What is Sales Equity?

    On: October 06 Author: Tom Cates Categories: client engagement No Comments

    If you’ve been following us on LinkedIn or Twitter you would know salesEQUITY sponsored last week’s INBOUND Conference here in Boston. By and large the number one question asked was, “What is sales equity?” So, in that vain and in the spirit of Thanksgiving (a subtle nod to Canadians celebrating the holiday this weekend), here we go:


    I'd like you to imagine a pie and in this instance the pie represents the total value of your product and/or service as perceived by your buyer (client). As would be expected, you want your client to feel like they're getting 100% of the value from the product and/or service your selling. You want happy, satisfied customers. When this happens, they are more likely, and in fact happy, to pay you for that product and/or service. The buyer’s equity, the value they actually get (the amount of pie they take home) is their “asset” (the size of the total pie) less their liability (the slice they give you). It stands to reason then, if the buyer perceives a big pie then the slice you take seems justified; conversely, if the buyer perceives a small pie then giving you a slice of it can become quite the bone of contention.

    Sales Equity3.png


    Let’s start by breaking down a buyer’s perception of the pie into three integrated sources of value, or “equities”: 

    Product Equity: The value a buyer receives from their perception of the product/service “asset”, including technical specifications, quality components and construction, functional performance, etc.

    Brand Equity: We all know this one, it’s the value a buyer receives from their perception of the brand offering the product or service (its name and symbols), including how well known, history of taking care of its customers, social acceptance, etc. 

    Sales Equity: The subject of our discussion; this is the value a buyer receives from his perception of the relationship with sales, marketing and account service teams, including integrity, competency, recognition, proactivity, savvy, and chemistry, etc.

    Think of these three integrated equities as concentric rings, building upon each other to grow the perceived size of the “value pie”.

    Sales Equity.png

    Sales Equity_Pie.png


    If your buyer only perceives the product equity then you have likely created a fairly small “value” pie and you’re going to have to fight like hell for your slice. If you can convince your buyer the product also has brand equity, then you’ve grown the perceived size of the pie and therefore you can take your fair slice and your buyer still ends up with more pie.

    Yet, when the buyer perceives the value trifecta of product, brand, and sales equity then the perception is it’s a big pie and giving you a slice of it isn’t a hardship to your buyer, in fact, you've earned it. Your buyer perceives a big pie and you’re able to grab a hefty slice and still leave plenty (value) for your buyer. 

    At the end of the day, you don't want to show up at Thanksgiving dinner with one-third of a pie; which is what most businesses offer - brand equity. The other pieces, product and sales equity are equally valuable and not only lend heavily to the overall perceived value of the relationship but are also instrumental in establishing trends and determining benchmarks.

    Now granted, at INBOUND we didn’t have the luxury of time and communicated this message as succinctly as possible in what was usually 2-minute intervals. But here, on this page, we’ve taken liberties; which I hope helps you better understand sales equity, and be more informed on how this impacts the overall value you bring to your client relationships.



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