For our March Webinar, Peyton Marshall, CEO of LeveragePoint and Ed Arnold, VP of Product at LeveragePoint discussed the ways that Value Maps provide a simple framework that help teams understand their product’s differentiation and competitive positioning, and reviewed how to use them in several real-world applications. To conclude the webinar, they answered some questions from the audience. Here are their live answers:
I don’t run product management in my organization, and our product managers are pretty technical. How do I get people started using Value Maps?
First of all, its a team exercise. Doing Value Maps alone doesn’t give you much insight but when you get a group of people together, it gets people aligned around the same sense of value. It’s important to have a facilitator to work with the team and run it, and if you have someone that has worked with Value Maps before, great, but if not, you can look at some of the resources we have on our website and you can do it yourself. And it’s always nice to have a tool. One of the reasons LeveragePoint exists is to make these techniques a lot easier to use. Having a way to capture your information in digital form so you can look at it again and again makes a whole lot of sense. So I’d advise people to 1) get together a team, 2) have someone lead the facilitation, and 3) use the right tool.
How can Value Maps be useful without extensive customer information to support them?
We’re in the era of Big Data, and we are spoiled by the idea that we can get high quality, extensive data almost anywhere we turn. Great customer data would be nice, but data aren’t cheap, and the first question is really how big is your market research budget? And the second question is how important is the product? The way I think about Value Maps is that it is very low cost to build an internal Value Map, and it reveals all kinds of things in terms of understanding your competitors better, your pricing, and your differentiation.
Next, take that Value Map and the hypotheses that it generated, and turn that into a few customer discussions. Usually, there are two or three different questions that emerge where you would actually like to understand what customers’ perceptions are, even if you think you have your own objective capabilities.
Finally, there is true market research. You can certainly do that, and we are aware of some companies that do some pretty extensive Value Mapping interviews, in addition to other types of market research. But you don’t have to be big-budget in order to get some reasonable insights from Value Maps.
Our teams are already using Value Models. Why would we use Value Maps in addition?
One of the advantages of Value Maps is that it takes in a broader scope of the industry. Value Models work best when you are doing a direct comparison with one competitor. When I work with teams on their Value Models, one of the biggest sources of confusion is when they are trying to do an economic analysis with multiple competitors at the same time. What’s good about Value Maps is that when you are in a situation where you are not sure about who the competitive threat is, or they have different capabilities or there is different segmentation at play, using Value Maps is a good step to sort those things out, and then based on that, you can prioritize which Value Model you focus on.
We see teams that work on their Value Models all the time. There are some situations it’s easy, and other situations where it’s complicated, and the complication often starts when teams start thinking about alternatives. It’s also the case where teams have a hard time defining their differentiation, that is brought to the fore in a pretty direct way when they sit down and think about Value Maps, because the first thing they’re doing is thinking about the benefits that matter, and the ones where there will be different scores. The next step is assigning a score to those benefits. This is a way to get a conversation going, which usually raises the question of “why did you score that one that way?” This usually gets people into the rationale, so that part of the exercise is great.
Where do you obtain the competitive data and how do you determine the competitors’ benefits of corresponding products and product features?
There are multiple places to get this data, but one place to start is to see what the competitors are saying themselves. They reveal a lot in their marketing and sales collateral, and sometimes they just list out what their key advantages are versus their competition. I would definitely use that as a starting point. Customers are also a great source of information. They love to talk about their experiences with other vendors, so there’s a lot of intelligence that’s provided that sales people hear. So in terms of getting started, those are the two easiest ways to get competitive information.
How do we apply these techniques to much lower value products that are sometimes seen as approaching commoditized?
Commoditization is interesting, and it’s often the case that the products themselves are pretty similar, and the interesting thing about a Value Mapping exercise is that you’re really trying to tease out what some of the soft differences are. Is there brand awareness? Is there a softer reliability perception? Is it about being green? Is it about being more reliable? Is it the services we deliver?
The more you start there, the more you can think about the perceived differences, and having thought that through, it’s not that huge of a step to get to the quantitative, dollarized value. Now lower value products may not merit a full investment in a Value Model, so a Value Map is a pretty good place to think about positioning. Although there may be flaws in Value Map-derived pricing, there is at least a sense that you have looked at it in an orderly, organized way, and you get a fundamental sense of whether you are positioned in a way to keep your market share, and whether to anticipate a ramp or decline.