Designing Effective B2B Value Propositions: 3 Questions Product Managers Should Ask to Engage Sales

by | Nov 5, 2014 | Presales

HomeBlogPresalesDesigning Effective B2B Value Propositions: 3 Questions Product Managers Should Ask to Engage Sales

At boot camp for B2B product managers, the sergeants drill recruits to understand customer value. Basic training starts with differentiated features, moves to customer benefits and ascends to quantified customer value. Those who don’t wash out emerge with an obsession for knowing everything possible about their products and their customers. They fixate on refining and improving their understanding of customer value. The result is often a series of value models with a long list of their product’s efficiencies, each of which is quantified in mind-numbing detail. This work can be a great foundation for pricing and segmentation strategy. It is great for understanding customers.

But not for sales to communicate with customers. Turning complex analytical material into good value propositions for sales can be an unnatural act.

It doesn’t have to be. Product managers need to shift gears to engage sales, improve execution and capture revenue.

The key to good value propositions for sales is to focus on the central goal:

Have the right people deliver the right message to the right audience at the right time.

To be effective, a good product manager needs to get his or her mind around three fundamental questions about delivering value propositions:

  1. Who? B2B customer-facing teams are usually diverse in their talents and capabilities. Good product managers harness team members’ motivations and aptitudes.
  2. To Whom? Messages go astray unless they are designed with specific audiences in mind. Good product managers pay attention to customer stakeholders and their motivations.
  3. When? Big ticket B2B products usually have long and complex sales cycles. Customer value can play a role at many points along the way. Good product managers design value propositions to fit critical stages in their typical sales cycle.

Answers to each of these questions have important implications for good value proposition design.

  1. Who? The revenue contribution of a sales force is almost always a bell shaped curve. Sales professionals generating the most revenues, at the right-hand end of the curve, have usually built substantial business with the company’s most important Strategic Accounts. Sales professionals in the middle of the bell shaped curve, at any point in time, tend to be focused on a mix of New and Emerging Accounts. The best of these sales reps are growing Emerging Accounts into the Strategic Accounts of the future. Recent recruits and other low revenue contributors are at the left-hand end of the curve, usually focused on a list of New Accounts where closing modest sized deals is necessary to survival. Sales professionals at different ends of the spectrum invariably end up with different skills, objectives and priorities. Generalist sales professionals in all parts of the curve rarely have the financial training or the bandwidth to drill deeply into technical aspects of most products they are selling.

    In most B2B enterprises selling complex products, quota-carrying sales reps are not the only members of the team who sell. Technical expertise is routinely delivered in the sales process through specialist team members with designations including technical sales, field sales, subject matter experts, business development and pre-sales support. In some companies, specialists even include members of a “Value Team.” Specialists deliver more specific, technical content and help build customer relationships in a way that leverages the time and skills of generalist sales reps. In addition to specialists, some senior executives get actively engaged in selling and retaining Strategic Accounts. This typical approach has implications for who delivers which value messages:

    • Specialist, technical team members are most suited to move quickly and readily into conversations about value. Specialists invariably start with a deeper understanding of products or customers or both. It is natural for them to have detailed conversations about product differentiation and to be able translate that into customer value. They are more likely to be comfortable asking questions and having detailed conversations about product-related aspects of the customer’s business. Even if speaking Customer Value takes some training, it is a natural extension of their knowledge and skill set.

    • It is a rare Strategic Account manager who gets into the details of a value proposition. Sometimes, successful account managers build relationships where direct competitive messages are less important, at least for now. More important, Strategic Account managers get the most support from technical specialists and from senior executives engaging with customers. Because they command resources, because they tend to use their own time efficiently, Strategic Account managers typically start with a strong habit to deliver technical specialists for detailed product conversations with their accounts. They might want to initiate a value conversation using a headline value message with one or two numbers, but they are more inclined to draw on support, hand off readily and orchestrate a team conversation by steering it toward clarity and away from landmines.

    • The New and Emerging Account group is the most likely place to find early generalist adopters of customer value in their sales conversations. Their business problem is to close more and bigger deals. Customer value can help them at many points along the way. They may be able to command specialist resources for detailed conversations on value but that is usually in the middle of the sales cycle or later and it may only be for larger deals. Because they don’t command the same resources as the Strategic Account manager, they need to understand the basics of a value proposition and be able to apply it themselves to move deals forward. To drive value adoption in this group, they need to understand what is in it for them and they need to have simple, flexible tools for value conversations. The best tools for this group are ones that get straight to the top 3-5 value messages, that provide an opportunity for high level conversations on key assumptions and that provide the rep with control as to how deep they want to go in articulating and quantifying differentiation.

    Who delivers what sort of value message tends to follow a pattern. Strategic account managers and executives engaged with key customers need to have headline value messages at their fingertips. They need to be able to orchestrate, control and often deflect any conversation about assumptions and detail. Specialist, technical team members need to be able to pick up value conversations originating with generalists and move the ball forward consistently, tapping any customer data or other information previously obtained by sales reps. The specialists are the team members most likely to get into deeper discussions about assumptions, formulae and customer technical problems, but the best specialists also want to control whether and when to drill down. New and Emerging Account sales professionals need to access value headlines, the basics of product differentiation and what that is worth. As generalists, they need to have confidence that they can control how deep a conversation goes and that they have good information readily accessible.

  2. To Whom? All good messages are designed with an audience in mind. Good value propositions are no exception. Most B2B companies selling big ticket, complex products face an array of stakeholders at their customers. Some individual stakeholders play more than one role. Product mangers looking for effective sales of differentiated value need to pay attention to several aspects of their customer audience:

    • Not all stakeholders are susceptible to value arguments. Procurement teams are often incentivized and evaluated based only on product acquisition cost. Legal, Technology and Compliance professionals often have narrow mandates that are about reducing specific risks.

    • Stakeholders who care about value often have different priorities and need value propositions to be translated into language specific to their functional role. Operating managers are often among both the Influencers and the Evaluators of a product. Operating Influencers and Evaluators tend to care the most about cost and usually want to see results expressed relative to key operating metrics, eg per unit of output. Members of the Finance department are most likely to ask for an ROI on the product. Decision-makers and the Finance Department, with shareholder communication in mind, often want to understand the annual accounting and cashflow impacts of a decision. They are likely be more receptive to broader value arguments related not just to cost, but also to revenue and risk.

    • Not all stakeholders are interested in getting into the weeds. Group meetings need to be managed accordingly. Detailed discussions of assumptions and calculations often leave some key stakeholders glassy-eyed. Even worse, detailed discussions can leave key stakeholders with misimpressions of “who won the argument” that are hard to reverse. Effective value selling is frequently about controlling the conversation, deflecting detailed discussions to smaller audiences, consisting primarily of Evaluators, where it is easier to clarify, drill down and build trust without an audience.

    • Sales teams may or may not have direct access to Decision-makers for the most important conversations about value. Decision-makers often delegate vendor relationship management to Key Recommenders and may or may not want to attend or be involved vendor meetings. Aggressive direct sales calls to Decision-makers that go around or over the head of Key Recommenders are rarely successful. Delivering an effective value proposition to Decision-makers tends to work best if sales can collaborate with Key Recommenders to build good value propositions. One aim of sales is that the Key Recommender at a customer becomes the primary owner of a value proposition. Having a Key Recommender who can leverage a value proposition with Decision-makers is also usually the best way to speed up sales cycles and to break logjams with Procurement.

    The implications for value proposition design are clear. Maintaining control over which conversations happen with which stakeholders is a major consideration for any sales team. Headline value conversations are important for many stakeholders. Translating results of those headlines into different units of measure and different language is also essential for diverse stakeholders. Having a way to focus on specific value drivers and applicable differentiation in conversations with different stakeholders is tactically very useful. Finally the ability to peel the onion gradually, in a controlled way, is important both in maintaining confidence of the team member having a specific conversation and in effectively managing conversations with different stakeholders.

  3. When? In a long and complex sales cycle, customer value can be deployed at a number of points to achieve a number of objectives. Although sales processes differ by vertical and with individual customers, it is useful to think of stages of the sales cycle and the role that value can play in each of them.

    • For New and Emerging account reps, customer value can play an important role early on. In qualifying accounts, a value proposition can help a sales rep identify a product with a good fit to a specific customer. With its emphasis on substantive product differentiation, a value proposition helps reps prepare for early calls.

    • In expanding the dialog at an account, value propositions support initial buy-in from an internal sponsor or a Key Recommender. At that point, headline value can be a useful way to get the next meeting or to get more people involved at a customer. Using a few key pieces of specific customer data instead of benchmark data to tailor a value proposition helps advance the conversation by making value more directly relevant to a stakeholder or Key Recommender.

    • First or early key meetings are more effective when a value proposition is part of the conversation. Headline value helps broaden customer engagement. Specific quantified sources of value tangibly emphasize product differentiation and benefits to a diverse audience. Having backup detail can help at this point, particularly when a specialist is part of the team. But having the ability to deflect or defer the drill-down discussion to a narrower audience helps control the conversation.

    • As customers test and evaluate, drill-down questions regarding assumptions and value quantification are likely to come up. Having a dynamic tool that has already been adapted to earlier headline numbers allows further modification and customization of a value proposition, either real-time or for rapid follow-up. Engaging in in-depth conversations about the customer’s business helps build trust and accelerate the buying process.

    • A validated value proposition at the proposal/recommendation stage, with buy-in from a Key Recommender is a great way to support internal decision-making about whether to buy. A compelling value proposition owned by a customer stakeholder helps in dealing with Procurement behavior and tactics.

    Timing considerations imply a need for different users to be able to deploy a value proposition in different ways with different stakeholders. The value proposition needs to be designed accordingly.

Good Value Proposition Design In summary, Product Managers should keep three principles in mind in designing good value propositions:

  1. Keep it simple and clear. Broad adoption of value propositions by sales will never occur without simplicity in what they see, simplicity in what they have to do and simplicity in their initial aims and priorities.

  2. Keep headline value messages front and center. Value propositions must be designed to make sales teams fluent in the language of the customer. It helps for a broad user group to be able to deliver headline messages. It helps to be able to translate headline messages into different units of measure to match stakeholder frames of reference. It helps to avoid a fixed multi-slide preamble to a value conversation when key stakeholders have short attention spans.

  3. Tools need to be flexible for sales teams to discuss and obtain detailed information, both when appropriate and without customer distraction. The likelihood of deeper and deeper conversations about the customer and about customer value need to be built into value proposition design as an onion to be unpeeled by a sales team, keeping as much control as possible. Some conversations are best deferred to a follow-up call with a narrower audience. Some conversations are best deferred to a follow-up call with a team specialist present. Value propositions should help teams call better audibles to build trust and control the process.

  4. To access the white paper Delivering Value Pricing Through B2B Sales Teams , please click here.

    About the Author:
    Peyton Marshall is CEO of LeveragePoint. Previously, he served as CFO and Acting CEO at Panacos Pharmaceuticals, Inc., CFO of EPIX Pharmaceuticals, Inc. and as CFO of The Medicines Company through their initial public offering and the commercial launch of Angiomax®. Previously, he was an investment banker in London at Union Bank of Switzerland, and at Goldman Sachs where he was head of European product development. He has served on the faculty in the Economics Department at Vanderbilt University. Dr. Marshall holds an AB in Economics from Davidson College and a PhD in Economics from the Massachusetts Institute of Technology.

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