For our March Webinar, Nimit Mehta, Associate Partner at Bain & Company, shared a pragmatic 6-step approach for arriving at an effective Value Pricing strategy for innovation. At the end of the session, he answered questions from the audience. In this blog, we share his live answers.
In which of the six stages do you find clients most often getting stuck? What is your advice for them?
Good question. I would say the place that I find customers, clients, and companies I have worked with get most frustrated is [at] the value drivers and quantification stage. Also, the stage that I found them the least invested in is value selling.
So let’s talk about value drivers and quantification. How do you go about dealing with the frustration? My advice is, and this is based on some of the battle scars that I have had over the years: just prioritize your value drivers. Not all the value drivers are as important. Before you start the quantification, look for the ones which are more material and more important to the value story that you are going to say for the segment that you are working with. The other thing I would say: be comfortable with “good enough.” As I said earlier, it’s not a scientific exercise – the answer that you will come out with in the first version would need to be iterated over.
When you take this first model to the customer it will not be perfect. Your assumptions will be all over the place. Still, it is much better to start somewhere and then iterate over time, then to spend a lot of time making it perfect from the get-go. The third thing is there is no substitute for building the value knowledge within your organization. Think about how you are collecting the customer feedback, how you’re taking the feedback and institutionalizing it within your own organization. And this can be coming from sales call logs or customer research or surveys. I have found expert interviews (that you should do time to time in the industry) can bring good strategic insights that you can build towards your value quantification exercise.
When working with clients, what sales adoption strategies have you seen to be particularly successful when introducing Value Selling?
That’s a great question. The ones who do pretty well – one of the biggest things is they always involve sales in a few answers upfront. So do not wait till you are done with Step 5, and then say, “okay, let’s go to sales and figure out how to value sell.” That never works.
Sales is your biggest ally, and they are the ones who are going to deliver the story. They need to be extremely comfortable. But not only that, they need to be part of developing this from Step 1. I have stopped initiatives where I don’t get the right sales champion to work with me from the first day. So I cannot emphasize enough having the right partner from sales from Day 1.
Also important is investing in sales capability building. This may require your organization to be upskilled, and you need to think through how you systematically invest in them in terms of training, mock interviews, supporting them with the right messages, tools – everything that we talked about.
The other thing I would say is give them enough proof points. Don’t let them go and face customers asking tough questions with nothing to prove your value for. As a marketing person, you have the responsibility to give them a very detailed set of proof points for the value that you are telling your customers about.
And another thing I would say is increase your access from beyond salespeople to procurement. You can only get so much out of talking to one type of stakeholder, so you need to have a broader radar there. And the last thing I would say is incentives. Organizations that drive the incentive structure closer to their value selling goals can help better their chance of a successful value selling implementation.
My organization’s data maturity is in early-stage; can I still use this approach?
Absolutely. Do not wait for your data to be perfect. That’s like waiting for a flying unicorn. In my experience, the data has to get better with the use case that you are putting in front of it. I guarantee you there are plenty of good starting points already out there for your organization.
I always found the “wisdom of crowds” method is useful when we collect people from technical services, people from marketing, from supply chain, from R&D labs, from sales, from customer service. You realize that there is so much knowledge already out there, but nobody really puts it together. Right? Start there, make assumptions based on all this wisdom and come up with a version 1.0 of whatever that model is.
But in the long run, I would say you need to do a few things. Identify what data gaps you have, which data is critical for your value pricing exercise, and go about making plans to get it. For example, at one of the companies [I worked with], we realized that we did not have a good benchmarking information. We realize that we did not have good benchmarking. And then we made a plan to go into the lab and create the benchmarks as competitors go out and do the customer research. Collect the economic information, invest in interviewing market influencers and market experts. So start with what you have, make a plan, and bridge the gap.