Capabilities - Skills around the value cycle
Steven Forth is a Managing Partner at Ibbaka. See his Skill Profile on Ibbaka Talent.
The fourth step in the Strategic Choice Cascade is “Capabilities.” This is not about your internal pricing capabilities (an important question that we will touch on below). The key business questions that need to be asked (and answered) at this step are
What skills do we need to create, communicate, deliver and document value?
What skills does the buyer need to understand and get value from the solution?
How do these skills change at each touchpoint across the customer journey?
In some cases, partner networks and even communities will need to be included in building capabilities.
This may seem distant from pricing strategy but it is not. One of the main reasons that pricing models fail when introduced is that the vendor is unable to communicate value. A robust value model may have been developed and validated, and prices may align to that model, but if marketing, sales, the implementation team or the customer success team cannot communicate the value then the price may well be rejected. As part of the pricing strategy an audit of the current skills on these teams should be made, any skill gaps that exist documented, and a plan put in place to close these gaps.
It is not enough to do this just with marketing and sales (though that can be a good place to start). The people implementing the solution and the people responsible for customer success must also have the skills needed. Map the roles, behaviors and skills needed across the customer journey. Do this for internal roles and for the customer (and partner if needed).
The value cycle or value flywheel gives another way of thinking about capabilities. Ask what capabilities are needed at each stage in the cycle.
Many companies are quite good at developing value creation and value communication skills.
Value creation skills are used to understand market needs and then develop, implement and evolve solutions. This involves many roles and is at the heart of many skill and competency models. It is not enough to ensure success.
Value communication skills are those used to communicate the value of the offer, and the price, to the target market and its personas. This includes general communication skills, but it also includes the relevant solution, customer, and the industry or domain knowledge. Value-based sales training is often needed here.
As one moves across the customer journey from decision to implementation and customer success, it is important to include value delivery and value documentation skills as well.
Value delivery is all the things that need to be done to make sure that the value promised is actually delivered to the customer. This can include everything from configuration and integrations to change management and training. There are many skills needed here as well, in both the professional services and customer success teams.
Value confirmation (documentation) is a critical part of a value-based strategy that is often overlooked. It requires a value model (such as the one developed in the How to Win work), good customer relationship skills, and consistency.
Finally, we get to pricing. One cannot sustain investment in the value cycle if you are not capturing back your fair share of value through price.
Value capture (pricing) skills are critical to success. This is a rich and under-explored area. Ibbaka is currently finalizing our Open Competency Model for Pricing Expertise and we will publish this model in early May (in time for the Professional Pricing Society Workshop. The roles covered by this model are shown below.
