lecture university of twente - introducing customer value in a b2b context
TRANSCRIPT
INTRODUCING CUSTOMER VALUE IN A B2B CONTEXT HUGO HEMEL | 08-10-2015
§ Customer value defined § Value strategy § Value analysis § Value communication § Key takeaways
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AGENDA
CUSTOMER VALUE DEFINED
Definition 1: “What is the customer worth to me?” § Lifetime value : what are my projected earnings during the relationship? § Share of wallet : what % of the total purchase volume do I take? § Cross selling : what related products and services can I sell? § Upselling : what upgrade opportunities can I capitalize on?
Definition 2: “What am I worth to the customer?” • Relevance : why should customers do business with us?
• Substantiate : how do I give rational grounds to favour our solution? • Perception : can I convince customers to buy from us? • Sustainable : how do I assure staying supplier of choice in the future?
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CUSTOMER VALUE TWO PERSPECTIVES DEFINED
VALUE STRATEGY
Source: Value Proposition Design, Osterwalder et al. (2014) 6
VALUE STRATEGY CUSTOMER VALUE PROPOSITION
Value proposition - net sum of relieved pains and created gains that customers can expect from a package of products and services.
gain creators
pain relievers
products & services
customer jobs
gains
pains
fit
Source: Value Proposition Design, Osterwalder et al. (2014) 7
VALUE STRATEGY CUSTOMER VALUE PROPOSITION
Customer jobs - the things that customers try to achieve in their professional and personal lives.
customer jobs
gains
pains
Different types of jobs: Functional jobs Social jobs
Emotional jobs
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Bosch professional campaign
Job insight: “People don’t want to drill. Instead they hire a drill as a means to put things together and make things nicer.”
Source: Value Proposition Design, Osterwalder et al. (2014) 9
VALUE STRATEGY CUSTOMER VALUE PROPOSITION
Pains - (latent) frustration points which customers experience prior to, during or after performing the job.
customer jobs
gains
pains
Different types of pains: Undesired consequences Obstacles
(Perceived) risks
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Pain insight: “Vacuum cleaners clog with dust which results in diminishing performance and causing personal frustration.”
Source: Value Proposition Design, Osterwalder et al. (2014) 11
VALUE STRATEGY CUSTOMER VALUE PROPOSITION
Gains - positive consequences which customers experience prior to, during or after performing the job.
customer jobs
gains
pains
Different types of gains: Required & expected gains Desired gains
Unexpected gains
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Bosch professional campaign
Gain insight: “Machines need to keep running so that they improve productivity and can generate money for the business.”
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VALUE STRATEGY CUSTOMER VALUE PROPOSITION
Criteria of a good value proposition: § Relevant “What’s in it for me?” § Distinctive “Why should I choose you over others?” § Measurable | monetizable “Show me the money!” § Sustainable “Does it give me a longer term benefit?”
Important considerations: § Determine your focus and don’t try to be everything to everybody.
§ First make sure you are relevant, getting preferred only comes second. § Some unrelieved pains just cannot be compensated by great gains. § Don’t try to solve a problem which simply doesn’t exist (‘featuritis’).
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Value proposition: “We keep your engines running. Power by the hour.”
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Value proposition: “We manage your tools, so you can manage your business.”
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Value proposition: “We accelerate sustainable transport by bringing compelling mass market electric cars to market as soon as possible.”
Source: The Myth of Excellence, Crawford and Matthews (2001) 17
VALUE STRATEGY CUSTOMER RELEVANCY
product price service access emotion
excel
differentiate
on par
Providing value - deciding where to be best, better and good enough.
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VALUE STRATEGY CUSTOMER RELEVANCY EVOLUTION
product price service access emotion
Relevancy is dynamic and ‘good enough’ expectations evolve over time.
on par tomorrow
on par today
how to stand out?
Source: BrandAsset Valuator, Young & Rubicam (2008) 19
VALUE STRATEGY CUSTOMER RELEVANCY BATTLE
differentiation relevance esteem knowledge
The financial value of a brand comes down to winning the relevancy battle.
brand strength
indicator future growth brand stature
indicator current value
the comfort zone
the magic zone
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Disruptor: “We revolutionize space technology, with the ultimate goal of enabling people to live on other planets.”
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Almost disrupted: “We bring unmatched productivity and security to all mobile devices.”
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Disruption crash tested: “We inspire people to take a more sustainable lifestyle. This is all in keeping with our holistic ‘Think Blue.’ philosophy.”
VALUE ANALYSIS
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VALUE ANALYSIS VALUE QUANTIFICATION
A B2B value proposition is useless if you cannot quantify the bottom line.
reference value ‘next best alternative’
positive value
Negative value
total economic value
‘benefit surplus’
‘competitor benefit surplus’
= theory
Source: The Strategy and Tactics of Pricing, Nagle et al. (2011)
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“There is no absolute truth. There is only perception.”
(Gustave Flaubert)
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VALUE ANALYSIS VALUE PRICING
Willingness to buy is about positively influencing perception of added value.
total economic value
willingness to buy
willingness to sell
perceived value
sales price
experiences
risk and cost
substitutes
negative value
marketing
cost price
Source: The Strategy and Tactics of Pricing, Nagle et al. (2011)
VALUE COMMUNICATION
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VALUE COMMUNICATION ADAPTING TO THE BUYING PROCESS
Different stages and roles in the buying process require different approaches.
advocate
consider
discover decide
status quo
commit to change
explore options
compare solutions commit to
solution
step back
justify the decision
make the selection
loosen status quo
“Are you committed to understanding our pains and gains?”
“Do you have a solution to relieve pains
and create gains?”
“Can you proof and quantify what you promise me?”
“Did your solutions do what they promised us?”
KEY TAKEAWAYS
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KEY TAKEAWAYS LESSIONS LEARNED
§ Customer value comes in two perspectives: inside-out and outside-in. § Key to success lies in understanding the job customers try to accomplish. § A good CVP is relevant, distinctive, measurable and sustainable. § It starts with being relevant, being preferred only comes second. § Being relevant today is no guarantee for being relevant tomorrow.
§ A good CVP in B2B only has meaning when you can quantify the benefit. § More than the theoretical value, it is the perceived value that counts. § Influencing perception requires understanding the buying process & roles.
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INSPIRATION WORTHWHILE TO READ
Elon Musk Ashlee Vance
Losing the signal Jacqui McNish | Sean Silcoff
Brick by Brick David Robertson
Big bang disruption Larry Downes | Paul Nunes
Value proposition design Alex Ostenwalder
GROUP DISCUSSION
THANK YOU [email protected] | NL.LINKEDIN.COM/IN/HUGOHEMEL