© 2013 Deloitte Belgium
Value based selling in advertising Estimating ≠ pricing
36
Cost 20 Mandays * 1500 $ = 30.000
Value 300 million $ incremental sales in first
year
Example:
What should the advertising agency charge to this company ?
© 2013 Deloitte Belgium
Value based selling in advertising Estimating ≠ pricing
At automotive companies, do you think prices are based on the number of hours it took to build the car?
37
Traditional pricing approach
• Standard rate cards
• Good knowledge of salary and overhead costs
• Billing to client based on # hours performed
Value based pricing & selling
• Don’t sell a service, sell an outcome
• Negotiate price before the work begins (perceived value is at its highest)
• Ask client what they think the assignment is worth
• Try to provide different pricing options
• Never lower your price, instead add value
• Be creative in pricing
• Be willing to walk away
© 2013 Deloitte Belgium
Different Price Models exist and new ones are popping up everyday
38
From…
SFR / min.
€ / ad
€ / car
€ / hour
€ / hour
To…
SFR / Call
€ / click
€ / month + € / km
€ / m²
?
Reason Why
Better price perception
Misperception of call durations
Value / Performance Based Pricing
No initial investment
Upgrade to higher battery capacity
Stop commoditisation
Value Based Pricing
? Advertising Agency
© 2013 Deloitte Belgium
COMMON practice in services is based on wrong assumptions
39
VALUE = TIME OR VALUE = RESULT
© 2013 Deloitte Belgium
Price in terms of RESULT instead of TIME & RESOURCES Case Consulting Services
40
Solutions Budget
0. Business Case € 33.000 2. Service card € 82.520 3. Pricing Power Card € 124.960
4. Target price € 42.440
5. Visibility on margin per car € 87.240
6. Sales Incentives € 5.900
Total € 376.060
© 2013 Deloitte Belgium
Sometimes we even consider Value Based Contracts in Consulting Services
41
• You need to determine metric (gross margin, revenue, net price, ...)
• Put a CAP on the VBB in line with level of risk taken.
• E.g. if 50% of fees are put at risk , then maximum upside ( = CAP) will be 50%
on top of fixed price. Upside is reward for risk taken.
• Simulation in table below is done based on the assumption that agreed metric is
met for 100% (maximum).
Total% € % € (maximum) € (maximum)
100% 276,000 € 0 0 € 276,000 €50% 138,000 € 50% 276,000 € 414,000 € 50%
Fix part VBB % on Fixed Price
© 2013 Deloitte Belgium
Move to fixed price contracts and manage the scope of those contracts – Case Facility Services
42
Fixed (*) Tolerance Variable Catering # of machines
# of meals 5 % Per meal
Travel # of tickets 5 % Per ticket Cleaning m2
Cleaning plan 10 % m2
Mailroom # letters 10 % Per letter Taxi NA Per taxi Translation NA Per assignment Technical maintenance
Maintenance plan 0 %
Per intervention
Building maintenance
Maintenance plan 0 %
Per intervention
∑ Price per year
(*) Includes Coordination
© 2013 Deloitte Belgium
From Pricing / HOUR to Pricing / INTERVENTION Case Technical Services
43
/ hour Engineering Preparation Execution
Planned
Unplanned
Urgency
Activity type Fl
exib
ility
/ intervention Standard Complex
1 month
1 week
1 day
Complexity
Exec
utio
n tim
e AS IS TO BE
© 2013 Deloitte Belgium
If you want to be a solution provider, you should also charge for the services that you provide
44
Medium Price Sensitivity Low Price Sensitivity
Elasticity is 2 to 5 times lower than sticker price elasticity
Be consistent – even with the "little stuff"!
Price Awareness Radar (Computer Hosting)
High Price Sensitivity
Price per user
Efficiency per user
Dedicated Server
On-Site Support
Attachment Storage Roaming
Fee for contract change
Extended flexibility
Warehouse Extension
© 2013 Deloitte Belgium
A rationalization of existing services will lead to significant quick wins
45
Average Value to
Customer
Costs to provide service
(per customer) Color: Quality vs. competitors
Better Equal N/A €x m
Size: Cost p.a.
Low High
Low
H
igh
“Low differentiation” Services “Loss-leading” Services
“Investment” Services “Easy-win” Services
Sample Service Value / Cost Analysis
Special logistics
Online service
24/7 spare parts
Product training
Consulting Services
Registration Service
Warehousing
Cleaning Service
Hotline
Technical training
Micrologistics
Service priced
accordingly?
Potential to increase customer
value?
Service offer neccessary?
Potential to realize higher
margin?
Service needed?
Make cost explicit?
© 2013 Deloitte Belgium
Put services that you want to offer in a Service Catalogue ! It will help to sell better and more
46
© 2013 Deloitte Belgium
Companies which have a portfolio of products and/or services, have principally two options to package and price them
2. Tiered Pricing
1. Add-on Pricing
• A base product (e.g. a standard car)
• Additional features bundled into a “pack” or “line” (e.g. Luxury, Sports, Modern)
• The three customer segments have three different needs-profiles and this is reflected in the pack
• The base service offering is in all the versions the same, as well as the basic attributes
• Only difference is the threshold level • Typically 3 options are offered
47
© 2013 Deloitte Belgium
Add-on pricing for Security Services
48
24/7 Security Guard on site
Mobile / Services Combined Solution
1 guard SB 24/7 No specific
training Low experience 2 language P.O. 8h / week
Loge Alarm & CCTV Monitoring Access management
Patrols 5 per shift Opening- and closing round
1 guard SB 8h (Risk periods: 8-10am and 6-12pm) Hospital guard
training Low experience 2 language P.O. 4h / week
Opening- and closing rounds 2 Patrols per shift C
ore
Secu
rity
Offe
r Po
tent
ial A
dded
Val
ue /
Pack
s Prevention
Safety Pack
Patient focus
1 guard SE 24/7
Prevention + Hospital training Certificate in 3 languages 2 years experience in industry
Response to emergency buttons on site Staff accompaniment
1 guard SE 24/7 Fire fighting, evacuation
steward, hospital training 4 years within industry
Green Savings checks Safety Patrols (fire ext, doors, etc) Vehicle management (wild
parking) 1 safety audit per year Monthly safety report
1 guard SQ 24/7 Client sympathy and
communication + hospital training 6 years within industry
Patient accompaniment Enforcement of visit hours
SPOC for disappeared patients
Alarm & CCTV Monitoring Access management
Prevention of opportunity theft
© 2013 Deloitte Belgium
Tiered pricing for Reception Services
Reception Service: Silver € 150/month
Reception Service: Gold € 200/month<
Reception Service: Platinum € 250/month
Telephonic Welcome Telephonic welcome Script training Physical Welcome Visitor Management Access Card Management
Admin & Secretary tasks Schedule & book taxis Luggage Reception Update logbook
Telephonic Welcome Telephonic welcome Script training Back-up secretaries Physical Welcome Visitor Management Access Card Management Incident follow-up
Admin & Secretary tasks Schedule & book taxis Luggage Reception Update logbook Access Control Reporting # visitors Crisis Management SPOC for accidents SPOC for evacuation
Telephonic Welcome Telephonic welcome Script training Back-up secretaries Call queue management Physical Welcome Visitor Management Access Card Management Incident follow-up Service outside opening hours Reception @ client events
Admin & Secretary tasks Schedule & book taxis Luggage Reception Update logbook Access Control Video Surveillance Management Helpdesk Reporting # visitors Crisis Management SPOC for accidents SPOC for evacuation SPOC for incoming demands Parking Management Visitor Parking Management Parking Access Control
49
© 2013 Deloitte Belgium
You need to be good at SHAPING the price and DEFENDING the price – CLOSE LOPED PROCESS
50
Going-in price
Catalog price
(product/ service)
Walk-away price
Discounts Reduce services Extra services
and solutions
Target Price
Floor Price
Communicating & Demonstrating the value
Defending the value by good negotiations
70-80% 20-30%
Price Setting Price Execution
© 2013 Deloitte Belgium
Customer Profitability needs to be looked at beyond Gross Margin – Cost to serve can make a difference !
51
List Price
Market Discount Quantity
Discount Volume bonus Freight
Packaging
Invoice Price
Pocket Price
Pocket Margin
Techn. Service Samples COGS
• Changing timings, staffing
• Change in proposals
• Involvement of experts
• Involvement of customer (stakeholder management)
• Data preparation
• Project Management (e.g. Status Reporting)
© 2013 Deloitte Belgium
Gut feeling doesn’t work !
52
02468
1012141618
Sales Rep 1 Sales Rep 2 Sales Rep 3 Sales Rep 4 Sales Rep 5 Sales Rep 6
Sales survey results estimated discount % on RFP
off-invoicediscount %on-invoicediscount %
Sales force
Request for proposal (RFP): Every Sales Rep uses different price setting arguments Typical huge spread in attributed discounts
Illustrative
© 2013 Deloitte Belgium 53
Conditional discount structure
FROM TO
Discount type % Volume?
Base Discount 10 % x
Customer Discount 8 % x
Special Discount 4 %
Volume Discount 3 % x
∑ 25%
Discount type % Volume? Full-package 3 %
Brand loyalty 7 %
Investment Discount 5 %
Reference calls 3%
Upfront payment 5%
Growth Discount 5% x ∑ 28%
Non conditional discounts
Customer can get more if he works more…
© 2013 Deloitte Belgium
Discounting is common practice in a car dealership – How do you handle this in a smart way ?
54
© 2013 Deloitte Belgium
To summarize
• Value Based Pricing and Selling should be considered where possible
• Dare to go for Fixed Price Contracts but manage scope
• Change pricing driver away from hours (labor)
• Consider all your services and at least provide a price tag
• Package pricing as a mechanism to move away from hourly pricing
• Be aware of cost to serve as it has a big impact on your profitability
• Consider the concept of ‘multiple commercial offers’, i.e. different scenarios
with different levels of value created
• Conditional discounting should stimulate WIN-WIN negotiations
55
© 2013 Deloitte Belgium
Some interesting quotes to conclude this part !
56
“If you are not perceived as being different, then you will be benchmarked on price” (Prof. Andreas Hinterüber)
“What is a cynic? A man who knows the price of everything and the value of nothing.” (Oscar Wilde)
“Arguing about price will lead to never ending discussions in which buyers and sellers can never win. Talking about
value will let them leave the room richer.”
© 2013 Deloitte Belgium
Exercise – Some ideas on different pricing models for our industry –services we might charge for
57
• Finance/reporting • Level of details for invoicing • Flexibility for author corrections
(changing scope) • Management • Maintenance of building • Meeting location or travel time • Rush rates • Waiting times • Competitive watch (pige) • Number of approval levels • Usage of studio services / server
storage
• Training of new people (client) • Expenses (km, …) • Number of call reports • Coordination / lead agency • Number and frequency of status
reports • Management of media agency • Exclusivity (sector, …) • Rights • …
© 2012 Deloitte Belgium
Know to whom you sell
58
59
Distinct Sales Occasions
Economic Deciders Users
Technical Buyers Coach
Key influencers for each ‘Distinct Sales Occasion’ should be considered when identifying the wins for Decision Making Units members
60
Several parties can influence the buying process. It is important to know who will be involved in the decision making process
The more complex a buying decision is, the larger the decision making unit (DMU) will be
The people involved in the DMU can change towards the end of the selling process
The level of influence can vary from person to person involved in the DMU
Identify DMU needs
61
Adapt your communication to the different members of the DMU
“Most managers have some targets. How can you contribute to their targets?
Find out what there targets are"
62
It is key to identify the Economic Decider for the DSO
The person who gives the final approval to buy our product/service
‒ He is the owner of the budget; direct access to the money
‒ He has the final ‘yes’ or the veto to say ‘no’
‒ Major decision criteria: the bottom line impact on the organization
Economic Deciders
63
It is key to identify the Economic Decider for the DSO
2. The tougher and more volatile the business environment…
3. The lesser trust in our firm’s capabilities…
4. The lesser experience with our products/services …
5. The bigger the potential impact of the sale on the organization…
… the higher up in the
organization, we need to look for the economic
decider
1. The higher the amount of the sales…
64
We have to please the Users … it is going to impact their performance
The person who will actually use the product
‒ Our product will impact his personal performance
‒ Major decision criteria: the impact of the product/service on the everyday operations in their area of responsibility
Users
65
Involve the though guys…
The person who actually cannot say ‘yes’, but can say ‘no’ (and often do so) ‒ They screen, reject and shortlist based on specifications ‒ Can be Purchasers, Head of Laboratories, legal advisers, accountants,
etc. ‒ Gatekeepers ‒ Major decision criteria: the match with the criteria
Technical buyers
66
The guys you cannot miss…
The person who provide you crucial information on the scope of the request, the DMU, … ‒ Invest time upfront in developing a coach – ask for coaching ‒ Good Coaches … you have credibility with him / he has credibility with
DMU ‒ Major concern: how can I help you to be successful?
Coaches
67
Make sure that your customer team is aligned with the DMU of your customer and that sales approach is customized to expectations of different parties
68
• It is very important that the persons identified as DMU are covered by the right persons of supplier. A technical user should be approached by a technical person of your company in order to optimize the value sell
• Make sure that top management is also involved in customer-facing activities to strengthen the value sell
• Sales persons as well as the managers should be trained to sell on value
Supplier
Customer
More intense relationships on multiple levels within the
organization
Each member of the DMU will have its own set of purchasing criteria that matter
69
• Knowing the Decision Making Unit as well as the specific criteria of each unit will have strategic advantages during the selling process
• The important issue here is to anticipate what buyers’ approach is going to be and be prepared with the right set of responses
• This will allow you to build selling power along the way
DMU Criteria Importance Rating *
1. Data on reliability of product2. Price3. Order cycle time4. Reliability of delivery date promisde5. Delivery capability6. Past performance7. Vendor stability8. Financing terms9. …10. Technical capability11. Ease of maintenance12. Ease of operation13. Quality14. Suppliers' ability to customize15. Supplier's ability to fill emergency orders16. …17. Ease of use18. Post-sale services19. Spare parts availablity20. Aid and advice21. …22. Reputation23. Vendor stability24. …
* red = not important green = extremely important
Economic
Deciders
Technical
Buyers
Users
Coaches
How Customers look at us?
70
RELATIONSHIP BETWEEN SALES & PROCUREMENT
27 FEBRUARY 2013
72
ON THE RELATION BETWEEN SALES AND PROCUREMENT
Survey launched in October – November 2012
To bring clarity on a number of topics: • Overall state of the relationship? • Main challenges and frustrations? • Opportunity to move to ‘win-win’ collaboration? • Concepts like ‘value selling’ or ‘solution selling’ are widespread,
yet also top of mind? • Is Sales aware of Procurement’s expectations and vice-versa? • Are both parties backed up by appropriate internal support?
32% active in procurement
54 respondents
BROAD SET OF RESPONSES
73
68% active in sales
113 respondents
WE LOOKED AT VARIOUS BEHAVIORAL ASPECTS
sales procurement
Scoring behavioral criteria on importance and
performance | assess gap Internal
challenges Internal
challenges
• Procurement management
• End-users such as engineering, R&D
• ICT • Finance • …
• Sales management • Marketing • Production and
supply chain • Finance • …
75
Sales is getting more and more challenged by their customers….it is a very complex job !
75
Importance* Performance*
Sales Buyer Sales Buyer
Deliver on promises 4,5 4,4 3,8 3,0
Understanding the customers' business challenges 4,3 4,1 3,6 3,1
Knowledge of product/service offerings (incl. pricing)
4,2 4,0 3,6 2,7
Long term, close and personal relationships 4,2 3,7 3,9 3,1
Sharing of benefits 3,9 3,7 3,5 2,6
Providing new insights 3,9 3,7 3,4 2,8
Insights on total cost of ownership / ROI 3,6 3,8 3,2 2,4
Transparency of product/service offerings (incl. pricing)
3,5 3,8 3,4 2,6
Source: Deloitte Research 2012
SALES BEHAVIORAL ASPECTS WHAT SHOULD SALES DO?
76
IMP
OR
TAN
CE
GAP TO BRIDGE
Fix it now
High Fives
We have bigger fish to fry
Tackle it later
• Ability to deliver on promises
• Efficient and proactive communication Good understanding of
the customers' business challenges
• Focus on sharing benefits with the customer
• Providing insight in the total cost of ownership
• Transparency of product/service offerings
• Exchange of company information
• Building long term, close and personal relationships
PROCUREMENT BEHAVIORAL ASPECTS WHAT SHOULD PROCUREMENT DO?
77
IMP
OR
TAN
CE
GAP TO BRIDGE
Fix it now
High Fives
We have bigger fish to fry
• Providing clear requirements
• Efficient, clear & timely communication
• Open communication about selection
• Sharing benefits
Focusing on business impact by searching for the means to generate bottom line or top line performance improvements
• Emphasize on long term personal relationships
• Provide performance follow-up and feedback
• Exchange company info
Supporting after sales follow-up and participating in satisfaction monitoring initiatives
Tackle it later
FRUSTRATIONS AT BOTH SIDES
FRUSTRATIONS AT BOTH SIDES
79
Procurement Sales
1. Limited information sharing / Poor communication
2. Procurement is not seen as the first point of contact
3. Opportunistic behaviour
Sales Procurement
1. Only focused on cost reductions and price negotiations
2. Lack of strategic insight / Lack of knowledge of business needs
3. Procurement reluctant to give access to other stakeholders Largest impact on relation
INTERNAL CHALLENGES
INTERNAL CHALLENGES
81
sales procurement
Overall understanding, perceptions & frustrations
Internal challenges
Internal challenges
• Procurement management
• End-users such as engineering, R&D
• ICT • Finance • …
• Sales management • Marketing • Production and
supply chain • Finance • …
LARGE MUTUAL UNDERSTANDING OF INTERNAL CHALLENGES FOR SALES
82
Sales say: Procurement thinks:
Top 4: 1. High administrative burden
2. Focus on short-term objectives
(e.g. revenue) rather than long-term opportunities
3. Internal alignment between departments on situation of customer
4. Internal misalignment, communication and company politics (e.g. regional vs global, sales vs marketing)
Top 4: 1. Focus on short-term objectives
(e.g. revenue) rather than long-term opportunities
2. Finding your way in a complex organization (e.g. different products, departments)
3. Internal alignment between departments on situation of customer
4. Internal decision power of sales department to live up to customer expectations
SAME FOR PROCUREMENT CHALLENGES
83
Sales thinks: Procurement says:
Top 4: 1. Too much focus on cost reduction
instead of TCO or added value
2. Convincing internal client of new suppliers
3. Internal acceptance as value-adding partner
4. Proving the added value to the business
Top 4: 1. Internal acceptance as value-
adding partner
2. Convincing internal client of new suppliers
3. Proving the added value to the business
4. Visibility of what comes up from the business
CONCLUSIONS
OVERALL FINDINGS
85
sales procurement
Overall understanding, perceptions & frustrations
Internal challenges
Internal challenges
• Value-adding partner • Demonstrating added
value • Convincing internal
client • Internal visibility
• Too much focus on short term
• Internal alignment on customer
• Internal misalignment, communication and company politics
Actions Sales: • Deliver on promises • Efficient and proactive
communication
Frustrations wrt Procurement: • Focus on cost and price • No access to other
stakeholders
Actions Procurement: • Clear requirements • Communication • Open communication about
selection • Sharing benefits
Frustrations wrt Sales: • Information sharing /
communication • Not first contact • Opportunistic
© 2013 Deloitte Belgium
How customers look at us
86
How procurement segments their suppliers
Risk
Value
Leverage
High Monetary Value Suppliers = Burden
Anonyms Bottlenecks
Low High
High
High Added Value Suppliers = Partners
© 2013 Deloitte Belgium
Value
What sales strategy should be adopted in the value / risk model?
87
Risk
Leverage
High Monetary Value Suppliers = Burden
Anonyms Bottlenecks
Low High
High
High Added Value Suppliers = Partners
Purchase focus:
Reduce burden by standardization of requirements
Sales strategy:
Demonstrate fit with requirements, create transparency, make value of options tangible
Purchase focus:
Reduce risk
Sales strategy:
Develop tools/systems to manage risk
Purchase focus:
No priority
Sales strategy:
Communicate hassle-free service
Purchase focus:
Develop win-win and partnership
Sales strategy:
Claim and maintain competitive position consistently
Purchase focus:
Reduce the bill by leveraging various components in value proposition
Sales strategy:
Make value of service tangible, communicate & demonstrate lower TCO
Asking the right questions
88
Maybe you find it difficult …
89
2. …to define a compelling business reason / the customers’ major business concerns …
3. …to qualify where you are in the sales (decision-making) process and what your chances are compared to competition …
4. …to establish a comfort level in the communication with the customer …
5. …to understand how you are perceived by the customer …
How can we get this crucial
missing information?
1. …to identify the members of the DMU and their respective wins …
The different types of questions to get, to validate and to expand the information
90
Validation Learning Mindset
• Verify/ validate current information on DMU, business concerns, current position, …
• Identify potential gaps between our perception and their reality
• Expand current information
• Identify missing information
• Understand customers’ business
• Identify personal information (the persons’ wins)
• Identify the persons’ values, beliefs, feelings, …
Getting relevant information to boost chances on success
The Validation Questions
91
Why? • Verify/ validate correctness of all and any data • Will provide you more up-to-date information
When? • At the beginning of the sales call
Techniques • Use words that refer to the present situation: now – at this time – currently -
still – remain – continue - … • Phrase them in such a way, they can be answered with a yes or no
• Last time we met, you mentioned you were not satisfied with the delivery performance of your current supplier. Is that still a problem?
• Does … continue to be a problem? Are you still using …? • As I understand it, what we have planned to do today is to … Is that your
understanding as well?
Examples
The Learning Questions
92
Why? • Clarify your understanding of what the customer is looking for • Filling the gaps of information • Tend to put people at ease when they can tell
When? • After (and build further on) the Validation Questions (in case of a ‘no’)
Techniques
• Use words that invite the customer to tell / explain : Who? What? When? Where? How?
• Explore with: tell – explain – demonstrate – show – elaborate - describe • Use “Why?” to follow-up and probe for additional insights – not as an opener (too
confrontational)
• Who is going to sign the final deal? When is the decision going to be taken? • Could you describe me how you are going to approach …? • I ‘d appreciate if you could elaborate a bit more on the reasons why … • It would be very helpful if you could tell me a bit more on …
Examples
The Mindset Questions
93
Why? • Understand how he/she will benefit or lose from this sale • Understand the values, beliefs and mindset • Reveal personal concerns
When? • When you feel the need to understand how the customer feels about the situation
Techniques
• Use words like: what? How? Which? Why? • Add phrasing to encourage voicing an opinion • Be careful not to challenge or question the opinion (be careful with the “why?”
question)
• How do you feel about …? • What is your opinion on …? • Which reaction might we expect from Michel, you think? • Why do you think this is important to Michel to achieve this deal?
Examples
How to build customer oriented propositions?
94
Why should the customer see / listen / meet me?
95
What is it? Benefits Criteria
‒ The info he/she needs in order to understand exactly who you are and why you want to see him/her now
‒ Why it makes sense to talk to you in terms of their business reality
‒ Purpose of meeting is clear upfront – sets mutual expectations
‒ Shows you are prepared!
‒ Efficient for you and the customer
‒ Relevant & impactful for customers’ concern?
‒ Is it a current pressing business concern?
‒ Is the Win for the customer clear?
‒ Concise & complete
Compelling Business Reason
© 2013 Deloitte Belgium
Understanding personality types*
96
High emotional
level
Low assertiveness
level
High assertiveness level
Low emotional
level
Analytic Pragmatic
Amiable Extrovert
Basic focus: Facts, data and details
• Attempt at good self-management, time management and being organized
• Able to maintain long-term attention
• Does not try to take on the leading role in negotiations and to assert his ideas
• Makes decision carefully and on the basis of a great deal of information
• Likes to gather information in case of future need
• Likes to look for causes and internal links
• Prefers precise facts, often in numerical form
Basic focus: Relevant facts, actions and overall
strategy
• High level of self-management, including time management
• May come across as impatient because he really does not like wasting time
• Has a tendency to persuade others into conforming to his ideas about origination and the time plan for a meeting
• Maintains attention for a short period of time until he has – in his opinion- sufficient information. Quickly loses interest after this.
• Likes to take the lead role in negotiations and enforces his ideas and opinions.
• Makes quick decisions on the basis of factors and strictly logical consideration. Flatly refuses all alternatives, which do not correspond to his way of seeing things
Basic focus: Relationships, positive emotions
and harmony with his surroundings
• Time management and organization are an eternal struggle for the friendly type
• He wants to be surrounded by people with similar opinions
• He is able to maintain long-term concentration, especially if supported by a friendly atmosphere
• Very slow decision-making
• Hates too much pressure
• The ideal situation for his decision making is general consensus
• Looks for long-term relationships based on trust
Basic focus: Emotion, inspiration and
momentary feelings
• Tries to convince others of the correctness of his opinion through enthusiasm and personal participation
• Time management is not a strong point of the extrovert type
• Maintaining long-term attention is very difficult for him, especially when negotiations go into too much detail and become boring for him
• Prefers fast-pitched negotiations full of emotions and turning points
• Tries to dominate negotiations
• Makes quick decisions on the basis of feelings and the momentary situation
*Inspired by Krauthammer
© 2013 Deloitte Belgium
How to negotiate with each of them?
97
Analytic Basic focus: Facts, data and details
• Provide him with sufficient information
• Use graphs, tables and structured diagrams
• Be precise with your numerical information and avoid rounding off or very rough estimates
• Carelessness in details could mean loss of credit
• Give him sufficient time to make his decision
• Avoid surprises
• Prepare a detailed programme for negotiations and strictly adhere to it
Pragmatic Basic focus: Relevant facts, actions and overall strategy
• Avoid wasting time and provide very structured information in the
correct amounts
• Proceed from synthesis to analysis
• Do not allow yourself to be put on the spot with quick decision-making
• Overly emotional reaction and over-enthusiasm could come across as untrustworthy
• If you wish to change the method of perception, proceed with care and in small steps
• Prepare space for compromise, which he may gain
• Do not allow him to win in negotiation points, which are less significant for you
Amiable Basic focus: Relationships, positive emotions and
harmony with his surroundings
• Create a friendly atmosphere
• Give the other party sufficient time to make their decision
• Do not create too much pressure
• Information must support trust and mutual understanding
• Compensate for his compromise
• Avoid surprises
• Try to establish a personal relationship
• Provide personal information at the beginning of the meeting
Extrovert Basic focus: Emotion, inspiration and momentary feelings
• If you want to convince him, use enthusiasm and show that you really
are concerned about the matter
• Focus more on the interests of the individual parties, not on details
• Provide structured information in the correct amount
• Expect quick decision-making that is dependent on the level of enthusiasm for the matter
• Check you facts and do not allow yourself to be carried away by his emotion
• Anticipate possible conflicts and do not allow him to express his opinion
• Allow him to lead negotiation if control of the facts remains in your hands
© 2013 Deloitte Belgium
Know to whom you sell Asking for MORE has to do with CONFIDENCE and understanding your PRICING POWER •Examining your pricing power can be done by assessing your position on the following criteria:
Competition • How many competitors are there and how
strong are they? • Did the client worked with the competition
before?
Product • Is your product the newest innovation? • What about quality? Is it ‘top of the bill’? • How unique is your product?
98
Brand • What are people willing to pay for your
brand?
Customer Service • What kind of service level is offered? • What is the response time? • Quality?
Pain of the customer • How fast does he need your support? • What does he lose if he does not buy your
service/product?
Relationship • How many people do you know at the
client side, how well do you know them and what level are they?
© 2013 Deloitte Belgium
Potential next steps
99
© 2013 Deloitte Belgium
Potential first steps to kick-start the process
100
1. Compose a (diverse) taskforce to:
• Analyze current situation and identify the drivers of margin performance
• Define the scope and expected outcome
• Develop a ‘draft’ service card
2. Align with all relevant stakeholders: management, finance, account
management, …
3. Make a selection for potential pilot(s), low risk clients and consider to roll-
out for new clients
4. Develop implementation and roll-out plan, incl KPI’s
5. Track, monitor and gradually improve (“start small to deliver big”)
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Creativity
Next steps – a potential framework
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2. Prepare! Prepare!
1. Define and align on scope
Analyze/fact-based input
Define expected outcome
Service Card
External analysis
Internal analysis
Define options
Future scenarios
3. Formulate tactics & action plan
4. Plan implementation
Action plan
Financial follow-up / KPI’s
Plans
Pilots (new clients &low risk clients)
Define roll-out plan
Phased action plan
Buy-in and involve internal
stakeholders Form
Taskforce Workshops and
analyses Just Do It – start small to deliver
big
© 2013 Deloitte Belgium
Short evaluation feedback
102
© 2013 Deloitte Belgium
Some feedback and advise for future
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• Quite heavy for one afternoon … re-consider to shorten/skip the module on
alternative business models
• Tip: consider inviting a Procurement Manager (real life case)
• Discuss / integrate specific burning question from the sector
• E.g. copyright discussion … we get less and less paid for it … how can we valorize this better?
• Overall positive feedback
© 2013 Deloitte Belgium
Always available for more sparring:
Marc Abels, Partner Deloitte Consulting [email protected] 0497 05 10 37 Dirk Peeters, Senior Director Deloitte Consulting [email protected] 0497 39 27 37
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© 2013 Deloitte Belgium
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