Many sales and marketing teams at B2B technology and manufacturing companies fail to maximize the total value of their offering. Consequently they restrict their capacity to achieve profitable revenue growth.
Sales and marketing teams are not necessarily doing this on purpose. However, during our ten years of working with B2B sellers and marketers, it’s become apparent that many people talk about value without truly understanding it or how to leverage it as an integral part of a winning business strategy.
Conceptually value is pretty simply to define:
In a B2B setting, value is how much your offering is worth, in quantifiable terms, based on how well that offering can solve a business problem for the customer.
Another way to think about value is what quantifiable business problem you help solve. Perhaps your offering helps your customers gain revenue, lower their cost of production, or reduce labor expenses. Wherever your value lies, it must always be measurable in terms of dollars and cents.
Based on our work with B2B clients in the technology and manufacturing spaces, we’ve defined a comprehensive process that we call the Value Lifecycle. This process involves five phases.
Phase 1: Establish Your Value in the Market
Setting your price is incredibly important to the success of your offering. The maximum price you can charge for your product/solution is the value you create minus the value of the next best alternative, plus the price of the next best alternative.
Phase 2: Generate Demand for Your Solution
Find the prospect’s business problem and get the prospect excited about solving it. We often tell our clients to imagine that they’re using a flashlight to shine a light on the size of the prospect’s problem -- this sets you up to illustrate to the prospect how much value your solution can create for them.
Phase 3: Differentiate from the Competition
Engage the prospect in a discussion about the relative value you create compared to a competitive offering. A formal total cost of ownership (TCO) analysis is an airtight way to show your value versus the competition’s value, and it takes into account the features and benefits of your solution. Beware not to get stuck in a conversation about features, functions, and benefits at this phase.
Phase 4: Justify the Cost of Your Offering
Build a compelling business case with the help of an ROI tool to clearly illustrate your value and persuade your prospect to purchase your offering. The decision maker at phase four is usually someone from the financial team (often the Chief Financial Officer) who will want to see a business case before they free up company funds and allocate them to your project. The challenge here is to create a comparison of results between what your offering can do and what the prospect’s current business state is (aka, what they’re currently doing to solve their problem, which may be nothing).
Phase 5: Deliver and Measure Value
Take steps to deliver and measure value wherever possible. This will strengthen your relationship with your customer and enhance your capacity to develop new offerings and improve existing ones.
The Value Lifecycle can help you better understand your sales and marketing efforts to find out where inefficiencies exist and how you could be doing more to cater to the new demands of customers, create more value, and ultimately secure profitability for your company. Soon we’ll be publishing an e-Book on this topic with much more detail about each phase of the Value Lifecycle.
