Mastering the Complex Sales & Value Leakage – Jeff Thull’s Rule

by Victor Antonio, Sales Buy•ologist

Mastering Complex Sale by Jeff ThullSometimes an author presents a concept that is so shocking (i.e., a paradigm wrecker) that it takes a while to get over the shock and socialize it.  Well that’s what happened when I was reading Jeff Thull’s book, Mastering the Complex Sale.  The book itself is about how to win the complex sale using a specific analysis-methodology in order to be more effective at selling your product’s value.

But that wasn’t the shocking part.  Towards the end of the book, Thull introduces the concept of the Value Leakage Bucket.  And in his explanation, he makes, in my opinion, a shocking revelation with regard to value degradation that quite honestly caused me to have the reread the section twice if not three times.

But before I share with you Thull’s assertion, allow me to paraphrase how he views the Value Chain of a product being brought to market.   (Note: As you read the following, keep in mind that I do not do Thull full justice and I suggest you get the book; worth every penny)

Here’s my “Victor-ization” of Thull’s assertion.

Step 1: Product is conceptualized by Product Management (PM), or the like, based on direct feedback from clients.  At this point in the process, the product being conceptualized is perfectly aligned with the needs of the client.  We can figuratively say that the Value Bucket is filled with 100% value.

Step 2: The Engineering Design Team (EDT) then begins to work on designing the product but realizes that certain compromises or trade-offs have to be made with the physical (e.g., size, aesthetics, layout) and the functional (features and capabilities) aspects of the product in order for it to be produced.  Value Bucket = 70%[1]

Step 3: Manufacturing reviews the new product design and communicates back to PM and the EDT that in order to make the product cost effective, certain changes (i.e., compromises) have to be made on the materials and components.  Value Bucket = 40%

Step 4: Marketing now has to craft a message, a strong value proposition, to sell this new product that is NOT completely aligned with what clients want.   Which means that the marketing collateral will center around ‘me too’ features thereby making the product harder to differentiate from the competitors.  The result is marketing collaterals with weak value propositions.   Value Bucket = 20%

Step 5: Sales now takes the product and the product collateral developed by marketing and tries to sell a product whose value is now about 20% of what the client’s want and/or need.

Wow!  That is a startling revelation.  Salespeople are only equipped with 20% of the intended product’s value when selling.  If true, emphasis on the if, then it’s no wonder salespeople have a hard time articulating a value proposition that DIFFERS from their closest competitors.

Said another way, Thull asserts that by the time salespeople gets their hands on the new product, its value once 100% aligned with the client’s needs, is now at 20% of its impact value which essentially equates to having a “me too” product like your competitors.  And, because the product is now comparable to a competitor’s product, the client sees no reason in paying a premium for the new product.  Translation: No difference in value equals price discount in the client’s eyes.

So blaming salespeople, for not selling more, may seem a gross miscarriage of management justice.   Salespeople are maligned when new product sales fall short of expectations, but the real blame should be spread across the entire product value chain, not just sales.  But could it be, according to Thull, that oftentimes salespeople are given products they can’t sell because there are no ‘real’ differences between their own and the competitor’s product?

When the value, the differentiators, have been reasoned out and whittled down to standard features, the product is condemned to the realm of commoditization.  Which leads to price concessions by the seller, which leads to lower margins, which leads to less R&D money for new products development, which leads to less tolerance for new product features, which leads to more watered-down products that salespeople can’t sell without price concessions.  The seller and the company have now entered the downward spiral of commoditization.

New Sales Term: Based on this premise, when a product has been reduced to 20% of its real value and the salespeople are expected to sell it, we should say that the salesperson is a victim of Thull’s Rule!

Yes, I made that up!  Jeff you can thank me later 🙂

[1] I extrapolated these percentages from Thull’s graph and should only be used as an indicator of magnitude rather than actual percentage drops.  Thull doesn’t use a specific percentage until he gets to Step 5.


One Response

  1. […] video is a follow to my article on Value Leakage.  After watching the video, I recommend you click here to read the […]

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