A Few Shining Examples of Value Communications

When marketing and salespeople use compelling value communications, great things happen, as the following two examples demonstrate.

The first is a SaaS (software-as-a-service) company whose products streamlined and optimized warehouse and other supply chain operations for its customers. The software forecasted the customer's demand and helped it stock the right amount of inventory in its warehouses (thereby reducing the cost of carrying excess inventory). That helped customers get the right products to the right places at the right times. The software also automated the picking and shipping workflows in the warehouse and eliminated manual errors that had been par for the course. Lastly, the software provided a real-time view to coordinate the workforce. It also eliminated the need to pass paper documents around the warehouse.

It was evident to the SaaS company that its new product would generate great value for customers, and it wanted the product's price to reflect that value. Many of the firms the company thought of as peers priced on a per-user basis (for instance, $50 per month per user).

But the SaaS company knew this would be suboptimal (that is, a minivation!). It wanted to position its product, and its price, on the value it delivered. So the firm started by creating a spreadsheet salespeople could use with customers to quantify the payback on the product after asking a few basic questions about their operations. (See Figure 10.1.) The salesperson could enter such data as the number of hours the customer spent having warehouse workers manually pick orders from shelves (a task the software automated), the amount of inventory carried (the software would reduce costs of carrying excess inventory due to better forecasting), the number of shipping errors that occurred (the software would eliminate those), and the savings from eliminating paper documentation (by ending the paper shuffling, real-time coordination in the warehouse would greatly increase efficiency). The spreadsheet then calculated the customer's total return on its software investment.

Voila! The value that the software brought to the table, in dollars and cents, became crystal clear to the software company's customers. The SaaS firm was able to easily justify the price the customer needed to pay for the software.

Along with communicating the dollars and cents, the salespeople also delivered a crystal clear benefit statement, one that captured the customer's attention because it was fully in line with the value they were looking for: a reduction in inventory carrying cost, greater warehouse efficiency due to automated workflows, and more. The result: Sales of its new product took off like a rocket.

The SaaS firm's approach was remarkably different from competitors, whose sales negotiations were still explaining features but not benefits. The SaaS firm's sales were many times higher than they would have been if it had opted for per-user pricing.

The second example is SmugMug, an Internet startup that lets people safely store, share, and sell photos online. SmugMug offered four customer plans. SmugMug loved the features of those plans, and so did its customers. But it offered simply too many features (100+) for the average customer to fully comprehend. (See Figure 10.2.)

Many customers simply chose not to purchase the product; they didn't know which way to go and which plan to select. As SmugMug continued to innovate and add more features to the plans, customers became even more confused. Sales were not picking up at the pace the firm expected. SmugMug cofounders Chris and Don MacAskill knew their innovation was a winner, and it was. The Wall Street Journal called SmugMug the “strikingly handsome photography site.” Forbes called it “one of the top company brands in its field and one of the most-liked and most-respected personal brands.” Nonetheless, the MacAskills had to solve their value communication and sales problems.

So the SmugMug founders revisited how they positioned their products. After scrutinizing their marketing messages, they realized they were spending a lot of time talking features and not benefits. SmugMug was trying too hard, and the value message was not reaching the average customer. The firm then revamped the messages for its packages (i.e. product configurations), using benefits—not features. They also moved the feature comparison to an optional section for those who still wanted to compare. They managed to condense the benefit statements from more than 100 to fewer than 10. (See Figure 10.3.)

The benefit statements, such as “beautiful design” and “unlimited storage,” were music to many ears. The average customer could now quickly understand what they would get with each product offering. If you wanted only photo storage, you would choose basic. Want personalization? Choose power. Did you want to sell online? Choose portfolio. How about marketing what you sell online? Then you would choose business.

The messaging was simple with clear value statements. That was a big change from the way benefits had been articulated before.

With these changes, Chris and Don MacAskill nailed it. By excelling at value communications, SmugMug saw a double-digit percentage increase in revenue and conversion.

Sounds easy? It isn't. Most companies have great sales and marketing teams and spend oodles of time trying to craft the right value messages. Yet, we have seen far too many companies struggle to communicate the values their products deliver. The next section underscores the root cause for this.

So Why Is Value Messaging Difficult?

The problem usually begins with a disconnect between the frontline sales and marketing teams responsible for communicating the messages and the innovation team driving new product development. The sales and marketing teams often are far removed from the innovation teams and are brought in toward the very end to pinch hit, to market and sell a product. By the time they join the process, though, it is typically too late. They were not part of the value-to-customer story that drove the product design process and pricing. Nonetheless, they are told to craft the value story and sell it. Strange, but true.

Without real information, they sit around a table to brainstorm ideas and develop a value story, which might not match the discussions the innovation team had when it designed the product. Sometimes the marketing and sales groups don't seek input from the innovation teams and they try to run with what they have, since they feel they already know their customers. This gets complicated quickly.

But even if marketing, sales, and product development managers convene to hash out the sales and marketing messages, the right communications often don't emerge from their meetings. As the teams try to reconcile divergent views of the product's value, the loudest or most senior voices in the room win the message-framing battle. And in too many cases, the winning message is different from the value proposition defined during product development, the one that excited potential customers.

Most companies do not pay enough attention to this gap, believing the handoff from R&D to sales and marketing is a standard business process. But in practice, it's not. It requires special effort. Great new products, even when they are priced right, don't sell themselves. Marketing needs to promote them, and sales needs to sell them.

Telling a compelling value story is well within every company's ability and means. It's not about getting a top Madison Avenue ad agency. Instead, it requires adding key marketing and sales people to your innovation teams from the very start. This helps them fully comprehend the value messages that resonated most with customers from the get-go and lets them give valuable input to the new product design process. This also enables salespeople to focus their conversations on value, rather than price. More on this in Chapter 14.

Now that you have understood how value messages can get scrambled, let's shift gears and learn about how to fix it. In the next section we provide three steps to get this right from the start.

The Three Steps to Create Great Value Communications

Step 1: Develop Crystal-Clear Benefit Statements—Not Feature Descriptions

A company that excels at value communications articulates its products' benefits in meaningful terms to customers. This is not about describing product features. A feature belongs to the product; a benefit belongs to the customer. Value is a measure of the benefit to the customer. Communicate benefits, not features. Take each feature and ask yourself this: What does the customer achieve because of this feature? If you are still unsure about how to phrase your product's benefits, probe your customers about their pain points and how your product would solve them. Ideally, you should understand how customers measure their performance—and how your offering would affect those measures. Once you know that, you can tailor your messages to the customers' priorities. You should also quantify the relative value of your product: the value it would deliver compared to the value your customer gets today from other offerings.

To be more specific, when you create a value message, you should determine the customer purchasing criteria and how your product or service might perform on those criteria compared to existing alternatives. Such information can be captured in a 2 × 2 matrix that we call the matrix of competitive advantages, or MOCA for short. (See Figure 10.4 for an example.)

To create this matrix, you list the relative importance of your innovation's benefits to customers on the y-axis. On the x-axis, you rate your innovation's performance against the competition—not as you see it, but as your customers see it. The benefits your product delivers that are most important to customers and that competitors can't match (top right quadrant) are the ones to emphasize in your sales and marketing messages.

But those aren't the only benefits to communicate. For the ones in the lower right quadrant—benefits you are better at delivering than competitors but which are less important to customers—you are trying to convince customers these benefits are more important than they might realize. However, if you can't prove it, don't emphasize them in your value communication.

The factors in the top left quadrant represent your competitive disadvantages, and you should prepare arguments to defend them.

Using this matrix, creating value communications will become more structured. It will also become easier to get all the innovation team members (R&D, product, sales, and marketing) on the same page.

A few more tips when creating benefit statements:

• When communicating the benefit statements, it's easy to fall into the trap of thinking your features are the same thing as the benefits to your customers. They aren't. Take the case of Carbonite, the online data storage and backup company. The firm used to describe the storage amount for data backup services to consumers as “20 gigabytes.” While an IT professional would understand how much storage that figure represents, the average consumer would not, and therefore they couldn't assess the benefit in a meaningful way. The offer of 20 gigabytes was most likely much more than what a majority of consumers would ever need. But the words “20 gigabytes” certainly did not identify a problem or a solution. Carbonite changed its description to “unlimited storage,” and the message truly resonated. Consumers could say, “With this service, I don't have to worry about running out of online storage space.” In reality, most consumers might still use less than 20 gigabytes, but the positioning strongly helped increase customer conversion.
• Customers are hardly interested in how you created your innovation or how much you spent on it. What's fascinating for you is not necessarily fascinating to your customers. Americans didn't buy Thomas Edison's incandescent bulb upon learning that he tested over a thousand filaments before settling on tungsten. It was a heroic feat of innovation, but most Americans never knew about it, nor would they have cared. They bought Edison's bulb so they didn't trip over their kids' toys in the dark. And a message along the lines of “the product is good because it has seven patents” is pretty meaningless as well. Your customers couldn't care less.
• You should also communicate those benefits with extreme brevity. Come up with a handful of words for a headline or sales pitch—not a line the length of Lincoln's Gettysburg Address (which by public speaking standards was a very short speech indeed, at only 272 words). The top-level messages about the core benefits to customers matter greatly. They must be short but sweet. You should test the messages with customers before finalizing them. Take the example of LinkedIn. In reformulating its Talent Solutions offering, the company found customers were clearly willing to pay for the opportunity to recruit “passive” job candidates—people not actually looking for jobs because they already were employed. LinkedIn's communications centered on recruiters' newfound ability to approach millions of these passive job candidates. The company led its messages with the very simple but very successful value message: “Find and engage the best passive talent.”
• Last, remember that passion can get in the way of communicating value. This happens when product and marketing professionals try to jam every feature and benefit statement into marketing and sales communications. Encourage the innovation cross-functional team to practice restraint and communicate only what matters most to customers.

Step 2: Make Your Benefit Statements Segment-Specific

As described in Chapter 5, homogeneity is one of the biggest wrong assumptions you can make in your new product design. Your customers are different. The same value messages are not likely to work for all of your customer segments. You should tailor your value messages to the needs of each segment. Marketing software maker Adobe, for example, does a great job of describing the right plan for the right segment using the right value message. (See Figure 10.5.)

For Adobe's Individuals segment, the messaging includes “getting all the creative apps” and “being able to search 45 million stock images and videos.” For the Enterprise segment, Adobe's messaging is “customized provisioning deployment,” “enterprise level support,” and “streamlined license management and deployment.” The messages are quite distinct from segment to segment.¹

Another company that creates great segment-specific message is Mini. While the car company has eight models (from the Hardtop two-door to the Roadster), each one has a very specific value message attached to it and a benefits statement that is exciting to read. For example, the value message for the Countryman is highlighted in Figure 10.6.²