Introduction
In the fast-paced world of commercial organizations, value management has emerged as a crucial discipline for building successful relationships with customers. Recently, we had the opportunity to host a meetup in London, where members of our Customer Value Community and sales professionals came together to discuss the importance of value management. In this blog post, we will delve into the concept of value management, its significance, and how it can be implemented to create collaborative and strategic partnerships with customers.
What is Value Management?
Value management, at its core, is a well-established discipline that has been around for decades. It involves a process where a supplier organization, typically a sales team, collaborates with a customer to map out the potential value a solution can offer or the demonstrated value the customer has derived from the solution in the past. While value management initially found its roots in the Software as a Service (SaaS) industry, it has now expanded to various commercial sectors, gaining recognition as an essential sub-function within organizations.
The Complexity of Value Management
As solutions have evolved to become more sophisticated, value management calculations have also become increasingly complex. Factors such as additional product offerings, service wraparounds, recurring revenue models, and long-term contracts have contributed to the intricacy of value management. To navigate these complexities, specialized value management teams have emerged to assist sales and customer success teams in building accurate and meaningful value calculations for customers.
Value Management as a Journey
While value management may involve calculations, it transcends mere numbers and becomes a transformative journey. Rather than presenting customers with a value calculation right away, a more effective approach involves starting with a broader question: "What are your strategic objectives?" Understanding the customer's core objectives is vital to determining the most suitable tactics, metrics, targets, and timelines for measuring progress.
The Five Dimensions of Value Management:
1. Strategic Objectives: Identify the customer's strategic goals and aspirations. This sets the foundation for the value management process.
2. Practical Tactics: Outline the actionable steps required to achieve the identified strategic objectives.
3. Principal Metrics: Define the key performance indicators (KPIs) that will measure progress and success in reaching the set objectives.
4. Specific Targets: Establish specific targets and thresholds of success for each metric to assess the effectiveness of the tactics.
5. Established Timeline: Determine a timeline for achieving the objectives, targets, and metrics, ensuring accountability and continuous evaluation.
Challenges of Value Management
Implementing value management involves engaging multiple stakeholders within the customer's organization. Aligning all stakeholders around the strategic objectives, tactics, metrics, targets, and timelines can be challenging but is crucial for a successful value management process. Value management teams play a vital role in providing guidance and recommendations on involving the right stakeholders in the decision-making process.
Digital Channels and Customer Collaboration
To streamline the value management journey, organizations are exploring digital channels to facilitate customer collaboration. By enabling customers to have value conversations with their colleagues around objectives, tactics, metrics, targets, and timelines through digital tools, organizations create a seamless and ongoing dialogue throughout the customer journey—from initial learning to post-sale customer success conversations.
Adapting to Realities
In the real world, circumstances change, and the value management process must adapt accordingly. Whether during or after the sale, the ability to adjust objectives, tactics, metrics, targets, and timelines to the current context is essential for maintaining a successful business relationship with the customer.
Conclusion
Value management is a powerful and indispensable tool for commercial organizations seeking to build strategic and collaborative relationships with their customers. It goes beyond calculations to become a journey of understanding and alignment with customer objectives. By involving all stakeholders, leveraging digital channels, and adapting to changing realities, value management becomes a dynamic process that fosters trust, mutual success, and customer satisfaction.
Watch this space as value management continues to evolve and transform the way businesses connect with their customers. With its impact already being likened to the transformative role of customer success a few years ago, it is evident that value management is here to stay, and embracing its principles will undoubtedly set organizations on the path to success in the ever-evolving world of commerce.
Are you ready to revolutionize your approach to customer relationships through value management? Reach out to our experts at Ecosystems today and discover how we can help you build meaningful, collaborative partnerships that drive success for both you and your customers. Let's embark on the value management journey together!
