Yesterday I was chatting on the phone with a former colleague from my days in San Francisco. We had worked together 15 years ago in B2B sales, and he’s now running the operations of a $40 MM engineering division of a mid-market company. He had called to discuss his new opportunity of taking over as the VP of Sales for the entire company, and to ask for advice regarding a problem that was polarizing the company.

“The biggest problem I see with our sales team,” he commented, “is that they sell and service our general contractor and municipality clients exactly the same way, when they’re actually very different and have unique needs.

“Our general contractor clients already have an existing relationship with us and have completed many of these types of projects. Their main concern is that their materials and workers show up on the job on time so they can complete their projects and get paid. They care about speed and accuracy and they don’t need any hand-holding.

“But the engineers running a municipal project rarely have completed a similar project before and need to be nurtured and guided throughout. Our sales reps provide few details during the bidding phase and are not consulting them during the project. These engineers have daily questions and need to understand specific details about the work we’re performing, as it affects their long-term plans. It’s a major problem – I’m in danger of losing two huge municipal projects to my largest competitor right now because of this.”

He continued by asking for advice on market research resources, thinking that he had two different markets and needed to provide a report to the senior management committee.

The reality is that the general contractors and the municipalities are part of the same market — they are just different segments of a single market.

Buyer Personas to Represent Market Segments

To resolve his problem, we created two fictional people for his buyer personas, or human representations of his two distinct market segments:

• Gerry the General Contractor
• Marty the Municipal Engineer

We profiled each in great detail, defining each person’s:

• Role in the organization
• Main problem they are tasked with resolving
• Experience level
• Department characteristics
• Age group
• Needs on a job
• Personal interests
• Life stage

Then we mapped out the appropriate marketing and sales messages and service to deliver to each. As it turns out, their current marketing and sales spoke directly to Gerry but not to Marty. It’s surprising that they had won any municipal projects.

And few of the current sales team had the right style and personality to provide the nurturing and consultative sales approach Marty required; my colleague realized that he was going to have to hire different reps to sell to and service this segment.

Creating buyer personas is a nice way to bring your market segments to life, creating a “real” person so you can better understand how to provide the value that they need.

Market segmentation is a standard exercise for MBAs and professional marketers, but it’s common for many mid-market companies to have grown successfully for decades and never put pen to paper to define them. Why? Many mid-market company’s marketing efforts are led by their VP of Sales and the sales team, who typically have little training or experience in marketing strategy, segmentation and competitive positioning.

Price is one of the classic “Four Ps” of marketing. In the Fortune 500, it’s a key element of every marketing strategy. Yet, in many mid-market companies, marketers aren’t involved in pricing strategy – pricing is led by the sales team and executives, and sometimes even the CEO.

Pricing is a complex subject – there are many factors to consider, both short- and long‑term. Yet the factors that influence pricing decisions in mid-market companies are typically different from the factors that influence the pricing strategy of a product/service delivered by a Fortune 500 company.

Consider the following scenarios:

• Has your VP of sales offered substantial discounts to book those last few sales at the end of the quarter, to meet his numbers?
• When a prospect brings up your competitors’ prices, are you quick to offer to match them?
• Do you find your sales team leading with price?

Pricing Reinforces How You Deliver Value

Your price sends a strong message to your market – it needs to be consistent with the value you’re delivering. It’s not a tactical component that you use as a crutch for an ineffective sales team.

For example, if you run heavy discounts every 75 days to make your quarterly numbers, your market will catch on to this trend and simply wait for your discounts, thinking, Why should I purchase now when I can get it cheaper later?

That might be ok if you’re the Walmart of your industry, with operational efficiencies that allow you to always deliver the lowest prices and still turn a profit. If that’s the case, your customers receive value by your ability to be the low-price leader.

The concept of value proposition has been in the marketplace since the early 1970s. Some marketers refer to a value proposition as a key selling point, or a differentiator used to persuade. We refer to the term value proposition as the method you use to deliver value to your market.

There are three ways you can deliver value to your market:

• Product leadership:  You deliver a unique product or service. Your focus is on innovation: new technologies and better products/services.
• Operational excellence:  You deliver your product/service at a lower cost than that of your competitors. Your focus is on better manufacturing processes, better economies, or other forms of leverage.
• Customer intimacy:  Your goal is to solve your customers’ problems with a broad portfolio or a customized set of products/services. Your focus is on delivering a relationship that is superior to the relationship offered by your competitors.

Value Proposition and Pricing Strategy

How does your value proposition affect your pricing? When your price and your value proposition are aligned, you’re in the optimal position to maximize revenue and profits.

For example:

• If your value proposition is operational excellence, then your price needs to be extremely competitive. If Walmart’s prices were higher than those at the local department store or grocery store, would anyone shop at Walmart?

• If your value proposition is product leadership or customer intimacy, a low price sends the wrong message. Does Mercedes ever run sales promotions with heavy discounts and 0% financing? How often does Apple run a sale on iPads or MacBooks?

While aligning price with value proposition is easy for consumer marketers, it’s a bit more challenging for B2B companies with complex offerings. But by determining how you deliver value to your market for each product/service, you reinforce the value your customer already perceives.

If your price and your value proposition are misaligned, you create confusion — your market isn’t able to truly identify the benefit they’re deriving from their relationship with you. It’s a “silent killer.” You don’t achieve the market share you desire and you can’t point to a single reason.

Here are general pricing strategies for the three value propositions:

• Product Leadership: Your pricing should be higher than inferior products/services, but your pricing strategy also depends on the maturity of the market and your market share goals.
• Operational Excellence: You’re competing on price; your price needs to be similar to or lower than that of your competitors.
• Customer Intimacy: Your pricing shouldn’t be lower than your competitors, but your pricing strategy also depends on the maturity of the market and your market share goals.

Think about your pricing and decide if it’s consistent with your value proposition. But keep in mind that short-term economic conditions, and your market lifecycle stage and market share goals, can influence these factors — and I’ll cover that in a future post.

Branding is a term that makes many mid-market CEOs shudder.

Why?

Maybe, for some CEOs, the term branding conjures up memories of smooth-talking agency people who razzle-dazzled their team into running a $100,000 “branding” campaign that failed miserably. Or maybe the CEOs think of the expenses related to changing their logo: sign replacement, new corporate identity and sales materials, and new product packaging, with no guarantee that any of it will actually increase sales.

Or maybe they’re nervous because they’re not quite sure what the term branding really means.

That’s a legitimate concern, as the word “brand” is often defined differently by different people. Designers often refer to your logo and visual identity as your brand. Product managers refer to your product as your brand. Which one is it?

Since most mid-market CEOs aren’t trained as marketers or product managers, they’re commonly confused about the best way to approach branding. A good way for mid-market CEOs to think about branding is this:

Your brand is the entire experience your market has with you.

Your Brand as an Experience

When you consider your brand as an experience, you begin to realize how many different elements affect the experience that the market and current and prospective customers have with you:

• The impression they get from viewing your logo and your colors
• The emotions and responses triggered by your interaction with the market through print, digital, and traditional media
• The tone of your conversations, both one-to-one and one-to-many
• The personality of the individual sales rep or customer service rep they speak with

All of these elements create an overall impression–one that’s good, bad, or forgettable. Once that impression is made, it’s difficult to overcome. And whether or not you’re consciously focused on delivering a certain experience, you can earn mindshare of the market … so it’s critical to get it right.

The Value of Branding

Strong brands influence markets and create economic goodwill on the balance sheet. Brands influence price and lifetime customer value – main drivers of overall company value – so CEOs (even those running a stodgy mid-market B2B company) should take ownership of their brands.

If you could increase your prices 3% without losing sales, or increase the lifetime value of your customer base by 5%, how would that affect your overall company value? (A little shameless self-promotion here – our financial modeling tools give you this answer instantly.) Good branding can make this easy to accomplish.

CEOs don’t need to get into the nitty-gritty details of branding and marketing work to take ownership of their brand. By keeping a high-level view of branding, and by focusing on the experience that your company, product, or service delivers, you can gain clarity about many decisions that you’ll encounter throughout the year.

A Simple Branding Strategy

To create a simple branding strategy, pick a product or service, and outline the details of the experience you’d like your customers to have each time they interact with you. Focus on how you want them to feel, as studies show that emotions drive most purchasing decisions, even in B2B brands. Be specific. Create a vivid written description so everyone is clear about what your brand should represent.

Then, share the write-up of the experience with everyone in the company who touches your market. Focusing on the experience you deliver to the market will tell you not only the things you should do, but also the things you should not do. Do you need a new logo? Should you fire your current marketing agency and try to find one that delivers higher quality? Or maybe you need a less expensive agency because your brand doesn’t require a high-end experience. Use the process to evaluate your current interactions with the market via your sales team, your customer service people, and your creative.

The Influence of Creative

Recently I was speaking with a successful CEO of a high-end manufacturing company. He struck me as a bright guy who had built a niche business selling a specialized product. His product costs more than his competitors’ products, but it very effectively solved a specific problem for particular market segments. He had a high volume of repeat customers, but he was having trouble acquiring new customers through external marketing.

Since his value proposition was product leadership (similar to Apple, Mercedes, or Tiffany’s), and his product was more expensive than those of his competitors, it was clear that he should be delivering a complete experience reminding his market that his high-end product was intended only for certain companies.

Part of his experience reflected that his factory was state-of-the-art, his machinery was brand-spanking new, and his people were knowledgeable, helpful, and friendly.

This CEO wanted to increase the business coming through his website, but this part of the experience didn’t reflect the value that he delivered. His logo and website design, critically influential components of the visual interaction with his market, were woefully outdated. The clipart logo and the 1995 website design instantly screamed “low-end mom & pop,” when in fact the opposite was true. Nothing on the website conveyed a sense of quality or product leadership, and it was clear that this was the reason he wasn’t acquiring new business from the Web.

First-time visitors couldn’t get past that initial negative experience.

By understanding that his brand was an experience, this CEO gained clarity and insight as to why his web orders never increased.