Value Tables – An Introduction to a Fundamental Tool
Value tables are crucial to pricing!!! If you can’t fill out a value table, you don’t know the value of your product. Harsh but true.
I originally created the concept of a value table to teach salespeople how to sell value, but I’ve come to realize thoughtfully created value tables help you with: selling value, messaging to the market, building the right features, deciding what market segment to go after, determining your pricing metric, and creating the right packages to offer to your market (think good, better, best). Oh, and it will help you set your price too. It feels like a magical tool, and it is. Many of the next several blogs will share with you what I’ve discovered about their importance, how best to create them and how to use them.
The first 4 columns of a value table are PSRV, Problem, Solution, Result, Value. Let’s go through them but not in that order. Let’s start with S.
Solution: These are your marketable features. When sales or marketing talks about the product, which features do they emphasize? These are features worthy of putting in a value table. You have many features which should not go in the table. The font that you use is a feature, but it’s not marketable. Only include the important features. You built those features for a reason.
The solution column is the easiest one for companies to fill in. After all, you think and talk about your features all the time. You invested in engineering effort to create a feature. Hopefully it has value to the marketplace. Put it on the list.
These next words are really hard to hear. NOBODY CARES ABOUT YOUR PRODUCT. Those features in the solution column are your product and nobody cares about them. Instead, people care about the problems those features solve and the results they will get when they solve those problems. That brings us to the first column, P.
Problem: As an ex-Pragmatic Marketing Instructor, the words “What problem does that solve?” resonate constantly in my head. This is crucial. If you don’t really know what problem is solved, then you can’t understand the value of your product or your feature. When your problems are written clearly and specifically, marketing and salespeople have messages that grab the attention of your market.
Result: When a customer has a problem and applies your solution, they end up with a result. Sometimes, the result is as simple as “the problem went away.” Sometimes we go a level or two deeper in the result to find something that is measurable. When it’s time to learn to fill this column out, we’ll go into more detail.
Value: This is the whole point (from a pricing perspective) of the value table. What is the value of the result? Every customer receives a different amount of value from your features. It’s impossible to put in a single number and assume it’s true for everyone. However, when you have the business acumen to fill in that box for a single customer, you are starting to understand the value. In the B2B world, you should be able to determine (estimate) the value of a result in dollars (or other currency of course). Otherwise, it’s not value. Imagine if you and your sales team could convincingly put a dollar amount to represent how much value a buyer receives from each feature. That’s knowing your value.
Unfortunately, creating a value table is not easy, especially at first. While mentoring clients, I’ve learned that creating value tables is not as simple as I imagined. Future blogs will share what I’ve learned so far. Once you have experience with value tables, you won’t think about pricing any other way.