LeveragePoint’s January Webinar, Value Story Telling is Key to New Product Launch Success, Q&A:
Why not do this all (value propositions) using spreadsheets and PowerPoints in a shared drive?
This is usually the default solution. The biggest problem is it’s not scalable. You have issues of version control and searchability. There’s a lot of reinventing the wheel. Shared drives are too inefficient for sales people, to get the information they need quickly. Keeping things in a cloud platform is more efficient and saves time.
What is the best unit of measure to use in a value analysis?
Per year is always a good choice because it is a common unit that works for customers as well as your solution. Often you need to have multiple units. For example, you can express value in terms of your customer’s finished products (like per vehicle or per sample) as well as in your offering unit’s (like per kilo or per instrument). The specific choices depend on the industry.
What about ROI as an indicator?
It’s often used and if that’s what your customer is expecting, go ahead and use it. But beware: it can be risky to use it as a single number. Primarily because customers are suspicious of ROI estimates because they tend to be overstated. Peyton Marshall has written a very good blog post about the issues of using ROI.
I fully agree that showing value based on competitors makes sense, but end of discussion there comes a zero-sum game where if the buyer can negotiate an extra 10% they win more. Any suggestions as to how to avoid that?
It doesn’t necessarily have to be a zero-sum game. It’s certainly true that procurement departments treat it that way, but by framing the discussion around value instead of price, especially with non-procurement stakeholders, you have a better chance of finding a win-win.
Make sure to compare your solution to what they’re using today. Value is not an absolute concept. Value is always in relation to what else I could be doing and I could be doing nothing, for example. So, it’s important to make the right comparison, because what you’re trying to do is get the customer to be spending more in their outlay to get a better performance which will lead to profitability so you have to show it that way.
Getting customers to collaborate where they want to commoditize the offering is tough. Any tips on how to gather “voice of customer”?
That’s why field testing is good for customer research. One of the things I’ve learned in my background is if you go and ask a customer what they want they will make it up, or have a hard time describing it. Whereas if you do concept testing and say, “Look here is a solution we are going to bring to the market. We want to get an understanding of how this fits with your operating needs.” Then you have voice of customer. Then you find out what’s more important to the customer.
You may have a solution with differential features, but customers usually care about 2 to 3 of the listed features. Zero in on those. Try to understand why they are important to them. You’ll have a qualitative sense of how it connects to their business, and once it connects to their business you can start putting dollar figures to that. It’s not a commodity if you have differentiation, even commodities are not commodities. If you think about services and support, those are not commodities so you have to banish that word “commodity” from your thinking.
Some values are difficult to quantify, for example: peace of mind or brand perception. Do you have any advice to take these parameters into account in the value analysis or business case?
These are skills of putting together value quantification. When I work with product teams I deal with this situation a lot. Just about anything can be quantified no matter how intangible. Things like brand reputation is riddled with reasons why people buy from you. For peace of mind: what does failure mean to me? I don’t have to wait for something when I’m in a hurry – what does that mean? Once you figure out what peace of mind is for your customer, once you zero in on specific use cases, then you can quantify. It’s not that hard once you do it a few times.
How do you deal with buyers who are unable to buy value? Either they don’t get it, they’re uncomfortable doing so, or it isn’t part of their company’s “way”.
Remember that catchy Geico slogan, “15 minutes can save you 15 percent or more…” That’s all you need to understand. Value means you’re better off working with us than the competitor. That’s an easy thing to understand; anybody who buys anything intuitively understands that.
Think about the products you spend a little extra on. In positioning your solutions to customers, you have to take that same approach. You must explain it in the same way you think about things when you buy; you pay more, but you feel safer because you know it’s not going to let you down. That is the essence of that metaphor.
When your offering has different options, do you prepare separate value charts for each, or start with one and show incremental difference, or is there another way?
You can do it both ways. What we’re seeing more is the desire to toggle between different scenarios. For example, I have a value chart against competitor X, and there are three value drivers there. I could click a button and replace what that competitor is, and it may change the reference price and change the performance against those three value drivers. That is the easiest way to do it. Our customers really love the convenience of the one button click.