A long, long time ago there was a television commercial for dish washing detergent (so long ago, that you used it in a sink not a dishwasher). It showed a head-to-head comparison between a premium dish-washing liquid versus a “bargain” brand. Even to this day, I still think it’s one of the very best demonstrations of customer value ever created for B2C and B2B products alike.
The demonstration itself was straight-forward. First you saw a sink of dirty dishes being washed with a bargain brand. When the suds died out, all that remained was dingy dish water. Then came the premium brand’s turn. One sink, two sinks, and the suds were still going strong. Then the brilliant close from the announcer: “See? Our brand is actually CHEAPER to USE than the bargain brand!”
The essence of a perfect value message: “Actually CHEAPER to USE … than the BARGAIN brand!”
It didn’t matter if that premium brand was the most expensive bottle on the supermarket shelf. It didn’t matter that it costs more per ounce than any other liquid soap. None of this matters at all because: It is actually CHEAPER TO USE … than the BARGAIN brand!
This example teaches us that choosing the right customer metric is essential for successful Value Communication. There are probably several other metrics that the advertiser could have picked to measure the superior performance of its product, for example, “suds per gallon.” But chances are none of them would be as meaningful to the target customer, in this case the frugal homemaker (although an R&D manager back at the plant would find “suds per gallon” pretty interesting, no doubt).
The advertiser was clever enough to realize that a “cost per dish” comparison demonstrated a compelling product advantage that catches the attention of frugal homemakers, because it matched up well with their criteria of thrift and cleanliness. So, “cost per dish” nails value for this customer segment much better than “cost per ounce” or “suds per gallon”. Even more profound are the subtle, underlying psychological messages at work: “I’m a smart buyer”; “I deserve this premium brand”, etc.
Unfortunately, in our experience we find that many B2B value messages fail to match the brilliance of this old-school TV commercial. We see tons of vague value statements about innovation, technology and sustainability that never tie into specific customer goals. We’ve seen plenty of complex value calculations that confuse, rather than illuminate, the real value delivered to the customer. Ineffective value communication inevitably leads to straight-up price comparisons, tough negotiations, discounts and lost margin (or even deals) – all because marketing couldn’t find (dish up?) the best value metric for their product.
Here are some suggestions about how to find the right customer units of measure.
- Start with identifying Key Performance Indicators (KPI): Every business/industry has its accepted performance stats: Construction uses profit by square foot. Agriculture uses profit by acre. Banks use profit per account, etc.
- Think carefully about which customer problem you are really solving: Going back to our dish soap example, yes it cleaned dishes; but recall that the TV commercial really zeroed-in on only one aspect of this problem: cost per dish. It wasn’t about shiny dishes, soft hands, or other product attributes. It focused on one important problem, and again, it nailed the comparison.
- Realize the KPIs differ by functional area: Consider using stakeholder-specific units of measure when dealing with multiple functional stakeholders. For example, a manufacturing operations manager may prefer to measure value on a “profit per unit” basis whereas a corporate function may prefer, “profit per year” better.
- Clearly show the link between customer and pricing units of measure: To be credible, you need to be prepared to reveal the conversion table of all your units of measure, particularly how customer units of measure (e.g., dishes) relates to your pricing metric (e.g., cost per bottle).
Once you’ve selected the best customer metric for your value comparisons, the art of value communication becomes much easier. I would be delighted to see other great examples, so please feel free to share with me and other readers.