Value Creation

An effective business starts with a vision of what it wants to become and ends with value creation. Competing in a competitive marketplace is difficult, and to survive and prosper long term, a company must develop and use its capabilities to create, real, sustainable, superior value for its customers and society as a whole. It requires a company to anticipate and profitably satisfy customer needs.

Let’s take a look at an example. How many of you own an Apple IPod? I would venture to guess that approximately 1 in 10 of you own an IPOD. (I recently saw a statistic that 11% of Americans own an IPod). Our family currently has three IPods, and we love them. How did Apple come up with this cool gadget? Did someone go up to Apple and tell them that they wanted Apple to develop a sleek, stylish, device that could store digital music and video files, and they would like the device to be able to sync up to a website that allows users to easily download millions of songs? Probably not. So how did they come up with the concept?

Apple understood their customer’s wants and needs. This understanding came from rich customer relationships that had been developed through years of product development, testing, and feedback. I would assume that Apple spends a large amount of money surveying customers and potential customers to get a clearer picture of their true wants and needs. Apple probably also has a clear understanding of its own internal capabilities. With this in mind, they anticipated what their customers would want, and developed a product that profitably satisfies these needs and wants. That’s value creation.

Do we have examples of anticipating and profitably satisfying customer needs? We do. Recently the sales team closed a large sale. Several months earlier, this account had been identified as a large sales opportunity. Many team members were involved in this particular sales process, and their efforts were rewarded with the acquisition of this account’s business. During their last monthly meeting, the sales team had an opportunity to analyze their performance on this sale. The key question that was raised was, “What led to the successful outcome of this particular sales process?” Here are the key takeaways from this analysis.

Takeaway 1: We need to understand the customer needs.

This prospect had similar needs to many other large, regional consumers of fuel, lubricants, and propane. These key needs can be summarized as follows:

• The prospect was focused on cost saving solution.
• The prospect wanted to consolidate suppliers as much as possible.
• The prospect expected its vendors to package their proposals in a concise and professional way.
• The prospect was open to new ideas, and was hungry for easy to understand market- based information.
  

Takeaway 2: We need to understand our strengths.


Customers are smart, and they can see through half-baked promises. Fortunately, for R.E. Powell, many of our strengths aligned with this prospects needs. These strengths include: A team of experienced professionals that could audit their operations and help them identify cost saving solutions.

• A supplier that can supply products to a large geographical area, so as to limit the total number of suppliers that they need to deal with.
• A supplier that can provide easy to understand, market-based information that can be used to make informed buying decisions.
• A supplier that can package their findings and solutions into a concise and professional looking proposal.
  

Takeaway 3: Prepare before the game.

By developing strong relationships with many of our large, regional customers, we knew that these type of customers have specific needs that need to be addressed. This knowledge had led us to adapt our strengths to meet these needs. Over the last couple of years we had made the following adjustments:

• Added new sales professionals to our team that are experts in their specific field.
• Expanded our distribution areas.
• Improved our ability to gather and disseminate market-based information.
• Improved our proposal writing and presentation skills.

We had anticipated and profitably satisfied the customer’s needs. That’s Value Creation.

So is there a standardized process for value creation? That’s a great question, and I will address that in my next blog.

I'd love to know your thoughts? tony@repowell.net

Tony

www.repowell.net