VALUE BASED SALES

Basic Principles Rick Struzynski y

Copyright 2010 2013 Rick Struzynski

Learning expectations Common understandings/definitions Buying Process Value Proposition Value Based Pricing

Copyright 2010 2013 Rick Struzynski

What are we g going g to g get out of this?

We are NOT going to become perfect sales people from this presentation

We are going W i t to get tab better tt understanding d t di of f who our customers are

And what drives them

We are also going to get a better understanding of what value is and how to quantify it

Copyright 2010 2013 Rick Struzynski

It goes by many different names:

Consultative Sales SPIN Sales (situation, problem, implication, need-payoff) Solution Selling Investigative Sales

It is really just about asking the right questions and quantifying intangibles

Copyright 2010 2013 Rick Struzynski

How many airplanes has United bought? How many automobiles has Hertz bought? How many microprocessors has Dell bought?

Yes, its a trick question, but an important understanding! g

Companies dont make purchases, people do

Copyright 2010 2013 Rick Struzynski

They are people, not companies They each have unique needs

Some may be obvious, others not

Until we understand the real drivers, we are just playing j p y gag game of chance

Assume your competition is meeting the stated scope. Have you ever lost a bid even though you were the lowest price? Playing the price war is a losing proposition p p
Copyright 2010 2013 Rick Struzynski

In the sales process value is most clearly and measurably y defined as that which the customer will take action to obtain or keep
Michael J. Webb, Sales and Marketing the Six Sigma Way

Copyright 2010 2013 Rick Struzynski

How did I go from this

to this?

And why you would be if you were the Jeep salesperson?

Because you never took the time to find out what my real drivers were. You only knew that I had an immediate need need, and was a very satisfied previous Jeep owner. In reality, you never had a chance because my wife hated the look of the Wrangler and her opinion far outweighed my desire for the Jeep. Copyright 2010 2013 Rick Struzynski

Stages:

1) Problem Recognition 2) ) Information Search 3) Evaluation of Alternatives* 4) Purchase Decision 5) Purchase 6) Post Purchase Evaluation

*This is the RFQ stage, if you are just finding out about pp y at this stage, g ,y you already y lost! the opportunity
Copyright 2010 2013 Rick Struzynski

1) ) Problem Recognition g

Cost reduction Process improvement New market k Etc Web Tradeshow Sales Rep Etc

2) Information Search

Copyright 2010 2013 Rick Struzynski

3) ) Evaluation of Alternatives

References Site Tours Quotes (includes ( l d a quality l value l proposition) )

4) Purchase Decision

Who best meets the stated and unstated criteria How much value is p placed in the intangibles g

Copyright 2010 2013 Rick Struzynski

5) ) Purchase

Ts & Cs Delivery

6) Post Purchase Evaluation

Service support Product/Service/Technology performance

Copyright 2010 2013 Rick Struzynski

What is a value proposition?

Do all products or services have a value proposition? Is it one size fits all? Yes, all goods & services must provide value to exist in the marketplace No, generally speaking, there is no single proposition to fit all customers!

Yes & No!

Copyright 2010 2013 Rick Struzynski

One of the best statements I Ive ve seen of what a Value Proposition is:

a clear statement of the tangible g results a customer gets from using your products or services
Selling to Big Companies, Jill Konrath

As all A ll customers have h different diff needs, d this hi suggests that a value proposition (to be truly effective) must be custom tailored to each buyer.

Copyright 2010 2013 Rick Struzynski

This is where investigative sales comes in Must have a good relationship Fill in the non-RFQ blanks

Copyright 2010 2013 Rick Struzynski

What are the key y issues facing g the business

SWOT analysis, background research, information gathering, etc

What is the impact of those issues

Cost, time to market, process improvement, etc etc

How can we help p

What products or services appear to be appropriate

Copyright 2010 2013 Rick Struzynski

What are the potential benefits

This is not about features, but about direct answers to the identified problems

Prove it!

Cite examples

Copyright 2010 2013 Rick Struzynski

In the end, you will develop a one or two sentence statement that clearly addresses what you know to be the critical decision criteria and how your solution answers those needs.

Copyright 2010 2013 Rick Struzynski

What is the typical pricing strategy?

And why do people use it? Cost p plus is most common, why? y Because its easy y but how often is the easiest way the best way?

Value based pricing attempts to quantify everything hi we j just di discussed d Works with utility function As this is a complex subject, what follows are just three examples of value based pricing found in the marketplace. marketplace
Copyright 2010 2013 Rick Struzynski

$380,000

$3,990

Copyright 2010 2013 Rick Struzynski

0 6 cents / ml 0.6
Same water in Airport

0.033 cents / ml
Bottled drinking water

Copyright 2010 2013 Rick Struzynski

0.238 cents / ml
Distilled water

21 cents / ml 98% distilled water

Copyright 2010 2013 Rick Struzynski

What is the value of a 100 Hagen-Dazs coupon?

Copyright 2010 2013 Rick Struzynski

Hagen-Dazs Hagen Dazs prints millions of 100 coupons

Cost so small relative to the other numbers free HD wants to deal in volume, not 100-200 or so HD sells them for 80 Value received: 20 Value received: goodwill unknown

HD then sells them to an intermediary y

Intermediaries then sell to Employers

Employers give to staff

Copyright 2010 2013 Rick Struzynski

Some staff use directly, chain over

Value received: 100 + unknown goodwill Value received: Guanxi (unknown goodwill) Value received: 100 unknown goodwill
1

Many y employees p y g give coupon p away y

Some receivers use directly y

Many y receivers sell to coupon p marketers

Typically 40% face value Value received: 40

Copyright 2010 2013 Rick Struzynski

Coupon Marketers need to do something

Easiest solution? SELL BACK TO HAGEN-DAZS! HD happy to pay 50 Value received: 10 Coupon shredded Value received: 30 + unknown goodwill

Hagen-Dazs the cycle ends

Copyright 2010 2013 Rick Struzynski

Tangible value received:

HD: 30 ( 80 50 initial investment [0]) Intermediary: y 20 Employee (small % use directly): 100 Receiver (small % use directly): 100 Receiver: 40 Coupon marketer (small % use directly): 100 C Coupon marketer: k t 10 2 Total tangible value :
30+20+10+9+36+8.1+7.3 30+20+10+9+36+8 1+7 3 = 120.4 120 4

Copyright 2010 2013 Rick Struzynski

Goodwill value received:

Hagen-Dazs Employer p y Employee (most)

Copyright 2010 2013 Rick Struzynski

1.

2.

There is a very active aftermarket for coupons in Chi (A China (Asia?). i ?) It I is i very common for f coupon holders h ld to sell a coupon they dont want/need in exchange for something more useful (at least at the time). Di Discounts t calculated l l t d as f follows: ll
1. 2 2. 3. 4. 5.

Assume about 10% of employees use coupon directly therefore realized value of 10 Assume about 10% of receivers use coupon directly therefore realized value of 9 (10% of 90% from step one) If 10% of receivers use coupon, resale value must be discounted - realized value of 36 A Assume about b 10% 0% of f coupon marketers k use coupon directly d l therefore realized value of 8.1 If 10% of marketers use coupon, resale value must be discounted realized value of 7.3

Copyright 2010 2013 Rick Struzynski

Our customers are people, not companies, and likely have hidden needs It is our j job to bring g value to each stage, g , helping customers move through the buying process A value proposition answers customer specific needs Value based pricing is a useful negotiation tool Value comes in all shapes, forms & sizes!
Copyright 2010 2013 Rick Struzynski

Thank you
Rick Struzynski +1.847.648.6018 +86.139.1764.8583 rstruzynski@gmail.com

Copyright 2010 2013 Rick Struzynski