Value based selling in advertising Estimating ≠pricing Selling seminar... · • Value Based Pricing and Selling should be considered where possible • Dare to go for Fixed Price

© 2013 Deloitte Belgium

Value based selling in advertising Estimating ≠ pricing

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Cost 20 Mandays * 1500 $ = 30.000

Value 300 million $ incremental sales in first

year

Example:

What should the advertising agency charge to this company ?


Value based selling in advertising Estimating ≠ pricing

At automotive companies, do you think prices are based on the number of hours it took to build the car?

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Traditional pricing approach

• Standard rate cards

• Good knowledge of salary and overhead costs

• Billing to client based on # hours performed

Value based pricing & selling

• Don’t sell a service, sell an outcome

• Negotiate price before the work begins (perceived value is at its highest)

• Ask client what they think the assignment is worth

• Try to provide different pricing options

• Never lower your price, instead add value

• Be creative in pricing

• Be willing to walk away


Different Price Models exist and new ones are popping up everyday

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From…

SFR / min.

€ / ad

€ / car

€ / hour

€ / hour

To…

SFR / Call

€ / click

€ / month + € / km

€ / m²

?

Reason Why

Better price perception

Misperception of call durations

Value / Performance Based Pricing

No initial investment

Upgrade to higher battery capacity

Stop commoditisation

Value Based Pricing

? Advertising Agency


COMMON practice in services is based on wrong assumptions

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VALUE = TIME OR VALUE = RESULT


Price in terms of RESULT instead of TIME & RESOURCES Case Consulting Services

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Solutions Budget

0. Business Case € 33.000 2. Service card € 82.520 3. Pricing Power Card € 124.960

4. Target price € 42.440

5. Visibility on margin per car € 87.240

6. Sales Incentives € 5.900

Total € 376.060


Sometimes we even consider Value Based Contracts in Consulting Services

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• You need to determine metric (gross margin, revenue, net price, ...)

• Put a CAP on the VBB in line with level of risk taken.

• E.g. if 50% of fees are put at risk , then maximum upside ( = CAP) will be 50%

on top of fixed price. Upside is reward for risk taken.

• Simulation in table below is done based on the assumption that agreed metric is

met for 100% (maximum).

Total% € % € (maximum) € (maximum)

100% 276,000 € 0 0 € 276,000 €50% 138,000 € 50% 276,000 € 414,000 € 50%

Fix part VBB % on Fixed Price


Move to fixed price contracts and manage the scope of those contracts – Case Facility Services

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Fixed (*) Tolerance Variable Catering # of machines

# of meals 5 % Per meal

Travel # of tickets 5 % Per ticket Cleaning m2

Cleaning plan 10 % m2

Mailroom # letters 10 % Per letter Taxi NA Per taxi Translation NA Per assignment Technical maintenance

Maintenance plan 0 %

Per intervention

Building maintenance

Maintenance plan 0 %

Per intervention

∑ Price per year

(*) Includes Coordination


From Pricing / HOUR to Pricing / INTERVENTION Case Technical Services

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/ hour Engineering Preparation Execution

Planned

Unplanned

Urgency

Activity type Fl

exib

ility

/ intervention Standard Complex

1 month

1 week

1 day

Complexity

Exec

utio

n tim

e AS IS TO BE


If you want to be a solution provider, you should also charge for the services that you provide

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Medium Price Sensitivity Low Price Sensitivity

Elasticity is 2 to 5 times lower than sticker price elasticity

Be consistent – even with the "little stuff"!

Price Awareness Radar (Computer Hosting)

High Price Sensitivity

Price per user

Efficiency per user

Dedicated Server

On-Site Support

Attachment Storage Roaming

Fee for contract change

Extended flexibility

Warehouse Extension


A rationalization of existing services will lead to significant quick wins

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Average Value to

Customer

Costs to provide service

(per customer) Color: Quality vs. competitors

Better Equal N/A €x m

Size: Cost p.a.

Low High

Low

H

igh

“Low differentiation” Services “Loss-leading” Services

“Investment” Services “Easy-win” Services

Sample Service Value / Cost Analysis

Special logistics

Online service

24/7 spare parts

Product training

Consulting Services

Registration Service

Warehousing

Cleaning Service

Hotline

Technical training

Micrologistics

Service priced

accordingly?

Potential to increase customer

value?

Service offer neccessary?

Potential to realize higher

margin?

Service needed?

Make cost explicit?


Put services that you want to offer in a Service Catalogue ! It will help to sell better and more

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Companies which have a portfolio of products and/or services, have principally two options to package and price them

2. Tiered Pricing

1. Add-on Pricing

• A base product (e.g. a standard car)

• Additional features bundled into a “pack” or “line” (e.g. Luxury, Sports, Modern)

• The three customer segments have three different needs-profiles and this is reflected in the pack

• The base service offering is in all the versions the same, as well as the basic attributes

• Only difference is the threshold level • Typically 3 options are offered

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Add-on pricing for Security Services

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24/7 Security Guard on site

Mobile / Services Combined Solution

1 guard SB 24/7 No specific

training Low experience 2 language P.O. 8h / week

Loge Alarm & CCTV Monitoring Access management

Patrols 5 per shift Opening- and closing round

1 guard SB 8h (Risk periods: 8-10am and 6-12pm) Hospital guard

training Low experience 2 language P.O. 4h / week

Opening- and closing rounds 2 Patrols per shift C

ore

Secu

rity

Offe

r Po

tent

ial A

dded

Val

ue /

Pack

s Prevention

Safety Pack

Patient focus

1 guard SE 24/7

Prevention + Hospital training Certificate in 3 languages 2 years experience in industry

Response to emergency buttons on site Staff accompaniment

1 guard SE 24/7 Fire fighting, evacuation

steward, hospital training 4 years within industry

Green Savings checks Safety Patrols (fire ext, doors, etc) Vehicle management (wild

parking) 1 safety audit per year Monthly safety report

1 guard SQ 24/7 Client sympathy and

communication + hospital training 6 years within industry

Patient accompaniment Enforcement of visit hours

SPOC for disappeared patients

Alarm & CCTV Monitoring Access management

Prevention of opportunity theft


Tiered pricing for Reception Services

Reception Service: Silver € 150/month

Reception Service: Gold € 200/month<

Reception Service: Platinum € 250/month

Telephonic Welcome Telephonic welcome Script training Physical Welcome Visitor Management Access Card Management

Admin & Secretary tasks Schedule & book taxis Luggage Reception Update logbook

Telephonic Welcome Telephonic welcome Script training Back-up secretaries Physical Welcome Visitor Management Access Card Management Incident follow-up

Admin & Secretary tasks Schedule & book taxis Luggage Reception Update logbook Access Control Reporting # visitors Crisis Management SPOC for accidents SPOC for evacuation

Telephonic Welcome Telephonic welcome Script training Back-up secretaries Call queue management Physical Welcome Visitor Management Access Card Management Incident follow-up Service outside opening hours Reception @ client events

Admin & Secretary tasks Schedule & book taxis Luggage Reception Update logbook Access Control Video Surveillance Management Helpdesk Reporting # visitors Crisis Management SPOC for accidents SPOC for evacuation SPOC for incoming demands Parking Management Visitor Parking Management Parking Access Control

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You need to be good at SHAPING the price and DEFENDING the price – CLOSE LOPED PROCESS

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Going-in price

Catalog price

(product/ service)

Walk-away price

Discounts Reduce services Extra services

and solutions

Target Price

Floor Price

Communicating & Demonstrating the value

Defending the value by good negotiations

70-80% 20-30%

Price Setting Price Execution


Customer Profitability needs to be looked at beyond Gross Margin – Cost to serve can make a difference !

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List Price

Market Discount Quantity

Discount Volume bonus Freight

Packaging

Invoice Price

Pocket Price

Pocket Margin

Techn. Service Samples COGS

• Changing timings, staffing

• Change in proposals

• Involvement of experts

• Involvement of customer (stakeholder management)

• Data preparation

• Project Management (e.g. Status Reporting)


Gut feeling doesn’t work !

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02468

1012141618

Sales Rep 1 Sales Rep 2 Sales Rep 3 Sales Rep 4 Sales Rep 5 Sales Rep 6

Sales survey results estimated discount % on RFP

off-invoicediscount %on-invoicediscount %

Sales force

Request for proposal (RFP): Every Sales Rep uses different price setting arguments Typical huge spread in attributed discounts

Illustrative

© 2013 Deloitte Belgium 53

Conditional discount structure

FROM TO

Discount type % Volume?

Base Discount 10 % x

Customer Discount 8 % x

Special Discount 4 %

Volume Discount 3 % x

∑ 25%

Discount type % Volume? Full-package 3 %

Brand loyalty 7 %

Investment Discount 5 %

Reference calls 3%

Upfront payment 5%

Growth Discount 5% x ∑ 28%

Non conditional discounts

Customer can get more if he works more…


Discounting is common practice in a car dealership – How do you handle this in a smart way ?

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To summarize

• Value Based Pricing and Selling should be considered where possible

• Dare to go for Fixed Price Contracts but manage scope

• Change pricing driver away from hours (labor)

• Consider all your services and at least provide a price tag

• Package pricing as a mechanism to move away from hourly pricing

• Be aware of cost to serve as it has a big impact on your profitability

• Consider the concept of ‘multiple commercial offers’, i.e. different scenarios

with different levels of value created

• Conditional discounting should stimulate WIN-WIN negotiations

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Some interesting quotes to conclude this part !

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“If you are not perceived as being different, then you will be benchmarked on price” (Prof. Andreas Hinterüber)

“What is a cynic? A man who knows the price of everything and the value of nothing.” (Oscar Wilde)

“Arguing about price will lead to never ending discussions in which buyers and sellers can never win. Talking about

value will let them leave the room richer.”


Exercise – Some ideas on different pricing models for our industry –services we might charge for

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• Finance/reporting • Level of details for invoicing • Flexibility for author corrections

(changing scope) • Management • Maintenance of building • Meeting location or travel time • Rush rates • Waiting times • Competitive watch (pige) • Number of approval levels • Usage of studio services / server

storage

• Training of new people (client) • Expenses (km, …) • Number of call reports • Coordination / lead agency • Number and frequency of status

reports • Management of media agency • Exclusivity (sector, …) • Rights • …


Know to whom you sell

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Distinct Sales Occasions

Economic Deciders Users

Technical Buyers Coach

Key influencers for each ‘Distinct Sales Occasion’ should be considered when identifying the wins for Decision Making Units members

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Several parties can influence the buying process. It is important to know who will be involved in the decision making process

The more complex a buying decision is, the larger the decision making unit (DMU) will be

The people involved in the DMU can change towards the end of the selling process

The level of influence can vary from person to person involved in the DMU

Identify DMU needs

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Adapt your communication to the different members of the DMU

“Most managers have some targets. How can you contribute to their targets?

Find out what there targets are"

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It is key to identify the Economic Decider for the DSO

The person who gives the final approval to buy our product/service

‒ He is the owner of the budget; direct access to the money

‒ He has the final ‘yes’ or the veto to say ‘no’

‒ Major decision criteria: the bottom line impact on the organization

Economic Deciders

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It is key to identify the Economic Decider for the DSO

2. The tougher and more volatile the business environment…

3. The lesser trust in our firm’s capabilities…

4. The lesser experience with our products/services …

5. The bigger the potential impact of the sale on the organization…

… the higher up in the

organization, we need to look for the economic

decider

1. The higher the amount of the sales…

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We have to please the Users … it is going to impact their performance

The person who will actually use the product

‒ Our product will impact his personal performance

‒ Major decision criteria: the impact of the product/service on the everyday operations in their area of responsibility

Users

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Involve the though guys…

The person who actually cannot say ‘yes’, but can say ‘no’ (and often do so) ‒ They screen, reject and shortlist based on specifications ‒ Can be Purchasers, Head of Laboratories, legal advisers, accountants,

etc. ‒ Gatekeepers ‒ Major decision criteria: the match with the criteria

Technical buyers

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The guys you cannot miss…

The person who provide you crucial information on the scope of the request, the DMU, … ‒ Invest time upfront in developing a coach – ask for coaching ‒ Good Coaches … you have credibility with him / he has credibility with

DMU ‒ Major concern: how can I help you to be successful?

Coaches

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Make sure that your customer team is aligned with the DMU of your customer and that sales approach is customized to expectations of different parties

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• It is very important that the persons identified as DMU are covered by the right persons of supplier. A technical user should be approached by a technical person of your company in order to optimize the value sell

• Make sure that top management is also involved in customer-facing activities to strengthen the value sell

• Sales persons as well as the managers should be trained to sell on value

Supplier

Customer

More intense relationships on multiple levels within the

organization

Each member of the DMU will have its own set of purchasing criteria that matter

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• Knowing the Decision Making Unit as well as the specific criteria of each unit will have strategic advantages during the selling process

• The important issue here is to anticipate what buyers’ approach is going to be and be prepared with the right set of responses

• This will allow you to build selling power along the way

DMU Criteria Importance Rating *

1. Data on reliability of product2. Price3. Order cycle time4. Reliability of delivery date promisde5. Delivery capability6. Past performance7. Vendor stability8. Financing terms9. …10. Technical capability11. Ease of maintenance12. Ease of operation13. Quality14. Suppliers' ability to customize15. Supplier's ability to fill emergency orders16. …17. Ease of use18. Post-sale services19. Spare parts availablity20. Aid and advice21. …22. Reputation23. Vendor stability24. …

* red = not important green = extremely important

Economic

Deciders

Technical

Buyers

Users

Coaches

How Customers look at us?

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RELATIONSHIP BETWEEN SALES & PROCUREMENT

27 FEBRUARY 2013

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ON THE RELATION BETWEEN SALES AND PROCUREMENT

Survey launched in October – November 2012

To bring clarity on a number of topics: • Overall state of the relationship? • Main challenges and frustrations? • Opportunity to move to ‘win-win’ collaboration? • Concepts like ‘value selling’ or ‘solution selling’ are widespread,

yet also top of mind? • Is Sales aware of Procurement’s expectations and vice-versa? • Are both parties backed up by appropriate internal support?

32% active in procurement

54 respondents

BROAD SET OF RESPONSES

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68% active in sales

113 respondents

WE LOOKED AT VARIOUS BEHAVIORAL ASPECTS

sales procurement

Scoring behavioral criteria on importance and

performance | assess gap Internal

challenges Internal

challenges

• Procurement management

• End-users such as engineering, R&D

• ICT • Finance • …

• Sales management • Marketing • Production and

supply chain • Finance • …

http://www.google.be/url?sa=i&rct=j&q=thinking+guy&source=images&cd=&cad=rja&docid=sa-b-chDV0G0VM&tbnid=dt9eUf_glJNC_M:&ved=0CAUQjRw&url=http://www.loanmodsmadeeasy.net/&ei=8bMcUanpD8O60QXtk4HwAQ&bvm=bv.42452523,d.ZG4&psig=AFQjCNFT-q_Z3NDrMwdaD8_eFcgDZOX4iw&ust=1360921956231712


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Sales is getting more and more challenged by their customers….it is a very complex job !

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Importance* Performance*

Sales Buyer Sales Buyer

Deliver on promises 4,5 4,4 3,8 3,0

Understanding the customers' business challenges 4,3 4,1 3,6 3,1

Knowledge of product/service offerings (incl. pricing)

4,2 4,0 3,6 2,7

Long term, close and personal relationships 4,2 3,7 3,9 3,1

Sharing of benefits 3,9 3,7 3,5 2,6

Providing new insights 3,9 3,7 3,4 2,8

Insights on total cost of ownership / ROI 3,6 3,8 3,2 2,4

Transparency of product/service offerings (incl. pricing)

3,5 3,8 3,4 2,6

Source: Deloitte Research 2012

SALES BEHAVIORAL ASPECTS WHAT SHOULD SALES DO?

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IMP

OR

TAN

CE

GAP TO BRIDGE

Fix it now

High Fives

We have bigger fish to fry

Tackle it later

• Ability to deliver on promises

• Efficient and proactive communication Good understanding of

the customers' business challenges

• Focus on sharing benefits with the customer

• Providing insight in the total cost of ownership

• Transparency of product/service offerings

• Exchange of company information

• Building long term, close and personal relationships

PROCUREMENT BEHAVIORAL ASPECTS WHAT SHOULD PROCUREMENT DO?

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IMP

OR

TAN

CE

GAP TO BRIDGE

Fix it now

High Fives

We have bigger fish to fry

• Providing clear requirements

• Efficient, clear & timely communication

• Open communication about selection

• Sharing benefits

Focusing on business impact by searching for the means to generate bottom line or top line performance improvements

• Emphasize on long term personal relationships

• Provide performance follow-up and feedback

• Exchange company info

Supporting after sales follow-up and participating in satisfaction monitoring initiatives

Tackle it later

FRUSTRATIONS AT BOTH SIDES

FRUSTRATIONS AT BOTH SIDES

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Procurement Sales

1. Limited information sharing / Poor communication

2. Procurement is not seen as the first point of contact

3. Opportunistic behaviour

Sales Procurement

1. Only focused on cost reductions and price negotiations

2. Lack of strategic insight / Lack of knowledge of business needs

3. Procurement reluctant to give access to other stakeholders Largest impact on relation

INTERNAL CHALLENGES

INTERNAL CHALLENGES

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sales procurement

Overall understanding, perceptions & frustrations

Internal challenges

Internal challenges

• Procurement management

• End-users such as engineering, R&D

• ICT • Finance • …

• Sales management • Marketing • Production and

supply chain • Finance • …



LARGE MUTUAL UNDERSTANDING OF INTERNAL CHALLENGES FOR SALES

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Sales say: Procurement thinks:

Top 4: 1. High administrative burden

2. Focus on short-term objectives

(e.g. revenue) rather than long-term opportunities

3. Internal alignment between departments on situation of customer

4. Internal misalignment, communication and company politics (e.g. regional vs global, sales vs marketing)

Top 4: 1. Focus on short-term objectives

(e.g. revenue) rather than long-term opportunities

2. Finding your way in a complex organization (e.g. different products, departments)

3. Internal alignment between departments on situation of customer

4. Internal decision power of sales department to live up to customer expectations

SAME FOR PROCUREMENT CHALLENGES

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Sales thinks: Procurement says:

Top 4: 1. Too much focus on cost reduction

instead of TCO or added value

2. Convincing internal client of new suppliers

3. Internal acceptance as value-adding partner

4. Proving the added value to the business

Top 4: 1. Internal acceptance as value-

adding partner

2. Convincing internal client of new suppliers

3. Proving the added value to the business

4. Visibility of what comes up from the business

CONCLUSIONS

OVERALL FINDINGS

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sales procurement

Overall understanding, perceptions & frustrations

Internal challenges

Internal challenges

• Value-adding partner • Demonstrating added

value • Convincing internal

client • Internal visibility

• Too much focus on short term

• Internal alignment on customer

• Internal misalignment, communication and company politics

Actions Sales: • Deliver on promises • Efficient and proactive

communication

Frustrations wrt Procurement: • Focus on cost and price • No access to other

stakeholders

Actions Procurement: • Clear requirements • Communication • Open communication about

selection • Sharing benefits

Frustrations wrt Sales: • Information sharing /

communication • Not first contact • Opportunistic




How customers look at us

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How procurement segments their suppliers

Risk

Value

Leverage

High Monetary Value Suppliers = Burden

Anonyms Bottlenecks

Low High

High

High Added Value Suppliers = Partners


Value

What sales strategy should be adopted in the value / risk model?

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Risk

Leverage

High Monetary Value Suppliers = Burden

Anonyms Bottlenecks

Low High

High

High Added Value Suppliers = Partners

Purchase focus:

Reduce burden by standardization of requirements

Sales strategy:

Demonstrate fit with requirements, create transparency, make value of options tangible

Purchase focus:

Reduce risk

Sales strategy:

Develop tools/systems to manage risk

Purchase focus:

No priority

Sales strategy:

Communicate hassle-free service

Purchase focus:

Develop win-win and partnership

Sales strategy:

Claim and maintain competitive position consistently

Purchase focus:

Reduce the bill by leveraging various components in value proposition

Sales strategy:

Make value of service tangible, communicate & demonstrate lower TCO

Asking the right questions

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Maybe you find it difficult …

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2. …to define a compelling business reason / the customers’ major business concerns …

3. …to qualify where you are in the sales (decision-making) process and what your chances are compared to competition …

4. …to establish a comfort level in the communication with the customer …

5. …to understand how you are perceived by the customer …

How can we get this crucial

missing information?

1. …to identify the members of the DMU and their respective wins …

The different types of questions to get, to validate and to expand the information

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Validation Learning Mindset

• Verify/ validate current information on DMU, business concerns, current position, …

• Identify potential gaps between our perception and their reality

• Expand current information

• Identify missing information

• Understand customers’ business

• Identify personal information (the persons’ wins)

• Identify the persons’ values, beliefs, feelings, …

Getting relevant information to boost chances on success

The Validation Questions

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Why? • Verify/ validate correctness of all and any data • Will provide you more up-to-date information

When? • At the beginning of the sales call

Techniques • Use words that refer to the present situation: now – at this time – currently -

still – remain – continue - … • Phrase them in such a way, they can be answered with a yes or no

• Last time we met, you mentioned you were not satisfied with the delivery performance of your current supplier. Is that still a problem?

• Does … continue to be a problem? Are you still using …? • As I understand it, what we have planned to do today is to … Is that your

understanding as well?

Examples

The Learning Questions

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Why? • Clarify your understanding of what the customer is looking for • Filling the gaps of information • Tend to put people at ease when they can tell

When? • After (and build further on) the Validation Questions (in case of a ‘no’)

Techniques

• Use words that invite the customer to tell / explain : Who? What? When? Where? How?

• Explore with: tell – explain – demonstrate – show – elaborate - describe • Use “Why?” to follow-up and probe for additional insights – not as an opener (too

confrontational)

• Who is going to sign the final deal? When is the decision going to be taken? • Could you describe me how you are going to approach …? • I ‘d appreciate if you could elaborate a bit more on the reasons why … • It would be very helpful if you could tell me a bit more on …

Examples

The Mindset Questions

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Why? • Understand how he/she will benefit or lose from this sale • Understand the values, beliefs and mindset • Reveal personal concerns

When? • When you feel the need to understand how the customer feels about the situation

Techniques

• Use words like: what? How? Which? Why? • Add phrasing to encourage voicing an opinion • Be careful not to challenge or question the opinion (be careful with the “why?”

question)

• How do you feel about …? • What is your opinion on …? • Which reaction might we expect from Michel, you think? • Why do you think this is important to Michel to achieve this deal?

Examples

How to build customer oriented propositions?

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Why should the customer see / listen / meet me?

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What is it? Benefits Criteria

‒ The info he/she needs in order to understand exactly who you are and why you want to see him/her now

‒ Why it makes sense to talk to you in terms of their business reality

‒ Purpose of meeting is clear upfront – sets mutual expectations

‒ Shows you are prepared!

‒ Efficient for you and the customer

‒ Relevant & impactful for customers’ concern?

‒ Is it a current pressing business concern?

‒ Is the Win for the customer clear?

‒ Concise & complete

Compelling Business Reason


Understanding personality types*

96

High emotional

level

Low assertiveness

level

High assertiveness level

Low emotional

level

Analytic Pragmatic

Amiable Extrovert

Basic focus: Facts, data and details

• Attempt at good self-management, time management and being organized

• Able to maintain long-term attention

• Does not try to take on the leading role in negotiations and to assert his ideas

• Makes decision carefully and on the basis of a great deal of information

• Likes to gather information in case of future need

• Likes to look for causes and internal links

• Prefers precise facts, often in numerical form

Basic focus: Relevant facts, actions and overall

strategy

• High level of self-management, including time management

• May come across as impatient because he really does not like wasting time

• Has a tendency to persuade others into conforming to his ideas about origination and the time plan for a meeting

• Maintains attention for a short period of time until he has – in his opinion- sufficient information. Quickly loses interest after this.

• Likes to take the lead role in negotiations and enforces his ideas and opinions.

• Makes quick decisions on the basis of factors and strictly logical consideration. Flatly refuses all alternatives, which do not correspond to his way of seeing things

Basic focus: Relationships, positive emotions

and harmony with his surroundings

• Time management and organization are an eternal struggle for the friendly type

• He wants to be surrounded by people with similar opinions

• He is able to maintain long-term concentration, especially if supported by a friendly atmosphere

• Very slow decision-making

• Hates too much pressure

• The ideal situation for his decision making is general consensus

• Looks for long-term relationships based on trust

Basic focus: Emotion, inspiration and

momentary feelings

• Tries to convince others of the correctness of his opinion through enthusiasm and personal participation

• Time management is not a strong point of the extrovert type

• Maintaining long-term attention is very difficult for him, especially when negotiations go into too much detail and become boring for him

• Prefers fast-pitched negotiations full of emotions and turning points

• Tries to dominate negotiations

• Makes quick decisions on the basis of feelings and the momentary situation

*Inspired by Krauthammer


How to negotiate with each of them?

97

Analytic Basic focus: Facts, data and details

• Provide him with sufficient information

• Use graphs, tables and structured diagrams

• Be precise with your numerical information and avoid rounding off or very rough estimates

• Carelessness in details could mean loss of credit

• Give him sufficient time to make his decision

• Avoid surprises

• Prepare a detailed programme for negotiations and strictly adhere to it

Pragmatic Basic focus: Relevant facts, actions and overall strategy

• Avoid wasting time and provide very structured information in the

correct amounts

• Proceed from synthesis to analysis

• Do not allow yourself to be put on the spot with quick decision-making

• Overly emotional reaction and over-enthusiasm could come across as untrustworthy

• If you wish to change the method of perception, proceed with care and in small steps

• Prepare space for compromise, which he may gain

• Do not allow him to win in negotiation points, which are less significant for you

Amiable Basic focus: Relationships, positive emotions and

harmony with his surroundings

• Create a friendly atmosphere

• Give the other party sufficient time to make their decision

• Do not create too much pressure

• Information must support trust and mutual understanding

• Compensate for his compromise

• Avoid surprises

• Try to establish a personal relationship

• Provide personal information at the beginning of the meeting

Extrovert Basic focus: Emotion, inspiration and momentary feelings

• If you want to convince him, use enthusiasm and show that you really

are concerned about the matter

• Focus more on the interests of the individual parties, not on details

• Provide structured information in the correct amount

• Expect quick decision-making that is dependent on the level of enthusiasm for the matter

• Check you facts and do not allow yourself to be carried away by his emotion

• Anticipate possible conflicts and do not allow him to express his opinion

• Allow him to lead negotiation if control of the facts remains in your hands


Know to whom you sell Asking for MORE has to do with CONFIDENCE and understanding your PRICING POWER •Examining your pricing power can be done by assessing your position on the following criteria:

Competition • How many competitors are there and how

strong are they? • Did the client worked with the competition

before?

Product • Is your product the newest innovation? • What about quality? Is it ‘top of the bill’? • How unique is your product?

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Brand • What are people willing to pay for your

brand?

Customer Service • What kind of service level is offered? • What is the response time? • Quality?

Pain of the customer • How fast does he need your support? • What does he lose if he does not buy your

service/product?

Relationship • How many people do you know at the

client side, how well do you know them and what level are they?


Potential next steps

99


Potential first steps to kick-start the process

100

1. Compose a (diverse) taskforce to:

• Analyze current situation and identify the drivers of margin performance

• Define the scope and expected outcome

• Develop a ‘draft’ service card

2. Align with all relevant stakeholders: management, finance, account

management, …

3. Make a selection for potential pilot(s), low risk clients and consider to roll-

out for new clients

4. Develop implementation and roll-out plan, incl KPI’s

5. Track, monitor and gradually improve (“start small to deliver big”)


Creativity

Next steps – a potential framework

101

2. Prepare! Prepare!

1. Define and align on scope

Analyze/fact-based input

Define expected outcome

Service Card

External analysis

Internal analysis

Define options

Future scenarios

3. Formulate tactics & action plan

4. Plan implementation

Action plan

Financial follow-up / KPI’s

Plans

Pilots (new clients &low risk clients)

Define roll-out plan

Phased action plan

Buy-in and involve internal

stakeholders Form

Taskforce Workshops and

analyses Just Do It – start small to deliver

big


Short evaluation feedback

102


Some feedback and advise for future

103

• Quite heavy for one afternoon … re-consider to shorten/skip the module on

alternative business models

• Tip: consider inviting a Procurement Manager (real life case)

• Discuss / integrate specific burning question from the sector

• E.g. copyright discussion … we get less and less paid for it … how can we valorize this better?

• Overall positive feedback


Always available for more sparring:

Marc Abels, Partner Deloitte Consulting [email protected] 0497 05 10 37 Dirk Peeters, Senior Director Deloitte Consulting [email protected] 0497 39 27 37

104

mailto:[email protected]

mailto:[email protected]


Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte's approximately 182,000 professionals are committed to becoming the standard of excellence. This publication is for internal distribution and use only among personnel of Deloitte Touche Tohmatsu Limited, its member firms, and their related entities (collectively, the “Deloitte Network“). None of the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this publication. © 2013 Deloitte Belgium

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