Value Stacking and Why Everyone Gets it Wrong

0:00 And the truth is, one of the mistakes, and it's just one of the traps, I write about the book, I call it value misstacking, is you get it wrong. And you perceive that the higher value is either emotional or it's functional, and you stack incorrectly in your messaging and your content and the way you train your salespeople, and you leave a lot of value on the table.

0:30 Welcome to The LeanScale Podcast, where we talk about everything RevOps. Thank you for listening. Like, what's the high order big here? How will the market perceive my promise of impact? And should I lead with these functional promises? Or should I lead with these emotional promises about performance narratives and board level work that inspire confidence to move forward, feeling like you can act with confidence through a data driven approach. And like you can really think, and I know we went through this, like it can really almost drive you crazy, like trying to contemplate which of these two brand choices are going to make the most sense.

1:23 And the truth is, like one of the mistakes, and it's just one of the traps, I write about the book, I call it value misstacking, is you get it wrong. And you perceive that the higher value is either emotional or it's functional, and you stack incorrectly in your messaging and your content and the way you train your salespeople, and you leave a lot of value on the table. Or the other common mistake is that you just throw it all up in the air, like, you know, the old spaghetti on the wall analogy, as if the market will sort it out.

2:00 But when you raise the cost of customer thinking, you never get rewarded, you get punished, because it is not the job of the marketplace to figure this out for you. It's your job as the marketer, the executive, the product person. And again, it's, you know, this becomes, I think, you know, the vacuum that's existed through my experience in business, if people were just never trained to understand how to do this scientifically. And so, you know, that sort of led to my, my investigation into this idea of like, okay, if if the key to success is to understand value exchange events, how do you measure value?

2:47 And the only unit of measure we use is price, but price and value are totally different things. So using price as a way to understand how the market will perceive value is a very sort of last minute. It's a last minute balancing concept, which is why I don't think in terms of economic value anymore, I think in terms of worthiness. So at the end, if you have effectively identified your superpower, its value type, this thing you can uniquely deliver that no one else can, or that you can deliver better than most other alternatives, and you stack your value correctly.

3:31 You know, you'll have to bring that into balance by making the offer worth it in the mind of the buyer. And yes, it means you'll have to put a price on it. But putting a price on it has nothing to do with the way people will perceive initially perceive this idea of, well, how effective will the tool be? And how will it make me feel? Looking at a price answers none of those questions. So I needed another way to measure, like the idea of a unit of value in all three categories, and there was no way to measure it. So I made one up.

4:08 And that led to this idea of the concept of, hey, how does the universe organize itself well through the force of gravity, which is largely an equation which says, you know, heavier objects will pull less heavy objects towards them. And that's the attractive force of gravity. And that felt somewhat like the way the relationship between vendors and customers worked. No, I, I really love that metaphor. And it's, it's throughout the entire book, and it's completely changed my perspective of how I think of business and value. And every time, every time I look at any, any value exchange situation, I can't stop thinking about the metaphor.

5:04 And so I know you talk about gravity. And I know you tagline it as gravity, the universal law of business. And I think it just makes so much sense. And, and I'd love for you to, to dive into that and why you chose that and, and give all the examples that you feel like the metaphor just relates so well to business. Well, I didn't want to have to create a way to think of how to measure a unit of value.

5:34 Like a nice number would have been nice, right, rather than needing to use a metaphor, but you're kind of forced to, you know, I didn't, I didn't, I didn't, I didn't, you know, it's hard like talking outside of, you know, existing frameworks and using non conventional terms, you know, always just makes it harder for an idea to break through. But as much as I tried not to use the metaphor of saying, like, look, let's think about value the way we think about gravity. If you have a lot of if an object is heavy, meaning it has a lot of mass, it will attract an object with less mass. So we could start with that.

6:19 There's that that aspect of like the idea that something cool has a high net gravity score is great, but you have to deconstruct how you achieve a high gravity source so the first element of understanding how to achieve this high gravity score would be to understand well how much mass does the offer have meaning innately before it leaves, you know, the basement of the R&D lab, just innately in and of itself, how much, how likely is it that some innovation will have high value before the market perceives it at all.

7:07 Like if you if you if you invented some breakthrough technology, like before the market knows about it, it's extremely valuable. And so I would call. So I refer to the innate value of any offer as just its mass, but just sitting there, how much mass does it have? Okay, well, we know that there's not just one object in the in the in the universe, right? So you can have an object with mass. But what are you trying to do? You know, marketers for years have been using this term. Hey, look, we're creating coal. And I thought, wow, like, you know, yeah, that's really what you're doing an object with mass will pull a customer towards it.

7:51 So, you know, I started imagining, you know, a world where, you know, your innovation enters the market, it creates a dent in the fabric of of the marketplace, because it has mass. Now, if an object meaning your customers close enough to your offer and they know about it, like, look, I knew about lean skill, because we know each other. So, but how else would I have known about you if we didn't have if we didn't have an existing relationship, like you, I would have had to have watched your podcast, or I would have had that somehow googled rev ops as a service and found you like all the extra work that has to go into getting the effect.

8:37 The second kind of gravity that can create pull is what I just call proximity. And that's more or less what most companies focus on the idea that if we build something cool and get it close enough to our customer, we should be able to create some value exchange. And we should get rewarded for our efforts. And that's that was, I mean, honestly, Anthony, that was probably the majority of my career was based on that thinking of like, let's have a really cool roadmap. Let's build really cool products. Let's get as close to the customer as we need to be, you know, if it's an enterprise customer, it's all the, it's all the high touch stuff.

9:20 And if it's an SMB customer, it's more of a volume, low touch thing. And, you know, you try to be efficient on that intimacy scale, depending on the offer. And it's cool, like that basic idea always, you know, was in my mind, but it wasn't enough, because if that's all you had to do, you would think like, it wouldn't be so hard to be a unicorn. So I knew like, I knew something else had we had to account for another force and the force that gets overlooked the most is the gravity of alternatives.

10:01 And you know, I like to say, like, what you want when you when you when you innovate, you want that you want an offer that has mass out the ass. That's kind of the little way I like to describe like, yeah, you want mass, more mass, the better. But what people have to understand is the gravity of alternatives has mass out the ass enterprise renewal rates for the last 20 years have a change. Once a company buys an enterprise product, they're renewing it north of 90%, even for like the third and fourth and fifth best

10:38 product in the market for the market leader. You know, we know they're renewing it almost 100%. We know that net positive churn best practices like you're monetizing at 135% of the prior transaction. So you're going even beyond the idea of dominating the market. You're like, you're extracting the market plus this premium on top through upsell and cross sell. So the gravity of alternatives has to be accounted for when you think about this idea of like, well, how the hell are we going to win? Like, how are we going to win? We build something that has mass, we bring it closer to customers.

11:18 But we face this immense opposing gravity, because we're not the only object in the universe. Like in cybersecurity, there's 5000 cybersecurity companies 5000. The world maybe needs 50. Right. So all of these alternatives are drowning the buyers, they're drowning out our voice. And even if our product has mass, and even if we achieve proximity, how do we rip the customer out from the gravity that holds them in place the gravity of the next best

12:02 alternative. And so I thought, you know, look, there, we have to account for this idea that look, other gravity is holding my customer in place preventing a value exchange event. So that became the third form of gravity, which I call anti gravity. And then occasionally, you can sort of get a fusion level event, where you almost get more, you get rewarded in a nonlinear fashion. And it's when things get, you know, essentially, either because of timing, or because of how significant it could become to get a job done.

12:43 Like I was in the antivirus industry, like 20 years ago, and imagine, you know, everyone woke up one day and the computers were sick. Like, out of the complete vacuum of space, suddenly a multi billion dollar industry was born.