Living in a materiaL worLd - Minnesota Precision Manufacturing ...

Competing on Value
BREAkING THROUGH SALES BARRIERS
by Terry Slattery
Increasing marketplace efficiency and the proliferation of technology have hastened
the demise of product innovation as a competitive advantage. The duplication of
new products and enhancements never has been easier, and the commoditization of
products never has been as far-reaching.
With a fast-growing number of
companies selling what have become
commodity products, the vast majority
of CEOs and sales executives I work
with tell me their three critical sales and
marketing challenges are:
1. Relentless pressure to match
competitors’ low bids.
2. Demos/Proposals that reach a dead
end.
3. Unacceptably long and costly sales
process.
These issues apply as much to
manufacturers’ salespeople as they do to
direct sales organizations. In fact, in order
to gain sales time, manufacturers need to
help their staff overcome these hurdles.
Competing on Price or Value
If you are serious about overcoming
these barriers to sales success, your
salespeople must compete on value.
Those who compete on price risk longterm
survival, settling for slim margins
and forfeiting profitable, predictable
revenue growth. They constantly must
drive down the cost of their transactions
through operational efficiency. In
contrast, value-driven sales organizations
that have clear differentiating value are
positioned to enhance margins, reduce
sales costs, and take market share from
their competitors.
How do you determine whether
you’re competing on price or value?
Indicators that you are competing on
price are:
▶▶Your sales force is being pressured to
match low bids by competitors whose
products and services are inferior but
being touted as comparable by the
prospect.
▶▶Sales force does demos and proposals
that come to a dead end.
▶▶Sales costs are unacceptably high,
and the sales process is too long.
▶▶Closing rate for proposals or demos
is less than 90 percent.
To compete on value that helps sales
people avoid or win price wars, and protect
and enhance margins, you must create or
re-create real value linked to dollars.
In a nutshell
This is not about value propositions
for products that discuss benefits
of using the product, or unproven
intangible statements designed to lure
prospects. It’s about translating your
22 | PRECISION MANUFACTURING May | June 201