The Role of Value Proposition in B2B Contexts | Blog

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Discover How B2B Marketing and Sales Are Prioritizing Value Proposition and Value-driven Strategies to Enhance Customer Experience.

‍In B2B companies, the concept of “Value” has become central when it comes to evaluating and measuring success. In recent years, it has become evident too that the criteria influencing B2B purchasing decisions are no longer exclusively rational and economic.

Individual, emotional, and inspirational elements are gaining significant roles in this process. The primary goal in Value-driven approaches is to create and maximize value for customers and their business models. Value Propositions effectively communicate the value of the offer to customers by transforming competitive advantages into financial benefits for the customer.

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At the core of every purchasing behavior is a consideration in terms of Value. But what does “Value” mean?

“Value is the customer’s perception of the relationship between the price paid for a product or service and the benefits received from it.”

This is how marketing expert Valarie Zeithaml defined the concept of Value in 1988. In today’s B2B market landscape, defining the concept of Value — and therefore the meaning of a “Value Proposition”— in a single definition is more than challenging. Today, this has acquired strategic relevance as a key evaluation criterion within the purchasing process, making it essential for B2B companies to understand how to measure it and translate it into successful performance.

If it is true that the decision-making process is mainly driven by value choices, it is equally important to understand which elements constitute the Value Proposition and the criteria that most influence these choices.

The spectrum of factors influencing business-to-business purchasing decisions is traditionally oriented towards rational and quantifiable criteria, regarding the economic and performance sphere. Which differentiates it from the more “subjective dynamics” of B2C. Today, this trend is changing in highly engineered sectors such as IT, Mechanical, Engineering, Life Science, Oil and Energy, etc.

As showed by a study conducted by Bain & Company’s Customer Strategy & Marketing Practice, it is pretty evident that the boundary between the two business models B2C and B2B is becoming increasingly blurred. And some considerations belonging to the individual, emotional, and inspirational sphere have become real driving forces behind some types of purchases in the same B2B sectors. The perspective that guides a “Value-driven” approach is now the so-called “H2H,” Human to Human: companies, suppliers, industrial realities, and organized distribution… Behind the processes, there are always people, A fact reiterated by Harvard Business Review:

“As B2B offerings become increasingly layered and complex, the subjective—often very personal—concerns of business customers during the purchasing process are increasingly important.”

Taking these Value elements into account impacts a company’s performance and, particularly, customer loyalty.

Many studies (Anderson et al., 2007; Hinterhuber, 2008) suggest that very few players in B2B are today actually able to quantify the Value Proposition for their customers. However, the ability to quantify Value is essential when dealing with the issue of offer standardization in the B2B market. The challenge lies in understanding all the factors, both rational and emotional, that influence corporate purchasing decisions. Additionally, it involves creating a competitive value proposition that transcends the commodity effect — a phenomenon where standardized competition reduces products or services to a single purchase variable: price.

The Value Proposition thus becomes essential for suppliers, as it allows them to effectively communicate the value of their offers to customers and align with the company’s internal resources. It includes all elements: tangible and intangible, structural and process, allowing the delivery of “superior and distinctive Value” (Payne et al. 2017).

The primary goal of the Value-driven approach in B2B sectors is then to create and maximize the Value of customers and their business models:

“It’s not about what your products or services do for your customers. It’s what your customers are able to do as a result of using your products and services.

(Hinterhuber, A., Liozu, S. (Eds.), Pricing and the Sales Force, Routledge, 2016)

Quantifying value means transforming competitive advantages into financial benefits for the customer. These advantages can be quantitative, qualitative, or both. Quantitative advantages are exclusively related to financial benefits, while qualitative ones are related to process benefits, allowing customers to achieve the same goals more efficiently through Silos Eradication. Advanced knowledge and skills are often limited to specific, non-communicating organizational sectors, making it difficult for many companies to fully exploit their resources beyond these boundaries. There are significant business, operational, and technological obstacles that companies must overcome to provide a quality Customer Experience.

Research conducted by Harvard Business Review Analytic Services (2022) reveals that the presence of Organizational Silos is the main obstacle to an optimal Customer Experience (34%). Overcoming them means making internal processes smoother and improving alignment between resources, roles, and stakeholders, creating added value both inside and outside companies.

A Value understood not only in terms of economic capital but also of creating and maintaining competitive advantage and defining innovative business development paths (Busacca, Castabile, Anacrani 2004).

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Conclusion

The essence of a quantifiable Value Proposition is about translating the company’s competitive advantages into performance improvements. This requires an always up-to-date analysis of competitors, an understanding of the company’s competitive advantages, and, finally, an understanding of customers, their needs, and their business models (Hinterhuber, 2004).

“The key to creating an effective value proposition in B2B marketing is to deeply understand your target audience, identifying their desires, challenges, and priorities. Only then can you offer a unique Value that drives them to choose your company.” (Adele Revella 2015, Buyer Persona Institute)

Building these relationships is complex: Value Propositions, though effective, need to be supported and reinforced by credible references. These can take various forms, from summaries of pilot projects to successful case studies.

In order to implement Value quantification, it is necessary to manage change within the organization (Liozu et al., 2012). New Value-driven approaches in B2B require new capabilities, new organizational structures, different goal systems, and priorities to be treated as a continuous change management process rather than a time-bound project (Hinterhuber and Liozu, 2014).

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SOURCES

A. Hinterhuber and T. C. Snelgrove (2017), “Value first than Price”, Routledge;
Hinterhuber, A. (2008), "Value delivery and value-based pricing in industrial markets";
Valerie Zeithaml, Journal of Marketing Vol.52 (July 1988), 2-22;
Hinterhuber, A., Liozu, S. (2016), Pricing and the Sales Force.

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