the art and science of compelling value | tom sant & qvidian

© 2014 Tom Sant. All rights reserved.

Do not reproduce without written permission.

Presented by:

Dr. Tom Sant

www.hydeparkpartnerscal.com

www.PersuasiveBusinessProposals.com

The Art and Science of

Compelling Value

http://www.hydeparkpartnerscal.com/



Your Presenter: Dr. Tom Sant

Author of Persuasive Business Proposals, the world’s

# 1 best selling book on proposal writing (3rd edition,

2013)

“One of the 10 most important business books of all time.”

Geoffrey James, Inc. Magazine

“America’s foremost expert on proposal writing.”

(American Management Association)

“One of world’s top ten sales trainers.”

(Selling Power Magazine)

Over 25 years’ experience with Fortune 500

companies

Over $30 billion in winning proposals



Value.

The magic word in selling today is



Value is supposed to cure all problems.

Price pressure

Intense competition

Slow sales cycles

Shrinking margins



A value proposition is a

promise

to deliver specific results that the client desires,

backed up by evidence that we can keep our promise.



But sometimes…

it doesn’t work.

Value has no value.



That’s because of a few common OBSTACLES:

1. Cognitive bias

2. Buyer behavior

3. Sales commissions

4. Weak value propositions

http://i.bnet.com/blogs/bigstockphoto_serious_boss1_733778.jpg



Obstacle # 1: Cognitive bias



Obstacle # 1: Cognitive Bias

People are predisposed

to overweight potential

losses vs. potential gain.



For example…



According to the Center for Disease Control,

we are facing a massive outbreak of a new strain of

influenza.

It is projected to kill 60,000 people in the U.S.

They want to know which program the public will

support.



In California, two programs have been proposed.

Which one should we pursue?

A. Save 20,000 people.

OR

B. 1/3 chance that all 60,000 will be saved;

2/3 chance that no one will be saved.

What’s Your Vote?



Place your vote…

Your results.



Statistically…

When asked which program we should pursue:

A. Save 20,000 people.

B. 1/3 chance that all 60,000 will be saved;

2/3 chance that no one will be saved.

72%

28%



In New York, two programs have been proposed.


A Different Option



In New York, two programs have been proposed.


A. 40,000 people will die.

OR

B. 1/3 chance that nobody will die;

2/3 chance that 60,000 people will die.

A Different Option



In New York, programs have been proposed that will

accomplish one of the following. Which one should we

pursue?

A. 40,000 people will die.

OR

B. 1/3 chance that nobody will die;

2/3 chance that 60,000 people will die.

A Different Option

22%

78%



Daniel Kahneman

2002 Nobel Prize in Economics

“…for having integrated insights from psychological

research into economic science, especially concerning

human judgment and decision-making under

uncertainty."



Loss Aversion

People are more motivated

to avoid a loss

than they are

to acquire a similar gain.



In a business setting…

The risk people fear most is

overspending.

Wasting time, resources and opportunities are bad,

but not as bad as wasting money.



Consequences…

People overweight loss vs. gain.

People overweight what they already

have vs. what you have to offer.

People prefer the status quo to the

risk of change.



Another cognitive bias against value:

People won’t change

even when the cost of doing nothing is higher

than the cost of changing.

The Status Quo Effect



Your client must believe your value is superior

when:

1. You are displacing an accepted vendor.

2. You are changing a process.

3. You are relocating control of something valuable.

4. Doing nothing is a viable alternative.

So When Does Value Matter the Most?



Obstacle # 2: Buyer behavior



The Price Buyer

*Based on the research of Dr. Reed Holden, The Strategy and Tactics of Pricing

Obstacle # 2: Buyer Behavior

When overspending is the fear,

aggressive procurement policies are an answer.



The Relationship Buyer

The Price Buyer The Value Buyer

Why Price Seems to Loom So Large

The Poker Player



The Relationship Buyer

The Price Buyer The Value Buyer

The Four Buyer Types

The Poker Player

Although 30% of all buyers are Price Buyers,

only 21% of enterprise-sized deals

go to the low-priced vendor.



Obstacle # 3: Sales commissions



Obstacle # 3: Commission-Driven Behavior

“I’m a commissioned sales rep

and I’m here to help you!”

http://brettduncan.files.wordpress.com/2007/08/used-car-salesman.jpg



To overcome the skepticism provoked by

SALES COMMISSIONS

we must

AVOID SELF-SERVING BEHAVIOR.



Do You Want Fries with That?

Upselling?

Cross-selling?

“Because they need

to know we offer it…”



Obstacle # 4: Weak value

propositions



Obstacle # 4: Weak Value Messages

How effective is this?

We offer a full range of

enterprise-strength, integrated

technology solutions.



Does this make you want to say YES?

We are a true one-stop shop

for all your information

management needs.



How do you like me now?

We enable the people-ready

business with leading edge

solutions and world-class service.



Pretty exciting, huh?

We are committed to the

success of the enterprise.



There Is No Value in Vagueness



Show me the money!

Building a Better

Value Proposition in 5 easy (sort of) steps



FACT: Without value, winning is just luck.

You must establish superior value

based on technical, contractual, managerial, quality, or service differentiators,

or the customer will choose based on

price

or may choose to do

nothing.



Smart Buyers Look for Positive Impact

• Improved financial performance

• Operational efficiency

• Reliability of mission-critical operations

• Reduced errors and rework

• Increased worker productivity

• Customer satisfaction

• Regulatory compliance

• And other key performance indicators



The promise inherent in our value proposition:

You will get more of the outcomes

that you want the most

if you choose us.



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 alternative

Costa = the cost of the next best alternative



The Basic Value Proposition

(Values - Costs) > (Valuea - Costa)

Return on Investment



Five “Easy” Steps to Compelling Value



Define the Value the Customer Seeks

STRATEGIC Business / Financial Increased profitability Increased market share Mission fulfillment Mergers / acquisitions Maximize return on capital

Increase share price

1



What are some examples of

strategic value*

your customers seek?

*Strategic value has a positive impact on the core measures

of business performance.



The Second Kind of Value: Tactical

STRATEGIC Business / Financial Budgetary compliance Profit improvement Downsizing Mergers / acquisitions Increased market share Reduced risk Faster product launch

TACTICAL Operational Efficiency Automating a manual

process Introducing best practices Adding flexibility Improving QC Achieving compliance with

regulatory standards




tactical value*


*Tactical value has a positive impact on operational

efficiency, improves the infrastructure, or introduces labor-

saving processes or tools.



The Third Kind of Value: Social/Political

STRATEGIC Business / Financial Budgetary compliance Profit improvement Downsizing Mergers / acquisitions Increased market share Reduced risk Faster product launch

TACTICAL Operational Efficiency Automating a manual

process Introducing best practices Adding flexibility Improving QC Achieving compliance with

regulatory standards

SOCIAL / POLITICAL Internal -Improve employee morale -Reduce absenteeism -Decrease turnover

External -Increase customer loyalty -Reduce carbon footprint -Generate good will




social or political value*


*Social/political value has an impact internally on employees

and/or externally on suppliers, customers, and/or

communities.



Asking the Right Questions…

1. How will you [the customer] measure success for this project?

2. How have you measured success for similar projects before?

3. Do you have any specific KPIs (key performance indicators) for

this project?

4. How did you measure results in previous projects of this type?

Do you plan to use those measures again?

5. How will you communicate so other managers in the

organization know that this project was worthwhile?

6. Do you have benchmark data of current performance?

7. Are you looking for a specific ROI? If so, what is your baseline

data against which you will measure?

8. Are you seeking regulatory compliance? Why does it matter?



Quantify the Value

1. Area of Outcome

• Cost of operations

• Carbon footprint

• Employee productivity

• Time to market

• Production volume

2. Movement

• Increase

• Decrease

• Minimize

• Enhance

• Boost

3. Metrics: %, $, time, weight

2



Three Bits of Information You Need

1. The starting point:

• Baseline data from the client

• Research data on the client

• Research data from the industry

2. The probable gain:

• Probable results after

implementation of your solution

• Quantified improvement

3. The value of the gap



Example: Monetizing the Impact

1. Baseline data regarding the area of performance.

Example: Currently, XYZ wastes approximates 7% of feedstock

run through your process.

2. An agreed upon estimation of probable gain, based on

data from other clients.

Example: Wasted raw materials = 7% of a total $3MM annual

spend.

3. Articulation of the value of the gap between current

performance and potential performance.

Example: Potential impact is $210,000 in savings.



Show the Value Graphically

Total savings for year one on reduced waste is calculated to exceed

$4.5 million.

Savings for years two through five will average

$7 million a year.

1. Focuses the reader’s attention—stops the skimming.

2. Increases the persuasiveness by 47%.

3



What if the customer has no baseline data?

Or just won’t share it?



Offer a Case Study or Testimonial

Profits! Power!

World domination!

Help them visualize success

with a case study that features:

• Same kind of client

• Same kind of problem

• Quantifiable results



Link Value to Relevant Differentiators

• Product/service features

• Corporate capabilities

• Methodology

• Management practices

• Personnel

• Facilities

• Size

• Experience

• Recognition, awards

4



Differentiators That Matter in Services

In differentiating a service, emphasize:

1. How you will do the work.

2. How you will manage the work.

3. The people you will provide.

4. Special equipment, facilities or tools you have.



Differentiators Proof

Value

Proposition

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.

Prove Your Claim 5



Real Proof, Not Fluff

Best of breed

World class

Leading edge

State of the art

Quality focused

Uniquely qualified

Innovative

Fully leveraged

High performance

Synergy

User friendly

Integrated

Partnership

Seamless

Robust

Highly available

Here are a few examples of marketing fluff….

Anything look familiar?

Vague generalities. Undefined or unsubstantiated claims.

Grandiose promises without substantiation.



Three Kinds of Proof

Things you say about yourself.

Things your clients say about you.

Things third-party experts say about you.



Things You Say About Yourself

Resumes or CVs

Company history

Corporate capabilities

Coverage maps

Process diagrams



Things Your Clients Say About You

References

Testimonials

Case studies



Things the Experts Say About You

Awards

Rankings

Recognition

Certifications



In summary



In summary…

Focus on outcomes: What the customer wants

Quantify the gain: numbers are stronger than words

Show me the money: the power of the graphic

Make it bulletproof: link it to your differentiators

Prove it: provide evidence to substantiate the claim



And good luck… in creating value propositions

that have real value!