Four Levels of Value
There are four levels of value you might create for your dream clients in B2B sales. The first level of value is the value found in your product or service (Level 1). While the value of your product is essential, it isn’t often enough by itself, and it isn’t likely to compel your dream client to change.
The second level is the value in the experience you provide your clients, something like your support, your service, and how easy it is to business with you (Level 2). This level of value transcends and includes the value of the product. They are greater together.
The third level of value is your ability to produce a tangible outcome of some kind, something you might call a “solution.” (Level. 3) Your client needs to buy a machine that will make widgets, and you provide it, allowing them to make their widgets.It very much matters that product works, that the experience is good, and that widgets come off the end of the line.
The fourth level of value is the strategic outcome you provide or enable (Level 4). The difference between level three and level four is transformational, as it speaks to the vital result your clients need—and what you sell. It’s the difference between selling a machine that makes widgets and selling a machine that makes widgets that will allow your client to reduce their costs, capture more significant market share, lower their labor costs, leapfrog their competition with a breakthrough product, reduce their failure rates, or lower their carbon emissions.
The levels provide a guide to stacking value, something that is even more powerful when you start to look at it through the lens of individual stakeholders and roles.
Matching Value to Stakeholders and Roles
There are people who very much care that your product works. The stakeholders who are going to use what it is you sell every day need Level 1 value more than they need Level 4 value.
In the B2B SAAS sales process, here is how the sales reps get this wrong. They want to demo the software for leaders, none of whom care about the features and functions, but whose buy-in is critical to winning. At the same time, they don’t want to spend time with the end-users who lack the authority to buy but who care deeply about the features and functions and whose support is necessary.
Some ancillary stakeholders need you to be easy to do business with, Level 2 value. The IT Department may require you to integrate with their software and workflows. Accounting and Finance might need you to provide them with reporting or terms that follow their guidelines.
You can lose deals when stakeholders who are not your primary contacts don’t receive the value they need to support you and your initiative during the buying process. As long as purchase decisions are going to be made by consensus, value creation for stakeholders on the horizontal axis (meaning outside of the primary department with whom you are working) is necessary.
Managers and leaders need you to provide them with a solution that works and generates the outcomes they need, Level 3 value. Theodore Levitt of Harvard Business School is credited with the saying, “People don’t buy drills. They buy quarter in holes. If they could have the hole without the drill, they wouldn’t buy the drill.” You have to deliver the hole.
You also have to provide something more than the hole. You have to deliver the strategic outcome (Level 4), the reason they need a hole in the first place, or maybe even something that would eliminate the need for the hole.
More Than Two Stacks
The first value stack is the one made by matching the value you create to the stakeholders who need certain levels. It’s unlikely that the end-users of what you sell are going to be interested in the strategic outcomes leadership would find compelling, and vice versa. Being able to check the box and speak to the fact that the stakeholders are all going to benefit the way they need to is an excellent value stack to start with, but there is another value stack that provides even higher value at Level 4.
Let’s go back to our widget-making machine, and instead of looking at the strategic outcomes I described as possibilities, let’s look at them as an actual list of value:
- Reduce the costs of goods
- Lower labor costs
- Reduce their failure rates
- Capture greater market share
- Leapfrog their competition with a breakthrough product
- Lower their carbon emissions
The list above is a stack of Level 4 outcomes, in addition to the stack made up of the first three levels of value. There is nothing in this second stack that says anything about your company or your solution, but in speaking nothing, it says everything.
If you want a competitive advantage, start at the highest level of value and build your value stack backwards.
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Filed under: Sales