Bringing Customers Closer to Your Norms

As a norm leader, you can offer customers a demonstrable advantage over their competitors by bringing them closer to your norms, which should be significantly superior to the industry average. This ability—to help your customers compete more cost-effectively—is your own competitive advantage as a consultant. It transcends your product price and performance, your deals and discounts, features and benefits, or any other aspect of your business and its sales propositions. It is the added value that your customers buy when they buy from you.

Without norms, you cannot quantify prospective customers. You may be able to learn where they hurt; where their "pain points" are. But you cannot know how much you can ease the pain, if at all, or how long it may take. Nor can you know the value that easing the pain can add to the customers' operation where the hurt—or opportunity—is located.

If your customers are providers of supply chain management software and you supply solutions to businesses in the SIC code 7372, your experience tells you that they derive revenues primarily from software licenses and services such as consultation, maintenance, and training. You also know that their two major cost centers are R&D and sales, both of which account for about two-thirds of their total costs.

You are most likely to target your leads where the customers' major sources of revenue bunch up and where the major costs cluster. But without norms, you can end up asking of everything you learn, "So what?"

What if you learn that the customer's revenues from license fees have decreased 38 percent from a year ago? So what? If you do not have norms for the value you can add to license fee sales, how can you make a compelling proposal to increase them? By how much can you normally raise them? How soon? How sure can you be?

What if product development costs have been increasing by an average 23 percent year over year? So what? Can you help speed up the customers' innovation cycle time? Can you help expand the number of commercializable products that come out of their R&D? You cannot answer these questions unless you know how much value your solutions normally add and how soon they normally add it. Within the context of your norms, you can calculate your value propositions with maximum certainty that they can pay off.

If the customers' profits are coming more from turning over licenses at discounted fees instead of high unit margins, can you help? How sure are you? If their selling cycle takes an average of twelve months, can you reduce it? By how much? How soon? At what value to the customers? Based on the value, at what price to you?

The superior level of your norm value—superior to both the industry average and your customer's current performance in an operation's dollar contribution to profits—should brand you as the partner of choice. By contrast, your competitors who sell from industry norms will be selling commodities. Even though they can propose customer improvement, they cannot propose leadership.

Maintaining a superior norm margin is crucial to your branding. Every time you perform below it, you lower it; every time you lower it, you come back to the pack of competitive commodity suppliers. This is your main incentive to work at your best. It also warns you to work only with customers who want as badly as you do the growth that your norms promise, who have the managers and support staffs who can partner additively with you, and who will be impressive references for your track record as norm leader.

A model set of norms, in this case "norms on a card," is shown below. The information on this three-by-five-inch card represents the normal savings that an automated process controls supplier can make in the major cost contributors to a pulp mill's operations.