Building A Value Propostion
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Building A Value Propostion

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Building A Value Propostion Building A Value Propostion Presentation Transcript

  • From Walking Catalogue To Trusted Advisor
    Professionalising The Sales Function
    Building A Value Proposition
    Presented By:
    Peter Gilbert
  • Brain Break 1:
    The Fire Hydrant
  • Program 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
  • Agenda
    1
    The evolution of selling & the forces driving change
    2
    Understanding business drivers and their
    relevance to building value propositions
    3
    Building your first value proposition--- “The elevator pitch”
    4
    Building more complex value propositions
    5
    Creativity in building value propositions
  • The 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’s Driving Change?
    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
  • Four acquisition mega-trends
    supplier consolidation
    increased sophistication: new supplier segmentations
    superior economics of continuous improvement over RFP
    total lifetime cost concept
  • supplier consolidation
    higher stakes: “all or nothing”
    increased sophistication: new supplier segmentation
    customers box you in
    business chain value – not just solutions
    total lifetime cost concept
    enterprise commitment/action required – not just sales team
    superior economics of continuous improvement over RFP
    Consequences of purchasing trends
  • How do trends like these change the way that customers acquire products and services?
  • Hi
    Strategic or cost
    importance of supplier’s product
    Lo
    Hi
    Difficulty of substitution
    or of obtaining alternatives
    Supplier Segmentation Matrix
    Leverage
    size
    Partner
    Shop around
    Manage
    risk
  • What 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
  • Is this your sales conundrum?
    Consultative
    Most sales forces are in no-man’s land
    Too expensive to succeed transactionally
    Too lacking in resources and skills to succeed consultatively
    Too misaligned and understaffed to succeed in enterprise relationships
    No
    man’s
    land
    Transactional
    Enterprise
  • Brain Break 2:
    The Alsatian Syndrome
  • Pick 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.
  • Entry
    Sales - Return on Investment
    Productivity
    Strategic
    Value
    High
    Level 4
    Business
    Value
    Level 3
    Chasm
    Solution
    Value
    Level 2
    Commodity
    Value
    Level 1
    Low
    Time
  • Chasm
    Levels of Business Relationship
    Value Created
    Relationship Level
    Trusted Advisor
    Impact
    Strategic
    Issues
    Exec
    Solution Provider
    Impact
    Business
    Issues
    Senior Management
    Middle Management
    Problem Solver
    Impact
    Operational
    issues
    Operations
    Offer product, service and support
    Product Vendor
  • Event
    Process
    System
    Outcome
    Transaction
    Solution
    Value / Innovation
    Relationship / Partnership
    Considered
    Competitive
    Preferred
    Dominant
    Ignorant
    Aware
    Agile
    Astute
    Price
    Cost of Ownership
    Return on Investment
    Business
    Value
    Operations
    (Transaction)
    Management
    (Trust)
    Executive
    (Political)
    Business
    (Partner)
    Make the list
    Make the sale
    Make the Rules
    Set the Standard
    Selling Levels
    Level 1
    Level 2
    Level 3
    Level 4
    Focus
    Orientation
    Status
    Political
    Finance
    Relationships
    Engagement
  • Product Expert
    Potential Resource
    Business Analyst
    Business Consultant
    Interruption
    Sales Pitch
    Joint Discovery
    Business Meeting
    Past Event
    Informative
    Creative Ideas Explored
    Compelling Value
    Ignored
    Sent Down
    Considered
    Continued Access
    Selling at the Executive Level
    Level 1
    Level 2
    Level 3
    Level 4
    Customer’s Impression of You
    Customer’s Impression of the Sales Situation
    Customer’s Conclusion
    Outcome
  • Strategic Resource
    Solution Provider
    Problem Solver
    Vendor
    Relationships & Role in the Decision Process
    Corporate Planning
    Assess Problems /Opportunities
    Forming
    Corporate Initiatives
    Analysing
    Results
    Initiate a Project
    Tracking
    Results
    Identify
    Suppliers
    Project
    Implementation
    Evaluate & Shortlist
    Products/Suppliers
    Select Suppliers
    Negotiate Contracts
    Prove theConcept
  • 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.
  • Financial
    Pressure
    Customers
    Suppliers
    Business Partners
    Competition
    Operational
    Pressure
    The Customer’s Business Drivers
    • Revenue
    • Cost
    • Metrics of Industry
    • Shareholder Equity
    • Financial Analysts
    • Militant customers
    • Satisfied Customers
    • Delighted Customers
    • Loyal Customers
    • Retain Customer Base
    • Grow the Customer Base
    • Quality
    • JIT
    • One Stop Shopping
    • Share Information
    • Problem suppliers
    Business Unit Executive
    • “Nightmare Competitors”
    • Niche Players
    • Potential Threats
    • Sell With
    • Sell Through
    • Impact
    • “Co-opetition”
    • Making, Selling,
    • Delivering Products
    • Right Skill Mix?
    • Reorganise
    • Regulatory
  • Problems
    Opportunities
    Consequences
    Payback
    The Compelling Reason to Buy
    How customers define and prioritise their “needs”
    Business
    Initiatives
    Business Drivers
    Business Profile
    Critical Success Factors
    Compellingreason 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?
  • BusinessProfile
    BusinessDrivers
    BusinessInitiatives
    Capabilities
    Solution
    Differen-tiation
    The Value Proposition
    UniqueBusinessValue
    Solution
    • 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
  • Critical Success Factors
    Business Initiatives
    Business Drivers
    Business Profile
    Business
    Initiatives
    Business initiatives are the projects, programs, or plans that address the business drivers.
    CSFs
    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 Business
    Business Drivers
    Business drivers are the internal and external pressures that create the need for change.
    Business Drivers
    Business Profile
    Business
    Initiatives
    Business Initiatives
    CSFs
    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.
    • Customer satisfaction metrics falling
    • Losing customers
    • Repeat sales to customer base are slowing
    • 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
    • Re-engineer service offerings and introduce Premier Service Plan
    • The Integrated Export Initiative
    • Train employees to deliver higher levels of services
    • Customer involvement in design of new services
    • Web-based Premier Service Plan
    • Understand quality, logistical and legislative requirements
    • Overcome the logistical / manufacturing capacity constraints
    • Develop brand awareness in East African markets by mid-year
    Examples of Business Drivers, Initiatives and CSFs
    Example 1
    Example 2
    Business
    Drivers
    Initiatives
    Critical
    Success
    Factors
  • Brain Break 3:
    It Is Better To Be Wrong Than To Be Confused!!
  • Maintaining your Executive Outlook
    Read what executives read
    • Newspapers: Business Day, Business Report etc.
    • Periodicals: Financial Mail, Finance Week, Business Week, Economist etc
    • Subscribe to the customer’s industry trade journals
    • Subscribe to industry consultants’ newsletters
    • Join the customer’s trade associations
    Follow the customer’s industry
    Follow the customer’s business
    • Subscribe to an on-line tracking service (McGregor’s)
    • Get on the customer’s PR mailing list
    • Get on the customer’s Investor relations mailing lists
    • Visit the customer’s website regularly
    • Access on line services (Business Day & FM)
    Put yourself in a position to meet executives socially
    • Attend the customer’s trade shows
    • Spend time where executives spend time
  • The Offering
    Value
    The Value Proposition
    Customer’s
    Issue
    Value
    Promise
    Your Services
    & Unique Capabilities
    Customer’s
    Investment
    Economic Payback
    Customer’s Improvement
  • Value Proposition Formats
    You will be able to ______________ resulting in ________________
    _____
    §
    business initiative
    specific or measurable outcome
    by implementing our _____________________. We delivered similar
    solution
    results at ____________________ which resulted in ______________
    ____.
    similar situation or customer
    past value delivered
    By changing from _________________ to ________________, you will
    §
    current situation
    our solution
    affect __________ which means ____________________. We will trac
    k the
    business driver
    specific or measurable outcome
    value delivered by _______________ and report it back to you ___
    ______.
    frequency/time
    value tracking system
    We can help you address __________________________ by installing
    §
    compelling event
    _________________ which will result in _________________________
    ___.
    specific or measurable outcome
    solution
    We will insure your return on investment by ____________________
    ____.
    shared risk/reward strategy
  • Constructing Your Value Proposition
    Customer
    Business Driver
    Your
    Capability
    Mutual Value
    Business Initiative
    Critical Success Factors
    Unique Solution
    Products
    Services
    Processes
    People
  • Business and Personal Value
    When you can combine business value for the customer with personal value for the individual, you create competitive advantage.
    ©2002 Consiliat Marketing. All rights reserved. Using Consultative Selling Skills
  • Asking 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
  • Value Proposition – Templates & Guidelines
    High Impact Questions
    Guidelines
    Template
    • 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?
    Step 1
    Identify 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 2
    Articulate the resulting impact of the trend / business driver on the second line of theValue 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.
    • 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?
    which causes:
    Articulate the resulting impact of the trend / business driver on the second line of theValue 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.
  • Value Proposition – Templates & Guidelines
    High Impact Questions
    Guidelines
    Template
    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:
    • 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?
  • Value Proposition – Templates & Guidelines
    High Impact Questions
    Guidelines
    Template
    Step 4
    Calculate 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:
    • 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?
    Step 5
    List 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.
    • 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?
    for:
  • Value Proposition – Templates & Guidelines
    High Impact Questions
    Template
    Guidelines
    • If it was possible to complete a pilot project and see a positive ROI within 6 months, would it make economic sense?
    Step 6
    The 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:
    Step 7
    On 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.
    • 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?
     
    as a result of:
    • 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 8
    Ensure 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:
  • Value Proposition – Templates & Guidelines
    Guidelines
    High Impact Questions
    Template
    • If we were able to reduce staff churn by 30% in year 1, what would the impact on your organisation be?
    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:
  • Never EVER Apologise To A Customer!
    Brain Break 4:
    A simple “sorry” would suffice
  • Consultative Questioning
    Situational
    What is the situation / How do you handle this?
    Asking
    Listening
    Issue
    Informing
    What’s wrong / What needs to be done?
    Asking
    Listening
    Consequence
    Informing
    So what?
    Asking
    Listening
    Value
    Informing
    How much?
    ©2002 Consiliat Marketing. All rights reserved. Using Consultative Selling Skills
  • Provide Context – Get the Discussion Going
    Situation Questions
    • 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?
    Examples:
    Ask open ended questions to get the discussion going
    Remember The Four Cs -
    Customers / Competitors / Commercial / Channels
  • Establish the Issue – What’s wrong?
    Issue Questions
    Examples:
    • 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?
    ©2002 Consiliat Marketing. All rights reserved. Using Consultative Selling Skills
  • Exploring the Consequences – So What?
    Consequence Questions
    Examples:
    • 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?
    ©2002 Consiliat Marketing. All rights reserved. Using Consultative Selling Skills
  • Explore the Need – What would help?
    Need Exploration Questions
    Examples:
    • What do you need? Why do you need it?
    • What solutions have you considered?
    • Would it be helpful if…………………………………..?
    • Do you really need (……….) or do you need (…………)?
    • What will it take to address this issue?
    • What would the ideal solution be?
    • If solving this problem by yourself were an option, what would you do?
    • What other approaches have you tried or considered?
    ©2002 Consiliat Marketing. All rights reserved. Using Consultative Selling Skills
  • Determine the Value – How much?
    Value Questions
    Examples:
    • 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?
  • ANY QUESTIONS???