The Five Stages of Prospect Value Identification

By Paul DiModica

Prospect value identification is an integrated process of perceived and actual value delivered based on your offering and your customer's perception of that offering at various stages of your sales cycle. There are five steps of prospect value identification that take place during your sales cycle and they include:

1. The Vendor's Perceived Value - This is a vendor presented value and is based on how you see your value and how you communicate its status to your prospects or existing customers during the pre-sales cycle through your firm's marketing communication and sales step process.
2. The Customer or Prospect Transitional Value - This value happens in tandem during the discovery process where the prospect matches or rejects your perceived value (vendor's perceived value) with their perception of your value. This is a value conversion step during the sales cycle.
3. The Prospect's Perceived Value of Your Offering - This value happens when your prospect or your customer finalizes their perception of your value relative to your competition and makes an assumption (correctly or incorrectly) of the value of your product or service relative to price, the business results it produces and the alternative options they have for purchase or non-purchase.
4. The Prospect's Actual Value - This is the alignment by the prospect or customer during their post-sale decision process to determine if the perceived value communicated by you in the pre-sale matches their perception of your actual value in the post-sale.
5. The Value Gap - This is the measurement or gap between the vendor's perceived value believed during the pre-sale steps and the prospect's actual value calculated after the first sale.

Prospect value identification by its very nature is a layered, intricate process that must be aligned with your sales and marketing communication as an integrated approach. Prospect value observation starts at the beginning of your sales cycle and your position is often determined based on your entry point into the organization.

Enter into a prospect's organizational chart below the title of Vice President at the beginning of your sales cycle and you are entering into the commodity zone of buying. Prospects below the title of VP generally make business decisions based on your offering's features, functions or price.

When you sell management at the Vice President level and above, they buy based on their perceptions of your business offering's value. This is a variable option that you can manipulate if you can sell correctly.

Often there is a gap between what firms believe in themselves and what their prospects actually experience.

It is not what you sell, but how your prospect positions the value of your offerings against the alternative buying options they have that must be managed.

To sell more, sell above the commodity line, manage the prospect's perception of your business value, and control the value gap between their perception of your value and your perception.

What the customer demands is last year's model, cheaper. To find out what the customer needs, you have to understand what the customer is doing as well as he understands it. Then you build what he needs and you educate him to the fact that he needs it. Nicholas Dewolf, Founder Teradyne Corp

To your success,

Rick Erling