Managerial implications

This study explored customer value assessment, a key challenge faced by managers in business markets (ISBM, 2012), and the results suggest the following practical implications.

Understand that customer value assessment is a longitudinal and cross-functional process.

The findings indicate that customer value assessment is not just a one-off event that can be conducted by sending a customer satisfaction survey after the supplier´s offering is delivered.

Instead, it is an ongoing process, which begins well before and continues long after delivery, often until the end of an offering’s life-cycle. Managers need to be aware of the long-lasting nature of customer value assessment, and coordinate the different functions and units responsible for the key processes accordingly. Specifically, managers should pay special attention to long-term value realization, which is the most critical, yet often neglected, process. Suppliers in business markets are often pressed by time and results, and salespeople, who are typically responsible for the “front-end” of customer value assessment, need to focus on closing the next customers. Therefore, managers must ensure that the responsibility for the long-term value realization process is clearly specified for the sales unit, or smoothly shifted to the service or project management unit.

Moreover, managers need to recognize that successful customer value assessment is a company-wide strategic process, which involves several organizational units rather than being the sole responsibility of sales and marketing. Managers can employ the proposed framework to coordinate the various functions and units responsible for the key phases, and to analyze the specific resources and skills needed in each phase to identify potential targets for development. As a minimum, managers need to ensure that teams responsible for value assessment have sufficient resources at their command to enable them to collect and share necessary information required to conduct the key phases in the process. This is particularly important in the long-term value realization phase as it might take a long time, while the sales

unit needs to move to the next customer. If customer value assessment is delegated to the sales unit without proper support, it can lead to overburdening the sales unit with too many activities, or to neglect of the long-term value realization phase.

Select an appropriate strategy for customer value assessment.

Managers need to select an appropriate strategy for customer value assessment depending on the market and offering characteristics, and assign clear responsibilities for value potential identification, baseline assessment, and long-term value realization. The identified strategies for customer value assessment illustrate alternative approaches that firms can adopt depending on their market characteristics and offering type. Specifically, the emergent value sales strategy is suitable for firms with relatively standard offerings as it focuses on a few selected cases and requires less resource investments compared to the alternative strategies.

The life-cycle value management strategy is particularly suitable for the development of complex and services-intensive offerings to satisfy the needs of large customer segments. It creates knowledge for the development of new product/service qualities and requires an organization-wide commitment to customer value assessment. The dedicated value specialist strategy is particularly suitable for customized offerings in markets where the customers’

purchase process is non-routine, complex, and characterized by high need and market uncertainty.

Identify and document realized value potential.

Managers need to inform customers on the value potential of their offerings. The interviews with suppliers involved in this study indicate that customers are rarely able to perceive all benefits a supplier has to offer without the supplier’s help and effort. In contrast, customers increasingly apply strategic purchasing models that limit evaluation across multiple suppliers to a few key benefits and costs. While this emphasizes the benefits a buyer deems important, it ignores those of which he/she is unaware, thus highlighting only a portion of the supplier’s total value potential. This is particularly relevant to the relational and intangible components of value potential that are often difficult to measure. For example, managers can highlight their cognitive value potential by demonstrating how customers’ knowledge and ability to utilize offerings might increase. Or alternatively, managers can highlight their emotional value potential by emphasizing trusted brands that reduce customers’ risk and anxiety. As identified value potential often defines benefits and costs that are assessed over the process, it is crucial to inform customers on the total value potential involved in an offering. If this is ignored, it can lead to under-realized value potential and lower margins.

In addition, managers need to put more effort and resources into documenting realized customer value. The findings indicate that best practice firms leverage their success with other customers from similar or different industries by systemically documenting realized customer value from their offerings. Documented customer cases serve as a valuable asset by accumulating a knowledge base for benchmarking purposes, and providing concrete evidence on value potential that has been realized by other customers. Given that industrial firms often struggle to document accumulated knowledge from previous customer deliveries (e.g., Jalkala and Salminen, 2010), the proposed framework can help suppliers develop value templates to document critical customer data before proceeding to the subsequent phase. Firms need to pay specific attention to documenting benefits perceived by particularly satisfied customers in order to leverage the results to build their reputations and attract new customers.

58 Develop services for analyzing value.

Considering that industrial suppliers increasingly seek service-led growth, customer value assessment provides managers with a potential service business opportunity. For example, best practice firms in B2B markets conduct baseline assessments and value analyses for a fee to help their customers understand how to improve their operations (e.g., Anderson et al., 2006). However, in this study, the managers from the pilot firms, which could be thought of representing the average players in the field in terms of value assessment capabilities, indicated that while their accumulated process experience enabled them to identify opportunities for cost reductions and/or performance improvements for customers, this type of service was not commercialized in any of the interviewed firms. In contrast, the managers from all of the best practice firms included in the study reported that they offered different forms of value analysis services (i.e., process optimization and consulting services) as part of their offering portfolio. Thus, managers should recognize that they might already have the resources and skills to conduct value analyses, and move from service for free to fee.

Build brands around key capabilities.

The findings highlight the importance of building a solution brand around key capabilities instead of product or service attributes. Managers need to identify which capabilities have the most potential in delivering customer value, and match these capabilities with their customers’ goals. While competitor and customer analyses are an integral part of every brand positioning process, they are not sufficient for solution brand positioning. Instead, solution providers need to engage in more in-depth analyses of their customers’ goals and develop a brand positioning strategy that highlights how their solutions contribute to meeting these goals. Thus, managers need to be aware of the potential solution brand positioning strategies, and consider different positioning strategies for different customer segments. For example, the Customer Value Diagnostic positioning strategy might be targeted at customers that place special emphasis on realizing the highest potential value from a supplier’s offering, or which are characterized by a long-term purchasing orientation and focus on optimizing the value realized from the offering.

Be aware of typical challenges related to customer value assessment.

While customer value assessment is critical for business firms, managers need to be aware of typical challenges related to it. For example, members of customer organizations can have differing goals and perceptions of realized value. While users tend to value ease of use, operational managers are often interested in cost effects and improvements in productivity, and top management is primarily interested in how the solution supports their organization’s strategic goals. This requires suppliers to cast a wide net to capture the value perceptions of all relevant decision influencers. In addition, identified value potential is typically realized in the long term during the post-delivery phase, and is dependent on a customer’s ability and motivation to actually utilize a supplier’s offering. It can be difficult to find motivation and resources to perform the actions necessary for evaluating resultant customer value during the later stages of delivery. Value assessment requires joint effort and a willingness to share information between supplier and customer. However, to protect themselves from higher prices, suppliers’ dominance, and imitation by competitors, customers can be reluctant to share information on how suppliers have helped them improve operations and productivity.

Finally, customer value assessment might not be suitable for all offering or customer types.

For example, customers who are purchasing offerings that are not strategic to their businesses, or who emphasize short-term focus with standard offerings and lower prices, might not be interested in allocating time and resources to value assessment. In contrast, value assessment might be particularly suitable for customers with purchasing processes that are characterized by long-term relationships, customized offerings, high need, and market uncertainty, and a focus on realizing the highest potential value from a supplier’s offering.