We sometimes think of differeniated value as a number, the dollar amount by which our solution is superior to that of our competitor. There are even software applications that claim to be able to determine the 'willingness to pay' of a customer or segment based on analysis of historical data. But is anything that simple really usable by sales when it comes to negotiating a price with the customer?
Imagine a sales person who is told that a certain customer should be willing to pay an extra 5% based on historical data. That can help to give sales a goal, but can the sales person tell the customer "Our software tells me that you should be willing to pay more, so come on." That conversation is not likely to get very far, espcially with procurement, which likely has its own data analyzing pricing and cost trends.
For value-based pricing to really work, sales has to be able to provide the customer with its unique value proposition.This is the differentiated value, the amount by wihch one solution is superior to another. But differentiated value is not a simple number. It is a composite, comprised of individual value drivers, the message that each value driver gives the customer, a formula and data used to quantify the value driver, and a way to get back to the evidence on which the claim is based.
Simple claims about willingess to pay, differentiated value, or even ROI and TCO (total cost of ownership) are not enough to help sales. Sales needs to get specific, for each customer, on the unique value proposition. They need to know how your solution has a comparative advantage over the next best competitive alternative (which defines the reference value). And they have to be able to have a conversation with the customer on value. This is what LeveragePoint supports. Our platform covers the end-to-end process of creating value in product development, communicating value through specific, evidence-based value messages and then supporting sales in its conversations with customers.