In a recent article I asked how you think a member of your sales team would respond if a prospective client said, “There are many others who do the same thing as you but at a lower price.”
There’s a good chance they’ll respond by touting your product’s features and benefits, quality levels and exceptional customer support. The odds are this is what your competitors would say as well.
The article stressed the importance of promoting your key differentiators. These include your employees, how your work and manage projects, as well as any specialized tools or equipment you use.
Another effective approach is to define the value of your products and services. If your team can’t do succinctly do this, it’s going to be tough to get a yes to your proposals, especially at reasonable margins.
When justifying the cost of energy efficiency upgrades, it’s only logical to emphasize the economic benefits of reduced energy consumption. But in many situations, saving energy is not enough to get a yes. It simply isn’t a high enough priority for many building owners. Considering most energy efficiency upgrades are capital-intensive, building owners often opt to invest their capital in operational improvements. The results are more visible, and in many cases with shorter payback periods.
The challenge is to identify the total added value of your products and services.
The Added Value of Your Products and Services
There are three basic ways your products or services provide customer value that should be included in your proposals:
- Increase revenue
- Decrease costs
- Provide an “emotional” benefit
This information will help increase the conversions and profitability of your energy efficiency proposals by identifying the total added value of your products and services over and above saving energy.
Here’s a chart you may find helpful.
The reference price is the price the customer expects to pay, or at least what they say they’ll pay. It could be based on what a competitor quoted, or even a price that you quoted or charged before.
It’s the starting point for defining, and justifying, the added value of your products or services.
Adapted from “Value-Based Pricing” by MacDivitt & Wilkinson
Energy efficiency upgrades-especially HVAC, lighting and window films-often result in a more comfortable and healthy environments. This is especially true in our COVID-19 world with improved air filtration HVAC systems with germicidal capabilities. For commercial real estate, this often results in higher occupancy and lease rates, as well as reduced employee absenteeism and improved tenant productivity.
The key to defining your added value stemming from reduced costs is to focus on the total cost of ownership. For energy efficiency upgrades, in addition to lower energy costs, these often include reduced equipment maintenance, repair and serving costs. For manufacturing operations, the upgrades-especially improved lighting-often result in lower scrap rates and improved quality levels.
Emotional value-we know it exists but it’s tough to put a number on it. A good example is the satisfaction of being a good environmental steward. Another example is attracting top talent. For many of today’s younger employees, working for an environmentally conscious company is not optional. Plus, there’s the PR benefit. We had a recent project where the owner insisted his solar panels be visible from the street because of the message it sent to prospective customers.
But Won’t Customers Realize These Same Benefits from Competitor Upgrades?
Yes, they will. However, many competitors don’t define the value created by their products and services. And when they do, the focus is usually on energy saved. Identifying the full added value created by your products and services will give you a competitive edge.
But you do have differentiators that set you apart from the competition. They include the people you have, how you work, your approach to project management, specialized tools and equipment, range of capabilities and your “tribal knowledge.” These all add value and are unmatched by the competition. This will be addressed in next week’s blog.
You don’t need to become, or hire, an expert in local commercial occupancy and lease rates, employee productivity and absenteeism statistics, manufacturing operations, etc. to take advantage of these value-added benefits. But citing formal studies addressing these areas add credibility to your proposals. Plus, they make great client leave-behinds.