The Ultimate Guide To Customer Value Management (CVM)
Today, companies are bombarded with potential solutions from B2B companies for every part of their business. The trouble is, they all sound the same. Every B2B technology and service provider claims to offer the best, largest, or leading solution to that customer’s problem. But to customers, it just sounds like noise. The solution? To sell, deliver and reinforce value to customers (aka Customer Value Management).
Customer Value Management (CVM) is an evolution of B2B value selling. It connects all stages of the customer lifecycle and focuses them on delivering value.
Most businesses will say that they do both of these things. Some use complex value calculators to do it, while others might employ value consultants. But many B2B SaaS companies repeatedly fail to meet revenue targets because customer satisfaction levels are low and churn is stubbornly high. This proves that their approach isn’t working.
The problem is that many businesses don’t completely understand what value is, how to uncover and implement it correctly, or how to reinforce it to customers.
This guide aims to ensure that sales management clearly understands all of these factors.
The Challenge of Adding Value
The problem with the traditional sales approach is that it focuses more on selling a product than on providing value to the customer.
This issue echoes throughout the customer relationship. Let’s take a look at why this is, one step at a time.
1. Failing to add value in Sales
The problem of B2B sales teams pushing products onto potential customers is so widespread that new definitions have been created. From buyers experiencing ‘Solution-Fatigue’, to sales reps ‘Pitch slapping’ unsuspecting prospects, B2B solution sales now resembles armies of reps flogging products.
The reality is simply that some sales reps are far more comfortable talking about features than business value. So when they get through to a customer who might have a need, they rush straight to presenting the solution.
They fail to take the time to demonstrate and add value—for example, they could help the customer understand the organisational problem they face.
2. Failing to add value in Customer Success
Even when a customer does buy a solution, the pain doesn’t stop. They are forced into regular ‘service review’ catch-ups with their assigned ‘customer success manager’, who explains how many support tickets they have raised in the last month. Thrilling.
Customer Success is often not given the information on what value was sold to the customer. And if Customer Success doesn’t know why a customer bought a solution, they talk about what was purchased and the service delivered.
In doing this, Customer Success is unable to:
- Create an effective success plan
- Reinforce value
- Discover new opportunities to grow the account
3. Failing to add value in Product and Marketing
Product and Marketing are supposed to be the customer and market experts. After all, they built the solution to the customer’s problem and crafted the proposition and positioning.
However, too often marketing messages remain generic and product teams focus on building features that don’t solve the customer’s problems. The reason is that Product and Marketing don’t get live feedback from the value-driven conversations Sales and Customer Success have (or should be having) to improve the proposition.
Even when great solutions that impact customers are built and excellent, tailored messaging is created, it isn’t used to add value to customers. The reason? Sales and Customer Success aren’t enabled to use it.
4. The economic downturn makes it worse
To exacerbate the problem, the recent economic downturn means each company’s fortunes are taking a hit and budgets are becoming tighter. Organisations are buying less and looking to trim their overgrown tech stacks.
With all B2B solutions looking and sounding the same, the only criteria to base a cost-saving decision on is economic value—in other words, price.
The Solution: Customer Value Management
There is a solution to this widespread problem, and it’s called ‘Customer Value Management’.
Let’s first define what we mean by ‘Customer Value’ before we talk about how to manage it.
What is Customer Value?
‘Customer Value’ is the benefit a buyer of a product or service gets from implementing that solution. In the B2B world, value is provided to a customer when a solution solves their problem and delivers a specific business outcome.
To define the two elements of value in more detail:
- A customer problem is something painful or challenging a person faces in executing a specific task in their job. It could be a task that takes too long, requires a lot of effort, or results in additional expense.
- A business outcome is an impact or change in a business’s performance that can be tracked, measured, and presented. This could be an increase in revenue generated or a productivity improvement.
Therefore, customer value in the B2B context is about improving how someone executes a task in their job and, in doing so, delivers a positive change in business performance. This positive change should be measurable.
What is Customer Value Management (CVM)?
CVM is the process of linking customers to the value they get from a solution, across the whole customer lifecycle. It starts from the first touchpoint a customer has in their buying journey and extends through the sales cycle, is integrated into customer success, and feeds into the product and marketing programmes and proposition development.
In other words, CVM is the process of:
- Discovering and selling value, rather than products, in the marketing and sales process.
- Building a customer success plan based on the ‘value case’ sold to the customer.
- Using the success plan created to deliver the solution and track its impact on the customer. Measuring this allows organisations to present back the value being provided, reinforcing why a customer bought the solution in the first place.
- By demonstrating value, Customer Success can find opportunities for the solution provider to add more value (in other words, an upsell conversation to expand the account).
- Finally, by tracking this whole process and capturing the data on customer value, Product and Marketing can get insights into what different customer segments value, and use this knowledge to evolve their messaging and offering.
Customer value management (CVM) therefore creates a virtuous cycle, where the insights from the value being discovered, sold and delivered helps the organisation to improve the value their proposition can provide.
Why is Customer Value Management (CVM) important?
Customers don’t buy products, they buy value (i.e. a solution to a problem and an expected business outcome). That means B2B companies that sell, deliver, track and reinforce value to customers throughout the customer journey (i.e. those that succeed at Customer Value Management) will always win over those that push products.
This becomes even more important for those with complex solutions. Where the offering is simple and can successfully be sold transactionally based on price, demonstrating value is less important because the cheapest solution wins. But for most B2B companies, differentiating and not commoditising their solutions is critical to justify the price paid.
Customer value management: Providing a competitive advantage
Implementing Customer Value Management will give your company a powerful competitive advantage.
As Forbes’ latest article on Customer Value Management (CVM) states, ‘the ability to communicate, sell, realise and expand the value your offering delivers to prospects and clients has become the basis of differentiation and competitive advantage in B2B’.
And research from Gartner shows that those companies implementing Customer Value Management are winning. Winning 2x more, in fact.
Gartner’s research goes even further, explaining how buyers now expect value to be demonstrated in the sales process. 17% of B2B buyers said that a business case demonstrating value was the number one most valuable thing in making their final decision (the highest score of any attribute surveyed).
Our view is that Customer Value Management is not just a new way to win—it is the only way to win for B2B companies. You can read more of our views on this here.
The Four Principles of Customer Value Management (CVM)
There are four key principles of Customer Value Management. They can be explained as much by what you should not do, as by what you should do.
At Cuvama, we’ve built our Customer Value Management consultancy and solutions around these principles. It’s what makes us different from other value-selling consultants.
|B2B solution providers should…||But the common reality is that they…|
|1. Discover a customer’s specific business problems||1. Jump to features, functions and price paid|
|2. Ask and align on KPI impact/outcomes||2. Present generic marketing statements based on economic value|
|3. Link outcomes to your unique solution||3. Give harbour-tour demos and all-in proposals|
|4. Monitor ongoing success and value realisation||4. Instantly forget about value upon signature|
What are the Key Customer Value Management stages?
There are three main stages to the Customer Value Management process:
- Selling value: Discovering pain and selling outcomes to customers.
- Realising value: Empowering Customer Success to create a success plan based on business outcomes they can track, deliver and reinforce.
- Optimising value: Capturing the insight into the pain points and outcomes that existing customers value, in order to evolve your proposition.
As mentioned previously, this is not a linear process but a virtuous circle that feeds back into itself.
It’s useful to explain this process in the context of the role customer value plays across an entire organisation.
How Customer Value Works Across an Organisation
Customer Value Management is something an entire organisation needs to align to. It’s not just a sales process or a way that Customer Success functions. There are four main areas of a business where customer value can play a significant role.
1. Customer value in lead generation
The first touchpoint a customer experiences in the buying journey is often a website, marketing campaign or sales email. This means that your marketing strategy is a key part of customer value management.
Customer value here means personalising messaging to address a prospect’s specific problems and highlighting the impact you can have on their business goals, building interest in your solution. There are two main ways to do this early on in the buying journey:
- Account-Based Marketing: If you’re marketing a complex solution to high-worth accounts, you need to tailor your value story to that specific business in your initial outreach. This will differentiate your business and generate a positive response.
- Online value discovery: Providing a way for a prospect to build their own value case on your company website is also a great way to present value to them when they are researching solutions. Doing this means that leads already understand the value your business can provide. This helps your sales team to better tailor their discovery, pitch and demo to the prospect’s problems, needs and desired business outcomes.
2. Customer value in Sales
Otherwise known as value selling, sales teams must sell outcomes, not products. There are five core principles to value selling.
Lead with a point of view
As popularised in the challenger sale (which you can read about more here), sales teams must add value to the customer in the first interaction by telling them something they didn’t know, which is valuable enough to ‘buy’ their engagement. This could be based on a macro trend which affects them, or what you have seen other companies like them do. You can use this to present a hypothesis that drives engagement with the prospect.
As we outlined in our post on the hidden cost of poor discovery, rockstar sellers consistently execute great value discovery. What do we mean by great discovery? Sales reps must ask, understand and align on the customer’s problems and measurable outcomes.
Performing good discovery is the mark of a great salesperson. There are seven levels of discovery skills, but only about 20% of salespeople use more than three of them. Check out our webinar to learn more.
Get consensus from the wider buying group
It’s unlikely that your contact is the only person involved in the buying decision. There will be many other stakeholders, both hidden and visible, who will have a say. It’s important to get consensus amongst these people. Do so by speaking to a wider range of stakeholders via your mobiliser—preferably those in more senior positions. Features and functions are divisive, so go through the same value discovery process to ensure you align with all stakeholders.
Connect your unique solution to Value
Sales reps then need to connect the problems and outcomes they have discovered to the specific capabilities of their solution. These must be unique to your solution, otherwise it could just as easily lead to a competitor’s offering as much as your own.
Collaborate on a business case
Finally, sales teams must collaborate on a business case with their customer to document and quantify the value to be delivered against the investment required. The importance of collaboration is crucial here. This is not about presenting back a business case completed to the customer like a piece of sales collateral. Customers need to be part of that creation journey to buy into and champion the solution being sold.
3. Customer value in Customer Success
Selling value isn’t just a ‘sales thing’—it’s a customer-first mindset. And since Customer Success is about making existing customers successful, CSMs are core to ensuring value is delivered and reinforced through the customer lifecycle.
This means understanding why customers bought a solution, not just what they bought, and building a success plan based on actual customer outcomes so that they can track and reinforce value on an ongoing basis.
In doing this, Customer Success also creates additional opportunities for the B2B solution provider to add value. In other words, they can accurately determine new value areas and expand the account.
4. Customer value in Product and Marketing
In simple terms, the job of Product is to build a solution that adds value. The job of Marketing is to help the organisation tell that value story. Customer value is therefore central to both functions.
This means that Product and Marketing need to be enabled with customer data and insight into what prospects actually value—not just what they say. If customer value is discovered by sales and customer success, then product and marketing need that insight to optimise building and communicating value.
How to Get Started with Customer Value Management
We’ve helped lots of companies implement Customer Value Management across their businesses. In doing so, we have identified five key steps to getting started:
1. Codify your Value prop
A process that’s often overlooked, you need to map your solution’s unique value to your persona and target market pain points, KPIs and outcomes. This is the foundation upon which Customer Value Management will be built.
2. Enable value selling
You then need to train your sales team to use your value proposition to lead with a point of view, discover value, and sell outcomes to different segments and personas. It will start with building their understanding through training, but also giving them the tools and ability to navigate and tailor the value message to specific customer sales conversations.
3. Collaborate with prospects
Once sales teams are trained, they need to be enabled to engage prospects in real-time in live value conversations. The first challenge here is guiding the sales team; relying on their recollection of every detail in their value proposition training isn’t going to help them. The second challenge is that value needs to be worked on in collaboration with prospects—so your sales team needs to be able to work with the prospect on a transparent business case for your solution.
4. Empower Customer Success
Customer success teams need to be given information on why a customer purchased a solution and what outcomes they were trying to achieve. This will allow Customer Success to build a success plan and reinforce value. Customer Success should also be enabled to discover value by having business-orientated conversations, rather than project or service-focused ones.
5. Evolve your proposition
Finally, the knowledge of what customers and prospects really care about needs to be captured and given to Product and Marketing to gain unique insights to evolve your value proposition and product.
Case Study: Zellis
As mentioned above, we’ve helped many businesses implement customer value management across their organisation.
One example is HR software provider Zellis. We’ve helped the company transition from a features and functions-focused business to an outcomes-centric selling and delivery culture.
Together, we’ve helped the company to:
- Double its win rate
- Increase average selling price by 35%
- Achieve 43% bigger deals
We’ve now entered a new phase, where we’re helping to extend Zellis’s use of Cuvama to its marketing and BDR teams.
“Cuvama is a critical component to our customer outcomes-focused business strategy. We have seen higher win rates on opportunities where our sales teams have used Cuvama than when they have not.”
“The additional benefit is we’re now also understanding why customers bought our solution, not just what they bought. This enables us to track and monitor whether or not Zellis’s services are helping our customers to meet their business goals.”
Head of Business Value Advisory, Zellis
We know customer value management can sound quite daunting and like a big organisational change.
But the reality is that it’s now become the only way for B2B solutions providers to gain a relative competitive advantage.
And the good news is, we’ve helped lots of companies go on this journey and succeed. Not only that, we were recognised as a representative Customer Value Management (CVM) platform in the 2022 Gartner report, titled Help Your Buyers Realize the Value They Can’t—or Won’t—Measure to Drive Account Growth.
Speak to us to find out more about how we can get you started with customer value management via consultancy and our powerful business tool.