When a company commits to a value-based strategy an immediate question arises: Where to begin? Deciding where may be so daunting that it can stop the entire initiative before it starts. Or it may lead to a delay (not to mention cost) of hiring an expert to help figure it out.
But hiring an expert may be unnecessary. Instead consider these examples of good — and not-so-good — answers for your consideration.
Let’s take the Not-So-Good Answers first . . .
Everywhere. As in: “let’s push it out broadly, then see where it sticks.” You can probably predict the problems with this approach. Broad push translates the need for a lot of time and energy. Payback on that effort can vary tremendously by product team and their competitive situation. It’s not fair to teams where this isn’t a good fit and/or unwilling or unable to make a real commitment.
Lost causes. As in: “this product is doomed anyway, so why not?” This is a set-up for failure. A value-based strategy enables companies to capture more of the value it creates for customers, but it can never rescue a product that fails to deliver any meaningful customer value. In this situation, the best it can provide is useful post-mortem learnings, but you’d be much better off to scrub a doomed product before it launches.
Ask for volunteers. As in: “I’ll see who’s interested?” Actually, this isn’t that bad of an answer because we’ve seen success stories of visionary, entrepreneurial product leaders who take the ball and run. But most product leaders tend to be more cautious and prefer sticking with tried and true methods. In other cases volunteers are more junior-level team members who, although enthusiastic, don’t have any real skin in the game, so the effort devolves into a purely academic exercise.
Here are suggested Good Answers of where to begin:
Strategic product launches. New product launches are by far the best opportunity for companies to capture more profit and growth using value. We’ve seen multiple success stories in recent years in B2B industries, even during tough economic times. One customer launch achieved a +10% price premium (versus traditional price setting methods). When faced with such a potentially enormous up-side (multi-million, multi-year gains), it makes a lot of sense to first look at your new product development pipeline to find candidates for your initial value-based strategy program.
Segmenting new market opportunities. Existing products in a company portfolio tend to evolve incrementally, often to better serve new customer markets. A value-based approach helps uncover which segments offer the best value-capture opportunities. We see this as being particularly important with global companies who want country marketing teams to share customer insights across different geographic regions.
Expanding existing customer relationships. Existing customers is another ideal fit for a value approach, especially when it comes to communicating value. Companies can leverage their customer knowledge to build an iron-clad case demonstrating how their existing product and service offerings improve both their customer profits and top-line growth, and where future offerings can provide even more. We have a customer who does a great job of this. Their customer-facing team regularly meets with key accounts to continue building on their value story. Each customer meeting makes it a little bit harder for their competitors to break in – regardless of price.
Defending against competitive attacks. Product, marketing and sales teams are frequently on high-alert for any new competitive threats. When the alarm sounds and potential deals or existing customers are under attack, sales people need appropriate responses. A value strategy provides guidance on what the immediate value messaging should be, so sales teams are prepared to dial-back any competitive noise, and put the customer sales conversation where it should be – on value.
Hopefully, these recommendations will help you select great places to begin your company’s value-based strategy journey. At this point you may wonder how best to get started. We recommend an agile method because it is fast, low-cost, and low risk. To access the webinar How to Implement Value-based Pricing in Under 1 Year, please click here.