As experienced business coaches, we are yet to meet a Client who wakes every morning wanting to buy time from a B2B service provider. Yet we regularly meet service providers who sell their value as an estimate of the time required to create and deliver it. Why does this come about and how can we build value into sales that achieves better outcomes for both parties?
7 Signs to Look Out For
The trap that many dedicated service providers fall into is to carry this focus on time rather than value into their day to day relationship. This shows up as:
- Service agreements drafted only in terms of time and resource levels that will be assigned to the Client for the duration, rather than the value that will be created
- Periodic activity planning and assignment in terms of hours per month (or quarter)
- A tendency on the part of the service provider to underestimate the time required to create, deliver and measure value i.e., to over promise, borne of their genuine determination to delight their Client
- A failure to allow capacity for the unforeseen requirements that will inevitably arise and require a further investment of time and resource by both parties
- Activity reporting detailing (and often under-reporting) the time spent by different resource levels each period, fuelling anxiety on one or both sides about whether a) this actually happened, b) the time spent was proportionate to the task and c) it represents value for money.
- Invoicing that details a periodic retainer for time spent, with no reference to the value created
- Relationship reviews, if they are scheduled at all, based on the inaccurate perceptions created by all of the above.
The Result of Selling Time Instead of Value
The result of selling time instead of value-added is an anxious, tactically-focused relationship that probably has little or nothing to do with the values espoused by the service provider, is based on an inaccurate understanding of the time both parties invest and is unlikely to deliver the value anticipated by either of them.
The outcome is invariably that the service provider’s cost to serve is higher than estimated, and the value delivered to the Client is lower than it should be, leaving the relationship vulnerable.
It is, of course, important to estimate and then measure the time a service business invests to create and deliver value to its clients: how else can it ensure that the commercial terms agreed with each new Client will be commensurate with a sustainable relationship?
Furthermore, prospective Clients often ask for a breakdown of resource levels and associated rates that will be assigned to them in exchange for their investment. Which is entirely reasonable.
Nevertheless, time- rather than value-based selling, and the reporting that follows, will result in a relationship vulnerable to challenge by senior management who will be more interested in outcomes than inputs.
Furthermore, at an industry level, the service provider is unwittingly performing a disservice to their sector, by encouraging a Client to focus on cost rather than value to the potential detriment of all.
The Heart Of The Problem
At the heart of the problem lies a failure to clearly articulate what the service provider is selling and the Client is paying for and as importantly, the service or process wrap that will educate and help the Client engage with this for greatest mutual benefit.
- What are the steps that the service provider will work through with the Client and revisit periodically, to create and maintain a shared understanding of their operating context and requirements?
- What product(s) will the service provider deploy in order to address these requirements, and what will be the role of both parties in this selection and implementation?
- How will both parties create and sustain a relentless focus on the value to be created using these products, and what milestones and measures will they use to both benchmark and assess progress?
- What steps will ensure that the relationship is regularly reviewed and refined to optimise the value it delivers?
The Solution: Product And Service Architecture
Clearly expressed and communicated, a product and service architecture will help everyone focus on value. The resulting conversations will be far more likely to identify incremental opportunities to deliver chargeable services and creative insights which convince the Client that they have chosen the right partner.
By mapping out a journey with clear steps, reviews and milestones, the service wrap will help both parties recall what the true situation was at the beginning of their relationship and at milestones thereafter, and so more accurately assess whether the promised outcomes have been delivered, the process followed and the full value created through their collaboration.
Once this can all be articulated in terms that are memorable and engaging, and assuming you have an aligned positioning and channel strategy, you will be in a much better position to set up and run each new relationship on the basis of selling and delivering value over time.
Time never was a true measure of value, so the sooner we stop selling (and buying) it, the better for all of us.
Get In Touch
Would you like to find out more about improving your business with the help of a business coach? Book an introductory call below, contact us online or call 0345 222 5618 to start the conversation.