I want to begin by stating what business academics call “the business order of things.” In order, they are Product, Marketing, Sales, Support, and Operations. All are interdependent, but conventional business starts (and to a certain extent, stops) with products and/or services intended to be sold to customers/buyers.
Nothing to sell equates to no business. The role of marketing is to tell the company and product story, to resonate with buyers, and create in them a sense of desire and perception of value.
Sales embraces the marketing message and sells the product or service to the buyers. Sales is dependent upon customer desires, and their perceived sense of value that has hopefully been built by marketing.
Support is critical during and after the sale, and keeps customers satisfied, loyal, and returning. Operations is the logistics (aka the glue) that holds it all together.
Each of these business elements have evolved over the years with the most obvious (at least to the casual observer) being the products and services that a company offers.
Related: B2B Marketing Predictions for 2022
Digging beneath the surface of the obvious, we find that it is the areas of marketing and sales and their respective psychodynamics that have evolved most significantly. If a company happens to have a product that fills an obvious need and is truly disruptive and unique, then… full stop.
Very little marketing is required. It basically boils down to sales fulfillment, aka. order taking. If this is the case, a “build it and they will come” approach will probably work.
If the product or service is not unique (and really… today very few are) a compelling story must be created and then propagated to target audiences. If this is not done (or not done well) then few will take the time to discover, absorb, and remember the message let alone the product.
If marketing does not create a desire for a product or service and customers do not perceive value, then a company’s product or offering will fail to meet its potential. Our story focuses on understanding, assessing, and creating perceived customer value from the ground up.
Perceived Customer Value
Customer value relates to their perceived level of satisfaction towards a business, product, and/or service. The word “value” can have a number of definitions and it means different things to different people. It’s often related to price, but it could also be interpreted as the overall worth of something on a sliding scale of high to low value.
Also, value is not necessarily limited to tangible products. Both products and services have value. How does the Merriam-Webster dictionary define value?
1. Relative worth, utility, or importance
2. Something (such as a principle or quality) intrinsically desirable
3. a numerical quantity that is assigned or is determined by calculation or measurement
4. Considering something to be important or beneficial
Customer value is the perception of what a product or service is worth to them versus the possible alternatives, or as compared to doing nothing at all. Worth means whether the customer feels that he or she will receive or has received provides benefits (aka. value) over the price that was paid. This can be stated in a simple equation:
Value = Benefits – Cost (V=B-C)
As we look at the equation keep in mind that cost is not limited to the dollar amount that is paid. You have to consider potential benefits versus costs.
Among customers, the benefits can vary which can shift and alter their value perception. What’s important to one segment of your audience may not resonate with another. To paraphrase the old adage, one “size’ of value does not fit all. Keep an open mind!
Potential benefits could include:
· Quality of the product and advantages of ownership
· Image, brand, and affiliation
· Access to a solution
· Experience and success from use
· Expanded knowledge
Potential costs could include:
· Monetary outlay (purchase, installation, service)
· Amount of time and energy spent
· Potential risks of improper decision making and change
· Political/career ramifications
· Emotional investments
Communicating and establishing value is important because it is the customers’ perception of that value that will determine a company’s success or failure. One expert admonishes us “Remember: your customers will never buy something from you because you like it.
They buy things because they like or need them. It’s never something you can force. Customer value can only be influenced – never controlled.”
Marketing provides that influence! You just need to understand what value is and what drives value for your customers and then (most importantly) create and provide a message/story that triggers their sense of value.
Let’s take a quick look at the evolution of approaches to marketing and sales, and see where the most effective marketing and sales messaging resides today.
The Market/Sales Evolution
The evolution of marketing and sales began with promoting technical features and a list of benefits. This approach presented a product’s capability to solve a specific problem.
For example, someone needs to nail something, so you sold them a hammer and some nails. As problems became more complex, buyers demanded more encompassing solutions. Sellers conducted a needs analysis and designed and sold in a more sophisticated manner providing a total solution beyond the confines of a single product.
The problem with the features and benefits approach (and to a certain extent solution selling) is a potential disconnect with a buyer. The old adage of “build a better mousetrap and they will beat a path to your door” is fine if you need a better mousetrap.
If you do not, then the better mousetrap has no value to you. We have now entered the era of filling defined/targeted needs and understanding, the evolved role of marketing, in presenting and selling value.
The new era of value marketing and sales began with what might be called the promotion of generic value. This is where sellers provided buyers with their own generalized value propositions or value achieved by others.
As in the mousetrap story, these generalized value propositions worked for some but were not relevant to every organization. The generic value approach is lacking in that it does not account for industry, geography, size, or use-case variations.
This led to specific value marketing and sales methodologies that enabled sellers to quantify value and customize it for each opportunity.
You connect with potential clients and research their needs and goals. From there, you put together a value presentation that explains exactly how your product will add value to their company. This gets us closer to the “holy grail”, but this also has limitations.
The latest phase in the evolutionary process of marketing and selling is differentiated value. In this case, value is quantified for a specific project, but includes differentiation from potential competition and other possible alternative uses of the budget and capital expenditures.
You compare the cost of your particular product or service to the cost of other solutions for a specific project. The comparison lets you demonstrate precisely how yours is the best at providing value. This approach expands on an understanding of value and recognizes its complexities.
This requires much more knowledge on the part of marketing and sales as they address potential buyers, but the results are worth the efforts. This all starts with the creation of a value proposition.
The Value Proposition
Our value story begins with understanding the classic value proposition. According to Investopedia “a value proposition is presented as a business or marketing statement that a company uses to summarize why a consumer should buy a product or use a service.
This statement, if worded in a compelling manner, convinces a potential consumer that a particular product or service the company offers will add more value or better solve a problem for them than other similar offerings will.” In short, it tells a potential customer why their company, products, or services are better than the competition, and just as importantly under the umbrella of a call to action, why do anything at all.
Before you can even begin any value-oriented approach you need to have a clear understanding of your own product or service. What is your unique selling proposition (USP)? What sets you apart from the competition?
How can you provide value? Research, understand, and believe in your USP before you begin to write a compelling value proposition or approach a client.
As value propositions are created, the inclination of way too many is to simply put forth a claim that they are “better”. Intuitively we know what the word means, and that the intention of using it is to stand out and differentiate ones company… but the concept of “better” requires exploration. Cambridge Dictionary provides us with definitions of the word better.
They state that: · Better is a comparative of good: of a higher standard, or more suitable, pleasing, or effective than other things or people:
· Better is something that is of a higher standard than something else:
· Better behavior, work, or treatment is more suitable, pleasing, or satisfactory:
At first glance the concept of “better than” seems like a great message to implant in the minds of a potential consumer. If only it was that simple.
There are three issues that stand in the way of this being as effective as you wish it was. The first is the sheer amount of information available to consumers and the second is the appearance of parity in similar products and services, and the third is that everyone tends to say the same thing. These three issues are inexorably linked in what is known as the “we are better syndrome”.
Go to Google or Amazon and search for an item. The sheer magnitude of the information coming at the viewer is like drinking from a firehose. Research by Gartner tells us that as much as 70% (or more) of a buying decision is made online, sans a salesperson being involved.
Translated this means that what a buyer sees online is critical to their buying decision. The problem with all the availability of information at anytime, anywhere, and on any device is that it can be overwhelming and often is confusing and contradictory.
Added to the sheer amount of information is the concept of parity and commoditization. Increasingly products are looking alike and are marketed in a similar fashion… and thus they become fungible. Fungibility is the ability of a good or asset to be readily interchanged for another of like kind.
The old adage that if it looks like a duck and quacks like a duck, it must be a duck is apropos, leaving the buyer to decide which duck to buy. After all, they all look the same… so why not buy the least expensive one, one with a good online review, or one you have heard of?
As noted earlier, this is where the “we are better” concept is attempted. The confusion now comes into focus since the claim that we are better dominates the internet, and everyone tends to look the same exacerbating the negative effects of parity, commoditization, fungibility, contradiction, and buyer confusion.
Suffice it to say that unless there is a truly disruptive or unique technology, there is no way around a degree of commoditization and parity at least at the product level. Before you throw up your hands in frustration and surrender to fungibility, there is a solution to this conundrum.
The key goes back to the definition of a value proposition and poses the questions of why a consumer should buy a specific product or service from you.
As we now know “we are better” is not sufficient. The message must convince the consumer that the products or services you offer will add more value and be better at solving their problems than the competitors. The (not so secret) secret is to market why you are better and how you will add value and solve problems.
Another way to think about value goes back to the concept of features and benefits. Features are facts about products or services; and benefits give customers a reason to buy because they explain how your product or service improves their lives.
To translate features into benefits, ask and answer the fundamental question “So what? This relates to the perception of value on the part of the buyer, and this is the key to your marketing message and business success.
Refine Your Value Proposition
Consider all the businesses out there offering exactly what you offer. Be honest! You need to communicate what makes you different, and continually work to increase that value proposition to set yourself apart. You can do that through:
· Identifying what you’re good at (the USP) and focus on it
· Research your customers and potential customers and why they buy or should buy from you
· Make your value proposition clear in all your communications
· Quantify your value with real data
· Communicate the real benefits in the eye of the customers so they can see the value
· Segment your audience, their sense of value, and what “makes them tick”
· Focus on your most valuable customers (existing and potential)
· Don’t make them think. Make it easy for your customer to understand and buy
Take the time to research and truly understand your market and the various segments. Understand each segment’s most pressing needs and what they find valuable.
Use the unifying characteristics of each segment to build a strong value proposition. From research and understanding your customers comes the marketing message/story.
The True Aim of Marketing
As one expert notes, “Marketing sits at the intersection of the business and the customer – the great arbiter of the self-interests of the business and the needs of the buyer. Marketing is not about who can talk faster, or close better. It is about deep psychological understanding of customer needs. Steve Jobs had this gift better than almost any example. Other examples are Henry Ford and Thomas Edison. Every innovation in the history of the world combined an uncanny understanding of human needs and the innovative vision to deliver it.”
This translates into perceived value on the part of the buyer.
Today we “tune into and remember” content and brands that solve our problems and help us. Great brands show us who they are in the experiences and value they deliver beyond the product itself.
At its best, marketing should seek to understand value and what a great experience should be. The critical element is to understand value in the eye of each customer.
Understanding Your Customer
Understanding customers is not automatic and it takes work from the bottom up as we will point out. Marketing should begin (before and not after the fact) with research and learning as much as possible about your potential customers to develop a product or service that meets their wants and needs and most importantly appeals to their sense of value. Take the time to fully grasp how your clients actually function.
In-depth customer research is continuous. Things like focus groups, customer surveys, and collecting user data online are all ways that can help you to learn more about your ever evolving customer base and ensure that you are communicating with them in the right ways.
We now have the ability to collect a vast amount of data about individuals including their demographics, location, shopping habits, previous brand interactions, likes and dislikes, and more. This data can be used to build a picture of your customers in a way that’s much more accurate and meaningful than ever before.
As marketers, if we look at things from the buyers perspective, they have some tough decisions to make based on their needs:
“Why buy? Why now? Why from a specific provider? What is the value and is it worth the cost?”
They must justify their investments and have the ability to measure and showcase business value after the solution is implemented. Research shows us that buyers feel they rarely get the help they need in justification from the sellers.
- Only 9% of buyers feel there is significant differentiation from one vendor to the next!
- 92% of buyers want to hear a value proposition EARLY in sales cycle
- Only 8% of customers say their sales reps exceed expectations
- Only 23% of buyers look to “Vendor Salespeople” as a top-three resource to solve business problems.
- 70% of customers have already defined their own needs and have decided to purchase something before they engage salespeople
What this tells us is that for many buyers there is a lack of differentiation and presenting value.
This perception is their reality, and it should become ours. The challenge is not the product but creating a message that resonates with buyers while conveying a sense of value and then the delivery and reinforcement of the message by salespeople. The job of marketing goes far beyond the product.
The job of marketing is to understand the customers, the differences in segments, what values they possess, what their pain points are, and what motivates them to buy. By doing our job, we will reap the rewards.