EP45: Mark Boundy– Why Value Should be a Religion to Every Business
Mark Boundy is a sales, value, differentiation, and pricing expert who helps companies sell more profitably.
He’s a consultant for Miller Heiman, an advisor and thought council member to The C-Suite Network where he advises corporations on all things value-related, identifying their fundamental differentiators to help them choose where to compete and how that informs boots-on-the-ground selling.
In this episode, Mark shares how W. L. Gore & Associates taught and instilled in him the importance of how customers perceive value, why value should be a religion to any business, the three central C’s in marketing, and the importance of focusing on the outcomes you bring to customers rather than benefit.
Why you have to check out today’s podcast:
- Discover the three central C’s of value; creating, communicating and capturing value
- Learn what is customer perceived value and how outcome appeals to them rather than benefits only
- Learn how to be a customer experience expert and how to get customers talking about your company
“I often see the word benefits use differently. So, I no longer like to use the word benefits with my clients. Because benefits sometimes mean less than what I think of its value. I use the term ‘outcomes.’”
– Mark Boundy
Get Accelerate Your Subscription Business: Your Blueprint to Packaging & Pricing for Growth Course
1:58 – Mark shares lessons he learned from a material science and engineering company called W. L. Gore & Associates
2:39 – How value has become a religion to him and everyone else at W. L. Gore & Associates
7:49 – Creating Value: Why it is important to know what the value of the customer is going to be and the value of the product to that customer
15:59 – Communicating value: why the outcome is better than the benefit
19:17 – Capturing Value. Why front-liners like salesperson has a significant role in understanding customer’s outcomes and why should they be trained in communicating understanding the customer’s business
21:17 – On being an expert at your customer’s business, how Microsoft Enterprise is practicing to help their consumers understand their market
24:33 – Mark shares how Bob Miller trains their consultants at Miller Heiman. Bob to Mark – “Customers don’t buy their products. They buy results or outcomes.”
“You need to be able to have a dialogue with a customer to understand their outcomes and to understand their business.” – Mark Boundy
“Help the customer understand that a high price is a low price to pay for the kind of outcome [you offer].” – Mark Boundy
“It’s the outcomes is the desirability outcomes, and it’s built on the differentiation, the outcomes they get from you that they can’t get anywhere else.” – Mark Boundy
People and Resources Mentioned
- The C-Suite Network
- Miller Heiman
- Bob Miller
- Microsoft Enterprise
- W. L. Gore & Associates
- Listen to Mark’s Impact Pricing Interview: Ep 15: Mark Boundy – Value Selling: How to Sell Value Rather than Price
Connect with Mark Boundy:
- Email: firstname.lastname@example.org
- Read his blog: boundyconsulting.com/blog
Connect with Mark Stiving
Full Interview Transcript
(Note: This transcript was created using Temi, an AI transcription service. Please forgive any transcription or grammatical errors. We probably sounded better in real life.)
Mark Boundy: Your gross price has to go down when your competitor stops dropping their price. Or conversely, if I am worth twice as much as my competitor, but I only charge 20% more, that competitor has to give it away for free before they can compete.
Mark Stiving: Welcome to Impact Pricing, the podcast where we discuss pricing value and the fantastic relationship between them. I’m Mark Stiving and today our guest is Mark Boundy. Here are three things you want to know about Mark before we start. He’s been a consultant for Miller Heiman, a sales performance company for many years and I’m a huge fan of Miller Heiman. I respect their programs a lot. He’s almost finishing with a book called Radical Value. The perfect book for today’s topic. And he was with Gore and that’s the reason we’re having him back. He was actually, I think your guests’ number 16 or something like that. Mark and you said something about Gore that piqued my interest so much. I had to have you back so we could just talk about Gore. Welcome, Mark.
Mark Boundy: Thank you very much, Mark. I’m really glad to be back.
Mark Stiving: I can’t wait to have this conversation. I just put the finishing touches on a new course called Value-Based Business and I gave Mark a chance to take a look at that mostly because I wanted him to see that, hey is this make sense? And we were again talking about Gore and I thought, wow, wouldn’t it be great if we could get Mark to tell us how Gore perceived all these different things that we have in our course. So, let’s start with anything generic you want to say about Goran value before we even start.
Mark Boundy: It was early in my working life and it was in looking back at it, it was such a gift to have shaped my entire career since then, working in lots of different companies and lots of different things that the people around we thought were commodities. But I figured out ways to make them not commodities because of what I had learned at Gore.
Mark Stiving: So the lessons you learned at Gore, you could carry forward in life. But the thing that I find fascinating about what you just said is, and it’s probably true with most companies I see. Most companies don’t understand value and Gore taught you what value actually means.
Mark Boundy: Value was a religion. I could go back 10 years later and meet somebody casually who was a Gore person and I could say, all right, complete this question or the sentence, what’s the, and they always knew the value because that was the chant inside of Gore. If a salesperson found an opportunity, the question was, what’s the value? If I needed a prototype run as a product manager and I go into manufacturing and ask them to, you know, interrupt the schedule. The question was, what’s the value? If we were trying to do a forecast and people were questioning whether or not a forecast or an opportunity was going to come true, the question was, what’s the value? Because if you know the value now you know how much the customer wants your product versus the next thing, and you can forecast it much more accurately than anything else. That’s next week’s blog post by the way.
Mark Stiving: Nice. Nice. I got to say that I am so impressed with this whole attitude of saying, look, we’re going to be a value-driven culture. Right? I think that’s a really important thing. So, so let’s dig in a little bit. How does Gore define value?
Mark Boundy: Gore, I was kind of looking back at some notes and some recollections, and it was an engineering heavy company and the, it’s the the definitions are very engineering ease, right? It’s the price that makes the customer’s total cost of satisfying their requirements equal to the cost, his total costs with the next best competitive alternative, which means basically what are you going to get by going with me instead of going by a competitor? And how much is that worth to you? How bad, how bad do you want the difference that you get by coming to, you know, with my product, my offer versus the next choice?
Mark Stiving: Yeah. And in my view of the world, that’s precisely the way I would define what I’ll call value in choice or value when people are making a “Which one?” decision. Am I going to buy from Gore or am I going to buy from a competitor’s product? Okay, great. How is our product better than our competitors?
Mark Boundy: Absolutely. Now they broadened it a little bit too. Sometimes that next best choice is doing nothing to keep on struggling along with what I have, the people who have, anybody who’s been in a big company has been in that conference room where you say, we’re trying to make a purchase decision to change what we’re doing and you struggle and you struggle and three hours later everybody throws up their hands and said, “What we’re doing just stinks, but not as bad as making a decision. So let’s just keep struggling until something shows its head that is appreciably better than what sucks so bad right now.”
Mark Stiving: Right? And so we call that value in use or what I would say people are making a will I decision, am I going to buy something in this product category or am I going to buy something? There is no competition. Now we have to focus on the value of solving the problem, the value versus what they’re doing today. Nice. Yeah. Nice. When they were…that’s a quick preview for the course, by the way, I always focus on value in three key chunks like creating, communicating and capturing value. So let’s spend a little bit of time creating value if we could. Did they focus on when they’re doing the product definition or the product development, did they focus on the value then and was it will I or which one and how do they think about that?
Mark Boundy: There was always which one? Mostly which one? Gore, in all of the divisions, I was thinking about this. Gore specializes in making components that fit into other companies’ stuff. The Gore-Tex garment you make isn’t, the garment Gore makes the membrane inside the garment that makes it waterproof and breathable. So they go to Columbia or North Face or a bunch of other companies to make the garment, but Gore-Tex that that membrane is a component. I made wire and cable which would go into a robot or into a piece of avionics or a piece of into a piece of defense gear. And so we were never in that “Will I” category. We were always me versus you know, that company was going to make that box or make that thing no matter what, we’re going to help them make it better.
Mark Stiving: Nice. So it wouldn’t surprise me if there were some “Will I” projects going on where you would think of those as basic research or can I find something totally unique or different in the marketplace? But I think it’s pretty common. Most of us are saying, Hey, we’ve already identified there is a problem. We can go solve it better than somebody else solves it today. And so that would be a which one type of product, which is exactly what you’re describing. In your role, did you do product definition where you’re trying to figure out what are we going to go build next?
Mark Boundy: I did a lot of product definitions and there was a whole definition, a whole process and a whole discipline around product definitions. You couldn’t get people around you at Gore to join you in working on a project until you could say, I want to make the best robotics cable in the world that does this best in all the world. And if you couldn’t tell me, tell the people around you what your product was going to be the best at nobody’s gas meter would go off.
Mark Stiving: The other thing I love about what you just said is implied or implicit in that comment was we are really clear at our segmentation. Yeah, we know who the customer is going to be. We know what the value of that customer is going to be.
Mark Boundy: Yes and no, because Gore is a technology company and they did everything at the time. I think, they’ve branched out a little bit, but still the majority of what they do is with one polymer polytetrafluoroethylene, which is one of the flavors of Teflon. And that Teflon has a couple of different physical and chemical properties and electrical properties that make it really good. But it’s a really expensive polymer. So if you’re putting it in a coaxial cable, it costs 10 times as much, 20 times as much per pound as the polyethylene that goes in the cable TV cable that you have in your house. So even though it would be slightly better in use that cable TV signals, it’s just not worth it. So we had to find, because we knew that we were operating at this cost differential, we had to find people who are worried about the very highest speed signals in the world or the most precision measurement devices of measuring super high signal speeds in the world. And we could do that the best. So there was a lot of basic research once we know where we live and where we’re the best at because of the material that we use. Now it’s about finding out who cares about those properties.
Mark Stiving: Yes, yes. And so that’s the market segment. Knowing the segments, willingness to pay because they care about the value of that capability or property. I just, I think that is absolutely incredible. And when you were defining it, did you layout and say, here’s the next best alternative or here’s the competitor’s product and here’s what we’re going to do differently and better and here’s the price they’re charging and here’s the price we think we can get away with?
Mark Boundy: That was, that was the whole thought process. When you asked internally what’s the value I gave you that complex definition. Yes, but when you ask what’s the value, it was always, if they don’t buy from us, what are they going to do instead? What does that cost? What do they get from us instead of that? What outcomes does that give? And so it was always value in with respect to what the competitor was going to do. So your value, your gross price has to go down when your competitors stop dropping their price. Or conversely, if I am worth twice as much as my competitor but I only charge 20% more, that competitor has to give it away for free before they can compete.
Mark Stiving: Yes, I got to say, and I’m embarrassed to say this, I actually have a tingle going down my spine now.
Mark Boundy: Yeah, it was really a lot of fun. Now the challenge is that for every one of these very unique, very high end bleeding-edge applications, new customer boxes that were being made, if you will, that we’re going to have a component in each challenge that the customer was to meet and each of the next best, you know, the alternative choice changed and what we could do and the value of what we could do changed. So we were looking at a value on a case by case basis and when opportunities got to be too transactional or too small, we would just kind of make a standardized price. But for as much as we could, it was, let’s really try to understand customer value for this application.
Mark Stiving: So when you say this application, I could see that being a market segment and I could see that being an individual customer.
Mark Boundy: Yeah, most often, yeah. There was some market segment and some, I mean the application, I think the modern term might be “used case” and so we did a lot. You can’t, yeah, market segments. There’s a lot of similarity behind individual use cases or applications, so you have very similar or identical pricing, but a Gore-Tex tube is worth one thing when it is in a cleanroom environment transporting fluids without changing the purity of that fluid. It means it’s worth something else when it’s an artificial aorta implanted in a human body.
Mark Stiving: Absolutely. Yeah.
Mark Boundy: The example, the simple example is salt, right? Salt’s a commodity, but it’s worth, you know, traditionally it was always worth more inland and less on the coast. It’s worth a different amount as an industrial commodity. Then as a culinary commodity and as a matter of fact, a bag of saline is worth quite a bit when it’s being put into a professional football player getting cramps, it’s worth a whole lot when it’s being put into a hiker who is near death because they dehydrated in a desert and it’s worth negative value if that same type of salinity is in your irrigation water.
Mark Stiving: Yes, it’s absolutely true, absolutely true. Hey, so we’ve beat up this creating value quite a bit and I’ve loved this conversation so far. Let’s shift into communicating value and typically when I think of communicating value, I’m thinking of, what are the messages that marketing is putting out into the marketplace?
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Mark Boundy: That was one of the other great lessons from that experience, that job experience and that is that marketing was very application-driven, very value-driven. We would take that statement that I talked about. We want to make the best robotic cable in the world that does this and this best in all the world. Once you have that definition, that product definition, you can give that to marketing and they have a very crisp marketing message because they say, well, Hey, robotics manufacturers, do you have this problem? Call us because we’re the only ones who can fix it. And so customers who would respond to that, and if you’d put that on a web internet ad, whoever clicked that page or that email self-selected to be somebody that you’ve got a natural advantage with because we’re just saying, Hey, here’s the problem we solve. Here’s what we’re going to go do.
Mark Stiving: Yeah, it’s, it’s obvious. Yeah. Here’s what, here’s what I find fascinating is I’ve worn Gore-Tex jackets for quite a long time. And if you’d asked me what Gore-Tex meant, I would have said the words you said, I would’ve said waterproof and breathable. So fantastic job. But I’ve never known that it was a polymer. I never knew the details or the product, dadada. And so they don’t talk about the product, they talk about the benefits or the value that they’re going to give. Yeah, I often see the word benefits use differently, so I no longer like to use the word benefits with my clients because benefits sometimes mean less than what I think of as value. I use the term outcomes, what customer outcomes, so that waterproof and breathable, there’s lots of waterproof garments, there are lots of breathable garments, but there’s only one that’s waterproof and breathable at the same time.
Mark Boundy: And you know, now that that patent is old, there’s, there’s some stuff that is a little bit, you know, maybe a little less waterproof or a little bit more breathable. But if you are a college student who goes out every hour and gets a little bit of drizzle, on you, every, you know, for 10 minutes between classes, you have a different trade-off for waterproof plus breathable, then an army special forces who’s out for long periods of time and really nasty environments, or a fireman who’s working extremely hard, sweating very profusely in an extremely wet environment. So that same waterproof and breathable benefit for different customers like salt, right? It’s, it has a different value in each of those applications. And uh, the casual student use has the lowest value and it has the easiest competitor hurdle to get over.
Mark Stiving: Yeah. So I think we’re right back to them, if we understand the market segment or the use case or the application, then suddenly we can have a conversation with our market in our messaging in the way that we talk to our market. So I think that’s absolutely fantastic. Yeah, let’s do the last of the three CS and that’s capturing value. So how did they focus on capturing value? When I think of capturing value, I usually think of salespeople having conversations with buyers.
Mark Boundy: You’re absolutely right. And I have taken what Gore has done and kind of taken that and added some of my own refinements to it over the years. And if you don’t mind, I’d like to kind of shift to that rather than strictly what Gore did.
Mark Stiving: Sure. Let’s hear the latest and greatest.
Mark Boundy: It is about outcomes. Salespeople in a business to the business environment have the ability, they are the only people in the company who do. There’s a couple who could have a front line, direct line of sight into the customer’s mind, where value lives, and so you need to be able to have a dialogue with that customer and understand their outcomes, understand their business. So I’ve got a whole business acumen, understanding the customer world set of courses so that salespeople can look beyond the surface to lots more customer outcomes and then help the customer understand those to quantify those in price so that I can help the customer understand that my high price is a cheap price to pay for this kind of an outcome.
Mark Stiving: Yes. I love the phrase you said when you teach them business acumen, which I think is a really hard thing to teach by the way. And so what we’re really asking our salespeople to, I like to say the words, look, sales doesn’t know the value that anyone customer is going to be able to get from our product. And anyone customer doesn’t know the value that our product is going to be able to deliver to them. Yeah. And it really takes this conversation where they work together and if our salespeople can learn what the business of our customer is. Then they can learn how our product impacts that affect it and what the real value to our product would be to their business. And that only happens with business acumen.
Mark Boundy: No man, you’re, you are so right. A customer is never going to be an expert in our solution or our capabilities. And we shouldn’t expect them to self-inform to the level where they can diagnose the perfect solution for themselves. Cause they never will and never, they never do it. Never will. So the salesperson is responsible for uncovering all of those possible customer outcomes and that takes insight. And I saw a great slide at a talk a couple of months back and I said, you can’t have any insight into something you don’t understand yourself. You can’t. And so you can’t know the customer’s business if you don’t know the business. And so part of being a great salesperson in the markets that I deal with, which is kind of business to business, it might be software, whether it’s SAS or enterprise software or a high-end components, highly differentiated, anything highly differentiated financial services, any mission-critical, anything. You have to be an expert in your customer’s business. Microsoft enterprise salespeople, a company buys them a full MBA so that Microsoft sales engineers can do that and help their customers understand holistically how a technology solution benefits their entire business.
Mark Stiving: Yes. So it’s kind of fascinating that we expect the people who define and the people who market our products to understand our value, but the people who have to understand our value and our customers value, the way they perceive value the best is our sales organization. Yeah. If we’ve got a direct sales organization. Yeah, it’s kind of, it’s a little bit intimidating to think that that’s really what it takes. On the other hand, every salesperson has a story or has heard the story of I covered all the people who were involved in the buying decision. I tried to talk to an executive, he’s told me I was talking to all the right people and I had a coach who was telling me greatly until I got the call and the call was, you know, a competitor’s in has talked to executives that told you are doing fine. Talk to departments that you didn’t even know, cared and sold value. That was so all-encompassing that you couldn’t discount your way out of trouble. Every salesman has, has had that awful experience. So rather than being the victim where you lost that deal, why don’t you be the person who sells that value, finds the executive, sells that broad value? Those are your two choices and the cost of being that second salesperson is business acumen, being an expert.
Mark Stiving: Can I say that? I was in sales once, many, many, many, many years ago. And I was one of the worst salespeople that ever walked the face of the planet. But boy, could I spew my pitch. Right. And what was funny about that, looking back is all I knew to do was talk about my product and the customer doesn’t care. Yeah, yeah.
Mark Boundy: You said, I was at Miller Heiman group and I was of the vintage of Miller Heiman consultants that you couldn’t be certified to teach anyone of their courses until you spent 90 minutes with Bob Miller and he would send out 20 to 45 questions depending on which course it was. And you had to respond to all those questions and he would read them and you had to submit those to them at least a week before the scheduled call. And he would grill you and make sure you really understood that. So I had this great relationship with Bob, and Bob always used to say, customers don’t buy our products, they buy results or outcomes. And so one day I, you know, with my value pricing stuff, I said, and Bob, what do you think about adding this? What they will pay for those outcomes depends on the desirability of those outcomes. And he just, he loved that. So we got into some really great pricing discussions. So that goes to how I define value. Value is the desirability of the differential outcomes, the outcomes that a customer can get by dealing with you that they can’t get with somebody else. I love your very simple value is what a customer will pay, but when I’m helping a salesperson understand, all right, how do you unpack that? What do you do to find out what they’ll pay? Then I get that complicated. It’s the outcomes, it’s the desirability outcomes and it’s built all on the differentiation, the outcomes they get from you that they can’t get anywhere else.
Mark Stiving: Yup. I agree. I, you know, value is what a customer’s willingness to pay is, isn’t sufficient, but it captures the concept. We still have to go on and define it and say, here’s how they’re going to figure out what they’re willing to pay or here’s how they determine their value.
Mark Boundy: Yup, absolutely. You know, I wouldn’t, I always struggle with my complicated definition because it can make some people’s eyes roll back in their head. I love your simple definition and then saying, all right, now let’s now that you know what it, where we’re going, let’s figure out how to unpack that and here’s my definition that’s more actionable because I don’t think you could, I think having both of those definitions, which works better than having either of those definitions in isolation.
Mark Stiving: Yup. Hey, and both of those definitions are better than the Gore definition,
Mark Boundy: Not if you’re an engineer. Right.
Mark Stiving: Mark, thank you so much for your time today. If anyone wants to contact you, how can they do that? I’m at email@example.com. Please connect. You can get to me on LinkedIn at Mark Boundy, B, O, U, N, D, Y. Almost like the paper towels and yeah, just go on the website, boundyconsulting.com and click the connect or just mark@boundyconsulting. All right. Thank you. Thank you, Mark. I really appreciate it.
Mark Boundy: Mark, this has been a pleasure. Thank you.
Mark Stiving: And for listeners, I invited Mark back on the podcast because the topics we just covered is a great case study for the topics that we cover in this new course we have coming out called Value-Based Business. It should be released sometime in December. I highly recommend that you take a look for it, a super powerful class, but that was episode 45 all done. My favorite part was all of it. I really enjoy listening to how a single company just adopts this concept of value. If you have any questions or comments about this podcast or about pricing in general, feel free to email me, firstname.lastname@example.org. Now, go make an impact!
**Note: Mark Stiving has an active LinkedIn community, where he participates in conversations and answers questions. Each week, he creates a blog post for the top question. If you have a question, head over to LinkedIn to communicate directly with Mark.
Mark is a pricing expert who helps companies understand value, how to create it, communicate it and capture it. He has a PhD from U.C. Berkeley and an MBA from Santa Clara University, plus 25+ years pricing experience. As an educator, speaker and coach, Mark applies innovative, value-based pricing strategies to guide growth and increase profits for large and small companies.