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Posted 03 Mar, 2017 | Posted in: Pricing | Tagged: ,

If a tree falls in woods, and no one is around to hear it, does it make a sound?  After listening to a presentation in which the speaker claimed value didn’t exist until the customer recognized it, I thought about this age old question a bit differently. Let me ask it again, but this time insert one key phrase: If a supplier’s product or service impacts a customer’s business, but a customer doesn’t recognize it, does that value exist?

The answer is really in how you define value.  My basis for B2B value is financial value, or your ability to impact the bottom line for your customer either through cost savings or revenue growth.  Your product or service delivers financial value to your customers whether they, or you for that matter, know it or not.  If it did not, you would not be doing business.

The next logical question is this: If you deliver value,  and your customer doesn’t recognize it, can you get paid for it? Well, the answer has to be no.  And often, customers either are not aware of the supplier’s value (shame on us), or are bluffing their way to lower prices by claiming value doesn’t exist. Either way, it’s up to us as marketers, pricers, and sales people to make value real for customers so we can get rewarded and paid for it.

Here are two examples that might help amplify the sound of a falling “value” tree:

The use of a data company’s information evolved over time as computing capabilities improved, allowing to the buyer of the data to reduce their operating costs significantly.  Originally the data was used and paid for once.  Now, complex models allow buyers to access the data hundreds of times to maximize their efficiency.  This new value to the buyer was never reflected in the price.

Buyers purchasing containers of product would take weeks to unload the containers before returning them to the supplier, a costly scenario for the supplier.   Customers wanted the security of back stock but didn’t have the warehouse capacity.  The supplier saw the containers solely as a delivery conduit, when in fact they provided warehousing value to the customer at the supplier’s expense.

I’ll ask you to reconsider, was value delivered even though the buyer never considered the source of value delivered by the supplier?

Here are a few situations that reflect an organization’s level of value awareness:

  1. The supplier is unaware of the value they deliver to the buyer
  2. The supplier describes value delivered in terms of specifications as opposed to financial impact to their buyers
  3. The supplier has an internal view of value delivered that is not differentiated in the market
  4. The buyer is unaware of the value they receive because the supplier does not communicate it
  5. Neither the buyer nor the supplier realizes value that is created through the transaction
  6. Procurement professes there is no value in an effort to commoditize the supplier’s offering

How we set our price metrics, how we talk about our price, how we position our offering, all depend on our ability to clearly understand and communicate our value.  This is the path forward to mutually beneficial profit growth for supplier and customer.

So, if you can’t defend your price with the financial benefits you deliver to the customer’s bottom line, it might be because you have spent too much time on the beaten path.  It’s time to wander around in the woods and listen for value that might be falling unnoticed.

Travis UmplebyWritten by Travis Umpleby

Travis Umpleby is a Business Consulting Manager at Holden Advisors.

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