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© IPED, a division of Everything Channel, a United Business Media Company. All rights reserved. IPED materials may not be reproduced or redistributed without the
express written consent of IPED.
Shifting the Conversation from Price to Value
Channel Elite Express Webinar SeriesJuly, 2008
© IPED, a division of Everything Channel, a United Business Media Company. All rights reserved. IPED materials may not be reproduced or redistributed without the
express written consent of IPED.
Channel Consulting, Education and Market Intelligence
• Over 50 years of collective experience in the channel
• Thousands and thousands of
partner profiles in every geography worldwide
• More than 90,000 interviews
with Channel Partners and their customers annually
From CMP to… Everything Channel
2
© IPED, a division of Everything Channel, a United Business Media Company. All rights reserved. IPED materials may not be reproduced or redistributed without the
express written consent of IPED.
Agenda
Dynamics of Pricing
Creating a Unique Business Value Position
Changing the Conversation
© IPED, a division of Everything Channel, a United Business Media Company. All rights reserved. IPED materials may not be reproduced or redistributed without the
express written consent of IPED.
Dynamics of Pricing
Why Do Prices Go Down?• They Must
– Macro-economic reality … as markets mature, prices drop– Customers always want to get the best deal = “best price”
• Perception of Product Equality– Product capability exceeds customer capacity
• Competitive Undercutting– When products are equal, differentiation is based on
credibility and price– Lack of selling and negotiating skills accelerates the erosion
• Changing Customer Buying Patterns and Processes– Savvy buyers; ubiquity of shopping; vast choices; beyond IT
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© IPED, a division of Everything Channel, a United Business Media Company. All rights reserved. IPED materials may not be reproduced or redistributed without the
express written consent of IPED.
The Reality of Pricing vs. Value
Lessons Learned in the Real World
• Price = What You Charge
• Value = What Your Customer Believes It’s Worth
• There is VERY LITTLE Statistical Correlation Between Price & Value
• Price Will Always Be an Issue … Even when Value is Perceived
• If Your Customers aren’t Questioning the Price … You’re Not Charging Enough
• No Matter How Competitive a Market is, Some Players Can Almost Always Justify Premium Prices
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© IPED, a division of Everything Channel, a United Business Media Company. All rights reserved. IPED materials may not be reproduced or redistributed without the
express written consent of IPED.
Creating a UniqueBusiness Value Position
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© IPED, a division of Everything Channel, a United Business Media Company. All rights reserved. IPED materials may not be reproduced or redistributed without the
express written consent of IPED.
56.8%
45.1%
42.7%
30.6%
22.8%
20.4%
14.6%
13.1%
13.1%
12.6%
10.2%
Technical Expertise
Cost
Experience With Technology
Understanding Of My Business
Implementation Time
Breadth Of Product & Tech. Offerings
Market Awareness
Ability To Prove ROI
Creative Expertise
Strategic Business Expertise
Staff Size
Greatest Areas of Value, In Relationship w/ Partners
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© IPED, a division of Everything Channel, a United Business Media Company. All rights reserved. IPED materials may not be reproduced or redistributed without the
express written consent of IPED.
Unique Business Value
What is the specific or measurable business result that we will
deliver?
How does the client define value? How will they measure it?
How have we quantified this value in the client’s terms?
Has the client confirmed their understanding of the value we will
deliver?
How does this value differentiate us from our competitors?
BusinessProfile
BusinessDrivers
BusinessInitiatives
CapabilitiesSolutionDifferen-
tiation
CompellingEvents
UniqueBusiness
Value
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© IPED, a division of Everything Channel, a United Business Media Company. All rights reserved. IPED materials may not be reproduced or redistributed without the
express written consent of IPED.
Capabilities—What Makes Us Unique and Superior?
People(Who)
Processes
(How)
Products
(What)
Intellectual capitalResource commitmentBusiness partnersExperience and expertiseSupport (before and after the sale)Culture
Share best practicesEducationImplementationAccount supportGlobal presence
FunctionalityQualityInnovationTechnologyIntegration
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© IPED, a division of Everything Channel, a United Business Media Company. All rights reserved. IPED materials may not be reproduced or redistributed without the
express written consent of IPED.
Building an Effective Position and Message
Components of Your Value Proposition
• The “Much-ness”– How much value will you deliver to the business … in what
commodity?
• The “Soon-ness”– When will the value begin to pay back … and how long will it
continue?
• The “Sure-ness”– Why should the customer believe your claims?
– Testimonials / Case Studies– Methodology– Business Acumen– Guarantee / Warranty– Shared Risk / Shared Reward
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© IPED, a division of Everything Channel, a United Business Media Company. All rights reserved. IPED materials may not be reproduced or redistributed without the
express written consent of IPED.
Changing the Conversation
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© IPED, a division of Everything Channel, a United Business Media Company. All rights reserved. IPED materials may not be reproduced or redistributed without the
express written consent of IPED.
Perception of Value
Integrated in-formation sys-
tems
Commitment of dedicated personnel
Deeper in-sight into
product plans
Gain competi-tive advan-
tage
Sharing price/cost
risks
Reduce lead time for
product de-velopment
0%
10%
20%
30%
40%
50%
60%
70%
63%
47%
37%33% 32%
28%
23% 28% 11% 6% 11% 6%
Benefit Received
Expected Benefit
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When you have formed “partnerships” with strategic suppliers, what benefits did you expect and what did you actually receive?
© IPED, a division of Everything Channel, a United Business Media Company. All rights reserved. IPED materials may not be reproduced or redistributed without the
express written consent of IPED.
Differentiating Your Value To the End Customer
9%
12%
12%
15%
18%
19%
20%
25%
25%
32%
37%
41%
Trusted Advisor Relationship
Technical Support
Specialized technologies Knowledge
Turnaround/Delivery Speed
Proactively Manage Customer Risk/Cost
Vertical market Knowledge
Customer Geographical Proximity
Vendor/Partner Relationships
Vendor/Brand Reputation
Number of References
Most Aggressive Pricing
Certification and Credentials
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© IPED, a division of Everything Channel, a United Business Media Company. All rights reserved. IPED materials may not be reproduced or redistributed without the
express written consent of IPED.
Justifying Premium Pricing Through ValueBusiness Critical
Provides significant
value to the business
and is directly
attached to GM or NI of the buyer
Client Dependenc
y
Client has little or no ability to
perform the service on their own, and the
service is critical to
the company
Urgency
Attached to customer
compelling event
Unique Skills
Based on a unique set
of skills that you have
and others don’t –
which are also
valuable to the
customer
Brand Equity
Reputation of the
provider justifies a premium
price based on the
customer’s perception of value
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© IPED, a division of Everything Channel, a United Business Media Company. All rights reserved. IPED materials may not be reproduced or redistributed without the
express written consent of IPED.
Make the Translation: “Connect the Value!”
From Technical Products
WHAT YOU SELL
• Servers• Printers• Software• Storage
• IP Telephony• Virtualization
To Business Value
WHAT THEY WANT
• Increase Revenue• Decrease Costs• Faster Time To Market• Minimize Business Risk• Establish / Protect
Competitive Advantage
“What’s In It for Them?”
HOW TO TRANSLATE
• How Much, How Fast• What will be impacted?• Risk/Reward • Total Available Benefit• Based on Previous
Success/Implementation
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