LeveragePoint Value Management Blog

Closing the gap between marketing collateral and sales effectiveness for B2B marketers.

Marketing teams in the B2B world spend thousands of hours carefully crafting marketing materials aimed at communicating the value proposition of their products and services. We've all seen the fancy PDFs filled with product specs, wordsmith messages, and impressive visuals designed to capture the essence of the solution being pitched.  Marketers responsible for putting together these materials also go through great efforts training sales teams on how to access and leverage marketing collateral with customers.  Unfortunately, throughout my 12 years as a marketing and sales consultant, I have never heard sales teams talk about how their fancy marketing fluff increased their effectiveness during the sales process.

The reality is that in B2B markets, purchases are essentially economic transactions, where buyers are trying to make rational tradeoffs on how to best allocate their limited resources.  In this context, marketing collateral often fails to answer the most compelling questions from customers.  “How is your solution better than your competitors and by how much will your solution impact my bottom line?”

In addition, buying decisions in B2B require consensus among a diverse set of stakeholders with varying needs and motivations.  No matter how much effort goes into developing that three-ring-binder of marketing collateral, many unanswered questions will remain from folks that can significantly influence a purchasing decision.  It is also really hard for sales teams to keep track and absorb the latest marketing materials produced by the marketing teams month after month.

So what is a B2B marketer to do to support a more effective sales team?

• Enable sales teams to have meaningful interactions with customers to uncover the monetary benefits of their solutions relative to the competition.

• Develop the hypotheses/formulas/logic and lay out a structure for capturing unique customer inputs needed to quantify the key sources of differentiation of the proposed solution.

• Provide a platform that allows sales teams to create customer-specific value propositions simply by asking the right questions that drive a discussion focused on value.

• Make it easy for sales teams to produce powerful value propositions that can be shared with customers to demonstrate the economic benefits delivered by your solution.

• Create an on-going feedback mechanism that allows the organization to capture the unique operational characteristics shared by customers in order to identify better ways to support customer needs over time.

Again, the goal is to give sales teams the ability to answer the two main questions from B2B buyers: “How is your solution better than your competitors and by how much will your solution impact our bottom line?”  Do you think that your sales team can close more deals or attain higher margins by creating the type of value propositions that address what customers really care about?  You betcha!

Roberto Rivera
Director of Professional Services, LeveragePoint

Ask the Expert, Follow-Up on Feb Webinar

In our February webinar, Jay Manson discussed the downsides of cost/price control and the dilemma of stagnant growth during the economic recovery. Click here to watch the recording "Surviving the Recession to Perish in the Recovery" or to download a copy of his slide deck. Here we review some of the questions which came from the audience.

Q: If a company is only concerned with passing on its increased costs to its customers, isn’t that cost-plus pricing?

Jay: It is cost-plus, and that's the issue. Too many orgnaizations don't have a value-based pricing strategy at all. They're not passing through the margin. The company referred to in my example has done a great job passing through its cost increases to their customers. And like many other companies they've succeeding in recovering revenues to the pre-crisis point, only to see their margins continue to slip (see chart below). Remember, margin is the value you add over and above all the costs, and customers must have clear visibility into that value, or you don't have a chance. 

 

Q: How do you get good data to make a good business case to the customer?

Jay: One of the key pieces of a value-based approach is collaborating with the customer so you understand their perception of value, not your own perception of value. Which one is right? Well, it’s not really relevant who is "correct". It’s what the customer feels comfortable bringing forward. Recently we were working with a large manufacturer in the mid-west. They were using LeveragePoint to build their value propositions. And they brought it home to senior management. We came in with our own hypothesis (of the value of LeveragePoint for them), but it wasn’t until they had changed the numbers themselves that they felt comfortable with it. The best data comes from the customer. You have to ask for it; and you have to ask for it in a way that demonstrates that you’re actually interested in improving their business.

Q: How do you get sales people to adopt a value-based selling approach?

Jay: This is an interesting issue. If you talk about it as being a "value-based selling" approach, a lot of times there's resistance. If you say you want to provide the three or four things that make us better than the competition, and we're goning to help you quantify that, no sales team turns that down. It's what we're all looking for in the marketplace. The challenge around adoption is who's positioning it, as opposed to how it's being used. The top sales teams in most B2B companies are doing something around this. The issue for most sales teams is how to make it systematic. LeveragePoint makes it very easy to make it systematic. There's opportunity to share; you can see how the better people are using it; you can see what works and what doesn't work in terms of winning deals. And for a sales team, it's all about: have you helped me close a deal? Can you help me win? If your application allows you to do that, you're going to win. If your application provides guidelines or controls for salespeople, you'll find the adoption very difficult.

Upcoming Webinar March 20 with Ardex Americas CEO Stephan Liozu

Internalization of Value-Based Pricing

Join Stephan Liozu for a webinar on March 20 at 11:00 AM EST (note the earlier time). You can register here.

Over the past few years, I have been given the opportunity to learn how firms transform their pricing orientation from cost or competition to customer value. Through rigorous and grounded research methods,  my conclusions contradict the widely held assumption that value-based pricing can simply be “adopted.”  Rather, research findings strongly suggest that implementation and internalization of value-based pricing requires organizational changes that transform the fabric of the firm and making it more adaptive in many dimensions. Marketing and pricing studies concerned with the adoption of the three main pricing orientations in business markets recommend value-based pricing as a modern and advanced pricing approach. I go a step further and argue that the implementation and internalization of value-based pricing transforms the firm’s organizational life and identity as well as the identity of actors within it. This transformation is manifested by a slow “mutation” of what research informants called their firm DNA from cost or competition to customer value. 

The implementation and internalization process of value-based pricing requires sustained organizational mobilization to transform established structure, culture, processes and systems. Marketers, sellers and product developers have to change their business mentality and their frames of reference and embrace value-related concepts which are expected to become a new “way of life”. They also must learn a new language in order to carry the value message internally and externally.

 Based on research findings as well as the numerous case studies presented at Pricing Society conferences, we have developed the 5 C model for the transformation of a firm’s orientation from competition or cost to customer value. The presence of the 5 C’s is essential but so is the organizational design of the 5 C’s within the firm. These five organizational characteristics are common to firms implementing value-based pricing: ability to effect deep transformational change, presence of a champion, skill in diffusing organizational capabilities, organizational confidence, and center-led pricing process specialization.

Firms we studied declared that the process of transformation took between 4 to 7 years on average. Because of the dynamic nature of the transformation, it required sustainable efforts, resources and leadership intensity. There are investments or actions firms can take to accelerate the implementation process. One of the most effective one is to embrace and implement Leverage Point Innovations value-based pricing platform to support the systematic and integrated process of value assessment and communication. Because of complexity generated by the way firms are structured and organized, there is a need to create a central convergence point that enables firms to reach consensus on value measurements as well as to communicate effectively to all key actors participating in the transformation.

Internalizing value-based pricing is a journey, not a destination. Adopting the proper powerful infrastructure can help reach this destination. At ARDEX Americas, we have implemented the 5 C model and now are embarking on the deployment of LeveragePoint value-based platform to accelerate our transformation. Stay tune for more news on how this deployment goes.

Stephan Liozu is President & CEO of Ardex America Inc (www.ardexamericas.com), an innovative and high-performance building-materials company located in Pittsburgh, PA. He is also a PhD candidate in Management at Case Western Reserve University and can be reached at [email protected].

Ask the Expert, March 2012

In January, George Cressman joined us to deliver an excellent webinar on The Right Path to Pricing Maturity. Click here to watch the recording or download a copy of his slide deck. At the end of his remarks, we received a number of great questions from attendees. This is Part Two in a two-part series in which we present George’s expanded responses. Click here to review Part One, his response on the time and resource investment necessary to complete the pricing maturation process.

Q: How do you assess the value to the customer? How do you deal with challenges of B2B value assessment?

George: The key is to understand your customer's economics. The key questions are: How does my customer make money? What is it that they're doing? How do they go to market? Who do they compete with? What's their key for delivering differential value themselves? And then ask the question: How do we impact that? How do we change that customer's economics (either by increasing their revenue flow or by decreasing their cost of operation)?. In a B2C environment, we need to understand how we can impact our customers' monetary lives. But we also want to understand from B2C customers how they behave. How do they position themselves versus their peers? And what is it that changes in their lives when they use our offerings?

Often, when we work with firms in a B2B environment, what we see happening is that we think of our customers in terms of the features or attributes of our offering, rather than in the context of how we impact their business economics. So one of the biggest challenges in B2B value assessment is moving beyond what our offering is to understanding how our offering impacts the customer; and then getting in front of the customer, and actually confirming that by having a conversation with the customer about what their business is about and how we can impact it.

 

Q: How do you obtain input from channels or sales, the customer-facing functions of the business, and how do you integrate those functions into the process?

Let's think about the sales force first. This falls into the category of a simple smart aleck response, and that is: if you want feedback from the sales force, it's always helpful to ask what they know. The issue with the sales team is that often we burden them with significant demands for who are our customers, what are our customers' plans for the next quarter. We rarely ask our sales team to think strategically about what are our customers' businesses, and what makes those businesses work for them; what are they trying to achieve. So my bias is the sales team is a terrific source for information about where customers are and what their businesses are all about. And one of the reasons why I really like the notion of an integrated customer intelligence database, is because that's a means for collecting that customer business information; collecting it and getting it sorted out and ultimately validated. And then for many sales teams, the ability to ask really good sales questions is a challenge; so there's a skill issue here that's important. Many of our sales teams are given scripts that send them off immediately to talk about the features, the attributes of our offering, before figuring out what the customer's business is. Equipping the sales team to ask really powerful questions about customers' business processes is really important.

Channels are another issue that's critically important. And there, of course, the smart aleck response is: it's important to ask what they know. Often our discussions with the channel firms are about what kind of discount they're going to get, how much product they're going to hold in inventory, how much they're going to move this quarter, and so on. Those things are clearly important in terms of business planning, but they really don't help us figure out what their customers' businesses are all about. So I find it particularly useful with channel firms to help them do the same kinds of things I've just highlighted about sales teams. The first is asking them what they know about customers' businesses, and helping formulate that in a way that we can accumulate it across our entire channel base.  Secondly, I think it's really important that our channel firms be equipped to ask good questions, too, about their customers' business, and sharing that information with you. Third, one of the challenges that lots of firms have today is that they have way too intense a distribution system, with way too many distributors. The challenge is that those distributors all compete with each other and they're always coming back to us, asking for better discounts and help for them to pursue an order with price. Particularly in very mature industries, it's incredibly important to go back through the distribution system, and ask: Are we getting what we should be getting out of our distribution system? Do we have too many distributors? And are we incenting them to do the wrong thing? My belief is that channel firms will share with you an incredible amount of information about their marketplace.  It's there for the asking, but we often don't ask.