Tech companies: Sell customer value rather than products

Sell customer value propostions rather than productsDuring our recent interactions and discussions with various technology firms in the software, Web and telecoms sectors, it seems that when commercializing their products and services, the majority focus on either promoting the features and characteristics they offer clients (e.g. A cloud-based file sharing services that syncs across mobile and desktop devices), or on the practical benefits that clients get from buying their offers (e.g. Simple, secure file sharing from anywhere).

While many companies offer leading edge, technology-based products and services, a large number end-up with a ‘me-too’ approach.

Such products and services usually lack a clear set of measurable advantages that come from using the offer as compared to the next best market alternative, including the unique value provided to prospective customers.

Does this really matter in our quickly-evolving technology marketplace?

Prospective customers consider many options with choosing new technology offers

Viewed from the customer standpoint, many of today’s tech companies sell comparable products and services, offering little if any differentiated value. Faced with a range of similar choices, clients often seek the offer that best meets their immediate needs, all at the lowest price. When their needs evolve, many switch to other options. This spells bad news for current suppliers.

For example, a small business that uses a simple, affordable file sharing service like DropBox to satisfy its team file sharing needs might need a service that allows group document editing or even social collaboration around defined projects. Assuming DropBox can’t satisfy these emerging customer needs, the small business will consider alternatives like Box, Chatter or Office 365, some of which offer more that just group file sharing capabilities.

To better serve clients, in addition to creating leading edge products and services, tech firms must also invest in developing differentiated and tailored client offers that consistently deliver distinctive value to each of their selected client segments.

Compared to Products and Services, Customer Value Propositions are driven by delivering ongoing value to clients

This shift in mindset from a product/service to a client value proposition (CVP) set has various important implications for any technology firms. In particular:

 

  • Products and Services are usually designed to fulfil identified customer needs and demands using technology, engineering, new processes, etc. (e.g. Sharing files across devices)
  • CVPs are designed based on a deep understanding of your target customers within the context of your product or service, and considering their on-going value experience within the evolving marketplace

 

  • Products or Services are built to deliver a range of tangible benefits, functions or features to the general user (e.g. Save time by not having to request files each time they are needed)
  • CVPs integrates any combination of Products or Services as part of an overall experience, offering customers certain benefits for dealing with your company

 

  • Products and Services are usually commercialized based on the general technical, functional, practical or economic advantages they offer clients and users (e.g. ‘Easily and safely share your files from wherever you go’)
  • CVPs are commercialized based on the differentiated reasons why a particular client segment should buy your offer, and the distinctive value they will receive

 

  • Many Products and Services are easily comparable with other existing market alternatives (e.g. SkyDrive, Google Drive, Box, SugarSync, OpenDrive, etc.)
  • Well-developed CVPs are fairly unique, making them harder to compare to other existing market offers

 

  • Products and Services are usually sold at standard pricing, based on the number and configuration provided (e.g. A monthly fee per user and per GB of storage required)
  • CVPs are often sold at a custom price, according to a client’s particular needs, demands, and  the specific set of benefits to be delivered

 

To create differentiated customer value propositions, tech companies need to adopt an outside-in approach, focused on delivering a strong value experience to clients, within the context of their offers in the fast-changing marketplace.

Delivering great value propositions allows firms to capture added value from clients

Designing and delivering enduring customer value propositions is a demanding, yet critical, on-going customer-driven process for any company wishing to grow with above average margins.

When done right a great client value proposition will fit its customer like a glove, offering them what they really value, and motivating them to pay more.

While the value experience endures, this generates client satisfaction, loyalty and even client advocacy.

So what is holding back your organization from delivering what your clients really value?

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One Response to “Tech companies: Sell customer value rather than products”

  1. Analyzing B2B Web behaviour can improve user engagement and boost qualified leads | Merkado | Technology Marketing Leadership Blog Says:

    […] correctly, and assuming a company has compelling client propositions and relevant, supporting value-driven content, this will ultimately help companies improve their […]

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