book.chapter Advantages of solution focus

Being centered on solutions means that an organization identifies itself by the problems it addresses for its customers, rather than by the products it sells or the services it offers. Companies that are focused on solutions provide value by resolving both the immediate and long-term issues faced by their customers. In a business landscape where decisions regarding capital investments are increasingly made at higher levels within customer organizations, adopting a solution-centric approach distinguishes a company from its competitors and positions it as a trusted advisor. This status serves as a solid base for future business opportunities. Although the concept of "solutions" is currently fashionable, for many companies, this simply translates to offering a collection of disparate products and services bundled together. Nearly every company across various industries strives to have their offerings perceived as comprehensive solutions. The surge in the trend of selling solutions can be attributed to four key developments in the marketplace: Firstly, there has been a transition from a market rich in demand to one that is demand-deficient. Before the year 2000, many industries could sell as much as they could produce. However, the economic climate after 2000 has become more challenging, with heightened competition across the board. The advent of the Internet has significantly increased buyer literacy, leading to more scrutinized purchasing decisions. Customers now require detailed justifications for their choices. Consequently, companies must work harder to stand out amidst the market noise and earn the right to engage with customers. Secondly, globalization and commoditization have escalated business competition. Domestic companies are now contending with international competitors. A successful product launch is quickly followed by competitors who introduce similar offerings. Large, well-funded companies add numerous features to appeal to customers, which eventually makes it difficult for customers to distinguish between products. This leads to a decline in sales revenue and profit margins as companies resort to steep discounts to maintain sales. Thirdly, corporations are finding it increasingly challenging to achieve sustained growth. Investors lavish rewards on companies that grow their top-line revenues, but achieving this growth is difficult. This is why companies are shifting towards providing solutions rather than mere products or services, as solutions imply greater customer value. By positioning themselves as solution providers, companies hope to capture and retain more value. Lastly, from a revenue and profitability standpoint, offering solutions rather than products or services has more potential upside. Companies that manage to offer genuine solutions to customer needs often see sales increases of 3 to 7 percent. They also benefit from stronger client relationships, which lead to longer and more profitable contracts, as well as access to new markets that were previously difficult to penetrate. Achieving these gains consistently requires a shift in mindset and a commitment to providing real solutions that offer value greater than the sum of their parts from the customer's perspective. Selling a solution is fundamentally different from merely offering a revised package of existing products and services. Solutions must be conceived, developed, sold, priced, and delivered in a manner distinct from a simple combination of components. Success in selling solutions is not a matter of incremental changes; it involves a holistic approach where the integrated value to the customer is greater than the individual parts, as customers are increasingly willing to pay only for the value they perceive and receive. Transitioning to a model of selling legitimate solutions and consistently earning a value premium for doing so necessitates a different approach to various aspects of the business model, particularly in marketing and sales. This shift involves asking customers about their business objectives and what they aim to achieve, rather than focusing on product quantities. The core of each successful solution lies in a unique blend of in-depth customer insight, the supplier's specialized technical knowledge, and the customization and integration of multiple components to effectively address a customer's most pressing issues.