Five Sure Fire Ways to End the Discount Dance

TOM PISELLO, Chairman & Founder

Blog: http://www.fightfrugalnomics.com

Twitter: @tpisello

http://www.alinean.com

Powering B2B sales to economic buyers

CHRIS EIFERT, Principal

Blog: http://www.tricomb2b.com/blog

Twitter: @eifertb2b

http://www.tricomb2b.com

© 2011 Alinean, Inc. 2

Five Sure Fire Ways to End the Discount Dance

• The Considered Purchase Decision Research

• How to End the Discount Dance?

• Top 5 Tips – Advice in Action

• Next Steps & Resources

Chris Eifert, Principal Tom Pisello, Chairman & Founder

The ROI Guy

© 2011 Alinean, Inc. 3

The Considered Purchase Decision Research

© 2011 Alinean, Inc. 4

Research Rationale

• The Considered Purchase?

– A systematic process for identifying a business issue, defining a specific need and selecting a solution to fulfill the need.

– Generally thought of as an important decision due to costs or risks associated with the issue and/or the solution.

• Buyer Focused

– What do influencers and decision makers think about during this process?

– What motivates and influences their decisions?

vs.

– What do other marketers think?

© 2011 Alinean, Inc. 5

Methodology & Respondent Profile

• Survey focus

– Product considerations & message relevancy

– Information consumption & online habits

• Respondent criteria (448 respondents)

– $50M min. company revenue

– B2B sales model

– Influencer or decision maker in considered purchase process (>$25,000)

Functional Role

Decision Role

© 2011 Alinean, Inc. 6

Price Dominates

• Price dominates decision for majority of purchases for 64% of respondents

• Good news for price leaders

– May not be good for customers who will pay more in the end, or get less business value than expected

• Bad news for majority of sales professionals & marketers

– More competitive

– Discounting

– Do all work, lose deal in the end

Source: 2011, TriComB2B and University of Dayton.

© 2011 Alinean, Inc. 7

TCO Focus Relevant For Some Buyers

• Senior executives and owners evaluated TCO more than any other role (67% vs. 56%)

• Deal Size Matters

– 42% begin doing so >$25,000

– 25% begin doing so > $100,000

• 60+ year olds twice as likely to calculate 100% of time compared to sample as a whole (32% vs. 15%)

• TCO by industry

• Most relevant in equipment-intensive industries

• Less impact in medical and IT

Source: 2011, TriComB2B and University of Dayton.

© 2011 Alinean, Inc. 8

Do Other Product or Service Features Matter?

Percent stating feature played significant role in purchase

decision 80% of the time

Source: 2011, TriComB2B and University of Dayton.

• Significant in majority of decisions (top 3)

• Process improvements (78%

• Operating costs (67%)

• Impact on customer service (66%)

• Other observations

• Operating costs lowest in IT (52%),

highest in process industries (76%)

• Process improvement ranked high(>74%) in all industries but construction (62%)

• Conceptual process improvement message important to owners/execs

• Business Value has an impact:

• Operating Cost Savings

• Process Improvements / Productivity Gains

• Customer Service

• Matters less:

• Financing options

• Ongoing maintenance / support contract costs

© 2011 Alinean, Inc. 9

Do Safety or Environmental Impacts Matter?

Source: 2011, TriComB2B and University of Dayton.

Significant factor in majority of decisions

• Safety (57%)

• Energy efficiency (48%)

• Green supply chain (27%)

•Other observations

• Safety even more dominant in energy and process industries; also age 50+

• Energy efficiency more important for senior execs/owners and age 60+

• Highest ranking for green supply chain was 36% (industrial manufacturing)

• Green does not have as big an impact as expected

© 2011 Alinean, Inc. 10

Research Conclusions

• B2B buyers are currently heavily motivated by price

– Good news for price leaders

– Important implications for the rest of us!

• TCO can be an important consideration for:

– Larger purchase decisions

– Sr. Executives & Owners

– Older decision makers

• Additional business value factors can be important.

http://tricomb2b.com//about/b2b-buyer-research

© 2011 Alinean, Inc. 11

Five Best Practice Recommendations to End the Discount Dance!

© 2011 Alinean, Inc. 12

Tip #1: Prove Lower Total Cost of Ownership (TCO)

• Move beyond purchase price to lifecycle cost to own

• Automate TCO comparison report development in tool:

– Self-service from web for executives doing their own research

– Sales tools for workshops and proposal development

– Needs Credibility = 3rd party developed / validated + research based

© 2011 Alinean, Inc. 13

Tip #1: Prove Lower TCO with Competitive Comparison Report

© 2011 Alinean, Inc. 14

Tip #2: Prove Higher Business Value and ROI

• Go Beyond TCO to include:

– Business Value (More savings, More productivity, More revenue / margin)

– ROI

– Payback

– Risk

© 2011 Alinean, Inc. 15

Tip #3: Engage Executives

• Direct meeting with executives

– Compelling analysis to connect & engage

• Arm champion to move discussions beyond price

– Executives

– Procurement

– Other Stakeholders

© 2011 Alinean, Inc. 16

Tip #4: Be Proactive

• Don’t wait for Price to become an issue – it will

• Don’t wait for Competition to present their case first

• Proactively develop case for lower TCO / incremental value

• Assure that all stakeholders have evidence they need to get beyond price challenges

Price Objections

Competitive Proposals

Frugal Stakeholders

© 2011 Alinean, Inc. 17

Tip #5: Tool to Succeed

• Buyer’s executives are empowered

– Use web to do research

– Self-service oriented

– Trust peers / analysts most

• Sales needs tools to succeed

– Equipped to better connect & engage with executives

– Automation to ease TCO / ROI business case process

– 3rd party credibility

© 2011 Alinean, Inc. 18

Five Best Practice Ways to Move Beyond Price / End the

Discount Dance

1. Prove Lower Total Cost of Ownership (TCO)

2. Prove Higher Business Value & ROI

3. Reach the Executive

4. Be Proactive

5. Tool to Succeed

© 2011 Alinean, Inc. 19

Next Steps & Resources

© 2011 Alinean, Inc. 20

Nest Steps & Resources

• Additional Research and Insights

http://tricomb2b.com//about/b2b-buyer-research

http://tricomb2b.com/blog

http://tricomb2b.com//about/b2b-b http://www.fightfrugalnomics.com

Ask the ROI Guy FAQ Center

http://www.alinean.com/faq/

Dozens of TCO Tool examples

© 2011 Alinean, Inc. 21

Q&A

Chris Eifert, Principal Tom Pisello, Chairman & Founder

The ROI Guy