In my work with product management I often see poorly designed Value concepts that become useless. This is because we turn the Value-work into a philosophical discussion rather than a business driven.When asking people “What is Value?”, most would probably propose a valid explanation. As a consequence of that, we could have thousands of potentially good definitions of Value. Most definitions would be able to stress different aspects of value, and would approach the word from different angles. Therefore, we have seen a need to define the concept to make it possible to work with. We have chosen to use the definition formulated by James C. Andersson et al. in the book “Value Merchants”.
“Value, in business markets, is the worth in monetary terms of the technical, economical, service and social benefits a customer firm receives in exchange for the price it pays for a market offering.”
The definition gives us a starting point and allows us to develop principles and processes. There are five main principles for working with Values (according to Andersson et al. & Tolpagorni). Let’s analyze them:
1. All values can be more than what a single customer needs
The intrinsic value of a product can be huge. A single customer will not benefit from all Values. The Value delivery to a single customer is not the sum of all values of the product, but a subset of them.
We will need to “Discover” all the values we are delivering. We need to get beyond the simple value statement into the true logic of our value delivery.
2. All values must be adapted to a specific context.
The Value of a product is not found in the product. It is found in the customers’ processes and usages of it. We need to truly understand the different customers’ business logic and their ways of working.
3. All values in a product must be compared with an alternative
There is always an alternative for the customer. Either a customer finds a competing product, builds one, develops a workaround or builds manual processes. There are numerous alternatives. And our Values must be compared with the relevant alternative. These alternatives are essential to “Define” the value we deliver.
4. All values can be expressed in monetary terms.
The key values of a product should be explained in a way easily understood and processed by our customers. To do that we firstly need to “Connect” the relevant value proposition with the target market. In addition, the product (and the alternative) needs a financial analysis. How can the customer monetize on our product?
5. All values in a product should be transferred to the customer in an effective way, to secure the adequate money recognition.
All sales processes are complex. There are triggers for pursuing procurement. They vary over the buyer’s journey. They are also accompanied by showstoppers. To communicate successfully we need to understand and “Connect” the triggers, showstoppers and stakeholders, in the buyer’s journey.
We need to support the sales force with specific tools to “Convey” the relevant value of our product. The support tools should engage the customers with a clear and effective message of the relevant value.
Based on these principles we can summarize the Value Development process into two main phases:
- Value Design – This is where we initially Discover the value logic, and then connect them to the target markets and the market insights. In the Value Design phase, we also need to Define the resonating focus of the Value Proposition for the different target markets.
- Value Communication – This is where we firstly Connect the key value messages with the buyers’ journey and stakeholders. In the Convey phase we choose how to support the customers buying our product, and how we support the sales organization to sell our products.
To really experience this journey, it is not sufficient with a simple value proposition or a good story line. It could be necessary to develop sales tools like Value Tree to engage the customer in the total benefit experience. Feel free to download our white paper that will guide you through how to build your own value logic.
For those interested, I host a workshop called The Value Engineering where we will go through the value concept more indepth. You'll learn a process and get 11 concrete tools to deliver effective product marketing. Last year it sold out. New chance in November. Hope to see you there.