Differentiating Your Company from the Competition to Accelerate Growth

written by D. Keith Pigues

Amazing things happen when an organization begins to think first about how it can make its customers better off. Really. The days of defining winning by only considering your own P&L are long gone. Leading B2B companies focus on making their customers more money than their competitors do while earning their fair share in return – redefining what it means to truly win with their customers.

But, how can you know if your organization is actually focused on winning with its customers? Start by answering the following four critical questions. Your answers will help to indicate if your organization is on the winning path:

First, Do you know specifically how your company helps customers make more money? This is the starting point and if you’re like most people, you easily and quickly say yes to this question. I would argue that if you are not absolutely sure of the answer to this question, maybe you should ask another question…Why are we in business?

Here’s the next question: Does your organization understand how it will make your customers more money in the future? Organizations that can answer yes to this question have a clear roadmap of the most valuable things they will do over the next few months or years to help customers grow their profits. If you answered yes, don’t get too excited, the tough questions are coming up.

The third question requires more thought. Does your organization measure and track how much money customers make doing business with your company over time? This question begins to part the waters and separate the companies who are more interested in their customers’ success from those that are absorbed with their own success. This provides a key indicator of whether your company may be more externally or internally focused.

The fourth and final question is the ultimate measure of winning. Does your organization measure and track how much more money your customers make doing business with your company versus your customers’ next best alternative? This is, after all, what your customers care most about. Proving that your company truly has a differential impact on your customers’ profits is the “holy grail” in business relationships between companies. It reduces all other measures of success with your customers to “noise.” Organizations that measure and continually improve their impact on customers’ profits and capture their fair share in return are the true winners, now and over the long haul. These customer relationships are not merely transactional (replaceable), they represent true partnership where both parties win together!

A few years ago at a major business executive conference that I attended, only 5 of 600+ (less than 1%) of attendees could answer yes to all four questions. Then again, among nearly 200 marketing and sales executives at an Institute for the Study of Business Markets (ISBM) member meeting, only 1 participant could answer yes to these questions. Finally, at a CMO Thought Leadership Summit, yet again, a very small percentage of attendees could answer yes to these questions that redefine what it means to win with customers. There’s an alarming trend here.

So, if your answers to these questions left you feeling exposed, you are not alone. The good news is, you can know with confidence and build on what you’re currently doing to win with your customers.

  1. Start by helping to change the conversation your sales, marketing and customer support professionals or executive team has with your customers. It’s these team members — who are on the front line of your organization — that are engaging with customers more often. However, in most companies the bulk of these conversations are not focused on what matters supremely to the customer – their profit and how to increase it. A new approach that makes each customer interaction more valuable for both parties is called Customer Value Xcelerator® (CVX). Asking customers to validate or invalidate your hypothesis of how you help them make more money with your value proposition creates the environment for a different and more fruitful dialogue – one that customers love to have. Does your product or services provide a differential impact by helping your customers increase sales or decrease costs, versus the impact of your competitor’s products? How about your sales force, brand, customer service or supply chain? Are they helping to grow revenue or trim costs that impact the customer’s bottom line in ways your competitor cannot? What you find will likely surprise you.

 

  1. The results of these new “value based” conversations are powerful. The information captured allows you to take the critical next steps to winning and quantify just how much more money your customer makes doing business with you versus your competitor in real dollars and cents. This new metric used to measure the incremental value gained by your customers is called the Differential Value Proposition or DVP. There is finally a quantitative measure of the effectiveness of your company’s value proposition – no more “wishy washy” discussions about your value proposition and how it differs from competitors. The DVP is a rigorous financial measure of how much additional operating income your customer earns by using your products or services and represents a true measure of your competitive advantage. The balance sheet measures company value, the P&L statement measures profit, but the DVP measures competitive advantage. This new metric is a breakthrough in measuring how you impact the customer. This metric is valuable to help you assess customer engagement, customer loyalty and customer experience. It is the first “direct“ measure of what drives customer engagement, loyalty or experience and represents a significant improvement over measures like Net Promoter Score (NPS) which is an indirect measure.

 

  1. With the DVP, companies are able to gain both quantitative and qualitative understanding of the opportunities to improve their winning score over time. In addition to the current measure of the value you bring, you’ll also gain a forward-looking view of how you can help your customers make even more money in the future. This forward-looking and actionable output provided by the DVP is another improvement over the traditional measures like NPS. If your customer indicates your DVP is 4%, this means that for every $1 million in purchases from you, the customer gains an additional $40 thousand dollars in operating profit by doing business with you rather than your competitors. This is indeed good information to have at your fingertips – no more guessing about where you stand with the customer. What is even more valuable is an output from this conversation we refer to as “Future Opportunities.”  Future Opportunities include the most impactful things the customer suggests you do to help them make even more in the future relative to your competitors. Each of these suggested investments is associated with a specific portion of your value proposition to improve or a new area all together, along with the customer’s estimate of the impact these investments will have on their operating profit and when they would like this new value delivered. This is worth pure gold and should be kept in your company vault – it’s the roadmap to your competitive advantage in the future. This is instrumental input for your business planning efforts and organic growth decision-making. It will help to align your entire organization with the things that matter most to the customer, while bringing a new level of understanding of what your people do to impact the customer’s business.

Business between two companies is really about a value exchange.  In most of these exchanges today, neither party is really measuring or validating how much value is exchanged or how it is shared – resulting in wasted time and effort, and mistrust. Through our Customer Value Xcelerator (CVX) Luminas helps clients gain the internal capabilities to win with their customers.  CVX helps companies identify the specific areas where they can create more value for customers than their competitors, measure the true financial impact of their value proposition and create plans in collaboration with their customers to deliver more value that is differential AND capture a fair share of that value for themselves in return.  Now, that is winning!

There’s no better time than now to get in the game and improve your winning score.

Keith Pigues, Founder and CEO of Luminas, is co-author with Jerry Alderman of “Wining with Customers: A Play book for B2B,” published by Wiley & Sons