Sales & Marketing Management - May/June 2008 - (Page 22)

It is a rare commodity in business markets to find firms that do business based on demonstrably superior value. competitors, or sell primarily on customer cost of ownership comparisons with the same competitors. Value merchants versus value spendthrifts A value merchant recognizes the supplier’s own costs and the market offering’s value to the customer and works to obtain a fair return for both the supplier firm and customer firm. The value merchant stands in stark contrast to the all-too-common value spendthrift, who squanders the superior value of the supplier’s market offerings while getting little in return. Below, you’ll find a series of paired statements that contrast value spendthrifts and value merchants. By candidly picking the statement in each pair that best describes your salespeople, you can construct a profile of them that indicates the extent to which they are value merchants or value spendthrifts. 10. Tell us customers are only interested in price, or tell us customer insights to improve the value of our offerings. Customer value management explained Doing business based on demonstrating and documenting superior value is, indeed, a rare commodity. Yet it doesn’t have to be so. By adopting the customer value management approach presented below, value merchants can prevail when they encounter challenges of the type that the IC salesperson faced. The accompanying figure places the processes in sequence. Your salespeople: 1. Routinely trade more business for lower prices, or routinely gain more business at the same price. Conceptualize Value Formulate Value Propositions 2. Make unsupported claims about superior value to customers, or demonstrate and document claims about superior value in monetary terms to customers. Conceptualize Value focuses on the fundamental building block of the customer value management and addresses questions like these: What do we mean specifically by “value” in business markets? How does one define points of difference, points of parity and points of contention vis-à-vis the next-best alternative? What are the three types of value propositions suppliers use in business markets, and why is a value proposition with a resonating focus preferred over the other two? Formulate Value Propositions begins with analyzing what potential changes in the market offering customers would value most vis-à-vis the next-best alternative. This is used to develop a value proposition to aspire to, and qualitative research is conducted to refine the value proposition. Finally, value word equations are developed to capture the points of difference in terms that customers can readily understand. Substantiate Value Propositions provides a methodology for persuasively substantiating value propositions to customers. The value word equations are brought to life with data that is gathered in a customer value assessment. They are then used to construct value calculators that demonstrate the value to customers. Finally, value case histories and value documenters help prove to customers that they did indeed receive the value that the supplier promised them. Tailor Market Offerings demonstrates how a deep understanding of customer value can be used to www.salesandmarketingmanagement.com 3. Focus on the revenue/volume component, or concentrate on the gross margin/profitability component of their compensation plan. 4. Give price concessions without changes in the market offering, or only give price concessions in exchange for cost-saving reductions in the market offering. 5. Complain that our prices are too high, or else complain our proof of superior value is lacking. 6. Give services away for free to close a deal, or strategically employ services to generate additional business. 7. Prefer to give quick price concessions to close deals and go on to other business, or are willing to “hang tough” in the negotiations to gain better profitability out of each deal. 8. Believe management pursues a capacitydriven strategy, or believe management pursues a value-driven strategy. 9. Sell primarily on price comparisons with 22 SALES &MARKETING MANAGEMENT MAY/JUNE 2008 http://www.salesandmarketingmanagement.com

Table of Contents Feed for the Digital Edition of Sales & Marketing Management - May/June 2008

Sales & Marketing Management - May/June 2008 Contents Editor's Letter Brian Tracy University Smart Sales Sales Strategy Smart Marketing Marketing Strategy Smart Management Management Strategy The Minister of Culture Become a Value Merchant Incentives/Motivation Streamlining Business Travel Book Excerpt The Way I See It

Sales & Marketing Management - May/June 2008

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