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Value Merchants
Value Merchants: Demonstrating and Documenting Superior Value in Business Markets
Overview:
Our intent in this book is to transform businesses and, especially, their sales forces into value merchants. Doing business based on demonstrating and documenting superior value is, indeed, a rare commodity. Yet, it doesn't have to be so rare. We contend that by adopting the customer value management approach we present in this book, value merchants can persuasively show purchasing managers that their companies really can help them achieve their cost reduction goals in other ways than simply giving price concessions. Specifically, readers of our book will learn how to:
- Assess customer value in practice.
- Craft value propositions that resonate with target customers.
- Achieve spirited implementation for superior profits.
By embracing customer value management, readers can employ it in their own firms to drive superior business performance, just as the best-practice firms we relate throughout our book have. We sketch the processes comprising our customer value management approach in the accompanying Figure. The figure places the processes in sequence, which serves also as the overview of our book. We devote a chapter to detailing each of these constituent parts of customer value management.
Chapter 2 focuses on how to conceptualize value, which is the fundamental building block of customer value management, and addresses questions like these: What do we mean specifically by "value" in business markets? How does one define points of difference, points of parity, and points of contention vis-a-vis the next best alternative? What are the three types of value propositions suppliers use in business markets and why is a value proposition with resonating focus preferred over the other two?
Chapter 3 describes a process for firms in business markets to formulate their value propositions. It begins with analyzing what potential changes in the market offering customers would value most vis-a-vis the next-best alternative. This is used to develop a value proposition to aspire to. Then qualitative research is conducted to refine the value proposition. Finally, value word equations are developed to capture the points-of-difference in terms that customers can readily understand.
Chapter 4 provides a methodology for persuasively substantiating value propositions to customers. The value word equations are brought to life with data that are gathered in a customer value assessment. They are then used to construct value calculators that demonstrate the value to customers. Finally, value case histories and value documenters help prove to customers that they did indeed receive the value that the supplier promised them.
Chapter 5 demonstrates how a deep understanding of customer value can be used to tailor market offerings. Instead of the usual "vanilla" approach that provides the same bundle of products and services to all customer firms, one can instead offer flexible market offerings or "naked solutions, with options". This allows more refined targeting through differential levels of service and enables suppliers to capitalize on differences between customers.
Chapter 6 challenges suppliers to transform their sales forces from selling on price to becoming value merchants. While getting sales compensation aligned with selling on value and profit is critical, it is not enough. Businesses must foster value merchants.They put a value-selling process and value-based sales tools into place. They ensure initial and ongoing value-selling experience with customers. They instill and invigorate a value merchant culture.
Chapter 7 is all about how companies can profit from the superior value they provide to customers. Although it is natural to think first of price premiums, there are also three other means of obtaining a fair return from customers for value provided in business markets. However, getting a fair return requires the supplier to manage pricing as if profitability depended on it! To accomplish this, we provide a value-based approach to pricing at the strategy, tactics, and transaction levels.
In our ending Chapter 8, we take up the challenge of prospering in business markets. We discuss what customer value management can and cannot do to help businesses prosper. We provide further evidence of the contribution it can make to superior business performance. We consider how businesses can get started in implementing customer value management and becoming value merchants. Finally, we discuss how businesses that are value merchants can continue to provide superior value and profit from it.
The customer value management approach we present in this book provides state-of-the-art thinking, supported throughout by best practice from a variety of businesses, industries, and countries. And, it has the benefit of being tested as a process in a number of companies over the years. Implemented with integrity, it can provide that rare commodity that suppliers seek: superior business performance through demonstrating and documenting superior value.