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You are browsing the archive for Value Proposition & Value Add.

Delivering Real Value beyond Product & Price

April 19, 2013 in Attitudes & Behaviours, Brand & Reputation, Business Acumen, Competition, Sales Forecasting, Sales Measures - Inputs & Outputs, Value Proposition & Value Add

In December 2012, we published the 12 Sales Trends Report for 2013 and released a brief summary of each trend. This month we are focusing on the Sales Trend “Delivering Real Value beyond product and price”.

For many years most of a product’s value came from the production processes that converted raw material into useful forms. Now real value is coming from supply chain logistics, partnership agreements, overall business improvements, shared innovations, technological improvements, styling features and other attributes that only people can create.  

In the 21st Century the intangible is now more valuable than the tangible. Products, services and technology can all be replicated by a competitor but people, ideas and relationships cannot. It is the intellect of our people, the creativity of our ideas and the depth of our relationships that must be fostered and there must be a clear relationship between these things and the brand. In other words, the organisation must be viewed as the source of these intangible qualities rather than the product.

This sales trend highlights that the real value of our offerings lies in intellectual property: the know-how and wisdom of our people and how they interact with our businesses and our markets.  The bottom line is that if you don’t value intellectual property then you don’t value relationships, you don’t value ideas and you don’t value thinking. You are on the path to obsolescence.

intellectual propertyFor organisation to harness and deliver real value beyond product and price there are three (3) key areas to consider:

  1. Tacit knowledge: Tacit knowledge represents the ‘know-how’ in an expert’s work, but it can be difficult to articulate. It typically becomes implanted in an individual’s routines and company’s culture and thus can remain hidden.  There is incredible value residing in tacit knowledge and people can pay good money to access it.
  2. The Value chain: smart companies know that their wisdom needs to be tracked right across their value chain, clients and suppliers.  Savvy salespeople know the touch points where this knowledge is crucial and so do their internal stakeholders.  The value lies in the educational journey across the entire value chain, not the product.  It is the outcome and consistency that is produced as a result of the effective use of the value chain.
  3.  Company Stories:  If done well, it is the companies that become synonymous with these intangible qualities that are the most successful. Think Google, Nordstrom, Mayo Clinic or Mattel – all are known as creative, relationships-driven organisations that attract those sorts of people. Those intangible qualities built around ideas and relationships have found their ultimate expression in the form of a brand. Stories are then told about that brand to reinforce the value of their intellectual property and those stories trump every other product, price or service advantage an organisation might have.

A major transition for any sales team

major transitionThis means that our sales teams need to transition from being walking talking product wikipedias to being business consultants and advisors who can confidently position the real value of their offering – namely them and their organisation’s people and their business partners/suppliers who genuinely know how to add value in real dollar terms.  

This sales trend highlights how we need to harness the power of our thinking, our people and our stories to add value beyond our traditional products and services.  Our sales teams and businesses need to be demonstrating our abilities to collaborate and work with our clients to make their lives easier, more effective, more efficient and less risky.  And the pleasant surprise is that more and more companies are beginning to see that people are prepared to pay a premium for this intangible because it brings comfort and consistency – something in short supply in the busy, hectic world we inhabit.

Remember everybody lives by selling something.

Author: Sue Barrett, www.barrett.com.au 

 

Procurement & Value Managed

September 15, 2011 in Customer Service, Procurement, Sales Culture, Value Proposition & Value Add

‘Procurement & Value Managed’ was voted as the Number 8 for Sales Trends for 2011. In 2011 we are seeing the development, thinking and sophistication of the Procurement Profession accelerate. This progression will surely see procurement on the front foot of supply chain management. Around 60 percent of major global corporations now have Procurement and Supply at the executive table alongside sales, marketing, finance, production, HR, IT, etc. Security of supply, environmental credentials, sustainable business practices, integrative processes and business cases will be up for discussion at the executive level and procurement are right in the centre of key decisions making. Smart procurement professionals will centre much of their thinking and advice around Value Management rather than Cost Management.

Contrary to popular myth that all procurement people want to negotiate the lowest price, the procurement profession is presenting itself as far more sophisticated than most sales people give it credit for.

Recently I had the opportunity to attend and present at the CIPSA CPO100 conference where the top 100 Australian companies were represented by their Chief Procurement Officers. The insights and findings were fascinating – a significant feature being the growing importance of having viable relationships with internal stakeholders, sales people, suppliers and customers. The procurement profession recognises that in the past, its members haven’t done the best job in building and managing viable business relationships within their own organisations or with suppliers, admitting that the end-user customer could even be forgotten.

But things are quickly changing – smart procurement professionals now recognise they need to look at the whole supply chain process. They need to have a firm grasp of the organisation’s strategy, culture and capability as well as an understanding of the intricacies of the changing needs of their customer base and their buying behaviours.

In this volatile world, it is well recognised that customers no longer buy vertically and now buy horizontally, subsequently creating havoc in traditional supply chains. For instance ‘Zara’* one of the latest fashion brands to hit our shores has a three week turnaround on new range promotions. This means that new product materials need to be sourced, made and shipped to store within 15 days. This means 16 new ranges per year. This has turned supplier relationships, procurement practices and the retail fashion business on their heads.

How does procurement respond in this instance? According to Supply Chain Management expert Dr John Gattorna they make sure they fully understand the business, its strategic priorities, its customers’ buying habits, internal stakeholders and suppliers’ capabilities. He states that sole focus on cost management will not work in this case and says that effective supply chain management is all about understanding the behavioural profiles of your customers, internal key stakeholders all the way through to your suppliers. Aligning your behavioural preferences along with your strategic intent and cultural values will get much better outcomes for all concerned.

Procurement realises that multi-disciplinary work clusters within organisations rather than silos proves more effective. This means that people actually get to talk to each other and really connect about projects, production, supply and successful outcomes in the field.

Procurement professionals admit there is still some way to go as far as the reputation and actual capabilities of their profession. They know they need to reposition and rebrand procurement as a strategic partner offering ‘value’, as suppliers also need to. Many procurement professionals are fast realising they need to adopt the same skills they value in highly effective sales people or account managers.

The irony is that often the professions of Procurement and Selling have been pitted against each other when they have all the while really been trying to achieve the same thing – bring value to their clients and/or stakeholders.

Rather than work against each other smart procurement and sales professionals work together each understanding their goals and objectives and where they can find common ground and viable business relationships. Smart procurement and sales professionals are business people looking for viable solutions that serve the end user – the customer, as well as the businesses of both client company and supplier.

This is why I’m building bridges between the two professions. I have invited Craig Rooney, Group Procurement Manager for Porter Davis Homes and former Coles Group Procurement Manager to discuss what 21st century procurement professionals are looking for from sales people that’s beyond the price discussion at the CSE11 Sales leadership conference on 10-11 October 2011. This will be the first time a procurement professional has presented to the sales profession in Australia. As I have been given the opportunity to speak at CIPSA conferences on several occasions I thought it would be good to hear from procurement.

So the sales profession could do itself a favour and pay attention to these changes and ditch the ‘Us versus Them’ scenario when it comes to dealing with procurement. 2011 and beyond is about working with procurement to build viable relationships manage real value.

*It should be noted that Zara has come under scrutiny for breeches of working conditions as it has been accused of using slave labour in Brazil. Their procurement practices are currently under investigation.

Remember everybody lives by selling something.

Author: Sue Barrett, MD of www.barrett.com.au

The Yin Yang of Selling

December 9, 2010 in Sales Assessments, Sales Leadership, Sales Relationships, Sales Skills, Sales Talent, Value Proposition & Value Add

In the 20th century the emphasis on B2B selling had a distinct aggressive ring to it. So much so, that you could walk down the halls of many businesses and think that you were involved in big game hunting. Many of these teams saw selling as an extreme sport, or more precisely, Big Game Fishing or Hunting.

  • Customers were ‘Targets’.
  • Getting a sale was referred to as ‘the Kill’.
  • Customers were regarded as objects to be possessed or trophies to be placed in their cabinet; to be shown off and admired (perversely so) like stuffed animal heads on the wall.

Little regard was really paid to building genuine relationships and developing real value. It was in essences an ‘us’ versus ‘them’ approach. And if you tried to develop deeper relationships it was seen as wimpy and soft. For instance, I can recall hearing of the death of one of my long standing clients, who died tragically in a plane crash when I was working as a recruiter many years ago. Upon hearing the news I found myself crying quietly at my desk at the loss of this lovely man. A few minutes later one of our senior managers found me and asked me why I was crying, and when I told him why, he just said “get over it, it’s only a client”. Extreme I know, however I have overheard many sales people speak about their clients in disparaging and disrespectful ways with little regard for the value of genuine relationships built on trust and transparency.

So why title this post as the Yin Yang of Selling? Yin Yang are complementary opposites that interact within a greater whole, as part of a dynamic system. Everything has both yin and yang aspects, but either of these aspects may manifest more strongly in particular objects, and may ebb or flow over time. There is a perception (especially in the West) that yin and yang correspond to good and evil (not respectively). However, Taoist philosophy generally discounts good/bad distinctions and other dichotomous moral judgments, in preference to the idea of balance.

I propose that the profession of selling has been out of balance for some time and to its detriment. If we look at how selling has been evolving over the last 50 years, we can see a distinct shift occurring from the aggressive one sided approach where conquest was king (too much yang) to a more delicate balance between the masculine and feminine aspects of yin yang.

It cannot be denied that selling requires yang – a proactive, focused, go-out-into-the-world and find opportunity approach (prospecting) however, selling must now be balanced with the ability to genuinely listen and respond to the subtleties of more complex relationships which involves patience, nurturing, and dealing with ambiguity which is yin. Think of the types of conversations you now need to have with your prospective customers where listening, questioning, resolving problems, collaboration, empathy and understanding are encouraged.

This is not just a fantasy. In reviewing the latest research on elite sale performers, gender differences in sales capabilities were found; women rated significantly higher than men on 5 of the 7 emerging competencies which gave them a distinct advantage in selling. Some of these capabilities included:

  • listening beyond the product needs;
  • engaging in self appraisal and continuous learning;
  • orchestrating internal resources;
  • aligning customer/supplier strategic objectives; and
  • establishing a vision of a committed customer.

These capabilities are in the realm of yin. May I suggest that we encourage more yin yang to assist us on our sales journey and encourage more success! To find out how you can achieve this in your team or career, have a look at the sales training that we provide for sales people, sales teams and sales leaders.

Remember everybody lives by selling something.

Author: Sue Barrett, www.barrett.com.au

Price is what you pay. Value is what you get.

October 27, 2010 in Ethics & Values, Procurement, Sales Skills, Value Proposition & Value Add

I recently had the pleasure of attending and speaking at the 6th CIPS Australasia Annual Conference for the procurement profession. It was my third invitation to speak at a CIPSA event in my capacity as a professional representing the sales profession. The theme for this conference was ‘Managing Volatility’. A key message I gleaned from the conference was Value Management rather than the narrow band width of Cost Management.

Don’t get me wrong, the Procurement Profession is still interested in cost, however, there was a distinct awareness about ‘cheap being a false economy‘. While it was important that it look to secure supply, and at the same time reduce total supply cost, it was not after ‘cheap’.

At the ‘Pricing Insight’ session, one of the many sessions I attended over the two days, the famous Warren Buffett quote: “Price is what you pay Value is what you get.” defined the issue.

Many of the procurement professionals in the ‘Pricing Insight’ session commented on the stupid pricing games played by sales people and their companies. They still found that too many sales people were product fixated rather than business oriented, and defaulted to unnecessary price wars at the expense of developing real value propositions. When something was offered up as very cheap, the procurement professionals were concerned about the guarantee of supply and quality of the offering. They did not want to buy ‘cheap’.

Contrary to the popular myth that all procurement people want to negotiate down to the lowest price, the procurement profession is far more sophisticated than most sales people give them credit for. The sales profession is doing itself a disservice if it pitches the ‘Us versus Them’ scenario when it comes to dealing with procurement.

The procurement profession is learning its lessons too. We cannot deny that there has been a climate in the past of procurement focusing on cost management only, and maybe some lingering effects still exist in some industries. However, they are learning that supply and demand are inextricably linked and not managing these issues well can cause greater costs and harm to their organisations and industries.

Take for example the European auto manufacturing industry. Prof Dr Nicolas Reinecke, a world expert on Procurement, cited how recently the major European car manufacturers had to bail out the world’s largest manufacturer of bumper bars to the tune of $100M because a climate of reducing prices by 1-2% every year finally sent the business into bankruptcy. What that auto industry had to learn was that they nearly killed off the only major quality supplier by being short sighted and self centred, as their own cost management behaviours had made it near impossible for other equivalent auto suppliers to exist. Bailing out this bumper bar business cost the industry much more than if they had have worked in a sustainable partnership model that allowed all parties to continue trading in a healthy manner.

David Noble, Chief Executive of CIPS worldwide, says that the volatile environment is the new norm and being near sighted about cost management only will harm everyone. The key differentiator, he states, is the Supply Chain as it touches all corners of the organisation and is the face of the enterprise. He commented that Value Add is increasingly generated external to the enterprise and that strong supply chains need to be fast, flexible and robust with the ability to control risk and environment.

The Supply Chain efficiency is increasingly seen as the key differentiator in business with the majority of value add in an enterprise coming from outside the organisation’s boundaries.

Sixty percent of major corporations now have Procurement and Supply at the top table with the world globalisation, recessions and environment all sitting squarely in the procurement space. David states that, the spotlight is on their profession and volatility is at the heart of supply chain management. Controlling volatility and managing value gives an organisation a huge competitive edge.

We are witnessing a quickening in the development, thinking and sophistication of the Procurement Profession – they are definitely on the front foot. They realise that they do not have to make negotiation a part of every sale – it is not about being adversarial for the sake of it.

The Procurement Profession has access to more information than ever before. Most clients know what they are after even if they don’t know how to articulate it. Today, clients expect to communicate and deal with a real professional who knows their own business and how they can best serve their clients’ needs with creative solutions and fresh ideas.

They don’t expect to be coerced, bullied, tricked or intimidated into buying. They don’t expect to be treated like an idiot by sales people who just talk at them and flash brochures or product sheets. Nor do they necessarily want to make ‘friends’ with sales people.

Clients, especially the procurement profession, are now after ‘business people’ who can sell, think about possibility and take information to the imagination phase. They are looking for partners to help them map a pathway forward into the future.

As a sales profession, we need to be keeping pace with the procurement profession and rather than working against procurement we need to work with them in a spirit of cooperation where we can manage value together.

Remember everybody lives by selling something.

Author: Sue Barrett, www.barrett.com.au

Are you ready for Sustainable Selling?

October 21, 2010 in Ethics & Values, Procurement, Sales Relationships, Strategy, Value Proposition & Value Add

Sustainable Selling was voted by you as the number 10 Sales Trend for 2010. With the green agenda comes Sustainable Selling. More and more questions are being asked by many about how we can best manage this relationship now and for future generations?

I recently attended and spoke at the 6th CIPS Australasia Annual Conference (peak industry body for the Procurement Profession) where Sustainability was well and truly on the agenda. The conference theme, ‘Managing Volatility’, had a range of national and international speakers presenting on how we manage and guarantee supply in an ever changing, often unpredictable world. The key topic, which everything seemed to revolve around, was about managing value rather than only managing cost. The messages I received was that the Procurement Profession wants to encourage real, measurable value, trust, transparency, substance, and ethical selling and procurement practices which discourages excessive consumption and greed. The focus was on forging legitimate business relationships which serve the environment, people, businesses and communities. ‘We are all in this together’ was the point that I resonated with.

Taking the lead from the CIPSA conference, other forward thinking professional bodies and emerging business practices such as Fair Trade, if we are to meet the needs of the present (economic, environmental and social) without compromising the ability of future generations to meet their own needs, we need to engage in Sustainable Selling practices which support the concept of Sustainable Development as part of our strategy moving forward.

The Brundtland Report that formalised ideas around Sustainable Development provides the basis for practical application of the principles of sustainability in the real world. Sustainable Development is not a fixed state of harmony, but rather a process of change in which the exploitation of resources, the direction of investments, the orientation of technological development and institutional change are made consistent with future as well as present needs.

Cradle to Cradle Design is one example of some clever thinking and action around sustainable development. Cradle to Cradle Design is a biomimetic approach to the design of systems. It models human industry on nature’s processes in which materials are viewed as nutrients circulating in healthy, safe metabolisms. It suggests that industry must protect and enrich ecosystems and nature’s biological metabolism while also maintaining safe, productive technical metabolism for the high-quality use and circulation of organic and synthetic materials. Put simply, it is a holistic economic, industrial and social framework that seeks to create systems that are not just efficient but essentially waste free. The model in its broadest sense is not limited to industrial design and manufacturing; it can be applied to many different aspects of human civilisation such as urban environments, buildings, economics and social systems.

Sustainable Selling, I propose therefore, is made up of ethical selling principles, ideas, values and practices which values trust, transparency, substance, community, the environment and healthy profits while discouraging the exploitation of people and resources, excessive consumption and greed. Sustainable Selling recognises that everybody lives by selling something and that selling is about the principle of exchange – the sustainable exchange of ideas, innovations, products, tools, concepts, feelings, money and value.

The focus is on creating Sustainable Selling business cultures by encouraging and training all people in sustainable selling and business principles and skills so they can forge legitimate business relationships which serve the environment, people, business and communities.

Take the Victorian Government and VECCI initiative Carbon Compass which was launched in April 2010. Carbon Compass is a place where small and medium businesses can find knowledge, share information and get practical advice on how to reduce their carbon footprint. The website has been developed to help us understand what carbon is and where it exists in our businesses. It is designed to help us make our businesses more sustainable. The carbon, climate change and sustainability solutions they host have been recommended by businesses for businesses.

At Barrett, we recognise the importance of minimising the impact of the way we do business. We have a continuous improvement approach and have developed a purchasing and recycling strategy and sustainability checklist amongst other things – our goal is to live and work with a cradle to cradle mindset. As one of our initial steps, we have signed up to Carbon Compass as well and find it a great resource.

However, our vision for Sustainable Selling extends beyond the day to day operations of our business. On a broader business perspective, at Barrett we are in the process of developing the Sustainable Selling Manifesto & Charter where we are inviting individuals and companies to contribute to its formation.

Following on from our vision extends to the creation of a tribe or community of businesses and business people who subscribe to the Sustainable Selling Charter which would lead to the subsequent opportunity for businesses to do business with other Sustainable Selling Partners.

The Sustainable Selling Charter & Practices would support the concept of Sustainable Development and Cradle to Cradle initiatives which provides practical applications of the principles of sustainability in the real world.

Sustainable Selling is not a fixed state of harmony but rather an evolving process in which the application of resources, the direction of investments, the orientation of technological development and institutional change are balanced with future as well as present needs. 2010 and beyond will be about putting eco into sales.

Remember everybody lives by selling something.

Author: Sue Barrett, www.barrett.com.au

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