Value-based pricing 2.0 goes beyond ringing the sales bell
Ed Arnold is a Senior Advisor at Ibbaka. See his Skill Profile on Ibbaka Talent.
Ed Arnold has led product development at LeveragePoint, a SaaS solution for value-based pricing and sales and at Forrester Research where he was VP Products for CX (Customer Experience) Analytics. He is a leading expert in value-based pricing and go-to-market strategies and how these energize the customer journey.
Having done the value-based pricing thing for well over ten years, it’s gratifying to see how far solutions in the industry have evolved from the traditional one-shot consulting study or training workshop. Today there are multiple SaaS-based solutions in the value space including LeveragePoint, Decisionlink, VisualizeROI, Cuvama, and others. The potential reward of these digital solutions versus traditional approaches is to provide a platform for continuous improvement. Truly, a digital transformation of the pricing, sales and customer success functions.
Yet these solutions are primarily fixated on the sales use case. Which is (to state it plainly) to use value-based pricing to communicate and persuade potential buyers of the unique business benefits (value) of your product, so they will prefer it to the alternatives and buy it. It boils down to: remove the buyer friction, accelerate the sales motion, close the sale - and then ding-ding, ring the sales bell. Afterwards just discard the value model which sold the deal because it served its purpose.
Don’t get me wrong, selling is a worthy use case! But it’s not the only one. And it’s dated too. ROI selling calculators have been around since the days of VisiCalc. Which explains why most buyers are naturally wary and suspicious of them. Overcoming this buyer's pushback will always be a challenge for companies selling on value.
Another and newer value use case - value pricing 2.0 - is to focus on what happens after the initial sale. That is to say, tracking value delivery across the entire customer lifecycle. This requires embedding value metrics into the delivery or customer success process. The intent is not to replace value selling, but to extend it by measuring the delivery on the value promises made during the sales process. A SaaS dashboard like this enables customers to visualize the fruits of their investments while giving the product/service provider insights to improve and deepen their customer relationships. This is a powerful and exciting direction for future value platforms to move forward.
During my early years as a consultant, I worked with a demanding partner who had an explicit “what have you done for me lately?” management style. Needless to say, it discouraged me from ever having a complacent attitude about my work and led me to develop solid professional habits. Likewise, tracking customer value on a regular basis via value dashboards keeps companies honest about the initial promises they make with their value-based sales calculators.
