Why Understanding Value is Critical for Revenue Performance Management
Revenue Performance Management (RPM) is transforming B2B marketing, and how marketing and sales processes interact. The transformation is being driven by a profound change in corporate buying behavior. Today, many potential customers have done extensive on-line research, have interacted with current users and other potential buyers through social media, and have formalized buying criteria before they ever speak with a sales person. Most of us have experienced this in our own lives. When making any major purchase, such as a car or an appliance, we begin by researching on-line, and then reach out to social networks to see what other people are saying. With the proliferation of smart phones, more and more of us are even doing this for what were once impulse purchases. These behaviors are also found in corporate buyers, especially business buyers (although procurement departments have also begun to scour social networks looking for deals and information about what other companies are paying) who begin the buying process on-line and want to be well informed before ever talking to a sales person.
Revenue Performance Management is a response to this change in buying behavior. In essence, RPM tries to identify signals that a buyer has become aware of a need or pain (and tries to make that awareness more likely) while at the same time trying to make people aware of the solution. It combines content of many forms (blog posts, eBooks, interactions on social media sites, webinars, Twitter) with search optimization, automated alerts and other methods to track behavior. Hubspot (one of the leading vendors in the space) talks about tracking the buyer’s “digital body language.” Just as a good sales person is sensitive to the body language in a sales call, a good RPM system helps the integrated marketing-sales function to identify digital buying signals and to predict buying behavior.
The key to RPM is to connect awareness of pain with awareness of solution, and when this connection is made, the potential buyer is often ready to move to considering a purchase. So anything that can be done to link awareness of pain to awareness of solution will help to move the buying process forward. So how does one help buyers make this connection and what does all this have to do with value-based pricing?
A value proposition, one based on a formal value model, is a compelling way to connect need to solution. Each value driver identifies a specific pain and connects that pain to how the solution provides an economic benefit for solving that pain. In the game of revenue performance management, value propositions have to be easy to discover on-line, and they need to be tied to customer awareness of pain. One way to do this is to combine search engine optimization with the crafting of value messages. Test value messages for their effectiveness in search and craft value messages that can be used as part of search engine marketing. Build blog and other on-line content around value propositions and make you’re them easy to find on-line.
Now that buyers are making more of their journey on-line without the guidance of a sales person, it is important to frame value early and make sure that value (the value of your solution) is injected into your potential customer’s thinking as early as possible. Your customer should understand your value proposition before contacting you, and should be thinking in terms of your value metric (one that you can connect to your pricing metric). You should also expect your customers to have a lot of insight into your pricing, and to have scoured social media and the web for information about your pricing and pricing behaviors. It is critical that they be able to find information on-line that frames your pricing in terms of your value, and the most effective way to do that is by building value propositions that communicate your differentiated value in a precise and targeted way.