Value creation can be hard to quantify. Customers may buy our products or services because they perceive an intangible benefit from them. One common example is productivity: new technologies, particularly Artificial Intelligence can help employees increase their output, which should in turn create value for their companies.

Cool technologies might win your first few sales, but in the end, it is value which keeps customers coming back. In the longer-term, businesses will need to see an improvement in their profits to justify continuing their purchases. There are many ways to do this, as discussed below. Building an ‘Ansoff Matrix’ for your customer is a good way to understand how these approaches can fit into their strategy, as the graphic above shows.

Revenue Up

Increasing your customer’s revenue is a good way to sell more to them. Looking at your customers’ products and their markets gives insights into where you can create value. Considering where they are today and their future aims can reveal the value in helping them achieve their goals. Here are some ways you could help your customers sell more:

Faster growing markets

Helping your customers gain access to high-growth markets can transform their business. Many technology companies sell on a ‘growth pitch’ – by showing how their products unlock entry to emerging opportunities. Consider which market segments you can help your customers gain entry to. Are there geographies or demographics where you have an advantage? Can you save them valuable Time-To-Market or open a window of opportunity?

Market Share

Even if your customers’ markets are flat, they can still increase their sales by gaining share from their competitors. Features which provide unique advantages or benefit more users will help your customers steal their competitor’s sales and grow their revenue.

New Product Categories

Innovations which create a new class of product or service can deliver the best results, as the competition may be weak or non-existent. Enabling your customer to begin a new line of business by integrating your technology or simply re-selling your products gives them a head start.

Portfolio extension

Many large companies like to offer a product range which caters to all the customer profiles within their market. Any gaps in their product portfolio create opportunities for you to add value. Researching your B2B customer’s competitors can reveal what’s missing from their portfolio and where your product might fit in.

Premium Products

Many startups view their technology as leading edge. But they are often less comfortable with charging for its advantages. Your customers may be more aware of your technology’s ability to create value than you are. Ask them how they might sell the benefits your features create. Carefully enquire if this could create a ‘market premium’ for them. They won’t want to give you an excuse to charge them more, but there might be opportunities to capture more value!

Cost Down

It’s tough selling your product purely on its cost to your customers. Investors are wary of business plans which rely on under-pricing your competitors. But saving your customers money in other ways can be a compelling reason for them to buy. Here are some ideas on how to do this:

Integrated Cost

Reducing your customers’ costs can still be possible without selling to them on price. Your technology might integrate other features they currently have to buy separately. Or you might enable a lower-cost manufacturing approach through compatibility with other components or materials. Think about what your customer has to add to your product to re-sell it to their customers.

Quality and Yield

Quality improvements often translate into lower rejection rates. Selling a better product than their competitors might improve your customer’s production yield or reduce their end-user returns. Either way, you’re reducing the ‘variable costs’ for their business and making it cheaper for them to deliver their products.

Labour, Energy and CapEx

Your customers’ overheads will probably include labour, energy and capital depreciation. Reducing these ‘fixed costs’ can be just as compelling for your customer. Find out how much manual work, energy and equipment your customer needs to deliver their products and services. These costs might be from their in-house operations or hidden in their outsourcing to third parties. Think how your technology might reduce costs through greater efficiency, reduced power consumption or lower-cost capital equipment.

SKU Costs

Having more Stock Keeping Units increases a business’ overheads. These ‘SKU costs’ include the storage, transport and management of more different products and tools. Maintaining a wider product range also brings hidden costs from maintaining their associated marketing, training and compliance documentation. Products often need regular updating to replace obsolete hardware components and unsupported software libraries. Understanding your customer’s SKU costs and how you might reduce them can add more value to your product. Consider how you could help them combine multiple product lines into one.

Risk

It’s difficult to estimate and communicate the value of business risk reduction. The perceived value in ‘peace of mind’ can be subjective and elusive. But delivering genuinely lower risks to your B2B customers is very valuable. The challenge is getting sufficient traction to build the evidence which demonstrates the customer benefits. Try to think like the insurance industry, who rely on extensive claim data and constant pricing adjustments to stay profitable. Be prepared to submit your customer ROI model for a detailed due diligence!

Creating B2B Value

Preparing a model of your customer’s business case shows how much value you could create for them. But be prepared for them to disagree your model – they may have their own version! Use any feedback you receive to refine your value model. Where possible, use real customer stories and data to help strengthen your business case.

If your customers are producing their own product using your technology, then a similar value analysis could apply to their customers or end-users. In this case, you can help your customer improve their sales by showing how your product creates value for their own customers. This should help you talk your price up too!

All this discussion of accounting may not seem exciting, but it’s the key to building and sustaining profitable B2B customer relationships. Your customer might make their first purchase simply because they like your products and your people. But they won’t keep coming back unless it makes sense for their business. Understanding how you can improve your customer’s bottom line is key to creating value from your B2B product. It can also explain why someone might want to buy your business too one day!

Please contact me if you’d like help creating value for your B2B customers!