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June 13, 2009

The perils of "Value Added" services

When you offer "value added" products the implication is that they were worth less before, or that they were even value-less.

Value added is how competitors try to position themselves in a commodity field. ERP players used to be swimming in a  sea by themselves. Today, they are in fierce competition for a dwindling market. Price becomes a key factor.

To get around that - and to try to sustain something like the profit margins of the good old days, they offer additional services - normally for an extra cost - or to try to prop up their prices for their bread and butter work. They offer value added services.

What does this do in the market? Clients start to believe that they are paying either the right (low) price for the existing services, and maybe even overpaying.b The result, the expectation that they can get more for less...they are already getting a pretty good investment!!

Here are some ideas to try out to get away from talking about, or even offering to give value added services.

1) Establish your value at the onset. Work through this stage with the clients, work through the issues, problems, past costs, future risks etcetera. Get them to assign a value to it. Help them, facilitate the process, but ultimately they need to make the statement.

Then they know the size of the issue facing them.... but this is only the beginning. They know now the problem, but may believe that they could employ any number of people to fix it. So...

2) Make sure that you have established your ability to deliver this value - rapidly. A track record of success, a brand that screams value, a long list of verifiable case studies, and a long line of people waiting to refer you if required... all pointing to the fact that you can be trusted with this problem. 

3) Deliver extraordinary value. In fact, number 2 is not possible without number 3. Make a lot out of your ability to compare with other anonymous industry leaders, your ability to produce scarce and valuable insights, and your ability to connect with others who are leading the field in whatever it is they want to do.

And when it is all over you must help them to work through what has been achieved, and help them to quantify the results of it, as well as understanding the steps that are going to be needed to make it all happen. Something you, and they, have had your eye on since the game started. 

Adding value is a 1990's con... and one that devalues your products and services. Selling value is what you want to be able to do - and then deliver beyond expectations. 

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