B2B Value - Your salespeople are leaving money on the table
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If your sales people only sell on price it is likely because they do not understand value. This slide set will help you understand what your customers value above and beyond product and service.
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B2B Value - Your salespeople are leaving money on the table
- 1. Understanding B2B Value Your salespeople are leaving money on the table
- 3. Merriam Websters definition of Value A fair return or equivalent in goods, services, or money for something exchanged
- 4. The product IS important
- 5. ..and there seems to be other value than product itself... Profit: 45% Manufacturing: 35% Retail Markup: 11% Operating Expense: 9%
- 6. B2B and B2C is very different The B2B Buying Process is: Long Complex Technical Group Based High Risk High Value Rational (Group) Emotional (Individuals) Impacted by Experts Company Brand Orientated Has significant Service focus Has lifetime focus Personal Interaction with Suppliers
- 7. First workshop Define the concept of value in your own words Make it Business to Business centric One statement per team 10 minutes
- 8. What was your experience?
- 9. A B2B definition of value The perceived benefits of a product minus the price minus the cost of using & owing it.
- 10. Value is subjective It does not matter what we decide value is it is the customers perception that is important!
- 11. The classical view of value is a zero sum game Any $ gained by the customer is a $ lost by the supplier
- 12. The Classical Perspective: Manufacturing as key value Driver
- 13. The supply Chain view of Value Supply Manufacturing Distribution Managing the Supply Chain Efficiency Driven Value Customer Revenue Generating part of the Corporation Demand Driven Value Cost Saving part of the Corporation
- 14. SUPPLIER Where is value created? CUSTOMER CO-CREATION
- 15. 2nd Workshop • What are key elements of Value? • We know value of the product itself – what other value elements are there? • Brainstorm on post-it notes for 5 minutes • Discuss in group and present top 3.
- 16. Customer Value Components in B2B Value Knowledge Product Service Relationship BrandSocial Market Application Access Risk Utility PerformanceGuarantee EconomicRisk Strategic Flexibility Repetitive Life Cycle Confidence Technology Trust Reliability Consistency Delivery Transactional Accuracy Time to Market Design Mutual Goals Problem solving Communication Innovation Solidarity Emotions Partnership Quality
- 17. Wich element of value is most important?
- 18. Value depends on an individuals department & Job function Typical Customer Benefits Offered Typical Purchase Team Members Highly competitive prices and quality Manufacturing plants on 4 continents Internet order placement, tracking and billing system 24/7 Customer response facility Customized manufacture and delivery of products jit Sunday and holiday delivery JÌT Warehouse Manager Purchasing Manager Logistical Officer Maintenance Manager Chief Marketing Officer CFO Supply Chain Head COO CEO Benefit Stack - Das Narayandas
- 19. Value changes according to a persons level in the organisation The higher in an organisation an individual is the less focus there is on: Product and service value The more focus there is on: Knowledge, Relationship and Brand Value
- 20. What are the characteristics of Value?
- 21. Value is not constant Use Situation The use Segment The Strategic mode June 29, 2007 Market Situations Place in network Contextual Changes 9 November 1989 Value
- 22. Value changes over time Dortmund fans view of Mario Götze 2/7-2013 Bayern Munchen 1/7-2013 Dortmund 15/10-2013 GER-SWE 23/11-2013 First goal against BVB
- 23. Frame of Reference is important for Value
- 24. What does customers Value Survey 1 to 5 scale 3.000 3.200 3.400 3.600 3.800 4.000 4.200 Large Customers Large Customers
- 25. Value is complex Fools ignore complexity. Pragmatists suffer it. Some can avoid it. Geniuses remove it. Alan Perlis
- 26. Let see if we make this less complex
- 27. To whom are you talking? The part of the Customers organisation responsible for Cost Saving or The part of the Customers organisation responsible for Revenue Generation
- 28. What are you talking about? Are you Selling or Exploring Value? Are you tailoring to the individuals perception of value? Are you Tailoring to the Customers market situation and high level goals ? Are you Tailoring to the Individuals Level in the organisation? Are you giving customers the freedom to innovate?
- 29. What are the value signals from the customer? Relationship? Invest? Access? Participation? Excuses?
- 30. Not all customers are evil and not to all suppliers Critical Partner to create Competitive Advantage Showstoppers Manage to reduce risk Leverage Manage for financial impact Recurring Consolidate Simplify Manage by Exception Impact of supplier on cost structure High and competitiveness Low MarketRisk/ LowLackofChoiceHigh
- 31. Why is this important to You Maturing Industry Declining Margins Challenger Focus is Value M&A is not just our Plan Survival
- 32. Why is this important to you personally? Maturing Industry Declining Margins Being Important to the Customer Upgrade Yourself Survival
- 33. The job war is already raging!
- 35. Key Points to Remember Value is subjective and in the eye of the client Value depends on people position, department Value is dynamic and changes according to frame, time, context, mode, segment and time Value has cost improving and revenue generating elements. Co-Creation of value is not a zero sum game Customers will show how much they value us by their investment in a relationship with us.
- 36. Three Key Points for the future • Spend your challenger time talking about value through growing revenue and managing cost and risk. • Understand what situation the customer is in and what each member of the buying group Value. • Read the Signals from the customer – what is really going on – and take appropriate action.
- 37. Thank you very much and enjoy the future Especially if you choose to create it!
Editor's Notes
- Why have we started the challenger journey? Is it because hardware is being commoditised? Is it because suppliers are being commoditised? Is it because power has shifted from the supplier to the customer in todays hypercompetition? Why does challenger work? Is it because we show the customer that we can give them other benefits than just product? What are these other things called – could it be called value? If it is value, we better find out what value is and how it interacts with our customers and ourselves? LOGOS PATHOS ETHOS small region-one of you, many ceo meetings in Russia, studied value in Mchp contex over a year. Today i am going to talk to you about value and it could be the most important thing about challenger you never heard. KEY POINT IS THAT CHALLENGERS KEY CONCEPT IS VALUE – YOU NEED TO ADD VALUE IN THE SALES PROCESS AND BEYOUND
- First important feature about value is that it is simply measured in money That is not the same as it being simple to measure. The second important feature is it has to be fair – fair is a subjective term although most people actually treat it as it was objective.
- How many here has an iphone? How many here will admit they have a Samsung? So you admit that your kids dont have cool parents.
- 45% Profit, 11% markup, 9% op ex, 35% Manufacturing So if there was only value in product we should be able to buy an iphone for 286$ and for 357$ if you want to buy it at best buy or the apple store. Did you think buying in the apple store was free? That nice place charges you 71.5$ for white plastic bag given to you by a guy with glasses and funny hair! t just hired Patrick Pruniaux, VP of sales at Tag Heuer. He will lead marketing of the iWatch. It hired Angela Ahrendts, former CEO of Burberry, to run Apple's retail operations. It hired Paul Deneve, the CEO of Paris-based fashion house Yves Saint Laurent, as a VP who reports to Tim Cook. It hired Ben Shaffer who worked at Nike, leading design. Shaffer worked on the FuelBand.
- The iphone example shows value in a B2C setting and this is how we normally think about value. - When we buy stuff ourselves. However the B2B world is significantly different – as can be seen on this slide. With multiple people from different departments it becomes a lot more complex, a lot longer and depend a lot more on you as an account manager than anything else the company does or have. This is important to understand this when we start to define what value is
- We are talking about value every day without truly understanding the concept. Value is a cruical element of Challenger – if we do not demonstrate and deliver value we will not succeed So we better get a good understanding of value
- Wolfgang Ulaga – one of the leading experts of Value research This is not the only definition and I am sure we will find some good ones from the workshops. The key word here is perceived.
- It does not matter what we think value is – it is the customers perception that is important. So we need to spend less time selling our value to our customers and more on finding out what they believe value is.
- The classical view of value is that it is a zero sum game Suppliers and customers battle for every cent. This is still the dominant view in the customers supply organisation and also a key objective of theirs. That will not change.
- This perspective is from the 80’ where hyper competition had not started yet. Value was to a high degree associated with the manufacturing process. Each step in the process refined the product and increased its value. This was also the case in the semiconductor industry where the manufacturing technology was a key differentiator. Today that is available to everybody. This also means that value is more than just manufacturing technology and product.
- If you communicate with the COST SAVING departments of the customers you will still see this as the dominant view. However there is another part of the customer where the future REVENUE is generated. What would these departments typically be called? Would any care to guess where challenger might be most effective? In the case of apple the efficiency driven value can work on improving 357$ - limits to how much can be done. The demand Driven organisation has created 292$ of value typically through product development and marketing. For APPLE the Revenue generating part of the organisation is the most important – for other customers it might be the Cost Saving part of the corporation. You need to decide with what customers you spend your challenger time and in what departments. It is your decision
- The Supplier - Classical perspective from a time where suppliers had the dominant power in the supplier-customer relationship The Customer - Chosen by some customers that does not see value in having a close relationship with their suppliers. Quite rare. Cocreation - The most recent view of value creation is seen as a co- production between the supplier and the customer The supplier needs to have market sensing capabilities The supplier needs to have value creating capabilities and engage in value creation activities. Value creation activities can be customers innovation process Effectively marketing of the value creation capabilities to the market so the customer wants to engage in a And what is the most important maketing channel in B2B? The direct salesforce Every industry matures – less and less margin can be derived from the manufacturing process itself. IP based development and foundries have made similar technology available to everybody and commoditised the process The value of product will deteriorate in every industry – firms will need to add other value to customers This is not new – it happens in every industry
- Product is obviously important – but we are pretty good at that. Value of service is also something we are quite comfortable with and it is of key importance to the customers cost saving organisation KEY POINT IS THAT THERE ARE MANY FORMS OF VALUE – WE CAN REDUCE COMPLEXITY BY USING 5 MAJOR CATEGORIES
- The things that the CEO values is very different from what the purchaser values. This is why we cannot have just ONE value proposition – we need many
- The reason is that high in the organisation they do not need to deal with products and service value – this is a tactical, oprational issue they will leave to a lower organisational level They want to know about what kind of knowledge that you have that can impact the value they bring to customers or improve how they go to market. They do understant that relationship is important and can be used to get exclusive access to certain assets of the supplier They do worry about brand – because if something goes wrong (and it will) companies with brands worry about how they look in the market and will respond to customer issues.
- We have talked about the elements of value Now lets shift gear and talk about the characteristics of value.
- Not all products are used for the same purpose so we need to understand value in the relvant use situation We already know we are more successfull in some segments Global changes can impact value – any here that grew up on the other side of the iron curtain – NO I DO NOT MEAN THE ENGLISH CHANNEL!!!! Did the valu of certain products change? The strategic mode of the corporation also matters – there was a change in value of buttons and swithes in the cell phone industry after the introduction of the iphone. Changes in supply and demand and economy makes a difference And lastly by not least – value in the network can change – somthing that HMV abd blockbuster found out. KEY POINT AGAIN IS THAT VALUE IS NOT CONSTANT
- To illustrate this I talked to dr siedhoff
- Actually we have investigated We do know that Mchp customers care more about kno,brand,relationship than product and service Not go into detail but it is not just theory / it is proven.
- Lot lets see if we can become geniouses and remove some of the complexity.
- Challenger core concept is values based but it works more effectively in the customers revenue generating department.
- Are you exploring what the customer value? Explore value in the challenger conversations that you have! When you find out what people value you can start to help them. Tailor your challenger conversations to the individuals and their view of value. Let the customer know ”WHY” we are doing it – not just what and how. Giving Customers the Freedom to Innovate
- This is the true measurement of value. The more valuable you are perceived, the more What kind of relationship do they want? Are they willing to invest? Are they willing to give you access? Are they willing to participate in value creation? Are they going to Masters? Or do they have a few delays on the project.... If not maybe it is time for a change – maybe you are one of three? KEY POINT IS THAT YOU ARE THE EASIEST PERSON TO FOOL AS YOU DESPERATELY WANT TO SUCCEED IN YOUR ACCOUNT- DONT FOOL YOURSELF
- We tend to think that individual customers behave in a certain way to all suppliers. In fact they behave in a very deliberate way according to how they see the supplier – they treat suplliers very differently. Purchasers will always ask for more though.... Customers know that we likely know more about electronics than they do – even if they are electronics specialist companies
- Challenger is founded in providing value to the customer above and beyond product. It is important to understand what your customer contacts believe value is When bringing the conversation to the customers revenue generating department value is different Value is different on the exec floor A company will show how much value you bring by what kind of relationship they want with you.
- We are all in the Job War – Upgrade yourself to stay relevant
- Quill can operate directly from data It is based on artificial information Not only does it deliver insights It delivers a narrative There are things that humans do that are not yet in [purview] of systems like Quill. They hear facts, they chase down compelling ideas, they reconsider and reestablish what they're looking for. Quill doesn't do that, but there will be a time when it does
- - are they participating or not?
- Engagement tackle one of the three “Challenger time” kept