Creating B2B Customer Value By Highlighting Your Product/Service Mix

As an election time approaches, politicians may remind themselves of the most important thing on voters’ minds by remembering the phrase: It’s the economy, stupid! In sales and marketing, there is perhaps a similar phrase that all of us should keep in mind: It’s the product, stupid! This might seem like an obvious statement of fact, but sometimes even the most obvious stuff gets lost along the way.

Of course, in the B2B world, products are often sold with an extensive service element included in the total package, and in some cases consist entirely of a service with no physical product at all. As a result, the distinction between what is a product and what is a service becomes rather blurred.

Let’s examine the total proposition of the product/service mix—the full extent of whatan organization can offer to its customers. This will become even more important when you consider customer value and how various elements of the total proposition can come together in different combinations to create value for a variety of different customers.

Product aspects

This element refers to the actual physical manifestation of the product or service, as well as its performance measured by speed, time saved, output created or any other aspect of measurable performance. Delivery is another aspect of product performance,  in terms of delivery lead time and the completeness and reliability of delivery.

Style, design or technical specification can also represent important aspects of the total proposition, together with anything relating to its reputation.

Technical aspects

The technical aspects of the total proposition include anything related to the product’s installation, such as its speed or the lack of disruption to existing operations. It also includes anything related to technology, such as provision of new technology or technology transfer. Additionally, advice provided for the product’s continuous operations, including technical advice, represents a further aspect of the total proposition.

Financial aspects

This can be particularly important. Such things as the terms of business, payment terms, promotions, discounts and loans can offer strong inducements for customers to place their business in a particular direction. Anything the organization can provide in these areas of financial support could be crucial in influencing customer choice, particularly during periods of credit shortage and strains on cash flow.

Networks

This relates to any particular alliances or partnerships the organizationenjoys with any other organization that might be of interest to customers. These might provide access to particular expertise, sources of information or technical data that will add value to the organization’s own products and services. Furthermore, these alliances and networks might provide access to those customers that might not be reachable otherwise, thereby creating additional business opportunities.

Image

Image, status and the overall value of the brand are important elements
that impact on the customer buying decision. Customer endorsements or referrals are another important aspect of the organization’s total proposition, particularly online reviews. Amazon is a particularly good example of this phenomenon. In addition to providing customer ratings of products, they also provide recommendations for additional purchases based on the purchasing profiles of other customers with similar interests.

A further aspect of increasing importance is the organization’s green credentials with regard to waste handling, recycling and carbon emissions. This can sometimes tip the balance in a sale.

Marketing aspects

Customer reach—the range and number of customers an organization is able to engage with—can be vital. This can relate to the ability to reach specific customer groups, to the organization’s geographical coverage, or to its use of all the various means (physical and electronic) that customers have available when accessing the organization.

Other marketing elements, such as the power and creativity of advertisingand the organization’s capability in new product development, particularly its success in bringing exciting new products to market, are also key elements of its total proposition. The organization’s sales force, especially its effectiveness and flexibility in coping with various market conditions, competitive actions and customer requirements, can also represent a very important aspect of the organization’s total proposition in B2B markets.

Quality

Product and service quality is ultimately measured by overall customer satisfaction at various points during the customer experience. The provision of warranties and guarantees are another way that organizations can demonstrate their quality and reliability. The ability of customers to share their buying experiences and quality perceptions online makes this factor increasingly important.

Support

This can include the provision of consultancy advice on either product selection or product usage and can also include after-sales service.

Differentiation

Putting together the total proposition is a very useful exercise and in most cases the number of different aspects identified comes as a pleasant surprise. It is common for executives in workshop sessions to fill whole sheets of flip-chart paper with different aspects of their total proposition, some forgotten due to over-familiarity and others discovered for the first time.

However, it is not unusual to find that many aspects of the organization’s total proposition are also offered by competitors. Therefore, organizations must identify those aspects that provide competitive advantage, by being unique to the organization, important to customers, and difficult to copy. In other words, an organization needs to find those elements of the total proposition that will differentiate it from the competition and will hopefully lead to customers beating a path to its door.

Unique to us

Competitive advantage is based on being able to do something different from or better than competitors. In any aspect of competition, the margins between being first and being nowhere are very small. In the Olympic 100  final, the difference between winning the gold medal and winning no medal at all is only a few tenths of a second. Similarly, in commercial competition a competitive advantage does not have to be huge, but it does have to be big enough to register in the mind of the customer.

Important to customers

Identifying a competitive advantage is important, but identifying whether it creates customer value is equally important. A competitive advantage is only valuable to the organization if it is important in the mind of the customer.

In marketing there is a phrase: perception is reality. It means that in the final analysis, it is what the customer thinks that is important, not what the organization believes to be true. If a customer believes that an organization has good customer service then this specific perception of reality is the only one that really matters.

A further issue is that different types of customers have different requirements and expectations; therefore, it must be decided which group of customers is being considered. An organization must have a specific group of customers in mind when it completes this analysis and should also bear in mind that different things can be important to different people.

Difficult to copy

The competitive advantage for an organization of having aspects of the proposition that are both unique and valuable to customers is made even more important if these advantages are difficult for competitors to copy. Some competitive advantages are harder for competitors to copy than others.

For example, financial advantages relating to prices, discounts and trading terms can be copied with the click of a mouse, providing the financial muscle exists to do so. Product advantages relating to the performance or specification of the product are also relatively easy to copy. The addition of a product feature today can be copied by a competitor tomorrow (or at least in a few weeks).

The advantages that are more difficult to copy are those that relate to any aspect of the total proposition where the organization has exclusive access. This may be to raw materials, technology, business processes, customers and markets, or people and skills.

The reputation of the organization and its products or its brand image are also elements of competitive advantage that are difficult to copy, as they have often been developed over time through a consistent and focused strategy. Similarly, advantages relating to any aspect of the customer experience, such as customer service and after-sales support, are equally hard for competitors to copy.

These sustainable competitive advantages provide the organization with moretime to exploit them in winning and keeping customers and in growingthe business. These advantages represent the crown jewels of any organization, providing the opportunity to create real competitive differentiation in the marketplace.

Rennie Gould is a B2B sales consultant and founder of Customize UK Training. This article is an excerpt from chapter 4 of his new book “Creating the Strategy: Winning and Keeping Customers in B2B Markets,” published Sept. 2012 by Kogan Page. Copyright 2012 by Rennie Gould. Reproduced by permission of Kogan Page.