What does value really mean for B2B marketers?
Challenging yourself about the real meaning of value is the key to more compelling propositions, happier customers and more effective content marketing
September 5, 2017
What do neoclassical economists and the marketing teams of ‘value’ retailers like Aldi and Lidl have in common? The answer is, they both see value as strictly defined by the market. Or, to put it another way, the true value of something is the lowest price that it can be acquired for. The market finds out its true worth despite anything that misleading marketers might do to cloud buyers’ judgment and get them to pay more.
Classical economists like Ludwig Von Mises tend to agree with the likes of Ferrari, Waitrose and Marks & Spencer that value can be a little more complicated. It’s not defined solely by price. Value might incorporate the perceived worth of something, the amount of time and labour it could save for the person buying it, the amount of effort and resources that went into producing it, even the amount of good it helps to create in the world. Value is complicated stuff – and the value of something for one person might not be the same as its value to another.
As B2B marketers, it’s worth pausing to think about what we actually mean when we start throwing the ‘V’ word about – because we throw it about quite a lot. It’s important to be clear about whether you mean value in the Lidl or Ludwig sense of the word, before you decide what you expect in exchange for it. If you don’t have a coherent definition of value then it’s difficult to construct a coherent B2B marketing strategy.
Constructing a B2B marketing value proposition
Consider the ‘Value Proposition’ – an increasingly integral part of both business and marketing strategy. The value proposition is basically defined as the benefits that somebody will gain from buying your product or service, minus the cost that you will charge them for it. It's the value transaction that you are presenting them with. Forward-thinking businesses focus their overall strategy around deciding how they can deliver clear and differentiated value to the customer. In other words, how they can charge a high enough price to make a profit whilst delivering enough value to ensure the customer walks away with a good deal. The work of marketing becomes both defining that value and communicating it in a way that adds up.
The value proposition is, by definition, classical economics, because it assumes that there is more to value than finding the cheapest price. However, it still leaves some huge gaps and ambiguities for marketers to fill in for themselves. Unless you’re clear on what form value is going to take, you can’t sensibly start working out whether your proposition adds up, let alone communicate it effectively.
The difference between B2C value propositions and B2B value propositions
It doesn’t help that both B2B marketers and their audiences spend a lot of their time being prompted to think like neoclassical economists. In their personal lives, FMCG marketers and the retail industry constantly nudge them into equating value with a lower unit price. From supermarkets to sofas, we’re taught that value means either paying less or being given something for free. Building a meaningful B2B marketing proposition involves moving beyond this mindset – and just as importantly, persuading others to move beyond it as well.
To show how tricky this can sometimes be, consider some common B2B marketing scenarios – and how different definitions of value would move relevant B2B marketing strategies forward in very different ways.
The value proposition for B2B auto
Let’s start with an auto brand selling vehicles to fleet managers. That auto brand and those fleet managers could define value in terms of the unit cost of their vehicles, and how much they have to spend to provide a relevant number of employees with a set of wheels. However, that’s only the most simple definition of value that they could choose to work with. They could also look at the discount the fleet managers are receiving compared to the costs of employees buying these vehicles privately – the additional value that the fleet managers are benefiting from. They could look at the likely running costs for the vehicles and how this might compare to other auto brands. They could look at the reliability of the vehicles, the service and support available from the brand, the frequency with which vehicles can be upgraded and other benefits of an on-going customer relationship. The value proposition varies depending on the different emphasis that auto brand and fleet buyer put on these different aspects.
There are other, more intangible forms of value that could be equally relevant to this transaction – and which often have a role to play in B2B value propositions. What impact will the brand of vehicle chosen by the fleet manager have on the morale of his or her colleagues? What impression will it have on the customers that those employees visit? What impact will it have on internal perceptions that the fleet manager is securing a good deal?
The value proposition in tech marketing
More potential dimensions to B2B marketing value emerge when we look at a sector such as technology – and the complex software solutions competing for the investment budgets of enterprise businesses. An IT buyer in these circumstances is unlikely to see value as simply the lowest-cost alternative for getting a particular job done and fulfilling a particular function. The systems they administer are so interconnected that to attempt to isolate value in this way would be unrealistic and irresponsible. The decisions made in one area have big implications for others, and a buyer has to bear this in mind when considering the way that benefits and costs balance out.
Besides the capabilities and compatibility of the systems they buy, and the levels of on-going support and service they can expect, tech buyers and marketers also have to consider other aspects of value. Confidence is one. Can we put a value on the ability of an IT manager to sleep well at night knowing that he has chosen a trustworthy supplier or brand? Can we put a value on his ability to focus on other aspects of his work and trust that he has the support he needs in a given area? Any IT buyer will tell you that you certainly should put a value on these things.
Value propositions and opportunity cost
This brings us to another important concept when considering what value means in B2B marketing: opportunity cost. Put simply, this is the idea that you can’t spend money, time or other forms of resource more than once. Choosing one solution means giving up on the benefits that an alternative solution might have to offer. Where technology is concerned, the opportunities that a buyer chooses between often have sweeping implications for a business strategy. The IT buyer for a major consumer bank has to consider not just what his systems can do today – but what types of customer experiences they will enable the bank to deliver in the future. Tech marketers have a big advantage when they can personalise their value proposition to the future needs and strategy of the business they are targeting.
What do metrics tell you about the value of B2B marketing?
As a B2B marketer who promotes marketing solutions, one of the value conundrums I’m most familiar with involves the cost of marketing and media. When B2B marketers are considering the value of the marketing solutions available to them, they could look at several different metrics: the number of people they are reaching in terms of cost per impression (CPM), the amount they are paying in cost per click (CPC) or the amount they are paying in terms of cost per lead (CPL). These all offer different ways of looking at the value of B2B marketing. They reflect different objectives and priorities. However, none of these metrics by themselves gives a complete picture of value.
CPM indicates one form of value, but the true value depends on how relevant those impressions are and what actions they are likely to lead to. Similarly, a low CPC doesn’t represent good value if the clicks you are paying a low price for are people who aren’t relevant to your business and just bounce off your website as soon as they arrive. A low cost isn’t value if that money is wasted.
Many B2B marketers would consider CPL a more meaningful measure of value – because it gets closer to the end-objective of generating a Return on Investment (ROI) from B2B marketing. However, even CPL doesn’t really tell the full story where value is concerned. We have to consider how likely the leads are to be accepted by sales, how much propensity they have to convert into customers, and how much revenue they will generate when they do. When comparing the value of B2B marketing in terms of CPL, we have to remember that not all leads are equal.
The issue of opportunity cost arises here too. Just ask your sales team. Time and resource spent nurturing and seeking to convert one lead is time and resource that can’t be spent nurturing and seeking to convert another. When B2B marketers flood their sales teams with low-quality leads, the value to the business suffers. Not only do those leads fail to convert into revenues, but they prevent sales teams from focusing on leads that would be more likely to do so.
How sales and marketing can unlock value for prospects
The more you consider the very different concepts of value involved in B2B marketing, the greater the importance of sales teams and marketing teams working together to help buyers identify and realise that value. In some cases, simply tallying up the numbers, doing the maths and presenting the value formula to buyers might constitute a compelling proposition. However, in far more cases, sales and marketing must take a personalised approach to surfacing the potential value that’s there. They must look at the opportunity costs involved, anticipate the trade-offs their prospect might need to make and the internal pressures they are under, think imaginatively about how to make the investment work. Collaborating with potential customers to explore the value on offer doesn’t just help to secure a deal – it provides a far stronger basis for an on-going customer relationship and recurring revenues in the future.
The value exchange in B2B marketing
Bringing propositions to life isn’t the only area of B2B marketing where thinking about the meaning of value can help to deliver a better strategy. How about the ‘value exchange’, which refers to customers exchanging their personal information for content and services? It’s amazing how often you hear this term used without any discussion of whether any value is actually being created. Effective B2B marketing strategies have a clear idea of why they are collecting data, what value it can create for the business and, just as importantly, the tangible value the exchange will deliver to the customer. That might involve improved, personalised customer experiences, a more relevant buyer journey, or a regular stream of relevant, value-adding content (for subscribers to a blog, for example). Collecting somebody’s data isn’t the end of the value exchange – it should be the start. If the value exchange doesn’t add up over time then the chances are customers will come to resent rather than embrace it.
Value in B2B content marketing
This brings me to a form of B2B value that’s particularly close to my heart: the value in B2B content marketing. Content marketing is at its most effective and sustainable when smart marketers keep challenging themselves about how the value balances out on both sides of the equation. They get engagement and the value that comes from that engagement: greater awareness, greater consideration, greater understanding of their brand and product, leads and revenue. However, they only access this value when they consistently deliver value in return.
As a B2B content marketer, it’s worth asking yourself not just whether your audience is prepared to click through to read your content – but whether the time they invest in doing so will create value for them. Will they consider the five minutes spent watching your video or reading your blog post to be time well spent? Will they have learned something new or valuable, found the answer to a relevant question, been assured that somebody understands them – or simply entertained? Any of these forms of value can justify the time spent engaging with content (and the opportunity cost involved in not spending five minutes doing something else). All of them involve thinking beyond engagement as a metric and interrogating the value that engagement represents. Just as with other aspects of B2B marketing, the value proposition for content needs to flow in both directions – and it needs to add up consistently.