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Surviving the Recession to Perish in the Recovery


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LeveragePoint discusses the downsides of relying too heavily on a cost/price control approach. We'll show a recent case example of a company facing the dilemma of stagnant growth - and how a value-based marketing and sales approach will save it.

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Surviving the Recession to Perish in the Recovery

  1. 1. Monthly Webinar Series - February 2012 Surviving the Recession to Perish in the Recovery Jay Manson Copyright © 2012 by LeveragePoint Innovations Inc. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means — electronic, mechanical, photocopying, recording, or otherwise — without the permission of LeveragePoint Innovations Inc. This document provides an outline of a presentation and is incomplete without the accompanying oral commentary and discussion. COMPANY CONFIDENTIAL
  2. 2. Sponsored by LeveragePoint the Software Solution for Value-based Pricing2
  3. 3. Today’s Presenter Jay Manson is Vice President of Sales at LeveragePoint. He joined LeveragePoint in June 2010 and is responsible for bringing LeveragePoint t market. bi i L P i t to k t He brings over 15 years in business development, sales and sales management experience, and has spent the past 10 years in the value-based marketing, pricing and sales industry. Formerly, a National Account Executive at Vendavo. Prior to Vendavo, Vendavo he served as Director of Business Development in Monitor’s Strategic Pricing Group and as Managing Director for Benchmark Partners.3
  4. 4. Market Forces Drive Relentless Margin Pressure THREE CS OF PRICE PRESSURE: Powerful CUSTOMERS Price Global COMPETITORS Product COMMODITIZATION COST – “RUG” – DYNAMIC RISING in an UNPREDICTABLE manner Costs based on GLOBAL factors TIME4
  5. 5. Polling Question5
  6. 6. Companies Have Recovered Revenue . . . 15.5% . . . but what happened to margin??? $1.5B $ $1.5B Margin $0.232B $0 232B 13.0% Net Revenue $0.195B Gross Income 2007 2008 2009 2010 20116
  7. 7. Is Passing Through Raw Material Costs Enough? Year 1 Year 2100 units are sold at $1 000 it ld t $1,000 Raw t i l R material costs rise b $200 t i byeach. Therefore, Total Revenue = per unit. All cost increases are$100,000. successfully passed through to the customer How H many units need t b sold i Y 2 it d to be ld in Year to get $100,000 in revenue? Answer: 83 units Sales has fought hard for revenue but selling fewer units at a lower margin. This is why companies are not surviving the recovery.7
  8. 8. So How do We Address This? In order regain our margin we need to pass through the value we deliver above and beyond our cost What is required: • Products priced based on the value they deliver • Sell based on the value you deliver How to do it: • Continual effort to understand how we improve our customers business and operations. • Systematic approach to capturing and quantifying the economic benefits we are delivering • Collaborating with customers to build a common understanding of these economics • Understanding of the value of the competition8
  9. 9. Products Priced Based on Value Traditional approach Product Cost Price Value Customers What is the best product we can offer customers? Value-based approach V l b d h Customers Values Prices Costs Products What is the best value we can offer customers?9
  10. 10. Key Questions for Products Priced Based on Value Product Development Process Opportunity Business Marketing Assessment Case Plan How do I determine Should the new offering How do I determine the value of my new be a stand-alone a value-based price? offering? product, feature product a feature, or an extension of an existing What are the right How do I segment my product based on: pricing metrics? market for pricing purposes? What will differentiate us most from the competition? What delivers the most value for the customer?10
  11. 11. Sell Based on Value Value-based lli V l b d selling answers th the question: What are the three or four things th t make you b tt th thi that k better than the competition and …. What is that worth to your customer?11
  12. 12. Sell Based on Value • Fact-based approach that quantifies the full f ll economic i i impact of the purchase f h h • Provides a comparison of your product against competitors • Quantifies the value in financial terms • Links the price and the value together12
  13. 13. What Value-Based Selling Looks Like LeveragePoint allows the user to develop the unique value with the customer13
  14. 14. Try LeveragePoint for 90 Days to Pass Margin On! • Delivers tangible, usable marketing/sales content within hours! – Use the application to price new products based on value – Use the application to sell based on value • Initiate the effort to understand how we improve our customers business and operations. d ti • Provide your team with a systematic approach to capturing and quantifying the economic benefits we are delivering • Unlimited use of LeveragePoint for your marketing/ sales teams to build value models and test value propositions • Includes initial training and coaching throughout the entire process • All for $15,00014
  15. 15. Our Next Webinar – March 20th • Stephan Liozu, President & CEO of ARDEX Americas A i •O Organizational T i ti l Transformation t V l f ti to Value- based Pricing: Case Study of a Mid-size Industrial Company p y • NOTE Earlier Time! 11:00am Eastern15
  16. 16. Thanks for Watching! Jay Manson (781) 727 – 597716