Building A Value Propostion


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Building A Value Propostion

  1. 1. From Walking Catalogue To Trusted Advisor<br />Professionalising The Sales Function<br />Building A Value Proposition<br />Presented By:<br />Peter Gilbert<br />
  2. 2. Brain Break 1: <br />The Fire Hydrant <br />
  3. 3. Program Outcomes<br />This workshop will equip you with some of the insights and tools , required to become a trusted advisor by:<br /><ul><li>Providing insight into the customer’s key business issues
  4. 4. Asking high impact questions to clarify the scope of each issue
  5. 5. Focusing on the relevant business drivers
  6. 6. Communicating the value of your solution</li></li></ul><li>Agenda<br />1<br />The evolution of selling & the forces driving change<br />2<br />Understanding business drivers and their <br />relevance to building value propositions<br />3<br />Building your first value proposition--- “The elevator pitch”<br />4<br />Building more complex value propositions<br />5<br />Creativity in building value propositions<br />
  7. 7. The Changing Sales Environment<br />The Changing Sales Environment<br />
  8. 8. What are the market forces that are driving radical change in business to business buying / selling relations?<br />
  9. 9. What’s Driving Change?<br />The usual suspects<br />Commoditisation<br />Competition<br />Pricing pressure<br />Capacity excess<br />High selling costs<br />Mergers & acquisitions<br />. . and some newer ones<br />The internet<br />Consolidation of suppliers<br />Continuous improvement instead of the RFP process<br />
  10. 10. Four acquisition mega-trends<br />supplier consolidation<br />increased sophistication: new supplier segmentations<br />superior economics of continuous improvement over RFP<br />total lifetime cost concept<br />
  11. 11. supplier consolidation<br />higher stakes: “all or nothing”<br />increased sophistication: new supplier segmentation<br />customers box you in<br />business chain value – not just solutions<br />total lifetime cost concept<br />enterprise commitment/action required – not just sales team<br />superior economics of continuous improvement over RFP<br />Consequences of purchasing trends<br />
  12. 12. How do trends like these change the way that customers acquire products and services?<br />
  13. 13. Hi<br />Strategic or cost<br />importance of supplier’s product<br />Lo<br />Hi<br />Difficulty of substitution<br />or of obtaining alternatives<br />Supplier Segmentation Matrix<br />Leverage<br />size<br />Partner<br />Shop around<br />Manage<br />risk<br />
  14. 14. What These Purchasing Trends Mean<br />even complex services will be increasingly commoditised and bought transactionally<br />customers are becoming ever smarter and more aggressive about capturing a bigger share of the value their suppliers create<br />relationships that seemed protected and locked-in are being questioned and are under threat<br />metrics driven, continuous improvement relationships have the best chance of resisting the new purchasing pressures<br />new enterprise relationships are supplanting traditional major account relationships<br />
  15. 15. Is this your sales conundrum?<br />Consultative<br />Most sales forces are in no-man’s land<br />Too expensive to succeed transactionally<br />Too lacking in resources and skills to succeed consultatively<br />Too misaligned and understaffed to succeed in enterprise relationships<br />No<br />man’s<br />land<br />Transactional<br />Enterprise<br />
  16. 16. Brain Break 2: <br />The Alsatian Syndrome<br />
  17. 17. Pick Your Battlefield Carefully<br />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.<br />
  18. 18. Entry<br />Sales - Return on Investment<br />Productivity<br />Strategic<br />Value<br />High<br />Level 4<br />Business<br />Value<br />Level 3<br />Chasm<br />Solution <br />Value<br />Level 2<br />Commodity<br />Value<br />Level 1<br />Low<br />Time<br />
  19. 19. Chasm<br />Levels of Business Relationship<br />Value Created<br />Relationship Level<br />Trusted Advisor<br />Impact <br />Strategic <br />Issues<br />Exec<br />Solution Provider<br />Impact <br />Business <br />Issues<br />Senior Management<br />Middle Management<br />Problem Solver<br />Impact <br />Operational <br />issues<br />Operations<br />Offer product, service and support<br />Product Vendor<br />
  20. 20. Event<br />Process<br />System<br />Outcome<br />Transaction<br />Solution<br />Value / Innovation<br />Relationship / Partnership<br />Considered<br />Competitive<br />Preferred<br />Dominant<br />Ignorant<br />Aware<br />Agile<br />Astute<br />Price<br />Cost of Ownership<br />Return on Investment<br />Business<br />Value<br />Operations<br />(Transaction)<br />Management<br />(Trust)<br />Executive<br />(Political)<br />Business<br />(Partner)<br />Make the list<br />Make the sale<br />Make the Rules<br />Set the Standard<br />Selling Levels<br />Level 1<br />Level 2<br />Level 3<br />Level 4<br />Focus<br />Orientation<br />Status<br />Political<br />Finance<br />Relationships<br />Engagement<br />
  21. 21. Product Expert<br />Potential Resource<br />Business Analyst<br />Business Consultant<br />Interruption<br />Sales Pitch<br />Joint Discovery<br />Business Meeting<br />Past Event<br />Informative<br />Creative Ideas Explored<br />Compelling Value<br />Ignored<br />Sent Down<br />Considered<br />Continued Access<br />Selling at the Executive Level<br />Level 1<br />Level 2<br />Level 3<br />Level 4<br />Customer’s Impression of You<br />Customer’s Impression of the Sales Situation<br />Customer’s Conclusion<br />Outcome<br />
  22. 22. Strategic Resource<br />Solution Provider<br />Problem Solver<br />Vendor<br />Relationships & Role in the Decision Process<br />Corporate Planning<br />Assess Problems /Opportunities<br />Forming <br />Corporate Initiatives<br />Analysing<br />Results<br />Initiate a Project<br />Tracking<br />Results<br />Identify<br />Suppliers<br />Project <br />Implementation<br />Evaluate & Shortlist <br />Products/Suppliers<br />Select Suppliers<br />Negotiate Contracts<br />Prove theConcept<br />
  23. 23. What Is A Business Driver?<br />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.<br />
  24. 24. Financial<br />Pressure<br />Customers<br />Suppliers<br />Business Partners<br />Competition<br />Operational<br />Pressure<br />The Customer’s Business Drivers<br /><ul><li>Revenue
  25. 25. Cost
  26. 26. Metrics of Industry
  27. 27. Shareholder Equity
  28. 28. Financial Analysts
  29. 29. Militant customers
  30. 30. Satisfied Customers
  31. 31. Delighted Customers
  32. 32. Loyal Customers
  33. 33. Retain Customer Base
  34. 34. Grow the Customer Base
  35. 35. Quality
  36. 36. JIT
  37. 37. One Stop Shopping
  38. 38. Share Information
  39. 39. Problem suppliers</li></ul>Business Unit Executive<br /><ul><li>“Nightmare Competitors”
  40. 40. Niche Players
  41. 41. Potential Threats
  42. 42. Sell With
  43. 43. Sell Through
  44. 44. Impact
  45. 45. “Co-opetition”
  46. 46. Making, Selling,
  47. 47. Delivering Products
  48. 48. Right Skill Mix?
  49. 49. Reorganise
  50. 50. Regulatory</li></li></ul><li>Problems<br />Opportunities<br />Consequences<br />Payback<br />The Compelling Reason to Buy<br />How customers define and prioritise their “needs”<br />Business<br />Initiatives<br />Business Drivers<br />Business Profile<br />Critical Success Factors<br />Compellingreason to Buy<br />Analysing the customer’s business drivers<br />Why does the customer have to act?<br />Something that matters to someone with influence?<br />What is the deadline for the customer to make a decision?<br />What will be the measurable impact on the customer’s business?<br />
  51. 51. BusinessProfile<br />BusinessDrivers<br />BusinessInitiatives<br />Capabilities<br /> Solution<br />Differen-tiation<br />The Value Proposition<br />UniqueBusinessValue<br />Solution<br /><ul><li>Defines your unique business value
  52. 52. Specific to the customer
  53. 53. Creates a specific or measurable business outcome
  54. 54. Sets the customer’s expectations
  55. 55. Assures your ability to deliver</li></li></ul><li>Critical Success Factors<br />Business Initiatives<br />Business Drivers<br />Business Profile<br />Business<br />Initiatives<br />Business initiatives are the projects, programs, or plans that address the business drivers. <br />CSFs<br />CSFs<br />CSFs are things that must happen or resources that must be in place to ensure the success of the initiative.<br />
  56. 56. Understanding the Customer’s Business<br />Business Drivers<br />Business drivers are the internal and external pressures that create the need for change.<br />Business Drivers<br />Business Profile<br />Business<br />Initiatives<br />Business Initiatives<br />CSFs<br />Business initiatives are the projects, programs, or plans that address the business drivers. <br />CSFs<br />CSFs are things that must happen or resources that must be in place to ensure the success of the initiative.<br />Compelling Reason to Buy<br />‘Selling Event’<br />Compelling situations that cause the customer to make a decision or a change in their current situation.<br />
  57. 57. <ul><li>Customer satisfaction metrics falling
  58. 58. Losing customers
  59. 59. Repeat sales to customer base are slowing
  60. 60. Opportunities exist to double branded goods exports to East Africa during the next year
  61. 61. Customers demand quality products and competitors are gearing up to take advantage
  62. 62. Re-engineer service offerings and introduce Premier Service Plan
  63. 63. The Integrated Export Initiative
  64. 64. Train employees to deliver higher levels of services
  65. 65. Customer involvement in design of new services
  66. 66. Web-based Premier Service Plan
  67. 67. Understand quality, logistical and legislative requirements
  68. 68. Overcome the logistical / manufacturing capacity constraints
  69. 69. Develop brand awareness in East African markets by mid-year</li></ul>Examples of Business Drivers, Initiatives and CSFs<br />Example 1<br />Example 2<br />Business<br />Drivers<br />Initiatives<br />Critical<br />Success<br />Factors<br />
  70. 70. Brain Break 3: <br />It Is Better To Be Wrong Than To Be Confused!!<br />
  71. 71. Maintaining your Executive Outlook<br />Read what executives read<br /><ul><li>Newspapers: Business Day, Business Report etc.
  72. 72. Periodicals: Financial Mail, Finance Week, Business Week, Economist etc
  73. 73. Subscribe to the customer’s industry trade journals
  74. 74. Subscribe to industry consultants’ newsletters
  75. 75. Join the customer’s trade associations </li></ul>Follow the customer’s industry<br />Follow the customer’s business<br /><ul><li>Subscribe to an on-line tracking service (McGregor’s)
  76. 76. Get on the customer’s PR mailing list
  77. 77. Get on the customer’s Investor relations mailing lists
  78. 78. Visit the customer’s website regularly
  79. 79. Access on line services (Business Day & FM)</li></ul>Put yourself in a position to meet executives socially<br /><ul><li>Attend the customer’s trade shows
  80. 80. Spend time where executives spend time</li></li></ul><li>The Offering<br />Value<br />The Value Proposition<br />Customer’s <br />Issue<br />Value <br />Promise<br />Your Services <br />& Unique Capabilities<br />Customer’s<br />Investment<br />Economic Payback<br />Customer’s Improvement<br />
  81. 81. Value Proposition Formats<br />You will be able to ______________ resulting in ________________<br />_____ <br />§<br />business initiative<br />specific or measurable outcome<br />by implementing our _____________________. We delivered similar <br />solution<br />results at ____________________ which resulted in ______________<br />____.<br />similar situation or customer<br />past value delivered<br />By changing from _________________ to ________________, you will<br />§<br />current situation<br />our solution<br />affect __________ which means ____________________. We will trac<br />k the <br />business driver<br />specific or measurable outcome<br />value delivered by _______________ and report it back to you ___<br />______.<br />frequency/time<br />value tracking system<br />We can help you address __________________________ by installing<br />§<br />compelling event<br />_________________ which will result in _________________________<br />___. <br />specific or measurable outcome<br />solution<br />We will insure your return on investment by ____________________<br />____.<br />shared risk/reward strategy<br />
  82. 82. Constructing Your Value Proposition<br />Customer <br />Business Driver<br />Your <br />Capability<br />Mutual Value<br />Business Initiative<br />Critical Success Factors<br />Unique Solution<br />Products <br />Services<br />Processes<br />People<br />
  83. 83. Business and Personal Value <br />When you can combine business value for the customer with personal value for the individual, you create competitive advantage.<br />©2002 Consiliat Marketing. All rights reserved. Using Consultative Selling Skills<br />
  84. 84. Asking High-Impact Questions<br />High-impact questions serve two purposes. You will use them to:<br /><ul><li>Uncover the customer’s business or personal views of theirImplied Needs and Preconceived Solutions
  85. 85. Deepen the customer’s view to explore Underlying Needs and Potential Solutions</li></ul>Purpose:<br /><ul><li>Conduct a dialogue that yields information that cannot easily be obtained through other means
  86. 86. Validate your perceptions, while demonstrating expertise
  87. 87. Reshape the customer’s thinking of both the issue and the solution
  88. 88. Expose underlying priorities and issues that reveal Underlying Needs</li></li></ul><li>Value Proposition – Templates & Guidelines<br />High Impact Questions<br />Guidelines<br />Template<br /><ul><li>The ABC industry is fiercely competitive and highly commoditised. Is this causing managers and share holders major concern?
  89. 89. Your ROCE is significantly lower than major industry players. Why is this? </li></ul>Step 1<br />Identify clear and indisputable market trends or business drivers: <br />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.<br /> <br />Currently, you’ve been experiencing:<br />Step 2<br />Articulate the resulting impact of the trend / business driver on the second line of theValue Proposition template:<br />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.<br /><ul><li>This must be placing great strain on your sales organisation? Do they have the skills and resources to sell at higher margins?
  90. 90. Is this causing higher levels of staff churn?
  91. 91. Do you have the calibre of sales management to respond appropriately to this situation? </li></ul>which causes:<br />Articulate the resulting impact of the trend / business driver on the second line of theValue Proposition template.<br />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.<br />
  92. 92. Value Proposition – Templates & Guidelines<br />High Impact Questions<br />Guidelines<br />Template<br />Step 3<br />Reduce the above thinking into a Business Driver , Potential Initiative and CSF for the Customer:<br />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.<br /> <br />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.<br /> <br />You will be able:<br /><ul><li>Do you have the tools and skills to make the transition from vendor to solution provider?
  93. 93. Does management understand the difficulties of making this transition?
  94. 94. What improvements in margins might be possible, if you make this change successfully?
  95. 95. What are the risks of failure? </li></li></ul><li>Value Proposition – Templates & Guidelines<br />High Impact Questions<br />Guidelines<br />Template<br />Step 4<br />Calculate the probable results of your solution on this line. <br />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.<br /> <br />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 <br /> <br />which would yeld:<br /><ul><li>Did you know that the successful solution providers are achieving 20-40% price premiums over their competitors?
  96. 96. Are you aware that companies who fail to execute this type of change successfully, suffer a significant negative ROI and lost credibility? </li></ul>Step 5<br />List your total pricing on this line.<br />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. <br /><ul><li>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? </li></ul>for:<br />
  97. 97. Value Proposition – Templates & Guidelines<br />High Impact Questions<br />Template<br />Guidelines<br /><ul><li>If it was possible to complete a pilot project and see a positive ROI within 6 months, would it make economic sense? </li></ul>Step 6<br />The time frame is listed on this line. <br />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.<br /> <br />within:<br />Step 7<br />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.<br /><ul><li>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? </li></ul> <br />as a result of:<br /><ul><li>Would it be possible for your HR and finance people to give us a detailed breakdown of staff churn for the last 2 years?</li></ul>Step 8<br />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. <br /> <br />This business issue is currently costing:<br />
  98. 98. Value Proposition – Templates & Guidelines<br />Guidelines<br />High Impact Questions<br />Template<br /><ul><li>If we were able to reduce staff churn by 30% in year 1, what would the impact on your organisation be? </li></ul>Step 9<br />Reduce the above thinking into an Economic Benefit for the Customer:<br />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.<br /> <br />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. <br /> <br />We will measure the results by:<br />
  99. 99. Never EVER Apologise To A Customer!<br />Brain Break 4: <br />A simple “sorry” would suffice<br />
  100. 100. Consultative Questioning<br />Situational<br /> What is the situation / How do you handle this? <br />Asking<br />Listening<br />Issue<br />Informing<br /> What’s wrong / What needs to be done?<br />Asking<br />Listening<br />Consequence<br />Informing<br />So what?<br />Asking<br />Listening<br />Value<br />Informing<br />How much?<br />©2002 Consiliat Marketing. All rights reserved. Using Consultative Selling Skills<br />
  101. 101. Provide Context – Get the Discussion Going <br />Situation Questions<br /><ul><li>Which cost issues will you be addressing with this initiative?
  102. 102. Which of the following two issues are the most important…..?
  103. 103. Who will you be looking to compete with in the new market sectors?
  104. 104. How many contractors are involved?
  105. 105. How do you feel about growth prospects for next year?
  106. 106. How ready are you to raise the bar against the competition?
  107. 107. What is your opinion on import substitution?
  108. 108. Which non-core assets do you plan to dispose of this year?
  109. 109. Once you have divested your non-core operations, where will you look for growth? </li></ul>Examples:<br />Ask open ended questions to get the discussion going<br />Remember The Four Cs - <br />Customers / Competitors / Commercial / Channels<br />
  110. 110. Establish the Issue – What’s wrong?<br />Issue Questions<br />Examples:<br /><ul><li>What are the major challenges in executing your strategy?
  111. 111. What opportunities look most attractive?
  112. 112. How are these challenges impacting you?
  113. 113. Where do you need to improve?
  114. 114. What effect will ………………have on your business?
  115. 115. Why isn’t it working as you’d like it?
  116. 116. How are you going to protect and grow your margins?
  117. 117. What’s keeping you awake at night?
  118. 118. What’s preventing you from being more cost effective?</li></ul>©2002 Consiliat Marketing. All rights reserved. Using Consultative Selling Skills<br />
  119. 119. Exploring the Consequences – So What?<br />Consequence Questions<br />Examples:<br /><ul><li>Why is this a problem?
  120. 120. What will happen if you don’t solve it?
  121. 121. What is this issue costing you?
  122. 122. How difficult would it be to solve the problem with internal resources?
  123. 123. What’s the worst that could happen?
  124. 124. If you don’t solve it, how will it affect your performance?
  125. 125. If you don’t act what do you stand to lose?
  126. 126. What do you gain by addressing this issue?</li></ul>©2002 Consiliat Marketing. All rights reserved. Using Consultative Selling Skills<br />
  127. 127. Explore the Need – What would help?<br />Need Exploration Questions<br />Examples:<br /><ul><li>What do you need? Why do you need it?
  128. 128. What solutions have you considered?
  129. 129. Would it be helpful if…………………………………..?
  130. 130. Do you really need (……….) or do you need (…………)?
  131. 131. What will it take to address this issue?
  132. 132. What would the ideal solution be?
  133. 133. If solving this problem by yourself were an option, what would you do?
  134. 134. What other approaches have you tried or considered?</li></ul>©2002 Consiliat Marketing. All rights reserved. Using Consultative Selling Skills<br />
  135. 135. Determine the Value – How much?<br />Value Questions<br />Examples:<br /><ul><li>How much would it help?
  136. 136. How would this approach make it easier for you?
  137. 137. How much would that save you?
  138. 138. Can you quantify the payback on this opportunity?
  139. 139. How would you assess each of these options?
  140. 140. Which of these potential solutions would have the greatest impact? Least Impact?
  141. 141. What does this option do for you that the others don’t?</li></li></ul><li>ANY QUESTIONS???<br />