B2B - Strategy Tools - Part 4

3 ways to create customer value

The first question to ask one self in business is: “How can we create value for our customers?” (The second is of course:”… and how can we make a profit doing it?”)

For now I will concentrate on the 3 ways a typical company working in the “Business-to-Business” (BtB) segment can create value for its customers:

• By influencing the sales price of your customer’s products or services.
• By influencing the productivity/efficiency of your customer’s processes.
• By influencing the unit costs of your customer’s products or services.

Value is created by satisfying needs and you should start by listing the most important needs of your customers that you fulfil today or that you will be able to fulfil with some development efforts.

For customers in the BtB-segment you will probably find that by supplying your products or services to your customers you will be able to fulfil some of the following needs related to their values generators sales price, productivity/efficiency and unit cost:

• Sales price
• Functionality of your customers’ product or service.
• Durability of your customers’ product or service.
• Life time of your customers’ product or service.
• Aesthetics of your customers’ product or service.
• 
  

• Productivity/efficiency
• Production cycle time of your customers’ process.
• Units produced per production cycle in your customers’ process.
• 
  

• Unit cost
• Total waste per unit produced of your customers’ product or service.
• Man power requirement per unit produced of your customers’ product or service.
• Process equipment and other fixed capital requirement per unit produced of your customers’ product or service.
• 
  
• The cost of your product or service per unit produced of your customers’ product or service.

Look for needs that you can fulfil today or with some development effort and that generate high value for your customers. In particular look where your products or services by fulfilling these needs are able to significantly improve the value generated by your customers.

Do not start with the price of your product or service!

PETER SØRENSEN