more durable and constructive to building a world class customers. Here are several tips to get better at understanding your true value add.
- Ask for Testimonials & feedback– if your customer will write a testimonial, then you must be doing something special. Writing it out forces them to reflect on what they really get from you. The testimonial will clearly synthesize your strengths from their perspective.
- Don’t assume – Just because you are smart doesn’t mean you do not have blind spots about how your value is experienced by customers. Some customers value one element, while other customers value a completely different element. For some, it may be that they can always get you on the phone or that you will meet with them immediately.
- Analyze your full spectrum of value add – meet with your senior managers and list all the things you do for clients. Make a long list and don’t omit something just because you think it is minor. Clients often place huge value on things you may think are inconsequential.