Earlier this year, Todd Snelgrove shared best practices in incorporating value quantification and communication into the innovation process during a live webinar. During the session, he shared a range of stories and best practices drawing from over two decades of experience in value quantification and selling. Here are five lessons he shared for B2B organizations looking to embed value in their go-to-market and sales processes.
Lesson 1: Quantify Value to Customer Early:
You need to show quantified value to the customer early to get traction. They end up chasing the newest internal priority instead. As a customer, I can’t prioritize what you are compared to everybody else until there’s a number beside it, so it’s no wonder why so many decisions become “no decisions.” It’s because there wasn’t a number for the customer to digest.
I’ve often been at big customer meetings where the decision-makers just got up and left – it’s too common to finally right people in the room to have their Blackberry beep and then leave the meeting. After this happened once, my former colleague told the seller, “Do you know why they left? It wasn’t worth their time to sit there. If I’m an executive listening to a presentation on bearings. I’ve got people that do this for me. I’m dealing with corporate travel and buying a company – I’ve got bigger problems than this.”
He continued, “The reason why is that you left your value at the end.” Too many sales presentations leave value to the late slides—if it’s presented at all. Instead of putting the estimated $5 million of value delivered on the last slide, you need to lead with that number.
Lesson 2: Make Sure Your Value is Relevant to Customer Segments
One crucial question is, “What does your value look like for customers? How do I quantify what that value is? How should I price it?” Also, role-playing the customer side, challenging the development team, and asking them, “Is that a value?” I would tell my team that we can quantify four hundred variables – less energy, less downtime, and increased customer satisfaction. Why don’t we mine those? If you’re creating a product or service, why don’t we pull those value drivers out? We know what the formula is. We should be able to do some research to see what it is worth to customers in different segments.
In some cases, the customer said afterward, “Yes, you presented me with a business case. You thought it would be worth X. I actually implemented it, and I got Y.” So now we start to get some data points—if we could reduce this, if we could increase that, we know what it’s worth. Then we start to get a good idea of what the value is worth by segments, by country, by any segmentation. What is it worth to each?
Value needs to start with what we build and how we build it, and sometimes, value might not be within the product or service at all. Once, I was working with a company that created a new product. They said the need in the marketplace was that we produce noise pollution, so they created this part that actually creates less noise.
One day, I was with some colleagues, and we were having a global key account meeting with a big pulp and paper customer. Of course, they went to the big paper facility, where the meeting room was buried in the back. We got all dressed up, went into the room from the back door, and in came the management team wearing big hearing protection, hard helmets, safety glasses, and boots.
My poor colleague was given the presentation, which focused on the value driver of reduced noise. He got to slide three and talked about how these bearings would reduce sound by 30%. And the head gentleman in production just started laughing. He goes, “Have you guys ever been in a paper mill? The bearings don’t make the noise.” The point is that value is specific to customer segments. You have to think through everybody’s segments, regions, everything. It’s different for everybody.
Lesson 3: Lean on Internal Expertise to Quantify Value
Once, I was working with a client, and somebody said that we believed we were worth more because we were a local supplier. We then pulled ten slides together, and the customer value ended up being 28% higher between the risks they were already taking on, the incremental inventory they would no longer need, plus the currency, tariffs, etc.
The message went from “local suppliers are good” to “local suppliers are worth 28% more to your company,” suddenly, everyone was interested. That might have seemed high to some and low to others. These things are challenging, but that’s why you need somebody who does this for a living who can spend the afternoon and see if you can give product managers and marketing anything they can walk through. Because if you’re the salesperson, you’ll say, “Well, we’re local,” anyway. It strengthens their argument to be able to put a number behind it.
Sitting down with technical teammates can also unearth value drivers. Once, I was working for a company that launched more efficient machine bearings, and we differentiated on reduced energy consumption. One day, I was talking about how one potential customer benefit was how the machine would run cooler. An engineer sitting next to me pointed out that there was a relationship between reducing the bearing temperature and extending the life of the lubricant, meaning I could decrease the amount of money I spend on lubricant disposal, lubricant inventory, and lubricant application.
The point is, if the person who worked for the company for 20 years didn’t understand this value and this was launched, no customer was jumping up and down because it turns out the 30% reduction of energy of the bearing is a rounding error of the overall energy consumption of the machine. But people got very excited when we started talking about lubrication, cost reduction, and how every bearing needs lubricant. A unique selling proposition is different from something that generates value.
Lesson 4: A Financial Business Case Is Essential
A long time ago, I was running a sales training. We did a session one day on how to sell and how to buy value. This lady, who is now Head of Procurement at a major company, said that suppliers rarely come to them with a business case. “It’s what we want,” she said, “sell your value and our numbers to get our attention. If you can’t quantify your value, don’t be surprised at procurement’s failure to recognize it.”
That makes sense if you’re in procurement or responsible for making a decision – if all your team does is sell a product or service and charge 20% more, how am I supposed to figure out you’re worth it? If you put a business case that makes sense in front of me, it might be high or low, but I’m not going to do the work to justify paying you more. That’s your job. I could never be an expert on the value of everything that every supplier could bring.
Value propositions and business cases can also help move along selling situations that might otherwise get stuck. I’ve worked with people who had contacts that were lower-level in their organizations – individual contributors, managers, and so on. When funding is needed, it has to come from someone else. I would always ask, “Go ask your boss right now for $200k for this investment – why do you want it? Does it make their life better? Better how? It’ll be easier and faster and save our company time and resources. What are we doing now? How does it compare financially?”
By following this logic, you can build a business case that enables your contact—your promoter—to share that upwards within the organization. If you’re selling to the user, I can get you excited, but that’s not how the deal gets done. You’ve got to get a budget from somebody. Give them at least some tools to start the discussion. To be effective, it has to be a business case versus marketing content that isn’t focused on value.
Lesson 5: Develop a Consistent, Scalable Process
There are a couple of crucial parts here. First, even if your whole organization talks about value, Pricing’s idea of value – such as setting and maintaining value-based prices – might be different than Product Development; who might be thinking, what’s the long-term innovation value for the company? Marketing and sales might be more focused on the value to the customer. We often don’t even have a common language, let alone a shared understanding of what it is and how to measure it. This creates confusion – a shared language is critical to getting aligned behind customer value.
Next, when you don’t have a scalable process, you get people going off on tangents, quantifying and communicating value differently across different business units and regions. I’ve seen companies five different business cases for the same solution, and the value drivers were all different. And depending on which salesperson or team you’re talking with, the customer might’ve received and given you different information. Too often, the cause of this is somebody just tried to dig up as much stuff as they could to throw it on an Excel spreadsheet and said, “Here you go.”
Smart customers ingest business cases from all their suppliers into a database and compare them. Smart suppliers utilize value quantification tools to support consistent value drivers, formulas, positioning, and processes. This ensures that everyone who speaks with customers can communicate outcomes and get paid for the value they provide.
