Understanding B2B Value

Your salespeople are leaving money on the table

Merriam Websters definition of Value

A fair return or equivalent in goods, services, or money for something exchanged

The product IS important

..and there seems to be other value than product itself...

Series1

Profit: 45%

Manufacturing: 35%

Retail Markup: 11%

Operating Expense: 9%

B2B and B2C is very different

The B2B Buying Process is:Long

ComplexTechnical

Group BasedHigh Risk

High ValueRational (Group)

Emotional (Individuals)Impacted by Experts

Company Brand OrientatedHas significant Service focus

Has lifetime focusPersonal Interaction with

Suppliers

First workshop

Define the concept of value in your own wordsMake it Business to Business centricOne statement per team10 minutes

What was your experience?

A B2B definition of value

The perceived benefits of a product minus the price minus the cost of using & owing it.

Value is subjective

It does not matter what we decide value is it is the customers perception that is important!

The classical view of value is a zero sum game

Any $ gained by the customer is a $ lost by the supplier

The Classical Perspective:Manufacturing as key value Driver

The supply Chain view of Value

Supply Manufacturing Distribution

Managing the Supply Chain

Efficiency Driven Value

Customer

Revenue Generating part of the

Corporation

Demand Driven Value

Cost Saving part of the Corporation

SUPPLIER

Where is value created?

CUSTOMER

CO-CREATION

2nd Workshop

• What are key elements of Value?

• We know value of the product itself – what other value elements are there?

• Brainstorm on post-it notes for 5 minutes• Discuss in group and present top 3.

Customer Value Components in B2B

ValueKnowledge

Product

Service

Relationship

BrandSocial

Market

Application

Access

Risk

Utility

PerformanceGuaranteeEconomicRisk

Strategic

Flexibility

Repetitive

Life Cycle

Confidence

Technology

Trust

Reliability

Consistency

Delivery

Transactional

AccuracyTime to Market

Design

Mutual Goals

Problem solvingCommunication

Innovation

Solidarity

Emotions

Partnership

Quality

Wich element of value is most important?

Value depends on an individuals department & Job function

Typical Customer Benefits Offered

Typical Purchase Team Members

Highly competitive prices and quality

Manufacturing plants on 4 continents

Internet order placement, tracking and billing system

24/7 Customer response facility

Customized manufacture and delivery of products jit

Sunday and holiday delivery

JÌT

Warehouse Manager

Purchasing Manager

Logistical Officer

Maintenance Manager

Chief Marketing Officer

CFO

Supply Chain Head

COO

CEO

Benefit Stack - Das Narayandas

Value changes according to a persons level in the organisation

The higher in an organisation an individual is the less focus there is on:Product and service value

The more focus there is on:Knowledge, Relationship and Brand Value

What are the characteristics of Value?

Value is not constant

Use Situation

The use Segment

The Strategic modeJune 29, 2007

Market Situations

Place in network

Contextual Changes9 November 1989

Value

Value changes over timeDortmund fans view of Mario Götze

2/7-2013Bayern Munchen

1/7-2013Dortmund

15/10-2013GER-SWE

23/11-2013First goal against BVB

Frame of Reference is important for Value

What does competitors

offer? What alternative solutions are

available

What is the

cost/benefit of

doing nothing

What does customers Value Survey 1 to 5 scale

Product Service Knowledge Brand Relationship3.000

3.200

3.400

3.600

3.800

4.000

4.200

Large Customers

Large Customers

Value is complex

Fools ignore complexity. Pragmatists suffer it.

Some can avoid it. Geniuses remove it.

Alan Perlis

Let see if we make this less complex

To whom are you talking?

The part of the Customers organisation responsible for Cost Saving

or

The part of the Customers organisation responsible for Revenue Generation

What are you talking about?

Are you Selling or Exploring Value?

Are you tailoring to the individuals perception of value?Are you Tailoring to the Customers market situation and high level goals ?Are you Tailoring to the Individuals Level in the organisation?Are you giving customers the freedom to innovate?

What are the value signals from the customer?

Relationship?

Invest?

Access?

Participation?

Excuses?

Not all customers are eviland not to all suppliers

CriticalPartner to create

Competitive Advantage

ShowstoppersManage to reduce risk

LeverageManage for financial

impact

RecurringConsolidate

SimplifyManage by Exception

Impact of supplier on cost structureHigh and competitiveness Low

Mar

ket R

isk/

Low

L

ack

of C

hoic

e

Hig

h

Why is this important to You

Maturing Industry

Declining Margins

Challenger Focus is Value

M&A is not just our Plan

Survival

Why is this important to you personally?

Maturing Industry

Declining Margins

Being Important to the Customer

Upgrade Yourself

Survival

The job war is already raging!

Key Points to Remember

Value is subjective and in the eye of the clientValue depends on people position, department Value is dynamic and changes according to frame, time, context, mode, segment and timeValue has cost improving and revenue generating elements.Co-Creation of value is not a zero sum gameCustomers will show how much they value us by their investment in a relationship with us.

Three Key Points for the future

• Spend your challenger time talking about value through growing revenue and managing cost and risk.

• Understand what situation the customer is in and what each member of the buying group Value.

• Read the Signals from the customer – what is really going on – and take appropriate action.

Thank you very much

andenjoy the future

Especially if you choose to create it!