LeveragePoint Value Management Blog

Surviving the Recession to Perish in the Recovery

Has the recession really ended? We're beginning to see companies emerge after a long period of belt tightening and cost management to breathe a cautious sigh of relief. Better days may soon be ahead. Yet ironically, so may new risks.

In our February webinar, Jay Manson discussed the downsides of relying too heavily on a cost/price control approach. He showed a recent case example (see graph below) of a company facing the dilemma of stagnant growth - and how a value-based marketing and sales approach will save it.

Click here to watch the webinar recording (or access the slide deck) and learn how to prepare your company in the year ahead.

Webinar - Improving the Value Proposition for New Products with Dick Braun of Parker Hannifin

EXCLUSIVE GUEST APPEARANCE

Wednesday October 19 at Noon Eastern - Register Here

Come hear a preview of Dick Braun's keynote address for the PPS Annual Fall Pricing Conference. Dick will describe how Parker Hannifin's Win Strategy has significantly increased both sales and margins by improved value creation and value capture. Dick will discuss layering in value management pricing strategies on top of Parker's already robust product and customer segmentation price practices. Learn the concepts of "value triangulation" - whereby the pricing team dynamically adjusts value propositions based on competitive position and customer-specific economics. See how a $12 billion global diversified manufacturer endeavors to deploy a consistent value management approach.

Dick Braun is Corporate Vice President of Strategic Pricing at Parker Hannifin Corporation. Dick's work was detailed in the Wall Street Journal feature article, "Seeing Perfect Prices, CEO Tears Up the Rules." Previously, he had a 24-year career at GE. As leader of Parker Hannifin's pricing program, he significantly contributed to Parker's earnings growth over the past 7 years.

Learn more about LeveragePoint's Software as a Service (SaaS) platform for value-based pricing and value-based selling.

 

Webinar - How to Develop a Value Proposition That SELLS with Jim Geisman

Our fall webinar series kicks off on Wednesday Sept. 21 at 3:00 PM EDT with Jim Geisman of Software Pricing Partners. Register here.

Everyone "knows" that B2B customers buy products when you show them the economic advantages of buying your offering. Often, you can develop a strong economic argument without collecting massive amounts of data, installing enterprise software systems or spending a ton of money. In this webinar, Jim shares his extensive experience working with companies to sharpen their value propositions. Jim will provide practical advice and tips that have helped B2B marketing and sales professionals in companies ranging in size from global companies to start-ups. Attend this webinar to learn how to improve and communicate your value proposition.

LeveragePoint's solution is built around the proposition that in B2B the price is negotiated as part of the deal. Companies that connect their price to their value proposition come out on top.

Our June Webinar - What Sales Needs to Close Deals: Collaboration

June 1, 2011 - Watch Now

This is a tough time to be selling to business customers.  Sales must create urgency to motivate customers to take action, but each customer has a unique set of challenges.  Sales depends on marketing to provide them with the 3 or 4 critical value messages to create urgency with their customers, but how does marketing do this when each customer and every sales situation is unique?  It is only through collaboration that sales and marketing can work together and create a unique economic value proposition for each customer.  By establishing a two-way communication channel, marketing and sales can quickly seize customer opportunities and move customers to closure.

In this 30-minute webinar, see how accessing our collaborative SaaS platform makes it easy for sales and marketing to create unique value propositions that motivate customers to take action. 

 

April Webinar - Use a Tablet to Make Value-Based Pricing Easy

April 27, 2011 - Watch Now

Value-based pricing is regarded as a best practice that's essential for driving profitable growth in B2B companies. So why hasn't it been more widely adopted? Some experts claim that implementing value-based pricing is a lengthy, difficult process that requires tremendous sophistication which is just too much for most organizations. 

We believe that by literally putting the right technology into the hands of the people who can leverage it, a value-based pricing strategy can be implemented rapidly to realize profitable growth. In this 30-minute webinar, see how accessing our collaborative SaaS platform on a tablet makes it easy for sales and marketing to communicate and capture the economic value you deliver to your customer's bottom line.

There is ample evidence that value-based pricing has a big impact on performance. See for example "Building a World Class Pricing Capacity" by John Hogan.

But recently Mark Burton, co-author of Pricing With Confidence and a partner at Holden Advisors blogged on Why Value-Based Pricing is Overrated. Reading this, what he is really saying is that while full-on value-based pricing should be every firm’s objective "implementing a sustainable value-based pricing program is extremely difficult and can take years to become standard practice in the organization. It requires sophisticated knowledge of the economic benefits received by customers; changes in  market research, how competitive strategies are conceived, product management, sales practices, and incentive systems". Stephan Liozu has investigated some of the challenges that industrial organizations face in adopting value-based pricing in his paper "Pricing Orientation in Industrial Markets."

This has not been our experience. Companies that have adopted our collaboration platform have been able to build value models (using the EVE approach), translate them into value communications packages, and then have sales use these packages to connect price and value with the buyer in a matter of weeks. Give people a work environment that supports value-based pricing and they will move to adopt it. And with the growing popularity of tablet computers like the Apple iPad, there are better ways then ever to put the power of value-based pricing to work.

Previous LeveragePoint webinars

• Dealing With Rising Commodities Prices with Dr. Tom Nagle
• Value-Based Pricing in Sales and Marketing Communication
• Value-Based Pricing in the New Product Development Process
• Avoid Discounting Using Value-Based Pricing
• Getting Your Organizatoin Aligned Around Value with Dr. Tom Nagle

 

 

 

Value-Based Pricing Resources Online

LeveragePoint continues to build the best collection of on-line resources on value-based pricing and how to apply this approach to product development, marketing and sales.

Our March 2011 webinar with Dr. Tom Nagle Dealing with Rising Commodity Prices is now available online. In this webinar Tom applies his long experience to the strategies and tactics companies need to apply to deal with the long-term uptrend in commodities prices.

Stephan Liozu, CEO of Ardex America Inc. and one of the few CEOs to be a CPP (Certified Professional Pricer) has shared his reseach on PRICING ORIENTATION IN INDUSTRIAL MARKETS: THE ORGANIZATIONAL TRANSFORMATION TO VALUE-BASED PRICING. He is leading his own organization's transformation to a value-based pricing strategy and is doing research into the field for his Ph.D. Stephan will be giving a keynote at the Spring Professional Pricing Society conference this coming May in Chicago.

LeveragePoint continues bring new capabilities to its collaboration platform for value-based pricing. In March we have added new functionality around configuration of value-based selling tools for the salesforce.

LeveragePoint will be exhibiting at the Spring Professional Pricing Society conference and we look forward to seeing you there. 

 

 

March Webinar - Dealing With Rising Commodity Prices with Dr. Thomas Nagle

 Special Guest: Thomas Nagle

Best-Selling Author of The Strategy and Tactics of Pricing

Register Here for the webinar on March 23 at 3:00 PM EDT, Noon WDT.

With raw materials prices increasing across a broad range of commodities and further inflation likely as the world economy continues to recover, maintaining margins is increasingly difficult. The higher and more frequent cost increases become, the greater the adverse effect from delays in passing them through. Still, in competitive industries, no competitor wants to take the lead in raising prices and the ire of customers.

In this 30-minute webinar, renowned pricing strategist and Monitor Partner Tom Nagle shares his perspectives on how organizations have succeeded in meeting this challenge in the past.  

If you are interested in this topic you may also want to follow the discussions on LinkedIn:

• Professional Pricing Society
• Network of Pricing Champions

Value-based pricing software like LeveragePoint can be used to understand the impact of changing commodity prices on the value of your solution for your customer in a time of rising commodity prices.

 

Webinar Value-Based Pricing in Marketing & Sales Communication

February 23, 2011 - Watch Now

In our February 2011 webinar, Jay Manson and Ed Arnold discuss how to communicate bottom-line value to your customers. They illustrate why it's essential to quantify the two or three things that allow you to beat your competition in the sale and to win the pricing negotiation.

Pricing is the most powerful lever that companies have to improve margins, it is a lever much more powerful that cost reductions. For a typical Fortune 500 industrial company, a 5% increase in price realization leads to a 50% increase in the bottom line (See Figure 1).

Value-based pricing is about a lot more than just setting a price. It covers the full value creation, communication and capture cycle. With value-based pricing, product development is focused on creating differentiated value; marketing identifies the segments and competitors that get the most differentiated value from the offer; pricing is able to connect the price to the value; and sales is able to negotiate a price based on value in the sales negotiation. (See Figure 2). LeveragePoint provides modules for the full value-based pricing process: Value Modeling, Price Setting, Value Communication, Sales.

During the webinar, participants weighed in on two polling questions. When is price introduced during the sales process? (Figure 3) How does marketing communicate the customer-specific value proposition? (Figure 4) To hear the commentary, view the webinar now.

 

 

Webinar on Value-Based Pricing in Marketing and Sales Communication

Creating value in new product development is good (see our webinar on Value Based Pricing in the New Product Development Process), but it will only create value for your own company if that value can be communicated by marketing and used by sales. This is the theme of our February webinar.

You can register here.

In this 30-minute webinar, Jay Manson and Ed Arnold discuss how to communicate bottom-line value to your customers. Using the case example of a "bet the farm" software product release, they illustrate why it's essential to quantify the two or three things that allow you to beat your competition in the sale and to win the pricing negotiation.

See how this value-based pricing approach is managed using a SaaS (Software-as-a-Service) solution that can be deployed quickly to deliver business impact in less than 45 days.

The LeveragePoint platform enables everyone in your organization to collaborate and align around the economic value you deliver to your customer's bottom line -- quantifying what truly differentiates you from your competition.

LeveragePoint helps product development and pricing set value-based prices; and helps marketing and sales communicate a value story that wins the price negotiation, shortens sales cycles, and captures wider margins.

 

Insights on Value-Based Pricing in the New Product Development Process

Our January 26 Webinar on Value-Based Pricing in the New Product Development Process drew an engaged audience of about 50 people. You can view the webinar here. We had a good mix of industries (from specialty chemical to data and information) and in job roles (from pricing to product development and sales). A recording of the webinar will be available in a few days. Meanwhile, here are some of the high points and a summary of the Q&A.

 The key take aways from the webinar are that

• New product development is critical to growth and profitability (see Figure 1)
• Product development is under pressure to create successful new products (see Figure 2)
• Asking 'value questions' is a key to success (see Figure 3)
• LeveragePoint improves the efficacy of the product development process (see Figure 4)

We also presented two case studies in the webinar, available as resources:

• Betting the Farm in New Product Development
• Extending the Product Lifecycle at an Industrial Material Manufacturer

 Questions and Answers

1. I know a number of companies that use value models like EVE in stage gate. One place they struggle is that the gate keepers don't understand value and pricing. How do you help the gate keepers?

This is a very real problem, one that we have also observed at a number of companies. LeveragePoint addresses this in three ways:

• By having a consistent presentation of value models, one that you can play with by switching value drivers on and off and by testing different data points, value models become much more engaging and easier to understand.
• By directly connecting a value driver with the sources of the data used in the value driver it is easier for the gate keepers to evaluate the value model and it makes it more real for them.
• The platform has compelling learning resources embedded in it - see for example our Brief Introduction to EVE and a Brief Introduction to Value Communication.

2.  Could one say that you help deal with the front of the pricing water fall (the potential price or share of value capture) Versus the back end (managing the leakage in discounting and other things)?

Yes, that is one way to understand it. In product development it is critical to understand the differentiated value if you are going to succeed in creating it. But value models and value communication are also critical during new product introductions (marketing) and in the sales process, where sales people are actually talking to the customer, demonstrating the value of the new product, and negotiating the price.

3. Have you ever conducted a conjoint analysis on a significant new product and compared the premium price indicated by the conjoint to a value based pricing model?

We have not done this, but it would be interesting to hear from anyone who has. In most cases, conjoint analysis will help one to prioritize features, but it doesn't really give one insight into how economic value is being created or into how to communicate that value to a customer. Getting specific about economic value is critical in B2B for product development, marketing and sales.

4. Do you ever discount the new value model to provide a more conservative price for your customers? If so, what would be the criteria for such a discount?

The value model gives insight into the differential economic value for a specific customer or segment relative to a specific alternative. It does not set a price. When setting the price there are two main things to consider: the pricing sensitivity factors (the Pricing Module of the LeveragePoint Platform helps you to think through these) and your market entry strategy. Examples of pricing sensitivity factors are "Brand Power" and "Perceived Risks." Pricing strategies include "Penetration Pricing" where a comparatively low entry price is chosen, or a "Skimming Strategy" in which a high-[rice is used at market entry. Value modeling can also be very important is designing your customer segmentation (and it is often important to do a good segmentation as part of a market entry strategy). For example, one can create a segmentation matrix by value driver and relative power of that value driver, so that customers that received a great deal of value for the same reasons (shared value drivers) are placed in the same segment.

Our next webinar will be on Wednesday, February 23, the topic will be announced later this week.