Customer Reviews

Value Merchants: Demonstrating and Documenting Superior Value in Business Markets

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No one will disagree with James Anderson, Nirmalya Kumar, and James Narus that it is important for businesses to deliver "superior value targeted to market segments and customer firms" while getting "an equitable return on the value delivered." Hence the importance of effective customer value management (CVM) that relies on customers' perceptions of value to gain an understanding of what customers' requirements and preferences are. Only then is it possible to determine in economic terms what that means. In this context, I am reminded of Warren Buffett's observation that "price is what you charge and value is what others think it's worth."

The co-authors explain how to:

1. assess customers' perceptions of value
2. conceptualize value
3. formulate an appropriate value proposition
4. substantiate value
5. create "naked solutions" with options
6. sell on value, not price
7. earn an equitable return
8. become a value merchant
9. leverage information from various sources
10. continue to be a value merchant

The CVM program the authors recommend in this volume is comprehensive, cohesive, and cost-effective. It will probably be of greatest value to C-level executives who are convinced that their companies are delivering superior value to their customers but have not convinced them of that. At this point, I presume to share two thoughts of my own, all of which are consistent with what the authors of this book assert. First, whatever an organization's size or nature, its executives must nail the economic essentials by knowing (a) exactly what the organization's operating costs are and (b) what the margin is on each product or service offered. I agree with Jason Jennings: "If it's DOA, bury it." Whoever and whatever that does not add value (directly or at least indirectly) to the organization should be eliminated. Second, the same strict standard should be applied to the given offering as well as to those who sell or service it: Whoever and whatever that does not add value (directly or at least indirectly) to the customer -- and at a profitable margin -- should be eliminated.

This is not an "easy read" but for those who absorb and digest the wealth of information and wisdom the authors provide, then apply whatever is relevant as their own organization' pursuit of its own objectives, this book can be of incalculable value. One final point: Merchants should be driven to provide superior value to two categories of customers: directly to their own, of course, but also indirectly to their customers' customers. I cannot think of a better way to lock in a valued customer than to do whatever is possible and (yes) prudent to help that customer to strengthen each of its own customer relationships. Think of that as Superior Value to the third or fourth power.

Should you read this book? That is a decision you must make but perhaps these questions will help: Does your organization now have a CVM program? Is it effective? If not, do you know why? Do your customers frequently thank you for helping them create value for their own customers? If your answer to any of these basic questions is "you," you need to read this book immediately.

Those who share my high regard for it are urged to check out Lawrence L. Steinmetz and William T. Brooks's How to Sell at Margins Higher Than Your Competitors: Winning Every Sale at Full Price, Rate, or Fee, Gary Hamel and C.K. Prahalad's Competing for the Future, Jason Jennings' Think Big, Act Small: How America's Best Performing Companies Keep the Start-up Spirit Alive, Anderson's The Long Tail: Why the Future of Business is Selling Less of More, and The Dollarization Discipline: How Smart Companies Create Customer Value...and Profit from It by Jeffrey J. Fox with Richard C. Gregory.

Congratulations to the team of writers for the book "Value Merchants". As someone whose whole job responsibility is to implement a value sales strategy and culture at a global industrial company, I was amazed at the clear and concise roadmap the book laid out. Not only is it filled with theoretical ideas of why it is important to create and document value for customers, but it gives a practical roadmap of how to transform a company into a value "merchant."

As most people in the world of sales know; today you either have to be the cheapest by line item, or if you're the best - you need to find a way to `explain this" so the purchasing, finance, production people can clearly see they are getting the best value for their organization. Without the ability to document the value that can be created and has been, you're left with little more than wishes and hopes, and finance people won't pay you for those.

Whether you are in the business of dealing with distributors, final end users, Original Equipment Manufacturers, or the general public, a clear concise value proposition that can be understood in financial terms and has the "proof points" to sustain it will be the only way to move forward and not be caught in the commodity trap of "lowest unit price".

Finally, for any procurement or finance people, what a great read. Learn how to partner with your suppliers to reduce true real costs, and really drive bottom line earnings per share. A Total Cost of Operation relationship with a supplier that can prove their value differentiators will make you more profitable today and in the future.

Todd Snelgrove, Global Manager; Customer Value
SKF

This book serves as a "how-to" for value based pricing in a B2B context. "Value Merchants" is written for the business leader or sales manager that sells products to businesses (B2B) who wants to get a better return on their products by quantifying (in terms of dollars) the benefits and savings for their customers to eliminate the need to provide price concessions in order to make a sale. The book could be read over a short flight as it is clearly written and has good flow.

The book makes the case for the use of and demonstrates how to create "value calculators" to document cost savings and incremental profit gains delivered to customers by purchasing the suppliers products and services, which they call "Customer Value Management Process". The authors show going through the process can help make stronger value propositions, quantify value claims, construct business cases for change, tailor market offerings, and transform the sales force into "value merchants" as opposed to "value spendthrifts".

There are only two criticisms that I have of this book. First, the "Customer Value Management Process" should actually be called the "Value Merchant Process" or the "Customer Value Based Marketing & Sales Process", as Customer Value Management is a much broader domain of thought comprising many tools that include the "Value Merchant Process". The second criticism is that the bibliography and references to scholarly works is very limited, where nearly half of the references point to author's own journal publications.

In summary, this book provides an introduction and a "how-to" for value based pricing in a B2B context and how are interested in learning about one of the many tools that make up Value Based Management.

Sales is not about a product or service or quality and brand you provide. Building a strong relationship, effective communication and creating a value-based proposition for the customer - that is all about.

If you are a marketer or pricer, understanding value is vital. This book is an easy to read, yet powerful framework for understanding value to customers in a very tangible way with direct financial consequences.

Value Merchants has been one of the best books I had the chance to read during last years. What makes it valuable for me is that the authors provide insights in issues which have been undervalued by companies for years. I will not go into context of the book, but just one example about the undervalued issues: the authors successfully and effectively put their arguments about the value propositions of companies, how they are decided upon and surprisingly how those value propositions affect the sales of companies. Anyone who is interested in sales, marketing, innovation and other related issues in today's competitive world should have a glance at this book. I am sure, you will find valuable insights for yourself. I did for myself.

Unless you have little idea of marketing, customer relationship management, customer value management and know not the basics like defining your customers needs and setting your marketing goals, this book is not for you. I do appreciate its emphasis on the importance of creating unique, well documented, quantitative success/value stories for its salesmen to communicate with their clients. However, the only applicable case is found in the four page Appendix B of a 210 page book. For those charmed by the excellent book title who want to learn how to put customer value management into practice, please give this a pass.

I can see how certain people would like this book, as it does contain a plethora of information, but it is so poorly written it is very difficult to understand. They are not clear in stating many of their points and do not explain them well. Additionally, the word choice and sentence structure is awful, I have extreme difficulty trying to figure out what they are saying. I am no genius, and I am not a writer, but I am the CEO of a fairly large company and I do understand business concepts well. I was going to assign this as a reading requirement for my sales team but to be honest; it is just too confusing and poorly written. The concepts are there but it is a very tough read and I had difficulty trying to figure out what was being said. Albert Einstein said "if you can't explain it simply, you don't understand it well enough". I think these people know what they are talking about but they failed to explain it in a clear down to earth way. This is a strictly academic read, good for college classes. If you are reading it with intentions of applying it to your business, I think it's simply too complicated to follow. What really bothered me the most was they never specified who the customer was, who the supplier was, who the interactions are amongst; as I have stated time and time again, it was just too hard to follow. I think they tried a little too hard to sound intelligent or something along those lines, as those in academia often do, but they failed... in my personal opinion. I believe in simplification and basic explanations everyone can understand, while fancy talk may impress some people, it is ultimately ineffective... especially when the message being sent is intended to be heard by thousands employees of all different intelligence levels and education backgrounds.