Sales & Marketing Management - May/June 2008 - (Page 23)

sales construct segment-specific market offerings as naked solutions with options. Instead of the usual vanilla approach that provides the same bundle of products and services to all customer firms, a supplier can offer these flexible market offerings. This allows more refined targeting through various levels of service and enables suppliers to capitalize on differences between customers. Transform Sales Force to Value Merchants challenges suppliers to transform their sales forces from selling on price to becoming value merchants. While getting sales compensation aligned with selling on value and profit is critical, it is not enough. Businesses must participate in a “Continuous Improvement Conference” at one of its major plant sites. Facing considerable pressure from Wal-Mart to lower its condiment prices, the producer decided to invite its incumbent suppliers, as well as competing suppliers, to a meeting designed to find ways to dramatically reduce its operating costs. Along with competing supplier sales reps, Policicchio was given full access to the plant and its personnel for one full day. From discussions with plant personnel, he quickly learned that a major and recurring problem stemmed from lost production and downtime attributable to poorly performing pumps on 32 huge condiment storage tanks. Through extensive interviews with the plant engineer, maintenance manager and purchasing manager, Policicchio gathered relevant cost and usage Tailor Market Offerings Substantiate Value Propositions Transform Sales Force to Value Merchants Profit from Value Provided foster value merchants and put a value-selling process and value-based sales tools in place. They must ensure initial and ongoing value-selling experiences with customers while instilling and invigorating a value merchant culture. Profit from Value Provided is all about how companies can profit from the superior value they provide customers. Although it is natural to think first of price premiums, there are also three other means of obtaining a fair return from customers for value provided in business markets: a more profitable mix of business, a greater share of the customer’s business, and the elimination of value drains and value leaks. [Editor’s Note: Value drains and value leaks were detailed in the Value Merchants Book Excerpt, which appeared in the March/April issue of S&MM.] But getting a fair return requires the supplier to manage pricing as if profitability depended on it! To accomplish this, a value-based approach to pricing at the strategic, tactical and transactional levels is necessitated. A value merchant delivers profit A recent experience from Rockwell Automation exemplifies how value merchants gain profitable growth. A condiment producer hastily summoned Rockwell Automation sales representative Jeff Policicchio to www.salesandmarketingmanagement.com data. He then relied on his laptop value assessment tool to analyze these data, find potential cost savings and construct the best pump solution for the customer. The next day, Policicchio and his competitors were called back to the plant; all were given one hour to prepare a solution proposal and present it to plant management. Following the presentations, he learned that he was the only one to demonstrate tangible cost savings for his proposed solution. Everyone else made fuzzy promises about possible benefits. Stated simply, Policicchio’s value proposition was, “Through this Rockwell Automation pump solution, your company will save at least $16,268 per pump—on up to 32 pumps—relative to our best competitor’s solution through the elimination of most downtime, reduced administrative costs associated with procurement and lower spending on repair parts.” Plant management was so impressed with Policicchio’s value proposition that they immediately purchased one pump solution for a trial. After a suitable period, plant managers audited its performance and discovered it to be even better than predicted. Based upon these findings, they placed orders for the remaining pumps, which will be installed as the existing pumps wear out. s&mm James C. Anderson, Nirmalya Kumar and James A. Narus are the authors of Value Merchants: Demonstrating and Documenting Superior Value in Business Markets (Harvard Business School Press). MAY/JUNE 2008 SALES &MARKETING MANAGEMENT 23 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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