Should Value Come Before Revenue?Jun 17, 2023
A great way to win business and grow revenue in today's environment is to offer indisputable value.
Think about what that means for a moment...
Historically and even presently, most B2B SaaS revenue is generated through this 3 step process:
1. Promise Value
2. Collect Revenue
3. Deliver on promised value (or not)
From there the pattern either breaks itself (churn) or repeats (recurring).
When buyers are in a cash-positive position (growing and inflating economy) they're likely to be comfortable with this 3 step process.
When buyers enter a cash-negative position (shrinking and deflating economy) they're significantly more risk-averse and less likely to spend before receiving value.
This means in today's climate, wherever possible, revenue will grow faster in situations whereby value can be delivered (and proven) before revenue is collected (payment made).
The two formats we're most familiar with for this approach are:
→ Free trials
→ Pilot programs
But the one that we see much less of in SaaS which is something many companies should consider today, is:
→ Pay-Per-Value models
Pay-per-value is similar to a usage based pricing model, except that instead of charging for usage, it's charging for proven value.
For example, an e-commerce website builder who lets you build and publish your website for free and only charges you a percentage of each sale you make would be considered a Pay-Per-Value model.
Another example could be a recruitment business who only charges you if you hire one of the candidates they send you. This allows them to prove their value to you with no risk.
While it's challenging for many businesses to adopt a model of this nature, I'd strongly encourage everyone to consider how they might be able to because when you can allow your value to be proven before you ask for payment, your sales process and buyer experience becomes the least restrictive aspect of your company's growth and turns into your revenue growth superpower.
Imagine how easy it is to grow revenue when you tell prospects they can get to the point of value being delivered before they have to sign a contract, enter a credit card, or make a commitment.
This also forces you to be extremely disciplined in only building and developing things that truly deliver value because if you don't, you'll simply be building and shipping them for free.
This will most likely become a more common way of doing business across all industries because the patterns of human behavior are quite predictable:
When money decreases, buyers become hesitant.
When buyers are hesitant, sellers are flexible.
When sellers are flexible, competition at the top of the funnel heats up.
You might as well skip to the front of that line by offering to prove the value of your product or service (to the extent that you can) prior to asking for a financial commitment.
→ Want to join my gym for $1,099 per year?
→ Want to use my gym for free for 2 months and join if you like it?
Which gym has more members by month 12?
Your commitment to value as a B2B service provider is everything.
The sooner you can prove that value in your customer acquisition process, the faster you'll grow.
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