differentiators that make a difference - qvidianinfo.qvidian.com/rs/qvidian/images/differentiators...

© 2011 Tom Sant© 2011 Tom Sant

Differentiators that Make a Difference

Value, Differentiators and ProofTom Sant

© 2011 Tom Sant

Why Differentiators Matter:Providing Support for Our Value Propositions

The ultimate goal of differentiating our offer and our company:

Win more business.Do it faster.

© 2011 Tom Sant

Smart Buyers Look for Positive Impact

• Revenue generation• Cost avoidance• Operational efficiency• Reliability of mission-critical operations• Quality of deliverables or execution• Sustainability• Worker productivity• Customer satisfaction• Regulatory compliance• And other key performance indicators

© 2011 Tom Sant

It’s not what you sell; it’s what they’ll gain

Focus on the hole your customer needs to make,not on the drill.

© 2011 Tom Sant

The Estimation Heuristic

Basic principle:Choose the course of action or alternative that

offers the highest rate of return.

Why the Inuit hunt whales.

Basic principle:Choose the course of action or alternative that offers

the highest rate of return.

© 2011 Tom Sant

The Basic Value Proposition

(Values - Costs) > (Valuea - Costa)

where:Values = the value of your solution Costs = the cost of your solution Valuea = the value of the next best alternativeCosta = the cost of the next best alternative

© 2011 Tom Sant

A value proposition is a

promise

to deliver specific results that the client desires,

backed up by evidence that we can keep our promise.

© 2011 Tom Sant

The Importance of the Value Proposition

It answers one of the three questions that clients ask when they are making a buying decision:

Am I getting what I need?Is it good value?

Can they really do it?

© 2011 Tom Sant

And Differentiations Helps Answer the Third




© 2011 Tom Sant

Four Principles of Value1. The payback measurements must be client-focused

If the client doesn’t care about it, it has no value.

2. The presentation of payback is more persuasive if it’s quantified

Show me the money!

3. The value proposition is more likely to be noticed and remembered if it’s graphical

Most decision makers don’t read; they skim.

4. To bullet-proof your value proposition, you must base it on your differentiators

Otherwise, your competitor just says, “Me too.”

© 2011 Tom Sant

The Process

1. Identify customer-desired outcomes

2. Quantify the value

3. Select relevant differentiators

4. Prove your claim

© 2011 Tom Sant

Step One:Identify Customer-Desired Outcomes

© 2011 Tom Sant

Four Areas of Outcome

Strategic Value •Budgetary compliance•Profit improvement•Downsizing•Mergers / acquisitions•Market share•Reduced risk•Better clinical outcomes

Strategic outcomes:• Financial metrics• Market share• Growth rate• Shareholder value

© 2011 Tom Sant

Four Areas of OutcomesStrategic:

Business / Financial•Budgetary compliance•Profit improvement•Downsizing•Mergers / acquisitions•Market share•Reduced risk•Better clinical outcomes

Tactical:Technical / Infrastructure• Introducing best practices• Adding flexibility• Improving QC• Automating a labor-

intensive process• Regulatory compliance

Tactical outcomes:• Operational performance• Productivity• Headcount• Quality, compliance

© 2011 Tom Sant

Four Areas of Outcomes


Technical / infrastructure goals• Introducing best

practices• Adding flexibility• Improving QC

Social / Political:• Internal

- Improve morale-Reduce absenteeism-Decrease turnover

•External-Gain public support-Win approval-Enhance recognition

Social / political outcomes:• Improved relations with employees, suppliers• Customer satisfaction• Sustainable / green operations

© 2011 Tom Sant

Four Areas of Outcomes


Technical / infrastructure goals• Introducing best

practices• Adding flexibility• Improving QC

Social goals• Internal

- Improve morale-Reduce absenteeism-Decrease turnover

•External-Gain public support-Win approval-Enhance recognition

Personal goals

© 2011 Tom Sant

Activity # 1: Identify Outcomes

15 minutes

Identify specific, quantified outcomes in each of the three areas where clients typically seek results.

Use the examples as a guide to create your own.

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© 2011 Tom Sant

Activity 1: Identifying Typical Outcomes

Share your results.

© 2011 Tom Sant

Categorize the Outcomes

By Business Function

By the Buyer’s Role

© 2011 Tom Sant

Create an Outcome Map for Your Opportunity

• Identify the key business functions with the client organization that will be part of the decision team.• For example: CEO, CFO, VP of Sales, General Manager of

Quality Operations• List the function across the top row.

• Fill in the specific outcomes each function desires in the columns below.

• Prioritize the outcomes in terms of the client’s decision process.

© 2011 Tom Sant

Client Business Functions

Desired O

utcomes

© 2011 Tom Sant

Marian Mercy Hospital SystemClient Business Functions

CEO CFOMedical Director

Director of IT

Desired O

utcomes

© 2011 Tom Sant



Director of IT

Desired O

utcomes

Integrate 3 new acquisitions

Achieve Top 100 Hospitals ranking

Improved core measures of performance

© 2011 Tom Sant



Director of IT

Desired O

utcomes


Improve net profitability


Reduce A/R by 5 days average


Reduced spend on drug therapy

(prompt shifts off of IVs)

© 2011 Tom Sant



Director of IT

Desired O

utcomes



Zero “never” events



Accurateworkload tracking




Reduced medication errors

© 2011 Tom Sant



Director of IT

Desired O

utcomes




Increased ROI from the Health

Information System




Simple, fast implementation





Access to outside expertise

© 2011 Tom Sant

Now…

Prioritize and group.

1. Which function or role has the most important voice in the decision?

2. Which outcomes are connected?

© 2011 Tom Sant



Director of IT

Desired O

utcomes




Increased ROI from the Health

Information System




Simple, fast implementation





Access to outside expertise

© 2011 Tom Sant

Activity # 2: Build an Outcome Map

15 minutes

Complete the Outcome Map for an opportunity you are currently pursuing.

1. Name the relevant business functions involved in the decision2. Identify outcomes that each function seeks.3. Prioritize the top outcomes: strategic, tactical or political? 4. Look for opportunities to group outcomes.

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© 2011 Tom Sant

Activity 2: Build an Outcome Map

Share your results.

© 2011 Tom Sant

Step Two:Quantify the Value

© 2011 Tom Sant

Some Principles for Quantifying Value

1. You know more than you think you do.2. Impact calculations do not have to be precise.3. Use conservative estimates.4. Get the customer to collaborate:

• How will you measure success?• What specific impact will you be looking at?• How are you doing in that area today? • Do you have baseline data that you can share?• Can we agree on some assumptions?

© 2011 Tom Sant

Six Ways to Quantify Value

• Anecdotal• Benchmarking• ROI modeling• Payback analysis• Internal rate of

return• Net present value

Impact on Sales

X

X

X

X

X

X

X

Payback Point

© 2011 Tom Sant

Anecdotal Evidence of Value

Example

Point

Benefit

© 2011 Tom Sant

Related: Case Studies to Establish Value

Problem: the challenge our customer faced.

Action: what we did to help them meet the challenge.

Result: statistics and metrics showing the impact our

actions had; a testimonial from the client.

© 2011 Tom Sant


AnecdotalBenchmarking

0

10

20

30

40

50

60

70

80

total cost of ownership

Competitor A

Industry Average

ACME

© 2011 Tom Sant


•Anecdotal•Benchmarking•ROI modeling

Typical Bank Performance Metropolitan Bank Performance

Assume: $2,000,000 trustAssume: 10% return per yearGross yield: $200,000Trustee fee: approx. ½ to 1%

= $10,000 to $20,000Investment management fee: ¼ to ½%

= $5,000 to $10,000Internal cost of administration: Assume 1 FTE @ $40,000/yrTaxes (at corporate rates): 35%

= $70,000Gross income: $200,000Fees: $ 10,000 to $20,000Fees: $ 5,000 to $10,000Administrative costs: $ 40,000Taxes: $ 70,000

Net income: $60,000 to $75,000

Assume: $2,000,000 trustAssume: 10% return per yearGross yield: $200,000Total trustee, investment management, and administrative fees: 2%

= $ 40,000

Taxes (at trust rates): 12%= $24,000

Gross income: $200,000Fees: $ 40,000Taxes: $ 24,000

Net income $136,000

© 2011 Tom Sant


• Anecdotal• Benchmarking• ROI modeling• Payback

What is Payback?

How long it takes for the monthly savings / benefits from an investment decision to recover the original cost.

Unit of measure = a time period

Very powerful for recurring benefits

© 2011 Tom Sant


What is Internal Rate of Return?

The investment “return rate per annum” arising from a comparison of all savings against the initial cost of that investment

This measure is a percentage indicating an annualized “rate of profitability” on the original investment)

• Anecdotal

• Benchmarking

• ROI modeling

• Payback

• Internal rate of return

© 2011 Tom Sant


What is Net Present Value or Economic Value Added?

A measure of whether a sales proposal delivers a “profit” or a “loss” using an annual cost of money applied to the timing of the original spend & future savings

This measure is in money:positive for a profitable proposal, negative for a loss-making one

• Anecdotal

• Benchmarking

• ROI modeling

• Payback

• Internal rate of return

• Net present value or economic value added

© 2011 Tom Sant

Payback, IRR and NPV are related

+9.09

-100.00

+109.09

-100

Today

+120

+120

365 daysSpend100

20%

IRRPayback

(12 Months)

Min return% / Interest

10%

(Original investment)

NPV(EVA)

© 2011 Tom Sant

Use methods you are comfortable with.

Avoid value proposition paranoia.

Gain agreement from the buyer prior to the proposal, if possible.

© 2011 Tom Sant

Step Three:Select Relevant Differentiators

© 2011 Tom Sant

Differentiate Your Solution and Your Firm

What is a differentiator?

Does it matter which ones you use?

© 2011 Tom Sant

What Are Differentiators?

• Product/service features• Corporate capabilities• Methodology • Management practices• Personnel • Facilities • Size• Experience• Recognition, awards

© 2011 Tom Sant

Common Mistakes in Differentiating

1. Not including any differentiators at all.• Without differentiators, it’s a commodity.

2. Using generic differentiators and random lists.• Generic value has no value.

3. Substituting marketing fluff.• No marketing fluff!

4. Insisting on uniqueness.• It’s the stack that’s unique

© 2011 Tom Sant

Activity 3: Differentiators vs. Competitors

10 minutes

1. Identify two of your top competitors.

2. For each competitor, brainstorm 3 or 4 differentiators and then indicate (a) why each matters (how the client benefits from them) and (b) how you can prove them.

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© 2011 Tom Sant

Activity 3: Differentiators vs. Competitors

Share your results.

© 2011 Tom Sant

Differentiating the Intangible

In differentiating a service, emphasize:

1. How you do the work

2. How you manage the work.

3. The people you will provide.

4. Special equipment, facilities or tools you have.

© 2011 Tom Sant

Activity 4: Identifying Differentiators

10 minutes

Identify as many differentiators and the proof to support them as you can in each category.

How you do the work:Differentiator______________________________________Proof: ___________________________________________

How you manage the work:Differentiator______________________________________Proof: ___________________________________________

Who will do the work:Differentiator______________________________________Proof: ___________________________________________

Special facilities, resources, equipment, etc.:Differentiator______________________________________Proof: ___________________________________________

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© 2011 Tom Sant

Answer: Create a Selection Matrix

List all of your differentiators:• By competitor• By corporate capabilities

Align your differentiators with the most common value positions you encounter.

Weight the differentiators.

© 2011 Tom Sant

Align Your Differentiators with Value Positions

Differentiator Financial Technical SocialAwards for superior products

True Web-based architecture

Lease or buy options

Standard code base

Fastest loading and retrieval

Open architecture

Microsoft Solution Partner

First to market

Team functionality

© 2011 Tom Sant


Differentiator Financial Technical SocialAwards for superior products 5 3 1True Web-based architecture 2 4 2Lease or buy options 4 5 3Standard code base 3 5 2Fastest loading and retrieval 2 4 2Open architecture 4 3 2Microsoft Solution Partner 5 3 5First to market 2 2 4Team functionality 3 2 5

p. 87

© 2011 Tom Sant


Differentiator Financial Technical SocialAwards for superior products 5 3 1True Web-based architecture 2 4 2Lease or buy options 4 5 3Standard code base 3 5 2Fastest loading and retrieval 2 4 2Open architecture 4 3 2Microsoft Solution Partner 5 3 5First to market 2 2 4Team functionality 3 2 5

© 2011 Tom Sant

Activity 5: Create a Selection Matrix

10 minutes

1. List your differentiators in column one.2. List the most common value orientations in the

remaining columns.3. Rank the relevance and effectiveness of each

differentiator to substantiate your ability to deliver that kind of value from 1 (none) to 5 (excellent).

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© 2011 Tom Sant

Differentiators Proof

ValueProposition

Value That Has Value.

What you do that no one else

does. What you do

differently from anyone else.

Verifiable claims you make about

yourself. Claims your clients make about you.

Third-party evidence.

Communicating Value That Has Value

© 2011 Tom Sant

What Kind of Proof Matters?Pile up the proof:

• Case studies• References• Testimonials• Team resumés• Project plan• Third-party validation (press clips,

articles, awards, etc.)• Company capabilities• Management philosophy• Guarantees• Quality control methodology

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© 2011 Tom Sant

Things You Say About Yourself

Resumes or CVsCompany history

Corporate capabilitiesCoverage maps

Process diagrams

© 2011 Tom Sant

From Value Chain to Value Claim

Client centered?

Focused on a specific value?

Quantified?

Illustrated graphically?

Tied to your best differentiators?

© 2011 Tom Sant

Writing Effective Value Claims

First:State the value the customer will receive, preferably in quantifiable terms

Example: “One important benefit of accepting this proposal is that Acme Ltd will see a decrease in energy consumption of 15 to 18%.”

© 2011 Tom Sant

Link Value with Your Differentiator

Then:Link the value proposition with your differentiator in a cause/effect sentence

Example: “That decrease in energy consumption will come as a direct result of implementing our gas and electric rationalization software, which will automatically manage your energy costs to assure that you pay the lowest possible price 24 hours a day. The only system of its kind, the software has been proven in controlled studies to reduce energy bills.”

© 2011 Tom Sant

Prove It!Third:

Provide a proof statement Case studyReference or testimonialThird-party validationVerifiable statisticsGuarantees or service-level commitments

Example: “For example, when Leeds Smelting implemented the software, they saw an immediate reduction in energy costs of more than 20%. Similarly, Birmingham Hospital reduced energy costs by 17% during the first year of using our software.”

differentiators that make a difference - qvidianinfo.qvidian.com/rs/qvidian/images/differentiators...

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