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

Feature | COMPETING ON VALue
value into cash, in the form of reduced
costs or increased sales for the prospect.
This principle is always the same, no
matter how simple or complex the
product or service—whether it is oil,
insurance, software, medical devices,
aerospace or agriculture etc.
If you take only one nugget away from
this article, leverage your differentiating
value by answering two questions:
1. What is the cost of not doing
business with my company; and
2. Who is impacted by this cost?
This is the right buyer who will pay
your price.
Company executives must be
responsible for providing value
ammunition to salespeople that
empowers them to meet and exceed
revenue and margin expectations.
Success: Selling Differentiating Value
to the Right Buyer Wins Margins
A U.S. manufacturer of computer
components, with clearly defined value,
was being challenged by a prospect (a
sophisticated supply-chain manager)
who tried to persuade my client to give
up their 60 percent price premium over
Asian competition. While the prospect
kept insisting the products were equal,
the lower priced product could not
provide the same high performance over
the 100,000 cycles the prospect required.
The salesperson asked, “When you
put both products through your cycle
test, what did you notice?” The seller
anticipated the answer that the buyer
confirmed: The inferior product began to
degrade toward the end of the test. Why
did that end the challenge? The cost of
recalls associated with product failures far
exceeded any temporary price advantage.
Our client won the business at their price
as well as the next three products that
contained the same components.
Barriers to Success: The right
Differentiating Value to the Wrong
Buyer
In some cases, the differentiating
value development exercise reveals that
the sales team is beating their head
against a rock-solid wall, trying to
get a prospect organization to change
suppliers. When the cost of not doing
business with their company is defined,
Develop your Differentiating Value Now
Start winning customers back and stop losing prospects. Engage your
entire sales team to help you start developing your special model.
Begin with four columns:
1. In the left column, list four to five things you do and the way you
do them that are unique to your firm or that your firm does better
than the competition.
2. In the column next to it, translate each entry into a quantifiable
consequence of not having what you offer.
3. In the next column, list the questions you can ask to probe for
those consequences.
4. In the far right column, list possible titles of the right buyer for
each entry.
they quickly understand that they are
meeting with the wrong person in
the prospect’s organization. They are
actually meeting with the “logical”
buyer—the person who appears to make
the purchasing decision, but who is not
impacted by the decision.
Here’s an example. One of our clients,
a global producer of clutch and power
train assemblies for transportation and
construction equipment, sells products
that replace OEM parts. Because their
products outlast the competition, they
drive tremendous cost savings—savings
that net these businesses way more than
the 35 percent price premium.
So why was the sales force having
trouble converting prospects to their
products? They were calling on logical
buyers. Instead, salespeople needed to
talk with the person in the organization
who was responsible for financial
performance. Once they understood that
their technical sale was really a financial
sale, they began meeting with CFOs—
“emotional” buyers.
The CFO became our ally. Our
differentiating value included less
down time, less overtime and fewer
replacement installations in the course
of a year. To the right buyer, these
translated into a relationship well worth
the 35 percent price premium.
Win More Pieces of the Pie
If your product is one piece of
finished products produced by your
customers, don’t assume they are aware
that you could provide additional pieces.
If your customer is happy with the value
you provide, they are a prospect for
additional products and/or services you
may offer. If your salespeople don’t dialog
with these prospects, they’re overlooking
possibly the lowest hanging fruits.
Be alert to the potential need for
each additional product to carry its
own value, depending on its role. Make
sure your salespeople are selling to the
right customer by answering the two
questions posed earlier: (1) what are the
costs of not purchasing the additional
components from us, and (2) who is
currently paying those costs?
In this brave new world, where
innovative products quickly lose their
exclusivity, product commoditization
is virtually the norm. Competing on
value—the fiscal detriment of not doing
business with you—is the most effective
way to win business and defend margins.
Terry Slattery is the CEO of Slattery
Sales Group in Edina, Minn. He can be
reached at tslattery@slatterysales.com or
952.832.5436. For more information on
differentiating value, please visit
www.slatterysales.com.
May | June 2010 PRECISION MANUFACTURING | 23