Value Propositions: Emergence of Use Cases and Value Chains
Technology companies create value propositions for specific use cases intended for a specific buyer and problem statement.
However, about a third of companies are tying these use cases together into a value-chain or ‘platform’ sale. They can now derive and sell incremental value (1+1=3) and reap success in terms of growth and profitability. The graphic below summarizes these two models.
Alexander Group’s technology practice leaders recently gathered a group of revenue growth leaders to discuss this topic. Some of them are still using distinct value propositions, while others are on their journey or already migrated to coordinated platform sales. Below are some additional findings from our discussion.
Multiple Types of Use Cases Translate to Multiple Sales Motions
One participant shared that there are different types of use cases that require different sales motions with different levels of talent.
Existing use case for an existing market. Sellers need to be well versed at competitive positioning when selling an existing use case for an existing market.
New use case for an existing market. Sellers need to advocate for a new value proposition that may not be expected or well-known.
New use case for new markets (disruptors). Sellers must evangelize a new value proposition to a new market; this takes the most effort and skill to be successful.
Use Case Strategy Impacts Sales Plays
The revenue growth leaders discussed three types of sales plays that companies use.
Use case to use case to use case. This bottom-up play is the easiest solution focused on lower-level buyers.
Platform sale sold to C-suite. This top-down play requires selling to higher-level buyers and longer sales cycles.
Use case to use case to platform sale. This hybrid play represents the ultimate land and expand strategy.
Developing New Use Cases Requires a Codified Process
Although some companies leverage a more rigorous process, they all acknowledged the following steps are important to codifying new use cases. Testing is the most important phase; it is critical to gather customer feedback in order to validate use cases and create well-honed value propositions.
Identify: There are two main methods that companies use to identify new use cases:
a. Organic – track trends in data and customer requests to identify new use cases
b. Systematic – scan the market to identify new use case opportunities
Test: Test use cases with customers and partners, leveraging advisory boards when created
Prioritize: It is important to validate internal capabilities and prioritize revenue potential of each use case
Approve: Obtain approval from leadership
Commercialize: Once approved, marketing must create messages and sales team must sell the use case
Theodore (Ted) Grossman is a principal in the San Francisco office. He is a leader of the Technology practice. Additionally, he is responsible for business development, management of key accounts and major consulting engagements. Ted has extensive experience in the areas of business strategy, business process re-engineering and organizational structure and design with a functional specialty in sales force and channel effectiveness. Ted’s industry background is extensive within the software, telecommunications and high tech manufacturing industries.
Rachel Parrinello is a principal in the San Francisco office. She is a leader in the firm’s Sales Compensation, Media Sales and Technology practices. In this role, Rachel delivers sales compensation expertise to many client engagements and directs the firm’s sales compensation IP and benchmarking methodology. Rachel’s fact-based, practical and aligned sales compensation solutions help her clients drive profitable revenue growth. She frequently speaks on sales compensation topics at various associations and partner events. Rachel has authored several articles and whitepapers including How Revenue Planning Drives Sales Compensation Success.