value-based selling - aalto€¦ · consultative and value-based selling approaches.” - (aberdeen...
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Value-based selling
Pekka Töytäri
Aalto University School of Science
Service Engineering and Management
efecto INVESTMENT ALTERNATIVE COMPARISON
INVESTMENT COST INVESTMENT COST
COST OF FUEL COST OF FUEL
COST OF OPERATING AND MAINTAINING
COST OF OPERATING AND MAINTAINING
The cost of producing
electricity over the lifecycle of a
power plant
CASE WÄRTSILÄ POWER PLANTS
POWER PLANT A POWER PLANT B
efecto TECHNOLOGICAL INNOVATION Increase of copper recovery by 1%
equals to of 2Meur increase of sales
revenues
SALES REVENUE FROM EXTRACTED MINERALS
SALES REVENUE FROM EXTRACTED MINERALS
CASE OUTOTEC FLOTATION
OLD MIXING MECHANISM NEW MIXING MECHANISM
ENERGY COST ENERGY COST
50 % energy decrease equals
to 100keur decrease of utility
cost
MAINTENANCE COST
MAINTENANCE COST
50% life time decrease equals to 50keur saving of
maintenance expenditure
efecto RIGHT SCOPE FOR DECISION-MAKING
Component cost A – 10 Eur Component cost B – 15 Eur
Increased energy consumption Increased lubrication need
Higher inventory cost Lower usability Lower reliability
Higher installation cost
Decreased energy consumption Decreased lubrication need
Lower inventory cost Improved usability Improved reliability
Lower installation cost
TCO 87,25 Eur TCO
57,00 Eur
TCO saving of 30,25 Eur
Case SKF bearings
efecto FROM BLUE OCEAN TO READ OCEAN
INNOVATION COMMODITY
Offering lifecycle
No active demand
Commoditization, competition on price, replacement purchases, ...
Active, growing demand
EXERCISE How are profitability, buyer/seller power positions changing over time?
efecto SYSTEMATIC DIFFERENTIATION
FUNCTIONALITY
AVAILABILITY
PERFORMANCE
PARTNERSHIP
• Process outsourcing
• Operating responsibility
• Differentiation by (lifetime) performance
• Mutual dependency • Differentiation by
mutually developing competitiveness against other industry clusters
• Comprehensive solution
• Differentation by completeness, ease of cooperation
• Product differentiators
efecto EARLY ACCESS TO INFLUENCE
Customer value provides compelling message to gain early access to influence and trigger customer’s investment and decision making process and escape the commodity trap
COMMITMENT SEARCH PRESSURE TO CHANGE SOLUTION VISION
Reactive ”specification based” approach
Proactive Value based approach
efecto VALUE SELLING KEY STEPS
• Select an influential stakeholder
• Share and agree on few salient business goals for the stakeholder
• Share quantified reference stories demonstrating impact on salient goal(s) for evidence of previous successes
• Conduct audit to determine improvement potential for the focal customer
• Quantify value for the focal customer
GOAL
EVIDENCE
AUDIT
STAKEHOLDER
PROOF
efecto Value sales process tasks & tools
efecto AGREE ON BUSINESS GOALS
efecto SHARE QUANTIFIED REFERENCE STORIES
efecto Value quantification
efecto Key sales tools
efecto VALUE SELLING AS COMPETITIVE ADVANTAGE
• ”Best in class companies are far more likely than other firms to ”take the high road” with more holistic, consultative and value-based selling approaches.” - (Aberdeen Group, 2011)
• ”Paradigm shift in professional sales, away from the old feature/friendship/price-based selling to highly educated buyer seeking the best total solution and maximum long term economic benefit”. - (Aberdeen Group, 2011)
• Customer value is quickly establishing itself as dominant approach in selling innovative industrial services
0%
10%
20%
30%
40%
50%
60%
70%
80%
Best in Class
Industry average
Laggard
“We clearly translate features/benefits of our solution into
economic value we can articulate to customers”