Value-add Strategy

Value-add Strategy

How to discredit your competition

By Ian Richardson, Managing Partner, Richardson & Richardson Consulting

Value-add strategy can discredit your competition

Understanding and making effective use of a value-add strategy is a difficult task for any entrepreneur. Making sure to balance giving away product, service, time, or consultation against the need to generate revenue and return for share holders can be a difficult task. If you utilize this technique appropriately however, you can not only create raving fans of your clients, but you can also discredit your competition without ever mentioning them by name. I’ve always been a fan of the 1-2 punch after all – read on to learn more.

What is a “value-add”?

Always important to make sure everyone has the same understanding of vernacular. For our time together today, a “value-add” is a service, product, or offering that you’re providing at no additional cost to your client. You’re adding value to their existing bill by doing a bit “extra” via the offering.

Value-add offers are the same as any other offer – you are still providing whatever it is the service normal entails, there is no invoice generated at the end of it for what has been rendered.

When to use the value-add

This is the trick of the scenario – when do you use the value-add? Before you EVER utilize the value-add, it is important to have a clear, concise, data-supported view of the what goes into the value-add itself. You, at a minimum, should have answers to these questions:

  • What are the deliverables of the value-add?
    • What are we promising to the customer?
  • What are the costs of the value-add?
    • Payroll
    • Materials
    • Revenue Loss
    • Soft Costs
  • Is there the potential the value-add could cause unanticipated extra work?
  • Do we have proper scope of work developed for this value-add?
  • Do we have the processes and procedures necessary to keep the value-add within bounds and control costs?
  • What do we anticipate gaining by delivering this value-add to our customer?
  • Does the potential gain outweigh the costs of the value-add?

After you’re certain that you have your value-add ducks in their appropriate rows, you can ponder when to utilize the value-add. I’ll share one of my key secrets on this topic.

There is no hard and fast rule on when you must use a value-add

Surprised? Don’t be – The value-add is one of the most flexible weapons in your arsenal. You don’t HAVE to use the value-add, its just an option. Your sales team can utilize it to close a deal if needed. Your account management team can use it to smooth over a bad result or upset customer. Your operations team could suggest it when a customer could benefit from the service. You can use it as a client appreciation gift, a new customer welcome package, or as a donation to charitable organizations.

The possibilities are endless on when or how you use the value-add, but I’ll share my favorite:

This stems from my discovery process from my old I.T. business. During the conversations around what was bothering or causing pain for my prospect with their current provider, I would “quantify and qualify” the “gap” they were expressing – I would make sure I understood what was happening currently, and what would need to happen for them to be happy and satisfied. After I got that information, I would present a path forward, related to our services, around that gap. For example, “Well Mr. Prospect, if we were able to collect data on how often these issues occurred, and then present that data to your sales team in an easy-to-understand report, would that help your managers and sales team better understand and address this problem?”

When the prospect indicated that yes, it would help address their issue, I would then ask the magic question: “Does your current provider offer this service to you as part of their regular contract?”

After receiving the “no” I knew was coming, I would pause, look slightly confused, respond with “Well, that’s odd – its standard in our contracts to do so. Well, lets move on to situation #2.”

The poison has already entered the competitor’s water supply – soon enough, that implied disconnect between what SHOULD be included and what IS included in agreements creates a lack of trust and faith in the competitor’s delivery, without ever directly saying so.

Don’t throw shade

A key consideration around value-adds, competitors, and “throwing shade.” Nobody appreciates someone who bad mouths their competition. There is no honor or glory in insulting, impugning, or disparaging another business owner or organization. Don’t directly state that your competitor is doing a bad job, not providing value, or whatever other belief you may hold or feel. It’s the punch Ali never hit Foreman with – it doesn’t need to be done. Practice good “sportsmanship” – after all, you never know if you might need a favor or want a conversation with that competitor down the road.

Final Thoughts

If you’re struggling to stand out amongst your competitors, or are concerned about strategy in general, Richardson & Richardson can help. Check out our case studies for stories of organizations that we’ve assisted with similar issues and download our white papers for deep dives on tools you can use in your organization. If you’re wondering where to start, book a complimentary session with one of the Richardsons today to come up with a plan on how to move forward.


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