Savvy management teams spend a lot of time defining ways to create differentiated value. Yet creating a highly differentiated value proposition proves elusive for most. A fundamental understanding of why customers buy is critical in forming a unique value prop.

In many of my speeches, I conduct an exercise in which I ask several members of one management team to step forward. I ask them to write down the top three to four reasons why their customers select them (purchase triggers). Surprisingly, when compared, there is a wide range of responses. Either the executives don’t know why their customers buy, or they weigh certain purchase triggers differently than their colleagues.

In a recent Harvard Business Review article, “The Elements of Value”, writers Almquist, Senior, and Bloch offered a model for how consumers evaluate products. We have adapted that model into a business-to-business framework, which we have entitled The B2B Value Pyramid.

Value Pyramid graphic 1016 ac

Having a differentiated value proposition is difficult in B2B, because the general construct of a value prop is very similar from one company to the next. For example, if you sell aerospace parts to original equipment manufacturers (OEMs), the buying decision would focus on quality, delivery time and price. It is hard to win on unique capabilities because almost any competitor could buy the same equipment and hire similar people. Oftentimes, professional procurement organizations will select a vendor based on their performance against a scorecard. Professional procurement is designed to destroy differentiation and reduce companies down to several buying criteria, including price.

But cutting deeper into client needs does provide an opportunity to unearth new understanding about the motives of buyers, and how vendors can capitalize on nuances in their messaging and language. As we have defined it in The B2B Value Pyramid, there are multiple dimensions that define why a customer buys. Customers buy based on these attributes and their needs at a given time:

Functional Value– When they are looking for a supplier who can “get the job done”.

Technical Value– When they need information, or need access to highly specialized skills such as those provided by an architect, engineer, or accountant.

Emotional Value– When they want to have a connection with the people they work with, or when the vendor enriches their lives beyond the business relationship.

Enterprise Value– When the vendor relationship is transformational enough that partnership with them increases the value of their company.

A value proposition is most meaningful when a vendor can provide multiple value elements across several dimensions.

Each company can create its own canvas to isolate the elements in its value proposition.

For example, an aerospace supplier:

  • Has the best quality available
  • Integrates with their customers’ systems
  • Saves time, as they have implanted themselves in the supply chain
  • Is fully compliant with standards important to the customer
  • Regularly educates on trends in metals and science
  • Agrees on 10 parts to sell only to that customer (exclusivity)
  • Reduces risk because they rarely have defects
  • Regularly invites the buyer to industry events (affiliation)
  • Takes him to baseball games or provides articles about his favorite team (affinity)
  • Provides safety to the buyer (they won’t embarrass me)
  • Has made the customer a better company because of their ability to innovate in the product development process

In our experience, vendors provide these criteria too narrowly, and only focus on two to three.

Buying criteria (purchase triggers) should be ranked based on customer feedback. For the sake of example, say again that you ascertain that customers buy because of:

  1. Safety- this vendor will not embarrass me
  2. Quality- our product always comes to spec
  3. Cycle time- can fill orders within 28 days
  4. On-Time delivery is 98%
  5. Ability to innovate in the product development price
  6. Is price competitive

In this example and in most all cases, price is a consideration, but it is not the most important purchase trigger. Factors such as quality are a tie. Customers will find a handful of potential suppliers in a particular price range, and then select the one that meets their other criteria. After all the supplier evaluation has been done, they select the vendor they like.

The further up the pyramid, the greater the value. One might argue that functional or technical attributes are the most fundamental reasons why customers buy. But we submit that most of these attributes are merely the cost of admission. Customer loyalty, or “stickiness” is achieved when emotional connections are made, and when suppliers increase the value of their customers’ businesses. The highest value item on the pyramid is when a vendor makes their customers’ customers more loyal. For example, our firm uses market research to give our client projects more meaning. Thus our market research partners are invaluable to us, because they increase our ability to obtain and keep clients.

All marketing, communications, advertisements and selling scripts should be based on these purchase triggers. The savvy marketer finds ways to PROVE their value. Understanding that some of the value is derived through emotional connection, the primary images on the website would communicate safety. Metrics on the same site would prove fast delivery. White papers would demonstrate innovation in the supply chain. All sales and marketing activities would be in alignment with this value proposition.

We find that such coordination rarely takes place. In some companies, sales and marketing barely communicate with one another. To reap the maximum benefits from The B2B Value Pyramid, management teams should:

  • Conduct significant research among customers on why they buy. This may be best achieved by having a neutral third party conduct interviews with current and past customers. Customers who recently made a buying decision may be the best source of information.
  • Conduct a pyramid exercise with your sales and marketing team. In an interactive setting, conduct a force prioritization, using sticky dots to select the most important attributes.
  • Articulate your value proposition in a series of statements (as we have done above) that clarify how you deliver unique value.
  • Conduct a sales and marketing summit, and develop an action plan of activities that rally your sales and marketing team around the value proposition.
  • Ensure all marketing collateral, digital assets and sales scripts support the value proposition.

So, employ The B2B Value Pyramid as a framework for identifying unique value and the full range of sales and marketing activities required to deliver it.