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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 prevail when they encounter challenges of the type that the IC salesperson faced. 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

FIGURE 1-1 SKF Documented Solutions program advertisement

Source: Provided courtesy of SKF USA Inc. Used with permission.

By embracing customer value management, readers can employ it in their own firms to drive superior business performance, just as the best-practice firms mentioned throughout this book have. We sketch the processes composing our customer value management approach in figure 1-2. The figure places the processes in sequence, which also serves as an 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-à-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 a resonating focus preferred over the other two?

FIGURE 1-2

Customer value management processes

Chapter 3 describes a process for firms to formulate their value propositions. It begins with analyzing what potential changes in the market offering customers would value most vis-à-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 is 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, a supplier can offer flexible market offerings. This allows more refined targeting through various 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 and put a value-selling process and value-based sales tools in place. They must ensure initial and ongoing value-selling experiences with customers and instill and invigorate a value merchant culture.

Chapter 7 is all about how companies can profit from the superior value they provide 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 strategic, tactical, and transactional levels.

In 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 and 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 having been tested 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.