Adding Business Value For Profitability

By Richard Okolo

Do you seem to notice that your customers are more focused on the price rather than the value? Has your business ever lost an account and your not quite sure why? Perhaps the answer is that your customers did not see that value that you add.

One of the most vital aspects of business today is how does your organization show and demonstrate the value added by your products and/or services to your consumers. The dollar value is the measure! Whatever your firm does to make your clients more profitable is the value added. Most customers do not know how to quantify the value you’re adding; therefore you must do it for them.

The reason dollar value is the measure for value is because your clients have to be able to differentiate between your value-added package(s) and those of your competitors. A company that can show the value they add significantly gains a competitive advantage. The great thing is that there will be clients willing to pay a premium for your value-added products and/or services.

Measuring The Value Your Firms Adds

There are three steps in measuring the value your firm adds;

• Identifying the value your company has already provided and/or can provide
• Determining how the value impacts your customer(s)
• Measuring the impact of the value on your customer(s) profit margin

There must be a unique selling proposition (USP). This proposition is based on your ability to improve your customers net income.

The next thing is that you must sell your customers a profit improvement proposal. In it, you are offering a guarantee of value instead of just stating it.

There are four areas to consider when creating a profit improvement proposal

• Price; At what cost will the value be added
• Added Value; How much value will be added
• Performance; Will the value added allow for long-term viability
• Client compatibility; How well does the value meet your client’s goals and objectives

The Competitive Advantage

A profit improvement proposal has the ability to provide your firm with a competitive advantage for the following reasons:

• Most firms cannot show the value they provide; especially if the customer does not either expect and/or ask for it.
• Most customers cannot measure the total cost savings your value will provide. By being able to show them the positive impact of their investment, management can now incorporate this into their goals and objectives.
• You can use the profit improvement proposal and the subsequent results to show to other potential clients. If others can see how you have added value to prior clients, they more than likely will want to conduct business with your firm.

Conclusion

Remember, adding value to any firm is a business decision with requires diligence and in-depth analysis. The bottom line is to create ways for your clients to gain more profitability by maximizing output and minimizing costs. Most importantly, make sure your clients see the value that your company will add.

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