Identify the Customer’s View of Value
The customer’s view of value has two components: price and performance. When placed on two axes, they form the Value Map.
While every customer would love to achieve game-changing performance with minimal cost, most know that isn’t realistic. Instead, fair value lies in the balance between value and price.
- Customers that want the highest possible performance must pay to get it.
- Customers who can accept lower levels of performance will pay a lower price.
Sometimes a customer falls below the fair value line—they want performance that exceeds a reasonable price. Several factors may be at play:
- They may not have experience purchasing this type of solution, so they don’t know what a reasonable price is—so the salesperson needs to guide them.
- They may not see the full value of the solution—so the salesperson needs to make a stronger connection between the solution and the customer’s highest priorities.
Furthermore, most B2B buying decisions have multiple stakeholders, and they may have varying perspectives about:
- How to define performance
- What they are willing to pay for the solution
These differing views of value can lead to a competitive disadvantage, unless the salesperson creates and deploys an effective competitive strategy.
Lay the Groundwork for a Winning Strategy
Answering three key questions informs the competitive strategy.
1. How does the customer define performance?
Stakeholders may have an array of performance definitions based on their perspective of their business issue and how to solve it. Is their highest priority after-purchase service? Ease of use? Reliability? Salespeople must remain focused on the customer’s view, which can be challenging. It’s easy to think they want the latest technology if that’s what your company is known for—but to do so is a mistake. Any value map is only as solid as the data that goes into it.
2. How does the customer define price?
Customers have different levels of price sensitivity and, like performance, define it differently. Some are concerned about the initial upfront purchase price; others focus on the total cost of ownership. Knowing their view can help the salesperson modify TOCs and payment terms to more closely align with the customer.
3. Where are the customer, you, and the competitor on the Value Map?
Once you understand the customer’s idea of value (price and performance), salespeople can place the customer on the Value Map, and then themselves and their competitors. Doing this as objectively as possible gives a clear picture of who is aligned with the customer and who is not—and helps determine the competitive strategy that will lead to a win.
Compete and Win
If your salesperson and the customer are nearby on the Value Map, go for it! Close the business quickly before competitors can change the playing field.
Unfortunately, this happy circumstance is less common than we would wish, which means salespeople need different strategies for different realities.
If the customer and the salesperson’s solution are at different places on the map, the salesperson can bundle or unbundle their offering and increase or decrease price accordingly. Doing so makes sense, unless a competitor is already close to the customer.
In that case, the competitor will likely try to close the sale quickly, just as your salesperson would if aligned with the customer. So, what’s their alternative?
Assuming the deal is worth the resources needed, the salesperson can work to change the customer’s point of view—about the problem, the approach they’re taking to address it, or the optimal solution. The time and effort required to change the customer’s perspective can definitely be worth it when the revenue and margin are significant or a win offers a beachhead in a new account or division.
Those strategic decisions are up to you and your sales team, based on the understanding of the competitive landscape you get from the Value Map.
Be Ready for Competitors’ Countermoves
No competitive strategy exists in a vacuum. Every move a salesperson makes leads to countermoves from competitors. Make sure your salespeople constantly clarify their understanding of the customer’s view of value and assess how competitors might position themselves.
The Value Map defines the lay of the land and helps salespeople execute the most effective competitive strategy for a given opportunity. It helps salespeople deliver the solutions that customers need—while outmaneuvering the competition.
1 https://www.customerexperienceinsight.com/the-no-1-reason-why-customers-stay-or-leave/