How often have you heard managers blame commoditization for their failure to sell? You might have wondered if it was just an excuse or if the manager had a point.
Many B2B companies fall into the commodity trap. It is a company’s predicament when it must end up selling its products based only on objective elements, and it ends up jostling for shelf space with dozens of similar products. But their jar of jam is not a herd product, so how can they make it stand apart?
In fact, there is plenty of opportunity for differentiation, all you need to know is the ‘sense of value’ of your buyers and customers. To position yourself as the best match in the market, you have to tailor the value proposition to the one buyers and customers prize most. Then, by sharing with them your content; that thoughtfully weaves their sense of value into your offerings; you not only ease their buying process but also become the undisputed vendor of choice for them.
Purchasing teams appraise vendors and evaluate their total cost of ownership to make quantifiable parameters on price and performance guide their analyses. It’s why sellers must optimize prices, meet specifications, follow regulations, and adhere to ethical standards. However, these are table stakes.
With B2B offerings increasingly commoditized, buyers’ subjective, even personal concerns are becoming more crucial in purchase considerations. Research reveals factors such as a product’s ability to enhance the buyer’s reputation or reduce anxiety play a significant role in purchase decisions. It is critical to recognize objective and subjective factors driving purchasing decisions and tailor the value proposition accordingly to avoid the commodity trap.
You would think people’s price-value calculation for a personal purchase differs from workplace negotiations. But they are not all that different. Their decisions for personal purchases include objective criteria such as price, warranties, and service levels, but other, more subjective criteria also figure in. Learn how to differentiate yourself from competitors in B2C in my article, Learning ‘elements of value’ and how it impacts B2C Marketing and its content.
40' elements of value' in the B2B environment
Marketers often boast about having relevant content that resonates with the audience, brings results, etc., but these are hollow expressions. What is required is content that speaks of values; it is the most sought-after element by audiences. A skilled writer can present your value proposition compellingly, but your value proposition must be solid too. Obverse, if your value proposition is compelling but not conveyed powerfully, your content marketing fails. The winning formula is to have a compelling value proposition and a story matching it.
To help B2B suppliers better understand customer priorities, Bain & Company, a Boston-based management consulting firm, examined scores of qualitative and quantitative customer studies for their clients, analyzing what buyers value most. They identified 40 fundamental ‘elements of value’ which fall into five distinct categories as follows:
- Table stakes
- Ease of doing business
- Individual, and
Let’s arrange these 40 values in a pyramid form. Predominantly objective values would form the base, and more subjective values will be at higher levels. That’s because human actions are motivated by an intrinsic desire to fulfill needs ranging from the primordial (security, warmth, food, and rest) to the complex (self-esteem and altruism). This ‘elements of value’ architecture provide insights into people in corporate roles and their motivations for buying and using business products and services.
Understanding the 5 levels of the 'elements of value' pyramid
In an ideal situation, a value proposition must include one or more elements from each level of the pyramid because it’s unrealistic to incorporate all elements from all levels. Developing a 5-tiered content strategy helps buyers and customers stay well informed about the aspects of your value proposition.
Level 1: Table Stakes are the essential elements and form the pyramid’s base: complying with regulations, adhering to ethical standards, and meeting specifications.
Level 2: It comprises functional elements such as cost reduction and scalability, which address a company’s economic and performance needs. For old-line industries like chemicals, automobiles, medical equipment, and pharmaceutical manufacturing, delivering on them has been a priority. B2B companies focus most of their attention on functional elements as buyers and sellers.
Level 3: Elements in the third level help ease business. Some offer purely objective benefits, like boosting a customer’s productivity (saving time, reducing effort) or improving operational efficiency (simplification, organization). Nonetheless, we are encountering the first set of subjective judgments from buyers at this point. They include aspects that enhance relationships between parties, such as cultural compatibility and supplier commitment to the customer organization.
Level 4: The next level of elements offers additional subjective value, addressing the priorities of individual buyers, personal (a reduction in anxiety, pleasing design, and aesthetics), or related to their career (improved marketability or expansion of their network.)
The elements of value here may address extremely emotional concerns. Fear of failure often holds back buyers who spend large sums of money and make decisions that could affect revenues or many employees. It is for this reason that some suppliers benefit from offering reputational assurance and risk reduction to those who are responsible for purchasing.
The culmination of the changes in buying has resulted in a shift from FOMO (fear of missing out) to FOMU (fear of messing up) as buyers move through the buying process. Research has found buyers are so paralyzed they won’t act due to the fear of making the wrong choice. There is a lack of confidence among buyers, resulting in indecision in over half of them. In my last article, Is blogging a worthwhile investment for B2B marketing in 2023? I mentioned why today’s buyers are more confused, overwhelmed, and frustrated than informed and spoke of the way forward.
Level 5: The elements at the top of the pyramid are inspirational. They elevate the customer’s vision of the future (eg. anticipating market changes), give hope to organizations or individuals (for example, that they can move to the next generation of technology easily and affordably), or make a company more socially responsible (have a purpose beyond getting the cash registers ringing).
What is meant by ‘purpose’ in a business context?
If you want to excite buyers and customers, inspire employees, and galvanize investors, creating a ‘wow’ product alone will not do it. You must invest in that product with a purpose beyond its functionality.
The purpose must be larger than life. It can be fun yet meaningful, like taking a swing at outdated social mores, for example, or it can be to fight for a serious cause, social, environmental, or economic. But in all cases, it must seamlessly blend with the brand’s image and become intrinsic to its narrative.
It should be able to win buyers’ and customers’ hearts and minds resulting in an unbeatable brand community coming into existence. In my article, How to build your brand community flywheel in 2023, I have discussed how to generate a stronger emotional connection with buyers and customers, engage with them, and win their loyalty gaining high returns at minimal risk.
Your product or service must become a consciousness that permeates consumers and buyers and expands their worldview; they must dread the thought of its absence. When you create this sense of attachment that transcends function, you have succeeded in making your product integrate with the buyers’ and customers’ inner world. It is the place where a product with purpose finds a lasting home.
Companies who work towards this goal lead the way. Their employees wake up with purpose daily, and their buyers and customers instinctively gravitate to such companies.
To understand it better, let’s imagine that purpose is like a well-placed window. It has a primary function (to keep out the elements, let in light, etc.), but it also gives you a view that ignites the imagination and makes your mind soar at the possibilities. Imagine if the window was not there.
The battle for differentiation
The pyramid’s base elements have long been easy to measure, so competing on them has been relatively simple. Middle and upper-level emotional elements are difficult to isolate and quantify and, therefore, more challenging to implement. But these less transactional aspects are becoming more critical in the battle for differentiation. It is difficult for a strategist or product manager to master the intangibles of a customer’s overall experience – such as the service, support, interaction, and communication surrounding an offering – than to make the product quicker, less expensive, or more enduring.
Companies need to use the B2B elements of the value framework to deal with that broader challenge. Through modern survey techniques and statistical analyses, they can determine what customers truly value and what aspects of an offering are worth investing in. Executives can bring scientific rigor to previously visceral decision-making. Let’s look at how firms can accomplish this.
How to figure out the elements that matter the most
To better understand how delivering on the elements impacts company performance, you must hire a marketing information company specializing in buyer motivations. One such name is Research Now.
Alternatively, you can hire a buyer persona expert to research for you. Also, hiring companies that help brands and organizations better understand the buyers and customers you want to build relationships with, collect the insights you need, and recommend a clear, business-savvy roadmap, such as Lucid, is an option. Collaborating with them can help you successfully conduct surveys with thousands of corporate decision-makers and buying committee members or stakeholders who influence decision-makers in your target market.
The analysis of the results will indicate which elements matter the most. It will help you gather information on buyers’ perceptions of how sellers in those industries performed on the 36 non-table-stakes elements of value. These are areas of differentiation, and thus your investment would be worth it. As far as table stakes are concerned, you must have already figured it out as they’re the prerequisites for being in business.
The result analysis provides another valuable lesson: how excelling at providing multiple and higher elements pays off. In the healthcare and manufacturing sectors, this asset is strongly correlated with acquisition and higher customer loyalty, and performance on the elements and customer loyalty have a nearly one-to-one statistical relationship.
The average NPS (Net Promoter Score) of strong performers is 60 percent higher than companies excelling at only one to five elements and several times higher than companies excelling at no elements. So, when it comes to elements of value, the more you integrate them into your value propositions, the better, but logic also says that cramming all elements is a recipe for disaster. You have to choose elements you can deliver and those that matter most to your buyers and customers.
For example, data shows that customers in the manufacturing industry make more repeat purchases from strong performers.
Merely selling a brand is passe; integrating it into the buyer ecosystem to create enduring relationships is the new world order for the marketplace. What better way to do this than through content that births a shared heritage for manufacturers/companies and buyers/consumers? The complete list of the 40 elements of value for quick reference.
The 40 fundamental "elements of value" for B2B buyers are arranged as below:
The 40 fundamental ‘elements of value’ fall into five distinct categories and are listed as follows:
Table stakes elements of value:
- Meeting specifications
- Acceptable price
- Regulatory Compliance
- Ethical Standards
Functional elements of value:
- Improved top line (an economic value)
- Cost Reduction (an economic value)
- Product quality (a performance value)
- Scalability (a performance value)
- Innovation (a performance value)
Ease of doing business elements of value:
- Time savings (a productivity value)
- Reduced effort (a productivity value)
- Decreased hassles (a productivity value)
- Information (a productivity value)
- Transparency (a productivity value)
- Organization (a productivity value)
- Simplification (a productivity value)
- Connection (a productivity value)
- Integration (a productivity value)
- Availability (an access value)
- Variety (an access value)
- Configurability (an access value)
- Responsiveness (a relationship value)
- Expertise (a relationship value)
- Commitment (a relationship value)
- Stability (a relationship value)
- Cultural fit (a relationship value)
- Risk Reduction (a relationship value)
- Reach (a relationship value)
- Flexibility (a relationship value)
- Component quality (a relationship value)
Buyers’s individuals elements of value:
- Network expansion (a career value)
- Marketability (a career value)
- Reputational Assurance (a career value)
- Design and Aesthetics (a personal value)
- Growth and development (a personal value)
- Reduced anxiety (a personal value)
- Fun and perks (a personal value)
Inspirational elements of value:
- Vision (a purpose value)
- Hope (a purpose value)
- Social Responsibility (a purpose value)