© 2014 Tom Sant. All rights reserved.
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Presented by:
Dr. Tom Sant
www.hydeparkpartnerscal.com
www.PersuasiveBusinessProposals.com
The Art and Science of
Compelling Value
© 2014 Tom Sant. All rights reserved.
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Your Presenter: Dr. Tom Sant
Author of Persuasive Business Proposals, the world’s
# 1 best selling book on proposal writing (3rd edition,
2013)
“One of the 10 most important business books of all time.”
Geoffrey James, Inc. Magazine
“America’s foremost expert on proposal writing.”
(American Management Association)
“One of world’s top ten sales trainers.”
(Selling Power Magazine)
Over 25 years’ experience with Fortune 500
companies
Over $30 billion in winning proposals
© 2014 Tom Sant. All rights reserved.
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Value.
The magic word in selling today is
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Value is supposed to cure all problems.
Price pressure
Intense competition
Slow sales cycles
Shrinking margins
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A value proposition is a
promise
to deliver specific results that the client desires,
backed up by evidence that we can keep our promise.
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But sometimes…
it doesn’t work.
Value has no value.
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That’s because of a few common OBSTACLES:
1. Cognitive bias
2. Buyer behavior
3. Sales commissions
4. Weak value propositions
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Obstacle # 1: Cognitive bias
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Obstacle # 1: Cognitive Bias
People are predisposed
to overweight potential
losses vs. potential gain.
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For example…
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According to the Center for Disease Control,
we are facing a massive outbreak of a new strain of
influenza.
It is projected to kill 60,000 people in the U.S.
They want to know which program the public will
support.
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In California, two programs have been proposed.
Which one should we pursue?
A. Save 20,000 people.
OR
B. 1/3 chance that all 60,000 will be saved;
2/3 chance that no one will be saved.
What’s Your Vote?
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Place your vote…
Your results.
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Statistically…
When asked which program we should pursue:
A. Save 20,000 people.
B. 1/3 chance that all 60,000 will be saved;
2/3 chance that no one will be saved.
72%
28%
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In New York, two programs have been proposed.
Which one should we pursue?
A Different Option
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In New York, two programs have been proposed.
Which one should we pursue?
A. 40,000 people will die.
OR
B. 1/3 chance that nobody will die;
2/3 chance that 60,000 people will die.
A Different Option
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In New York, programs have been proposed that will
accomplish one of the following. Which one should we
pursue?
A. 40,000 people will die.
OR
B. 1/3 chance that nobody will die;
2/3 chance that 60,000 people will die.
A Different Option
22%
78%
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Daniel Kahneman
2002 Nobel Prize in Economics
“…for having integrated insights from psychological
research into economic science, especially concerning
human judgment and decision-making under
uncertainty."
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Loss Aversion
People are more motivated
to avoid a loss
than they are
to acquire a similar gain.
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In a business setting…
The risk people fear most is
overspending.
Wasting time, resources and opportunities are bad,
but not as bad as wasting money.
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Consequences…
People overweight loss vs. gain.
People overweight what they already
have vs. what you have to offer.
People prefer the status quo to the
risk of change.
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Another cognitive bias against value:
People won’t change
even when the cost of doing nothing is higher
than the cost of changing.
The Status Quo Effect
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Your client must believe your value is superior
when:
1. You are displacing an accepted vendor.
2. You are changing a process.
3. You are relocating control of something valuable.
4. Doing nothing is a viable alternative.
So When Does Value Matter the Most?
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Obstacle # 2: Buyer behavior
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The Price Buyer
*Based on the research of Dr. Reed Holden, The Strategy and Tactics of Pricing
Obstacle # 2: Buyer Behavior
When overspending is the fear,
aggressive procurement policies are an answer.
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The Relationship Buyer
The Price Buyer The Value Buyer
Why Price Seems to Loom So Large
The Poker Player
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The Relationship Buyer
The Price Buyer The Value Buyer
The Four Buyer Types
The Poker Player
Although 30% of all buyers are Price Buyers,
only 21% of enterprise-sized deals
go to the low-priced vendor.
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Obstacle # 3: Sales commissions
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Obstacle # 3: Commission-Driven Behavior
“I’m a commissioned sales rep
and I’m here to help you!”
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To overcome the skepticism provoked by
SALES COMMISSIONS
we must
AVOID SELF-SERVING BEHAVIOR.
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Do You Want Fries with That?
Upselling?
Cross-selling?
“Because they need
to know we offer it…”
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Obstacle # 4: Weak value
propositions
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Obstacle # 4: Weak Value Messages
How effective is this?
We offer a full range of
enterprise-strength, integrated
technology solutions.
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Does this make you want to say YES?
We are a true one-stop shop
for all your information
management needs.
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How do you like me now?
We enable the people-ready
business with leading edge
solutions and world-class service.
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Pretty exciting, huh?
We are committed to the
success of the enterprise.
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There Is No Value in Vagueness
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Show me the money!
Building a Better
Value Proposition in 5 easy (sort of) steps
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FACT: Without value, winning is just luck.
You must establish superior value
based on technical, contractual, managerial, quality, or service differentiators,
or the customer will choose based on
price
or may choose to do
nothing.
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Smart Buyers Look for Positive Impact
• Improved financial performance
• Operational efficiency
• Reliability of mission-critical operations
• Reduced errors and rework
• Increased worker productivity
• Customer satisfaction
• Regulatory compliance
• And other key performance indicators
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The promise inherent in our value proposition:
You will get more of the outcomes
that you want the most
if you choose us.
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The Basic Value Proposition
(Values - Costs) > (Valuea - Costa)
where:
Values = the value of your solution
Costs = the cost of your solution
Valuea = the value of the next best alternative
Costa = the cost of the next best alternative
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The Basic Value Proposition
(Values - Costs) > (Valuea - Costa)
Return on Investment
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Five “Easy” Steps to Compelling Value
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Define the Value the Customer Seeks
STRATEGIC Business / Financial Increased profitability Increased market share Mission fulfillment Mergers / acquisitions Maximize return on capital
Increase share price
1
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What are some examples of
strategic value*
your customers seek?
*Strategic value has a positive impact on the core measures
of business performance.
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The Second Kind of Value: Tactical
STRATEGIC Business / Financial Budgetary compliance Profit improvement Downsizing Mergers / acquisitions Increased market share Reduced risk Faster product launch
TACTICAL Operational Efficiency Automating a manual
process Introducing best practices Adding flexibility Improving QC Achieving compliance with
regulatory standards
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What are some examples of
tactical value*
your customers seek?
*Tactical value has a positive impact on operational
efficiency, improves the infrastructure, or introduces labor-
saving processes or tools.
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The Third Kind of Value: Social/Political
STRATEGIC Business / Financial Budgetary compliance Profit improvement Downsizing Mergers / acquisitions Increased market share Reduced risk Faster product launch
TACTICAL Operational Efficiency Automating a manual
process Introducing best practices Adding flexibility Improving QC Achieving compliance with
regulatory standards
SOCIAL / POLITICAL Internal -Improve employee morale -Reduce absenteeism -Decrease turnover
External -Increase customer loyalty -Reduce carbon footprint -Generate good will
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What are some examples of
social or political value*
your customers seek?
*Social/political value has an impact internally on employees
and/or externally on suppliers, customers, and/or
communities.
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Asking the Right Questions…
1. How will you [the customer] measure success for this project?
2. How have you measured success for similar projects before?
3. Do you have any specific KPIs (key performance indicators) for
this project?
4. How did you measure results in previous projects of this type?
Do you plan to use those measures again?
5. How will you communicate so other managers in the
organization know that this project was worthwhile?
6. Do you have benchmark data of current performance?
7. Are you looking for a specific ROI? If so, what is your baseline
data against which you will measure?
8. Are you seeking regulatory compliance? Why does it matter?
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Quantify the Value
1. Area of Outcome
• Cost of operations
• Carbon footprint
• Employee productivity
• Time to market
• Production volume
2. Movement
• Increase
• Decrease
• Minimize
• Enhance
• Boost
3. Metrics: %, $, time, weight
2
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Three Bits of Information You Need
1. The starting point:
• Baseline data from the client
• Research data on the client
• Research data from the industry
2. The probable gain:
• Probable results after
implementation of your solution
• Quantified improvement
3. The value of the gap
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Example: Monetizing the Impact
1. Baseline data regarding the area of performance.
Example: Currently, XYZ wastes approximates 7% of feedstock
run through your process.
2. An agreed upon estimation of probable gain, based on
data from other clients.
Example: Wasted raw materials = 7% of a total $3MM annual
spend.
3. Articulation of the value of the gap between current
performance and potential performance.
Example: Potential impact is $210,000 in savings.
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Show the Value Graphically
Total savings for year one on reduced waste is calculated to exceed
$4.5 million.
Savings for years two through five will average
$7 million a year.
1. Focuses the reader’s attention—stops the skimming.
2. Increases the persuasiveness by 47%.
3
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What if the customer has no baseline data?
Or just won’t share it?
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Offer a Case Study or Testimonial
Profits! Power!
World domination!
Help them visualize success
with a case study that features:
• Same kind of client
• Same kind of problem
• Quantifiable results
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Link Value to Relevant Differentiators
• Product/service features
• Corporate capabilities
• Methodology
• Management practices
• Personnel
• Facilities
• Size
• Experience
• Recognition, awards
4
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Differentiators That Matter in Services
In differentiating a service, emphasize:
1. How you will do the work.
2. How you will manage the work.
3. The people you will provide.
4. Special equipment, facilities or tools you have.
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Differentiators Proof
Value
Proposition
Value That Has Value.
What you do that no one else does.
What you do differently from anyone else.
Verifiable claims you make about yourself.
Claims your clients make about you.
Third-party evidence.
Prove Your Claim 5
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Real Proof, Not Fluff
Best of breed
World class
Leading edge
State of the art
Quality focused
Uniquely qualified
Innovative
Fully leveraged
High performance
Synergy
User friendly
Integrated
Partnership
Seamless
Robust
Highly available
Here are a few examples of marketing fluff….
Anything look familiar?
Vague generalities. Undefined or unsubstantiated claims.
Grandiose promises without substantiation.
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Three Kinds of Proof
Things you say about yourself.
Things your clients say about you.
Things third-party experts say about you.
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Things You Say About Yourself
Resumes or CVs
Company history
Corporate capabilities
Coverage maps
Process diagrams
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Things Your Clients Say About You
References
Testimonials
Case studies
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Things the Experts Say About You
Awards
Rankings
Recognition
Certifications
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In summary
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In summary…
Focus on outcomes: What the customer wants
Quantify the gain: numbers are stronger than words
Show me the money: the power of the graphic
Make it bulletproof: link it to your differentiators
Prove it: provide evidence to substantiate the claim
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© 2014 Tom Sant. All rights reserved.
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And good luck… in creating value propositions
that have real value!