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Competing - using a Value-Based Price strategy

by Rick Baker
On May 2, 2012

A year ago, I wrote about Competing - Using a Low-Price strategy….the introduction was: 

At our Leaders’ workshops we tie two marketing concepts together. The two marketing concepts are ‘the PQS Triangle’ and ‘Differential Advantage’. Both of these concepts are ‘vintage’ marketing thoughts…..things we learned a few decades ago. 

PQS Triangle is a picture, designed to make it clear businesses can set its marketing strategy based on a combination of Price, Quality, and Service. Rarely, if ever, can a business succeed if its marketing strategy is designed to win at all of P, Q, & S. Put another way – it is virtually impossible to deliver the lowest Price, the highest Quality, and the best Service all at once. Something has to give. For most of our Clients the thing that has to give is Price: most of our Clients are not in a position to offer the lowest Price. 

Differential Advantage answers the question: Why do our Clients buy from us rather than do nothing or buy from one of our competitors? 

When the PQS Triangle and Differential Advantage are combined we have the essence of the marketing strategy. 

For certain businesses the marketing strategy does contain Price – i.e., the business can compete by offering better prices than their competition. 

Now, about Competing – using a Value-based Price strategy: 

Hanan & Karp expressed the concept concisely in ‘Competing on Value’.

"A value-based price has five characteristics:      

  1. Price is premium price.
  2. Price is compared with the improved profits it contributes to a customer’s business, not to competitive prices.
  3. Price is recoverable by the customer’s improved profits and is therefore an investment rather than a cost.
  4. Price is not discountable.
  5. Price is applications-specific. It varies in direct proportion to each customer’s improved profits."

This, of course, is the exact opposite to competing – using a low-price strategy.

So, the spectrum of pricing strategies goes from low-price at one end to value-based on the other end. 

Where do you position your pricing in that Price-Strategy Spectrum?

Tags:

Leaders' Thoughts | Marketing | Sales

Thought Tweet #447

by Rick Baker
On Apr 3, 2012

Thought Tweet #447 Wild Goose Chases: Stop makin' 'em; Stop takin' 'em.

 

The Thinking Behind The Tweet

One reason why salespeople fail to make a sale is they never had any chance of making a sale in the first place. David Sandler, the sales educator, said something like that. And, it's true. So, salespeople should do what they can to stop takin' Wild Goose Chases. Similarly, buyers waste their time with dysfunctional buyer-seller interactions. Everyone should stop makin' &  takin' Wild Good Chases.

Tags:

Sales | Thought Tweets

Setting Sales GOALS

by Rick Baker
On Mar 14, 2012

I have been thinking a lot about Goals, specifically B2B Sales Goals.

Over the last few years, I have met with and talked with many people who have struggled with B2B Sales work and failed to meet their B2B Sales Goals.

I do not think it is a coincidence that these B2B Sales struggles are happening at the same time social media activity is expanding exponentially.

Clearly, there is either a cause-and-effect relationship between these two phenomena or both these phenomena are the effects of a common cause. Either way, it is not a coincidence that 20th Century B2B Sales methods are faltering and failing in the 21st Century.

The 21st Century is a time of unleashed creativity and unprecedented self-expression...captured in real time, worldwide, via 'social media'.

In contrast, 20th Century B2B Sales methods are, for the most part, laced with pedantic formula-driven thinking and action.

20th Century B2B Sales methods just don't work any more.

And, the 20th Century goal-setting methods linked to B2B Selling just don't work any more.

Carrot-and-stick approaches to Sales performance are doomed to fail. That's true. However, the matter is either much simpler or much more complex than the choice of intrinsic versus extrinsic rewards for performance. 

Given the choice, and considering Ockham's Razor and other time-tested wisdom, let's choose - the matter is much simpler than the implications of intrinsic versus extrinsic rewards. The matter is about relationships....interpersonal relationships between buyers and sellers.

B2B Sales, if they result in exchange of [more-or-less] equal value always involve real interpersonal relationships. The best of these real interpersonal relationships, the ones that sustain over time and allow both buyers and sellers to prosper, are broader than the product or service in the hands. They are also deeper than the product or service in the hands.

It is that simple.

Tags:

Goals - SMARTACRE Goals | Sales | Seeking Simple!

Should You be in a Sales role?

by Rick Baker
On Mar 8, 2012

To be or not to be...in a Sales role...that is the question.

There is another question: isn't it time to re-invent the Sales role? The quick answer to that question is - Yes. A longer answer will follow in a future Thought Post.

Today, the question is - Should You be in a Sales role?

In order to answer that big career-choice question, you should break it down into bite-size pieces. For example, you could ask then answer the following questions. You could use your answers to create lists of the 'pros' and cons' about your choice of a Sales role.

Here are some of the questions you should consider then answer Yes No or Maybe:

Yes No or Maybe - Do I have self-knowledge about my Strengths?

Yes No or Maybe - Do I have self-confidence, even when the going gets tough?

Yes No or Maybe - Do I think Sales is a very-important business function?

Yes No or Maybe - Am I interested in other People?

Yes No or Maybe - Do I have a strong work ethic?

Yes No or Maybe - Am I a self-starter, with lots of energy and drive?

Yes No or Maybe - Do I know how to listen?

Yes No or Maybe - Do I know how and when to stop talking?

Yes No or Maybe - Do I have a pleasing personality?

Yes No or Maybe - Do I enjoy delivering value?

In addition, at some point the questions will involve other factors...the company you will work for, the product/service you will sell and, of course, the Clients who will buy your product/service.

Yes No or Maybe - Does this Company creates and delivers value to its Clients?

Yes No or Maybe - Does this product/service is of value to Clients, whom I know I can serve well?

Yes No or Maybe - Do I know how to go about selling this product/service and delivering value to these specific Target Clients?

Yes No or Maybe - Am I enthusiastic about working at this specific Sales role?

 

PS: the more Yes answers the better. In fact, a single No answer could mean you should seek another career, another company to work at, or another product/service to sell. And, about Maybe answers - BEWARE - successful Sales people do not like Maybe answers!

Tags:

Questions?: The Art of Asking Good Questions | Sales

Do you have a "SELLING PURPOSE"?

by Rick Baker
On Jan 26, 2012

Business Leaders: do you have a Selling Purpose?

Here is the way Spencer Johnson1 presented this concept in 1985:

"MY SELLING PURPOSE

is to help people get

the good feelings they want

about what they bought

and about themselves."

He went on to add:

"I quickly reduce my stress

because I no longer try

to get people to do

what they don't want to do.

When I sell On Purpose,

it's like swimming downstream."

(I did not add the underlining...that was in the book.)

Now, that advice can apply to:

  1. Sales people,
  2. Leaders,
  3. Everyone who wants to sell an idea, &
  4. Everyone who wants to inspire other People.
I propose it be applied to all 4.
 
Leaders need Purpose...and they should do things On Purpose.
 
Leaders need to explain their Purpose to the People who are following. And, Leaders need to repeat, repeat, repeat...ideally, using sticky stories.
 
Leaders should aim to have less stress...that applies to them and to their followers...that only makes good sense...Right? Purposeful, focused action generates less stress than haphazard, unfocused fire-fighting...Right?
 
And, the bottom line...
 
People want to feel good.
 
 
Footnote:
  1. 'The One Minute Sales Person', Spencer Johnson (1985)
 
 
 

 

The Wonderful World of Sales

by Rick Baker
On Nov 25, 2011

As you can see from my book reviews, I just read a sales book and re-read an old one.

The two books are called:

Stop Whining! Start Selling!

Profit-Producing Strategies for Explosive Sales Results

&

Stop Selling & Do Something Valuable

 

Stop whining, start selling, stop selling, & do something valuable.

What end's up & what's a salesperson to do?

Welcome to the Wonderful World of Sales.

No end to the sales advice...almost all of which is good advice.

***

Question: Why so much appetite for sales advice?

Answer: Because, for most folks Sales just keep getting tougher and tougher.

***

I am working at creating a simple & fool-proof recipe to help Salespeople.

Here are the primary ingredients in my Sales-Success Recipe:

  1. A compelling and precise answer to this question: 'Why are you in a Sales role?'
  2. A definite Purpose...a clear picture of a Career Goal.
  3. An emphatic commitment to Self-Discipline.
  4. A commitment to Life-Long Learning...about People.
 
Footnotes:
  1. The answer to the question 'Why are you in a Sales role?' is always 'telling'. Few answers cut the mustard. So, we need to keep our eyes and ears open for the answers that do cut the mustard. [All the less-than-acceptable answers signal future failure in the making.]
  2. Sales must be done 'on Purpose'...it is as simple as that.
  3. Self-discipline is essential because Sales roles tug at the Salesperson's emotions and emotions pull and shake Salespeople every which way but rarely point them in the successful direction.
  4. Life-Long Learning about People...remembering, People really do want to buy...buying stuff - well that's a perk enjoyed by most human beings.

Tags:

Emotions & Feelings @ Work | Sales

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