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Capital Equipment Consulting
REDRED Selling Selling
Learning – Single loop Learning – Single loop
Problem Solving - developing alternative solutions
ImplementationBecomes
routine
Something tells us we have a problem or an opportunity to make an improvement
Decision Making – choosing the bestWhat is What is
double double loop loop learning?learning?
Single Loop And Double Loop Learning Single Loop And Double Loop Learning
Observe
Implement Assess
Design
Frame-works Routines
Existing mental modelsSingle loop learning
Frame-works Routines
Revised Mental models
Double loop learning
Single loop learning a thermostat, Double loop learning changing the setting.
Most business processes are single loop learning and are resistant to double loop which causes conflict.
Managers try and resolve the conflict – they should not it is healthy.
Paradigm Shift
Organisational LearningOrganisational Learning
Observe
Implement Assess
Design
Frame-works Routines
Existing mental modelsSingle loop learning
Frame-works Routines
Revised Mental models
Double loop learning
Paradigm Shift
Other Department’s frameworks and routines
Negotiation of
Paradigm Shift
Other Department’s frameworks and routinesOther Department’s
frameworks and routinesOther Department’s frameworks and routines
Capital Equipment Consulting
Assessing our customers Assessing our customers requirements and how requirements and how should we respond to should we respond to
themthem
Look at the buying Look at the buying process through your process through your customer’s eyes – customer’s eyes – RED RED buying – what are the buying – what are the
processes he goes processes he goes throughthrough
RedRed Buying – Buying – RRecognition of ecognition of NeedNeed
Logical Argumen
t
Emotional Appeal
RedRed Buying – Buying – EEstablishing criteriastablishing criteria
Customer’s weighted buying criteria
To help justify this we must develop quantifiable value justification that the customer accepts as his analysis
-1875 23125
-3750 21250
2500040Price differential justifiable from ours
Means that features account for 60% of the decision so comp 1 and 2 can stand a 15 and 7% price differential
380 0.95
360 0.9
40060Total of features % of ours
Delivery delay of 1 week costs £2000 to have samples done outside
50605010Delivery Speed
Agreed service will keep machine within +/-3%. Each additional 1% drift will cost £10,000/year
14012014020Service
£10,000 saving from not having to develop a new calibration
1059010515Compatibility with existing
Operator ease converts at 1 min/hr saving enables the operator to handle 2% more samples a day = £20/day = £4500/year
859010515Operator ease of use
Value Justification of featureComp two
Comp one
Wgtdscore us
WeightBenefits sought by customer
RedRed Buying Buying DDecideecide
Emotional Emotional JumpJump
Is there a fourth stage for Is there a fourth stage for the seller?the seller?
RedRed Selling – Selling – Verifying theVerifying the criteria criteria 44thth stagestage
Customer’s weighted buying criteria
To help justify this we must develop quantifiable value justification that the customer accepts as his analysis
-1875 23125
-3750 21250
2500040Price differential justifiable from ours
Means that features account for 60% of the decision so comp 1 and 2 can stand a 15 and 7% price differential
380 0.95
360 0.9
40060Total of features % of ours
Delivery delay of 1 week costs £2000 to have samples done outside
50605010Delivery Speed
Agreed service will keep machine within +/-3%. Each additional 1% drift will cost £10,000/year
14012014020Service
£10,000 saving from not having to develop a new calibration
1059010515Compatibility with existing
Operator ease converts at 1 min/hr saving enables the operator to handle 2% more samples a day = £20/day = £4500/year
859010515Operator ease of use
Value Justification of featureComp two
Comp one
Wgtdscore us
WeightBenefits sought by customer
The The REDRED buying and selling buying and selling process – what is the process – what is the difference between difference between
prospecting and an RFP?prospecting and an RFP?
Now Situation Future SituationRecognition of need
Establishing the criteria for choosing the best solution
Deciding the best alternative
Help position this future Situation such that only we
Can achieve it
Help select the criteriaThat will rate us highly
Help make it urgent,demonstrate the payback,provide the resourcesminimise the risk andshow the consequences of not buying
RFP vs ProspectingRFP vs ProspectingRFP Prospecting
Start at the bottom and get stuck
Start where you want and simultaneously
Come in late when need and criteria decided
Initiate the need
Often it is speculative or budgetary
We initiate the need
They are already looking at others. Someone else is column A.
We become the benchmark and position to our strengths
RedRed Selling – Perceptual Selling Selling – Perceptual Selling and Perceptual Pricingand Perceptual Pricing
Benefits sought by customer
Weight
Wgtd score us
Comp one
Comp two
Operator ease of use
15 7 105
6 90
6 90
Compatibility with existing
15 7 105
6 90 7 105
Service 20 7 140
6 120
7 140
Delivery Speed 10 5 50
6 60
5 50
Total of features % of ours
60 400 360 0.9
385 0.95
Price differential justifiable from ours
40 25000
-3750 21250
-1875 23125 Perceptual Selling
Perceptual Pricing
Technology leader
Close to the customer
Operational efficiency
Pricing – Perceptual PricingPricing – Perceptual Pricing
Perceived benefits
Perceived
Price
Comp 2
Comp 1
Us Decreasing Value for money
Band of indifference
Us Revised
Increasing value for money
Giving information
Decide the best
Getting commitment
Getting information
Recognition of need
Getting Information
Establishing Criteria
Perceptual SellingPerceptual Selling
The Value EquationThe Value Equation
Cost of Solution
Seriousnessof problem oropportunity
Don’t Buy
Buy
RedRed Selling – Value Selling and Selling – Value Selling and Value PricingValue Pricing
Benefits sought by customer
Weight
Wgtd score us
Comp one
Comp two
Value Justification of feature
Operator ease of use
Operator ease converts at 1 min/hr saving enables the operator to handle 2% more samples a day = £20/day = £4500/year
Compatibility with existing
£10,000 saving from not having to develop a new calibration
Service Agreed service will keep machine within +/-3%. Each additional 1% drift will cost £10,000/year
Delivery Speed Delivery delay of 1 week costs £2000 to have samples done outside
Total of features % of ours
Price differential justifiable from ours
Value Selling Value Pricing
Technology leader
Close to the customer
Operational efficiency
Value SellingValue Selling
Closing with Value
Decide the best
Present a targeted Value
Proposition
Recognition of need
Verifying and confirming value
for customer
Evaluation of options
Value PricingValue Pricing
Market Size £M
Eco
no
mic V
alue fo
r a Trip
lex pu
mp Reference Value of a high
Speed centrifugal pump
Economic Value Refinery
Economic Value Offshore Oil Platform
Economic value Pharmaceutical
Plant
Consultative selling
Critical success factors Perceptual and valueCritical success factors Perceptual and valueBenefits sought by customer
Weight Wgtd score us
Best Comp
Us Final Value Justification of feature
Operator ease of use 15 105 90 135 Operator ease converts at 1 min/hr saving enables the operator to handle 2% more samples a day = £20/day = £4500/year
Compatibility with existing
15 105 90 105 £10,000 saving from not having to develop a new calibration
Service 20 140 120 160 Agreed service will keep machine within +/-3%. Each additional 1% drift will cost £10,000/year
Delivery Speed 10 50 60 50 Delivery delay of 1 week costs £2000 to have samples done outside
Total of features % of ours
60 4001.11
360 1.0
450 1.25
Means that features account for 60% of the decision so comp 1 and 2 can stand a 15 and 7% price differential
Perceptual Price differential justifiable from ours
40 155
140 180 To help justify this we must develop quantifiable value justification that the customer accepts as his analysis
Value Price difference 10 Features that develop a cost difference that can be quantified like power consumption
Value adjusted price difference
40 155 150 180 Price allowing for both perceptual and value benefits.
NicNicee
NeeNeedd
Contract ManufacturingContract Manufacturing1. Managing Director – Risk of
project being a failure, increased flexibility Notoriety within the Group
2. Marketing Director – Reduced manufacturing cost and delivery flexibility meet targets
3. Production Director – Continuation of a role for him and key subordinates
4. Finance Director – Reduction in working capital Notoriety within the group
Individual’s CriteriaIndividual’s Criteria
Decision Criteria
% say
Us Comp1
Comp2
Comp3
Comments
Price ! 20 8160
10200
7140
8160
Not really sure about pricing can Our coach help us?
Ease of use !
40 8320
8320
7280
6240
Judges us equal to 1 but we are better
Flexibility 40 7280
8320
7280
6240
Try and get him to speak to md of Alfa.
Total 760 840 700 640 ? No one has seen him
Personal payoff
Control of salesforce
7 8 9 6 Have to persuade him ours gives control
What personal benefits will he get from achieving the results focus first on results then ask attitude questions how they help (coach?)
Customer’s Decision Making TeamCustomer’s Decision Making TeamName Type %
say
Veto orSpecifier
Us Comp1
Comp2
Comp3
P Robertson
EconomicFollower
20
None
760152
840168
640128
750150
S Tebbutt UserSkeptic
40
Veto 1
550220
330132
650260
780312
C Riseley UserCharismatic
20
None 700140
850170
700140
600120
A Langley UserController
20
None 600120
700140
750150
850170
S Perry Technical 0 None
R Peters Sponsor 0 None
Total 632 610 678 752
Number of People Involved Number of People Involved in Industrial Purchasing in Industrial Purchasing
DecisionsDecisionsNumber of employees in company
Average number in DMU
Average number of contacts by sales people
Under 200 3.42 1.72
201-400 4.85 1.75
401-1000 5.81 1.9
Over 1000 6.5 1.65
