How to build really awesome things out of really regular stuff
Commoditization. The death knell for marketers.
Especially for those of us in the B2B space where it’s becoming increasingly difficult to demonstrate the competitive value of our products and services to the 6–10 different customer stakeholders that influence the purchase decision. And when the customer has an incredibly savvy procurement team…life can really stink.
And true to the definition, unless you own a highly proprietary technology in a white space nobody can touch, your customers can (and will) source what they get from you…from someone else. Conversations quickly turn to price and things like margin erosion, customer churn and irrational competitive behavior become a reality as everyone fights for a shrinking sliver of pie.
So, how do you avoid slipping down the commodity slope? How do you build something your customers value (and will pay more for) out of the same stuff everybody else has access to?
In other words…how do you win?
If acquiring your competition isn’t an option and you’re not the low cost leader…you’ve got to differentiate. But to successfully build (and sell) a differentiated solution and create sustainable advantage, you’ve gotta know WHY you’re building WHAT you’re building and HOW you’re going to build it…BEFORE you build it.
And these 3 things will ensure you build the smartest strategy…and execute it flawlessly.
01 Know your customers really, really well
Having a deep understanding of the market, who you’re selling to and what you’re solving for is almost as important as remembering your wedding anniversary. Almost.
Do your homework. Don’t be afraid to ask your customers questions and for Pete’s sake…listen to the answers. Insight around their needs, challenges, growth opportunities and how they buy will ensure you’re building the right solutions and selling the right value.
And it doesn’t stop at the customer level — individual stakeholders within your customers’ organizations have different perspectives and interestingly enough, often competing needs. According to Salesforce, 66% of B2B buyers expect their suppliers to understand their unique needs but only 34% of those suppliers treat those stakeholders like unique individuals. If your sales team isn’t hyper-curious or comfortable navigating complex organizations and they struggle to adjust your value prop for different audiences, differentiated selling will be difficult.
And don’t forget how important it is to know when to say “no”. Decisions around who you WON’T sell to are a huge (and often overlooked) piece of your strategy. Make no mistake, it’s hard to turn away business, but if you waste valuable resources on customers who don’t value what you bring, your profitability will suffer and so will your team’s morale.
02 Create bulletproof value propositions
The insight and knowledge you generate will give you the tools to create solutions that deliver on your customers’ most-pressing needs in a way that no other supplier can. And that can be through innovation or value add — bundling products and services to create — you’ve got it…added value. Even within the most commoditized segments, there is opportunity to differentiate and add value through things like supply assurance, logistics and warehousing, short runs and quick turns, easy ordering and tracking, creative and marketing support and other services.
But this isn’t a one-size-fits-all kinda game anymore. Your value propositions should be tailored to the customer as well as the individual buyer (or stakeholder) you’re talking to (and yes, there’s more than one). You’ll drastically increase your likelihood of closing a deal if you can make all stakeholders happy.
Bain Consulting created an excellent framework based on years of both quantitative and qualitative data that captures 40 fundamental “elements of value” — or what matters most — to B2B buyers. The model traces its conceptual roots to Maslow’s hierarchy and covers both very rational needs (like price and specs) as well as more emotional needs (like reducing buyer anxiety or enhancing their reputation at work). Those more subjective “elements of value” are becoming an increasingly important component of B2B purchase decisions. Understanding both the business value add AND the personal value add will set you up to uniquely speak to (and solve) your customer’s full spectrum of needs and make you really, really sticky.
And…you’ve GOT to price right. Quantifying the true (and total) value your solution delivers to the customer — as well as the true cost to serve that customer — will help you do that. If your customer really wants apples and you sell apples…don’t price them like oranges. (You can quote me on that)
03 Empower your team to sell better
And finally, you’ve GOT TO SET YOUR TEAM UP FOR SUCCESS. Selling from a catalogue and talking price are way easier than talking value and selling solutions. Train your team to do this well and incentivize your team to want to do it. Developing a strategic compensation plan that’s aligned with your organizational goals and rewards consultative selling is absolutely critical.
And for commercially-driven B2B organizations…it’s absolutely imperative that your sales and marketing teams are 100% in lockstep. The engine you build to differentiate effectively and sell-in successfully must be well-oiled and high functioning. Sales and marketing should have the same performance metrics, use the same tracking systems and operate with well-defined accountabilities and mutual respect. Period.
But one of the most important things you can do to ensure your team’s success is to nurture an owner’s mindset. According to Chris Zook, author of The Founder’s Mentality, 94% of the barriers large companies face in achieving their growth targets are internal. INTERNAL!! And more than two-thirds of the reasons are related to complexity — a natural byproduct of growth.
Unfortunately (and ironically), nothing stunts growth like complexity. For those of us who’ve worked with large, complex organizations, that’s not really a surprise. Scale creates layers and layers breed bureaucracy and bureaucracy not only stifles entrepreneurial spirit and speed…but it enables (and often rewards) mediocrity. And that’s a killer.
Empower your team to feel and act like owners. Encourage them to think creatively, incentivize them to make decisions holistically and give them the tools to execute quickly. And NEVER forget…your organization is only as good as your worst manager. Putting the right leaders in place to nurture a culture that attracts and keeps the talent you’ll need to take intelligent risk and win in today’s hyper-competitive environment is one of the fastest ways to win.