How To Quantify Value Part 2

by | Dec 19, 2012 | Quantify Customer Value, Sales

HomeBlogQuantify Customer ValueHow To Quantify Value Part 2

Ask the Expert: Follow Up From December 2012 Webinar

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Q: Other than Quality and Expertise, what are other typical intangible values?

A: In our experience, the most frequently mentioned “intangibles” that companies differentiate themselves are brand or industry reputation, expertise, and quality.  Other intangible differentiators include innovation, diversity, global-reach, customer focus, etc. Generally, you find this type of language in corporate annual reports.

The important thing to keep in mind about all of these high-level attributes is that they usually can be traced to real economic impacts on customers, either in reducing costs are growing revenue. The process of breaking down these high-level attributes to specific, quantified value drivers is exactly the same as we described earlier.

Q: How do you get the sales team to embrace this approach and be effective?

A: If you want your sales team to be effective, you first need to arm them with what they need to engage them in a value discussion with the customer. Using the thinking that has gone into the value you are delivering, how can they articulate that to the customer? How can they demonstrate that, and create a relationship with the customer that would enable them to engage in those discussions? Using LeveragePoint is one of the ways you get to that point because the whole application is designed to get the sales team comfortable in having those discussions with a customer. It’s a very common challenge, and one we see on a daily basis.

Q: Shouldn’t you start with a model of a customer’s business, or business process?

A: Absolutely. If you can identify how your customers go to market, how they operate, how they work, and you have those insights, that can be a great starting point for putting together some hypotheses as to how you impact that. The more you have visibility into how your customers operate, the better off you’re going to be when you are trying to get started going down this journey. You have to understand the customer’s perspective to quantify value, and you cannot do it otherwise.

Q: How do you quantify value when customers may receive a wide range of value from products? For example, a word processor used to write a best selling book vs. students using the same product to do their homework.

A: For products that have a wide range of value to the market, there are two main things you need to do. You really need to think about how you segment that market, and you need to think about how you create fences for each customer segment. Sometimes in software that’s relatively easy to do; vendors can add enough features in that product that has enabled them to set a fence for a particular audience, and people are willing to pay much more because there is additional functionality that’s worth the extra money.

This is easier to do for B2B products than consumer products. This is because in many cases there’s functionality, names, brands, etc. that you can develop that may be very similar products but are marketed differently to each audience.

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