Making both buyers and sellers feel they are getting good value is part of the

At its core, Customer Value Management (CVM) is an approach to managing all aspects of the “value journey” that a customer takes — from initial contact with prospective buyers — whether that is through a web calculator, SDR outreach or a targeted marketing campaign or through the active sales cycle to on-going customer relationship management following solution implementation.

The CVM journey consists of three distinct collaborative stages:

1. Value Discovery. Both the buyer and seller need a reason to initiate a meaningful conversation. Buyers need a “directional sense” of potential business value: “Given your understanding of our business challenges, what is the potential business value of your solution for my organization?” To respond, sellers need an efficient way to (a) gain unique insights into the buyer’s business needs; (b) reach the Economic Buyer and frame the conversation around potential business outcomes; and (c) quantify an “outside-in” business value hypothesis. The goal: gain buyer agreement to collaborate on a business case to justify investing in the seller’s solution.
2. Value Delivery. This collaboration consists of first determining the solution benefits that are relevant to the buyer and then quantifying them according to the buyer’s input. The goal: create a transparent business case, transfer ownership to the Economic Buyer, and implement the B2B solution, successfully setting the stage for periodically quantifying value achieved.
3. Value Realization. Following a successful implementation, value realization measures actual value achieved relative to the original baseline ROI model — helping the customer showcase business value. This stage leads to a satisfied customer, helps lock-in renewals, and opens the door to cross-sell / upsell opportunities. In addition, customer testimonials and case studies along with benefit proof points should be captured and fed back into the value models for continued refinement and enrichment.

By achieving these goals, CVM complements and enhances the traditional Customer Relationship Management (CRM) discipline. Specifically, by adding insights and assets that enable value-centric conversations at each customer interaction touchpoint, CVM helps customers achieve success, which in turn accelerates seller success — a win-win value proposition for buyers and sellers.

What is the History of Customer Value Management?

Awareness of Customer Value Management, or differentiated value selling, has not happened overnight. For people who have been in sales long enough, there has been an evolution leading to the ultimate goal of Customer Value Management, as illustrated in the figure below.

The evolution began with Technical Product / Feature Selling decades ago — when there was a relatively

straightforward way to map a product capability to a specific problem.

As problems became more complex, buyers and sellers increasingly relied on Solution Selling to define and scope requirements and design more sophisticated solutions.

As competition stiffened further, a Generic Value Selling framework appeared — where sellers provided buyers with generic examples of the value achieved by other organizations. But these generalized value propositions were not specifically relevant to each organization; they did not always account for industry, geography, size, or use case variations.

This led to Specific Value Selling methodologies that enabled value to be quantified and customized for each opportunity.

Agile Customer Value Management completes this evolution. Specifically, CVM brings organizations to the level of Differentiated Value Selling — where value is quantified for a specific project including differentiation from other alternative uses of budget such as direct competition or alternative uses of capital.

Why is Customer Value Management Important?

Businesses today face great challenges from global competition, mergers and acquisitions, technology advancements, digital transformation, rising consumer expectations, and cybersecurity threats. The need for cost-effective B2B solutions to deal with these challenges has never been greater. As a result, horizontal and vertical competitive B2B solutions continuously enter the marketplace at an astonishing pace, leaving buyers with the tough decisions: “Why buy? Why now? Why from a specific provider?”

However, in a seemingly paradoxical convergence of interests, buyer and seller expectations are precisely the same when it comes to justifying investments in these B2B solutions. Both parties recognize that their key to success is an effective business case to justify investments and the ability to measure and showcase business value after the solution is implemented.

Typical enterprises have a long list of potential projects to fund. So, buyers and sellers need a credible way to “rack and stack” investment priorities. After all, it’s not just a question of convincing decision makers that your problem is worth solving. It’s a question of “hurdling” other projects in the queue and moving up the funding priority list.

In fact, industry analyst research reports that 90 percent of buyers require quantifiable evidence of business benefits before investing. Yet two-thirds of buyers confess that they are poorly equipped with knowledge and tools to create a credible business case, while over four-fifths of buyers look to their suppliers for assistance in quantifying value.

On the seller side, CSOs and CMOs understand that quantifying and selling the business value of their solutions is critical to their success. After all, if only 10-15 percent of deals have a compelling business case, how much money is being left on the table? A lot!

What Does a Great B2B Buyer-Seller Experience Look Like and How Can Customer Value Management Enable That?

Buyers desire to engage in initiatives that will help them achieve their organizational and personal objectives and sellers seek to help buyers buy. However, both parties often find it difficult to overcome the allure of the status quo. So, what does a great seller-buyer experience look like?

The seller experience should seek to achieve four goals: gain the attention and support of a Champion and Economic Buyer; establish credibility with the decision maker and influencers; build a defensible business case, and lock-in a longer-term relationship as a Trusted Advisor.

These goals can be achieved by three key actions:

1. Grab attention with a provocative Value Hypothesis. Based on your account research, internal account team knowledge, and industry benchmarks, a Value Hypothesis provides the Economic Buyer and Champion with a “directional sense” of your solution’s business value. The objectives of a value hypothesis are to: (a) pique the buyer’s curiosity enough to continue a meaningful dialogue and (b) gain agreement to collaborate on refining the value hypothesis into a defensible business case. Consequently, the value hypothesis provides a strawman model to drive a business case working session.
2. Build a credible, transparent business case. The same methodology used to build the value hypothesis is used to engage the buyer’s team with a non-intrusive process leading to a defensible business case. The objectives of the business case modeling exercise should be to: (a) gain buyer team consensus on the metrics required by the Economic Buyer to justify investment; (b) provide complete traceability from the ROI and payback calculations down to individual pain point-value statements pairs that comprise the business case; (c) help quantify the cost of delay, and (d) move the seller solution up the investment priority stack.
3. Lock in an on-going relationship as Trusted Advisor. The final business case model also serves as the baseline for periodically measuring and showcasing value realized following solution implementation. This part of the seller experience is critical to locking in renewals and setting the stage for expanded implementation through cross-sell and up-sell opportunities.

This seller scenario also contributes to a great buyer experience. Specifically, the Economic Buyer and Champion leverage a proven, rigorous methodology to: (a) justify budget and set funding priorities that support their current decision-making process and (b) provide evidence that their current investments are achieving the original ROI expectations.

It’s a win-win situation: the buyer gets the solutions needed to achieve their business objectives and the seller achieves recognition as a Trusted Advisor. Sounds straightforward. But there are some challenges that sellers and buyers must overcome to achieve this great experience.

How Do You Quantify Customer Value?

Value model development and validation is a stage of CVM Program implementation. Specifically, there are two interdependent use cases to consider.

1. Value Model Content Development / Validation. This stage is about developing the Value Data Model and validating it with customers. It includes precisely defining the universe of benefits associated with a B2B solution — focusing on the underlying “pain point–value statement” pairs and the factors required to quantify them. The initial “strawman” value model should be developed by capturing the collective knowledge of people internal to the B2B solution organization – across the sales, SE, marketing, and product management teams. For this activity, Excel serves as an excellent “rapid prototyping” tool. The result of this stage can then be used to validate the strawman Value Model and outputs with “friendly” customers.
2. User Experience (UX) Validation. The next stage of validation requires assessing the best way to implement the value model and associated assets in the steady state. Can the delivery of the Excel-based Value Model be scaled? Is it easy for the sales teams to use it? Does it support iterative refinement as you move through the sales cycle? Will customers accept the transparency and quality of the resulting deliverables? Can these outputs be quickly and efficiently regenerated during the business case refinement process? Here is where Excel falls short and a CVM platform makes a tremendous difference.

The Solution Value Model is the collection of benefits that constitutes the content foundation for a CVM Program. It is critical to every stage of the CVM journey – creating a value hypothesis with your internal account team; building and refining a defensible business case with the buyer team; measuring value realized post-solution implementation, and creating persona relevant assets along the way.

Sellers often struggle with the challenge of connecting their buyers’ challenges (pain points) to the business value of their B2B solutions. Inability to do this may lead to a credibility gap — providing numbers without context. Overly simplistic ROI Calculators fail to bridge this gap; in fact, they may widen it. While calculators may be a provocative way to open the door and generate leads, they fail to provide the rigor required to justify an investment in a B2B solution.

Thus, the challenge is: how do you build a value model that can both be used to generate interest (with a provocative value hypothesis), then move on to refine the hypothesis into a compelling business case, and finally close the loop by using the baseline model to measure value realized.

The answer is: build a rigorous Value Data Model – a collection of benefits that constitute the baseline financial model to be used and customized by sales reps in building a unique business case for each customer. It provides Economic Buyers with the ability to assess alternative scenarios from worst to best case — performing sensitivity analyses, observing the impact of possible risk factors, answering “What if?” questions, and projecting a variety of financial factors (e.g., ROI, NPV, payback, etc.) for a proposed investment.

What Are the Important Ways That Value Enablement Impacts B2B Businesses?

Over the past few years, books have been written and significant research has been conducted on the

benefits of selling business value.

• The Challenger Sale by Matthew Dixon and Brent Adamson emphasizes that sales conversations must be tailored to align with each buyer’s economic value drivers.
• Reed K. Holden, in his book, Negotiating with Backbone, argues that the “game” of selling is actually a test of sales rep confidence in solution price and value.
• Miller Heiman, in its 2018 CSO Insights Study, reports some eye-opening statistics on the buyer-seller experience as shown in the table below.

More recently, IDC published a research report noting that value-selling at a cloud-based software company led to a 70 percent improvement in close rates with net-new accounts, along with improved upselling close rates from approximately 70 percent to 75 percent. IDC’s recipe for success includes producing scalable, sharable, and reusable models that can monitor value delivery post sale along with an automation platform that supports economic value analysis for every rep.

In April 2020, Dimensional Research conducted a value management survey5 of 203 qualified individuals working at B2B SaaS companies with more than 50 sales reps in a sales, sales enablement, or value consultation leadership roles. The findings noted that 82 percent of customers ask for value tools beyond what these organizations are capable of providing. Not surprisingly, they also reported that more than 90 percent of sellers report that they struggle with value management.

It’s important to realize that the significance of the above metrics to a business depends on where it is in stage of growth and business maturity. For example, early stage enterprises are most likely interested in value differentiation — to ensure profitable revenue growth. These enterprises measure success in terms of improved marketing campaign conversions, lead conversions to sales qualified deals, close rates, discount reduction, and deal velocity.  A late stage business may want to focus on protecting margins and renewals, thus achieving reduced customer churn, while increasing opportunities for cross-sell / up-sell are important performance metrics.

Regardless of stage, it’s helpful to frame the benefits of your CVM program in terms of its value to the end-to-end marketing and sales processes:

Marketing Campaign -> Marketing Qualified Lead -> Sales Qualified Opportunity -> Forecast -> Close Deal -> Customer Success

How Are Companies Leveraging CVM Today?

Many companies today are leveraging CVM is an analog, offline way, relying heavily on error-prone spreadsheets and limiting the ability to have a repeatable, scalable process for delivering value to their buyers and customers. This analog method is labor-intensive, expensive and results in a slow turnaround and low output. As a result, only the most strategic or at-risk deals are supported by value analysis. In customer success organizations, there is a blind spot for success because there is no seamless handoff from the sales team to the implementation team for why the customer bought and what outcomes they expect to achieve. This impacts the ability to measure and quantify the value achieved by the customer that is necessary to continually justify the investment (especially in SaaS scenarios).

Companies that have transformed their value management processes have learned that they need a scalable, SaaS-based solution to serve as a system of record for their prospects and customers. Those that are leveraging value across their customer journey realize improvements across the funnel — from marketing to sales and customer success.

How Do CVM Applications & Software Work?

A comprehensive, scalable CVM platform will contain a collection of benefits that constitutes the content foundation for the value program. This foundation is critical to every stage of the CVM journey – creating a value hypothesis with your internal account team; building and refining a defensible business case with the buyer team; measuring value realized post-solution implementation, and creating persona relevant assets along the way.

Sellers often struggle with the challenge of connecting their buyers’ challenges (pain points) to the business value of their B2B solutions. Inability to do this may lead to a credibility gap — providing numbers without context. Overly simplistic ROI Calculators fail to bridge this gap; in fact, they may widen the gap.

While calculators may be a provocative way to open the door and generate leads, they fail to provide the rigor required to justify an investment in a B2B solution. Thus, the challenge is: how do you build a value model that can be used to generate interest (with a provocative value hypothesis), then move on to refine the hypothesis into a compelling business case, and finally, close the loop by using the baseline model to measure value realized. The answer is: build a rigorous Value Data Model with the ability to abstract data to suit a variety of needs. Let’s explore the practical implications of this statement.

The Value Model is a collection of precisely-defined benefits that constitute the baseline financial model to be used and customized by sales reps in building a unique business case for each customer. It provides Economic Buyers with the ability to assess alternative scenarios from worst to best case — performing sensitivity analyses, observing the impact of possible risk factors, answering “what if?” questions, and projecting a variety of financial factors (e.g., ROI, NPV, payback, etc.) for a proposed investment.

So, what is a precisely-defined benefit? A benefit is the fundamental building block of a value model. Think of it as the “atomic unit” of business value that provides the buyer and seller with the wherewithal to assemble a customized business case for a B2B solution. A well-defined, reusable benefit consists of the following elements:

• Benefit Name. A label that communicates how a specific driver’s improvement is quantified in terms of its business impact. For example: does it reduce costs, improve productivity, mitigate risk; etc.?
• A narrative that provides: (a) context for the benefit by characterizing the nature of pain and (b) a brief value statement communicating specifically how business value is quantified. For example, will it reduce the time and effort associated with a given activity (e.g., problem resolution); displace software license costs; reduce customer churn?
• Describes the use cases or specific features of a solution offering associated with the value statement claim.
• Proof Points. Specific evidence that supports the value statement claim, typically in the form of either” (a) first hand customer experience (value realized) with the B2B solution capability and / or (b) industry analyst benchmark data.
• Value Calculation. Three factors are used to quantify each value statement, including:
• Driver Factor. A key measure of business success or business risk that the solution contributes to or mitigates. For example: Number of Security Incidents; Number of IT Staff; Number of Software Licenses.
• Financial Factor. A value that monetizes the calculation — typically expressed as a Labor Rate, Unit Cost, or Unit Revenue.
• Improvement Factor. A range of expected improvement associated with the Driver factor (Conservative – Probable – Aggressive) which may be expressed in percentage terms or absolute numbers.

With the Value Data Model as the “center of gravity” for the CVM Program, the buyer engagement process is illustrated and described below.

What is Value Engineering?

Value Engineering is a practice that is critical for a business to achieve higher close rates, increased average deal size, improved customer retention, and increased account growth through cross-sell and up-sell. To begin, it’s important to understand that the role of Value Practitioner is referred to in a variety of ways by different organizations – Business Value Consultant, Value Expert, Value Engineer, Value Analyst, Cloud Economist, and Business Analyst to name a few.

Regardless of label, there are a number of Value Practitioner roles depending on personal goals and strengths. Generally speaking, these opportunities fit into two broad categories:

1. “Field-facing” Value Engineers work directly with the field sales teams to engage prospects and existing customers in value conversations throughout the engagement process leading to: (a) a business case that justifies investing in a B2B solution and (b) an assessment of value realized post-implementation. Individuals who enjoy customer contact and working on the front lines to help close specific opportunities typically follow this career path.
2. “Back-office” Value Engineering support is essential to achieve the goals of scalability, repeatability, and consistency of high-quality deliverables. This role involves largely, but not exclusively, working behind the scenes with internal stakeholders (sales, sales operations / enablement, marketing, product management, and customer care organizations) to create and maintain reusable content that the field sales teams need to engage prospects and customers. This content typically includes: value models, customer ROI case studies, proposal boilerplates, deal success stories, and enablement training courseware. To achieve this goal, two key processes must be formalized: (1) an internal collaboration process for understanding the expectations and “demand” of your stakeholders and (2) an external customer engagement process that clarifies how and when to use sales assets and collateral. Success in this role requires aligning content with your go-to-market strategy and supporting your organization’s prescribed selling approach (g., Challenger, MEDDIC, Miller Heiman, etc.).

How Does Customer Value Management Support Sales Enablement?

Once implementation of your CVM program is complete, it’s time to give the sales team members the confidence to carry on effective value conversations throughout the customer engagement process.

Sales enablement content can be packaged and delivered in a variety of ways – including recorded sessions on a Learning Management System; formal face-to-face venues like sales roadshows; Sales Kick-off events; onboarding events, and one-on-one coaching sessions. The table below suggests different assets that value engineers can prepare for value management enablement:

What refers to marketing function that involves finding a buyer or buying selling and pricing?

Which marketing function involved determining where products will be sold?

What are the 7 functions?

What performs the function of selling goods or services?