Much of the work we do at Ibbaka is centered around value-based pricing. Now, I would like to explore another critical business process—value-based selling. How can we enable our sales people to practice value-based selling?

The key is to have a way to rapidly categorize our prospects and existing customers so that we can focus our communication tactics and keep the focus on value.

To be good at value-based selling, we really must begin by understanding how our prospects and customers see our offering in terms of value and their willingness to pay. We have found this 2 by 2 matrix a useful way to categorize prospects. Looking at our prospects' understanding of our value on one axis and their available budget on the other provides guidance.

Good prospects understand and align with the value of a differentiated offer

These are Good Prospects because they understand the value of our offer, have the budget and can justify a higher willingness to pay. Sales efforts should focus on prospects that appear in this category. Marketing and pre-sales should shift other prospects to this space.

Potentially good prospects need to understand the value of your differentiated offer

Potentially Good Prospects are those who have budget, have the willingness to pay, but do not understand our value. As sales and marketing professionals, we need to understand and show how these types of prospects can derive greater value from our offering. Ask yourself, how can we communicate differentiated value to prospects who have budget but do not have a clear understanding of how we contribute value to their business and how we differ from the alternatives?

Prospects to nurture understand value, but may not be able to buy now

The upper left quadrant represents prospects to Nurture. These are prospects which recognize the value of the offer but have limited budget. Because of their limited budget, they will have limitations around the willingness to pay. How do you communicate value if the prospect has a low budget? For these prospects, you have to be disciplined and help them to recognize our differentiated value. Nurture their willingness to pay.

Prospects to educate may need time

The lower left quadrant represents prospects who you need to continue to Educate and Make Aware. While you should not focus as much attention on these prospects, continue to soft touch these prospects. It will be a long road to convert these prospects to buyers because they do not understand the value provided and they also do not have the budget to afford your offering.  

Customer success - the key to ongoing value based selling

Let’s now examine our proposed categorization for current customers. Here is another 2 by 2 matrix. This time, we will be look at getting value on one axis and pricing perception/pricing level on the other.

You want your customers to be in the upper right quadrant. Customers here are happy because they are getting value. Also, they are paying fair price for this value that they receive.

Customers in the lower right quadrant are At Risk. They do not feel they are getting value. These customers are paying a fair price, your customer success team needs to find ways to increase value for these customers and to help them to recognize the value they are getting.

The upper left quadrant represents customers who are getting value but are underpriced. You need to Upsell based on value and get a higher monetization. This category of customers represents those customers with whom we are leaving money on the table. Your customer success and sales teams need a playbook to help these customers to convert to a higher tier of pricing. The to do this is by communicating differentiated value supported by the right pricing structure. A lot of handholding and communication is needed to do this successfully.

The bottom left quadrant represents customers who are not getting value and they are not paying fair price for our offering. Continue to reinforce and Build Awareness. It will take time and effort to move these customers to the upper right position. You will need to find a way to increase value while shifting these customers to a higher price point. 

Sales and customer success need to know which quadrant each prospect and customer lies in and have a plan to move them to the upper right or to coach them out. This should be built into CRM and customer support tools.

Effective, rapid and actionable categorization of prospects and existing customers will enable business development teams to better focus efforts and come up with better ways to communicate value to optimize the monetization of offerings. The goal is to align customer success with our own success.