Jamie Cleghorn Bain
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Bain’s Jamie Cleghorn focuses on value in consumer, business relationships

BY Jenna Lomeli

During April’s Digital Disruption Innovation Summit, industry leaders met to discuss the brave new world of marketing in the digital age, and how best to adapt to it. Jamie Cleghorn, partner at Bain and Company, outlined how shifting values can be classified, and how lessons from consumer decision-making can help inform B-to-B relationships, as well.

“What is value?” Cleghorn asked. “What makes a customer or a consumer exchange perfectly good US. currency for whatever you’re selling?”

The answer, it turns out, depends on a reconfigured hierarchy of needs for the modern consumer, and includes around 30 different elements. These elements, which he visualized as an updated version of Maslow’s pyramid, begins with a base of such functional needs as whether or not something saves time or reduces effort.

Further up the pyramid are emotional elements, including wellness or entertainment value, followed by such life-changing elements as hope, and finally, at the top of the pyramid, the social impact elements, i.e., whether or not an object provides self-transcendence. The more value elements a brand or object delivers, the higher their Net Promoter Score, which, according to Cleghorn, is “very highly correlated with future revenue growth.”

Analyzing the ways in which brands cater to these values and comparing their scores, Cleghorn determined that incumbent brands are falling behind insurgent brands.

“In general, the insurgents outperform the incumbents on every dimension,” Cleghorn said, adding that while incumbents are keeping up on quality, design and aesthetics, the insurgents surpass them by also performing well in such areas as sensory appeal, variety, cost reduction, life simplification and wellness.

Cleghorn compared incumbent brands Gillette and Schick with such insurgent brands as Harry’s and Dollar Shave Club. He pointed out that the blades could be coming from the exact same factory, but the perceived brand differences remain, as does the fact that insurgent companies are approaching their branding and strategy differently than incumbents.

Cleghorn ascribed this difference to what he called the insurgent playbook, which includes memorable, authentic branding, as well as shopper visibility, and what he calls “hero SKUs” — brand-defining items that make up the bulk of sales with little differentiation to maintain production agility and focus on household penetration.

Using the learnings from his analysis of delivering on value for consumers, Cleghorn highlighted how breaking value down into elements also can be used to improve business-to-business relationships. “B-to-B decisions are more multifaceted,” Cleghorn said, adding that the amount of people involved in decision-making and the higher stakes of B-to-B business complicate these sales. But underlying those complexities is the fact that most B-to-B sales are made because of price and quality.

That being said, he identified 36 different elements of value in the B-to-B context, again adapting Maslow’s pyramid, with the elements divided across four sections. At the base were such table stakes as meeting specifications, with such functional values as cost reduction and product quality, ease of doing business and such individual values as marketability growth.

According to Cleghorn, in the B-to-B context, multiple elements are required to work in concert to succeed.

“You can lose on function. In fact, the reason you lose is because you have bad product or bad price. And you can actually be brought down by being hard to do business with, absolutely. But you can’t win on function alone — you can only win on being easy to do business with,” he said, noting that ease of doing business is an area where technology could be brought to bear most effectively.

He noted technology can impact B-to-B relationships by simplifying such functions as monitoring stock on shelves in real time, and that these functions offer potential for strengthened relationships.

“We’ve talked a lot about digital as a media platform, as a communication platform, as an ad platform, and I think that is all true and that is all real,” he said. “But don’t forget about digital in the backend.”

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