building a value propostion
DESCRIPTION
Particularly useful for solution salespeopleTRANSCRIPT
From Walking Catalogue To Trusted AdvisorFrom Walking Catalogue To Trusted Advisor
Professionalising The Sales Function
Building A Value Proposition
Presented By:
Peter Gilbert
Brain Break 1: Brain Break 1:
The Fire Hydrant
Program OutcomesProgram Outcomes
This workshop will equip you with some of the insights and tools , required to become a trusted advisor by: Providing insight into the
customer’s key business issues Asking high impact questions to
clarify the scope of each issue Focusing on the relevant business
drivers Communicating the value of your
solution
AgendaAgenda
1 The evolution of selling & the forces driving change
2Understanding business drivers and their relevance to building value propositions
3Building your first value proposition--- “The elevator pitch”
4 Building more complex value propositions
5 Creativity in building value propositions
The Changing Sales EnvironmentThe Changing Sales Environment
The Changing Sales Environment
What are the market forces that are driving radical change in
business to business buying / selling relations?
What are the market forces that are driving radical change in
business to business buying / selling relations?
What’s Driving Change?What’s Driving Change?
The usual suspects
Commoditisation Competition Pricing pressure Capacity excess High selling costs Mergers & acquisitions
The usual suspects
Commoditisation Competition Pricing pressure Capacity excess High selling costs Mergers & acquisitions
. . and some newer ones
The internet Consolidation of
suppliers Continuous
improvement instead of the RFP process
. . and some newer ones
The internet Consolidation of
suppliers Continuous
improvement instead of the RFP process
Four acquisition mega-trendsFour acquisition mega-trends
supplier consolidation increased
sophistication: new supplier
segmentations
total lifetime cost concept
superior economics of continuous
improvement over RFP
Consequences of purchasing trends
superior economics of continuous
improvement over RFP
total lifetime cost concept
increased sophistication: new supplier segmentation
supplier consolidation
enterprise commitment/action required – not just
sales team
business chain value – not just
solutions
customers box you in
higher stakes: “all or
nothing”
How do trends like these change the way that
customers acquire products and services?
How do trends like these change the way that
customers acquire products and services?
Leveragesize
Partner
Shop around
Managerisk
Strategic or cost
importance of supplier’s product
Hi
Lo HiDifficulty of substitution
or of obtaining alternatives
Supplier Segmentation Matrix
What These Purchasing Trends MeanWhat These Purchasing Trends Mean
even complex services will be increasingly commoditised and bought transactionally
customers are becoming ever smarter and more aggressive about capturing a bigger share of the value their suppliers create
relationships that seemed protected and locked-in are being questioned and are under threat
metrics driven, continuous improvement relationships have the best chance of resisting the new purchasing pressures
new enterprise relationships are supplanting traditional major account relationships
Brain Break 2: Brain Break 2:
The Alsatian Syndrome
Pick Your Battlefield CarefullyPick Your Battlefield Carefully
Where you and your organisation choose to fight your sales battle, will have a profound effect on the form, structure and nature of your value
proposition.
Level 1
Level 2
Level 3
Entry
CommodityValue
Solution Value
BusinessValue
Time
Level 4StrategicValue
Sales - Return on InvestmentSales - Return on Investment
Productivity
Low
High
Selling LevelsSelling Levels
Level 1 Level 2 Level 3
Focus
Orientation
Political
Finance
Relationships
Level 4
Event Process System Outcome
Transaction SolutionValue /
InnovationRelationship / Partnership
Ignorant Aware Agile Astute
Price Cost of OwnershipReturn on Investment
BusinessValue
Operations(Transaction)
Management(Trust)
Executive(Political)
Business(Partner)
Make the list
Make the sale
Make the Rules
Set the StandardEngagement
Status Considered Competitive Preferred Dominant
AnalysingResults
Project Implementation
Select SuppliersNegotiate Contracts
Prove theConcept
Evaluate & Shortlist Products/Suppliers
Initiate a Project
Forming Corporate Initiatives
Corporate PlanningAssess Problems /
Opportunities
IdentifySuppliers
TrackingResults
Vendor
Problem Solver
Strategic Resource
Solution Provider
Relationships & Role in the Decision Process
What Is A Business Driver?What Is A Business Driver?
A business driver is any source of pressure (either a problem or an
opportunity), that is impacting on an executive and/or the company, and
creating a need for change.
The Customer’s Business DriversThe Customer’s Business Drivers
FinancialPressure
OperationalPressure
Customers
CompetitionBusiness Partners
Suppliers
Making, Selling, Delivering Products Right Skill Mix? Reorganise Regulatory
“Nightmare Competitors”
Niche Players Potential Threats
Militant customers Satisfied Customers Delighted Customers Loyal Customers Retain Customer Base Grow the Customer Base
Revenue Cost Metrics of Industry Shareholder Equity Financial Analysts
Sell With Sell Through Impact “Co-opetition”
Quality JIT One Stop Shopping Share Information Problem suppliers
Business Unit
Executive
The Compelling Reason to BuyThe Compelling Reason to Buy
Analysing the customer’s business drivers Why does the customer have to act? Something that matters to someone with influence? What is the deadline for the customer to make a decision? What will be the measurable impact on the customer’s business?
BusinessInitiatives
Business Drivers
Business Profile Critical Success Factors
Consequences Payback
Problems Opportunities
How customers define and prioritise their “needs”
Compellingreason to Buy
The Value PropositionThe Value Proposition
Defines your unique business value
Specific to the customer
Creates a specific or measurable business outcome
Sets the customer’s expectations
Assures your ability to deliver
Solution
BusinessProfile
BusinessDrivers
BusinessInitiatives
Capabilities SolutionDifferen-
tiation
UniqueBusiness
Value
Critical Success FactorsCritical Success Factors
BusinessInitiatives
Business Drivers
Business Profile
CSFs
Business Initiatives
Business initiatives are the projects, programs, or plans that address the business drivers.
CSFs
CSFs are things that must happen or resources that must be in place to ensure the success of the initiative.
Understanding the Customer’s BusinessUnderstanding the Customer’s Business
Business Drivers
BusinessInitiatives
Business Drivers
Business Profile
CSFs
Business drivers are the internal and external pressures that create the need for change.
Business Initiatives
Business initiatives are the projects, programs, or plans that address the business drivers.
CSFs
CSFs are things that must happen or resources that must be in place to ensure the success of the initiative.
Compelling Reason to Buy‘Selling Event’
Compelling situations that cause the customer to make a decision or a change in their current situation.
Examples of Business Drivers, Initiatives and CSFs
Examples of Business Drivers, Initiatives and CSFs
Example 1 Example 2
BusinessDrivers
Initiatives
CriticalSuccessFactors
Customer satisfaction metrics falling
Losing customers
Repeat sales to customer base are slowing
Train employees to deliver higher levels of services
Customer involvement in design of new services
Web-based Premier Service Plan
• Re-engineer service offerings and introduce Premier Service Plan
Opportunities exist to double branded goods exports to East Africa during the next year
Customers demand quality products and competitors are gearing up to take advantage
Understand quality, logistical and legislative requirements
Overcome the logistical / manufacturing capacity constraints
Develop brand awareness in East African markets by mid-year
• The Integrated Export Initiative
Brain Break 3: Brain Break 3:
It Is Better To Be Wrong Than To Be Confused!!
§ You will be able to ______________ resulting in _____________________
by implementing our _____________________. We delivered similar
results at ____________________ which resulted in __________________.
§ By changing from _________________ to ________________, you will
affect __________ which means ____________________. We will track the
value delivered by _______________ and report it back to you _________.
§ We can help you address __________________________ by installing
_________________ which will result in ____________________________.
We will insure your return on investment by ________________________.
business initiative specific or measurable outcome
solution
similar situation or customer past value delivered
current situation our solution
business driver specific or measurable outcome
value tracking system frequency/time
compelling event
solution specific or measurable outcome
shared risk/reward strategy
Value Proposition Formats
Constructing Your Value PropositionConstructing Your Value Proposition
Customer Business Driver
Your Capability
Mutual ValueBusiness InitiativeCritical Success Factors
Unique SolutionProducts Services
ProcessesPeople
©2002 Consiliat Marketing. All rights reserved. Using Consultative Selling Skills
Business and Personal Value Business and Personal Value
When you can combine business value for the customer with personal value for the individual, you create competitive advantage.
Asking High-Impact QuestionsAsking High-Impact Questions
High-impact questions serve two purposes. You will use them to:
Uncover the customer’s business or personal views of theirImplied Needs and Preconceived Solutions
Deepen the customer’s view to explore Underlying Needs and Potential Solutions
Purpose: Conduct a dialogue that yields information that cannot easily be
obtained through other means
Validate your perceptions, while demonstrating expertise
Reshape the customer’s thinking of both the issue and the solution
Expose underlying priorities and issues that reveal Underlying Needs
Step 1Identify clear and indisputable market trends or business drivers: that currently have or have the potential to have an effect on your Customer’s way of doing business. The better you can prioritise the trends or business drivers according to the business significance of their impact, the more attention your solution will command.
Currently, you’ve been experiencing:
Step 2Articulate the resulting impact of the trend / business driver on the second line of the Value Proposition template:Once you have identified and prioritised trends / drivers, analysis will yield the probable areas within your Customer’s organisation that are or will soon be feeling the pain, or will be prime for being held accountable for new unfolding opportunities. The more individuals and functions that can be uncovered, the broader the scope of your Value Proposition, the greater its receptivity. Articulate the resulting impact of the trend or driver on the second line of the Value Proposition template. If you identify a wider audience, you may decide to have a number of different versions of the same Value Proposition for these different targeted individuals.
which causes:
Value Proposition – Templates & Guidelines
Guidelines Template High Impact Questions
Articulate the resulting impact of the trend / business driver on the second line of the Value
Proposition template.
If you identify a wider audience, you may decide to have a number of different versions of the same Value Proposition for these different targeted individuals.
The ABC industry is fiercely competitive and highly commoditised. Is this causing managers and share holders major concern?
Your ROCE is significantly lower than major industry players. Why is this?
This must be placing great strain on your sales organisation? Do they have the skills and resources to sell at higher margins?
Is this causing higher levels of staff churn?
Do you have the calibre of sales management to respond appropriately to this situation?
Step 3
Reduce the above thinking into a Business Driver , Potential Initiative and CSF for the Customer:
Please note that one business driver or industry trend may spawn different potential initiatives and CSFs for different functions and/or business units within your Customer’s organisation. Be sure to select a Driver /Initiative / CSF that represents a key area of activity in which favourable results are absolutely necessary for your Customer to achieve its business goals. The more pertinent your CSF to your customer, the more compelling your Value Proposition. On line three, specifically state that you will address the selected Drivers and CSF, and describe the success that can be expected. Your Value Proposition should contain a total business solution involving multiple areas and facets of the Customer’s environment to which we will contribute. Account interventions, therefore, will be larger and will take full advantage of your combined expertise, thereby decreasing the likelihood of duplication by a competitor.
You will be able:
Value Proposition – Templates & Guidelines
High Impact QuestionsGuidelines Template
Do you have the tools and skills to make the transition from vendor to solution provider?
Does management understand the difficulties of making this transition?
What improvements in margins might be possible, if you make this change successfully?
What are the risks of failure?
Step 4Calculate the probable results of your solution on this line.
Remember, a Value Proposition is to be co-developed with your Account, but it often works best if you present an estimated number initially. This will increase your credibility as you relate real results from a similar solution being applied to other companies. Also, be prepared to ask your client the right questions. It is important to solicit and secure your customer’s involvement as early as possible in the sales cycle
which would yeld:
Step 5List your total pricing on this line.
You may elect to drop a footnote to itemise the different components of your solution if deemed appropriate. Note, however, that if you break your solution into smaller components, your client may be tempted to un-bundle your solution and shop its individual components out to the lowest competitive bidder.
for:
Value Proposition – Templates & Guidelines
High Impact QuestionsGuidelines Template
Did you know that the successful solution providers are achieving 20-40% price premiums over their competitors?
Are you aware that companies who fail to execute this type of change successfully, suffer a significant negative ROI and lost credibility?
Initiatives of this nature typically cost around R100k per thousand employees, an ROI of 50% or better would be quite feasible. Would this be attractive?
Step 6The time frame is listed on this line. Care should be given to how you represent your time scales. Accelerating your time may give you advantage over a competitor who may not be able or willing to move at your speed.
within:
Value Proposition – Templates & Guidelines
Guidelines Template High Impact Questions
Step 7On this line, state as succinctly as possible, exactly what you are asking the customer to buy. Make sure to differentiate from your competitors in your description. The client must be able to easily describe what he/she is recommending that his/her company buy.
as a result of:
Step 8Ensure that you can translate time from line six into – either loss costs (Consequences) or opportunity costs. This will prevent “slippage” in your forecast. This important line item allows your ally to move forward aggressively in championing your solution.
This business issue is currently costing:
If it was possible to complete a pilot project and see a positive ROI within 6 months, would it make economic sense?
We could have an experienced team in place within 2 weeks and a complete installation completed within 4 weeks. Do you have the resources to absorb this type of change?
Would it be possible for your HR and finance people to give us a detailed breakdown of staff churn for the last 2 years?
Step 9
Reduce the above thinking into an Economic Benefit for the Customer:
If done well, this final line may enable you to enact a performance bond or contingency fee pricing structure. If all the variables that will dictate your project’s success can be identified and weighted, it may be possible to raise a “barrier of entry” to your would-be competitors. Illustrating that you will take your profit from the Customer’s resulting incremental profit (that you will assist them in realising) is always well received. Should you choose this type of approach, you are justified in elevating your fees to accommodate the risk you will be absorbing. Even if you do not elect to do any risk-reward sharing, a results tracking approach will give your client a sense of confidence to move forward with the project.
We will measure the results by:
Value Proposition – Templates & Guidelines
Guidelines Template High Impact Questions
If we were able to reduce staff churn by 30% in year 1, what would the impact on your organisation be?
Brain Break 4: Brain Break 4:
Never EVER Apologise To A Customer!
A simple “sorry” would suffice
Consultative QuestioningConsultative Questioning
Situational
Issue
Consequence
Value
What’s wrong / What needs to be done?
So what?
How much?
What is the situation / How do you handle this?
Provide Context – Get the Discussion Going Provide Context – Get the Discussion Going
Which cost issues will you be addressing with this initiative? Which of the following two issues are the most important…..? Who will you be looking to compete with in the new market sectors? How many contractors are involved? How do you feel about growth prospects for next year? How ready are you to raise the bar against the competition? What is your opinion on import substitution? Which non-core assets do you plan to dispose of this year? Once you have divested your non-core operations, where will you look for growth?
Situation Questions
Ask open ended questions to get the discussion going
Remember The Four Cs -
Customers / Competitors / Commercial / Channels
Examples:
Establish the Issue – What’s wrong?Establish the Issue – What’s wrong?
What are the major challenges in executing your strategy?
What opportunities look most attractive?
How are these challenges impacting you?
Where do you need to improve?
What effect will ………………have on your business?
Why isn’t it working as you’d like it?
How are you going to protect and grow your margins?
What’s keeping you awake at night?
What’s preventing you from being more cost effective?
Issue Questions
Examples:
Exploring the Consequences – So What?Exploring the Consequences – So What?
Why is this a problem?
What will happen if you don’t solve it?
What is this issue costing you?
How difficult would it be to solve the problem with internal resources?
What’s the worst that could happen?
If you don’t solve it, how will it affect your performance?
If you don’t act what do you stand to lose?
What do you gain by addressing this issue?
Consequence Questions
Examples:
Determine the Value – How much?Determine the Value – How much?
How much would it help?
How would this approach make it easier for you?
How much would that save you?
Can you quantify the payback on this opportunity?
How would you assess each of these options?
Which of these potential solutions would have the greatest impact? Least Impact?
What does this option do for you that the others don’t?
Value Questions
Examples:
ANY QUESTIONS???ANY QUESTIONS???