By Ed Pierce, Fleet Industry Marketer
Although the economy has been growing for some time now, businesses continue to focus on savings when comparing products and services. Savings is just too limited a means of determining the potential benefit of a product or service.
A good example: cost savings persist in carrying the most weight in the procurement’s “weighted scorecard”. Worse, there is the oversimplification of costs into two buckets — “hard” or “soft.” This effort may uncover easy-to-find “hard” cost savings while disregarding or undervaluing “soft” costs that have a detrimental effect on the business.
The Value Spectrum Improves the Analysis
Value, on the other hand, is all-encompassing. It takes into account both cost reduction and revenue generation. Yes, it is inherently harder to analyze but provides a more accurate basis for decision-making by offering an entire spectrum of possible business rewards.
Picture the left side of the value spectrum as products or services that generate savings in the budget TODAY.
Moving to the right, a product or service that delivers savings on the balance sheet, cash flow, or working capital is FUTURE-oriented, but still quantifiable.
Next to the right are products or services that contribute to cost avoidance or capacity enhancement. These bring EXPECTED savings realized from higher production, increased customer satisfaction or faster transaction speed.
On the far right are products or services that are ALIGNED with corporate goals, e.g., safety improvements, legal, or environmental changes. These products have no immediate proof of savings. They offer no initial quantifiers, meaning that they are riskier.
Movement Within the Spectrum
However, there are plenty of opportunities for a product or service to migrate from one category to another. What starts as EXPECTED can deliver tangible results TODAY over time as EXPECTED savings come to fruition during implementation.
Fleet industry product and service providers need to deliver a compelling value story to customers and prospects. By introducing them to the concept of the value spectrum instead of being pigeonholed into an evaluation of hard and soft costs, there’s a better chance to demonstrate real value while helping the company make a more informed decision.
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