Date post: | 10-May-2015 |
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Five Sure Fire Ways to End the Discount Dance
TOM PISELLO, Chairman & Founder
Blog: http://www.fightfrugalnomics.com
Twitter: @tpisello
http://www.alinean.com
Powering B2B sales to economic buyers
CHRIS EIFERT, Principal
Blog: http://www.tricomb2b.com/blog
Twitter: @eifertb2b
http://www.tricomb2b.com
© 2011 Alinean, Inc. 2
Five Sure Fire Ways to End the Discount Dance
• The Considered Purchase Decision Research
• How to End the Discount Dance?
• Top 5 Tips – Advice in Action
• Next Steps & Resources
Chris Eifert, Principal Tom Pisello, Chairman & Founder
The ROI Guy
© 2011 Alinean, Inc. 3
The Considered Purchase Decision Research
© 2011 Alinean, Inc. 4
Research Rationale
• The Considered Purchase?
– A systematic process for identifying a business issue, defining a specific need and selecting a solution to fulfill the need.
– Generally thought of as an important decision due to costs or risks associated with the issue and/or the solution.
• Buyer Focused
– What do influencers and decision makers think about during this process?
– What motivates and influences their decisions?
vs.
– What do other marketers think?
© 2011 Alinean, Inc. 5
Methodology & Respondent Profile
• Survey focus
– Product considerations & message relevancy
– Information consumption & online habits
• Respondent criteria (448 respondents)
– $50M min. company revenue
– B2B sales model
– Influencer or decision maker in considered purchase process (>$25,000)
Functional Role
Decision Role
© 2011 Alinean, Inc. 6
Price Dominates
• Price dominates decision for majority of purchases for 64% of respondents
• Good news for price leaders
– May not be good for customers who will pay more in the end, or get less business value than expected
• Bad news for majority of sales professionals & marketers
– More competitive
– Discounting
– Do all work, lose deal in the end
Source: 2011, TriComB2B and University of Dayton.
© 2011 Alinean, Inc. 7
TCO Focus Relevant For Some Buyers
• Senior executives and owners evaluated TCO more than any other role (67% vs. 56%)
• Deal Size Matters
– 42% begin doing so >$25,000
– 25% begin doing so > $100,000
• 60+ year olds twice as likely to calculate 100% of time compared to sample as a whole (32% vs. 15%)
• TCO by industry
• Most relevant in equipment-intensive industries
• Less impact in medical and IT
Source: 2011, TriComB2B and University of Dayton.
© 2011 Alinean, Inc. 8
Do Other Product or Service Features Matter?
Percent stating feature played significant role in purchase
decision 80% of the time
Source: 2011, TriComB2B and University of Dayton.
• Significant in majority of decisions (top 3)
• Process improvements (78%
• Operating costs (67%)
• Impact on customer service (66%)
• Other observations
• Operating costs lowest in IT (52%),
highest in process industries (76%)
• Process improvement ranked high(>74%) in all industries but construction (62%)
• Conceptual process improvement message important to owners/execs
• Business Value has an impact:
• Operating Cost Savings
• Process Improvements / Productivity Gains
• Customer Service
• Matters less:
• Financing options
• Ongoing maintenance / support contract costs
© 2011 Alinean, Inc. 9
Do Safety or Environmental Impacts Matter?
Source: 2011, TriComB2B and University of Dayton.
Significant factor in majority of decisions
• Safety (57%)
• Energy efficiency (48%)
• Green supply chain (27%)
•Other observations
• Safety even more dominant in energy and process industries; also age 50+
• Energy efficiency more important for senior execs/owners and age 60+
• Highest ranking for green supply chain was 36% (industrial manufacturing)
• Green does not have as big an impact as expected
© 2011 Alinean, Inc. 10
Research Conclusions
• B2B buyers are currently heavily motivated by price
– Good news for price leaders
– Important implications for the rest of us!
• TCO can be an important consideration for:
– Larger purchase decisions
– Sr. Executives & Owners
– Older decision makers
• Additional business value factors can be important.
http://tricomb2b.com//about/b2b-buyer-research
© 2011 Alinean, Inc. 11
Five Best Practice Recommendations to End the Discount Dance!
© 2011 Alinean, Inc. 12
Tip #1: Prove Lower Total Cost of Ownership (TCO)
• Move beyond purchase price to lifecycle cost to own
• Automate TCO comparison report development in tool:
– Self-service from web for executives doing their own research
– Sales tools for workshops and proposal development
– Needs Credibility = 3rd party developed / validated + research based
© 2011 Alinean, Inc. 13
Tip #1: Prove Lower TCO with Competitive Comparison Report
© 2011 Alinean, Inc. 14
Tip #2: Prove Higher Business Value and ROI
• Go Beyond TCO to include:
– Business Value (More savings, More productivity, More revenue / margin)
– ROI
– Payback
– Risk
© 2011 Alinean, Inc. 15
Tip #3: Engage Executives
• Direct meeting with executives
– Compelling analysis to connect & engage
• Arm champion to move discussions beyond price
– Executives
– Procurement
– Other Stakeholders
© 2011 Alinean, Inc. 16
Tip #4: Be Proactive
• Don’t wait for Price to become an issue – it will
• Don’t wait for Competition to present their case first
• Proactively develop case for lower TCO / incremental value
• Assure that all stakeholders have evidence they need to get beyond price challenges
Price Objections
Competitive Proposals
Frugal Stakeholders
© 2011 Alinean, Inc. 17
Tip #5: Tool to Succeed
• Buyer’s executives are empowered
– Use web to do research
– Self-service oriented
– Trust peers / analysts most
• Sales needs tools to succeed
– Equipped to better connect & engage with executives
– Automation to ease TCO / ROI business case process
– 3rd party credibility
© 2011 Alinean, Inc. 18
Five Best Practice Ways to Move Beyond Price / End the
Discount Dance
1. Prove Lower Total Cost of Ownership (TCO)
2. Prove Higher Business Value & ROI
3. Reach the Executive
4. Be Proactive
5. Tool to Succeed
© 2011 Alinean, Inc. 19
Next Steps & Resources
© 2011 Alinean, Inc. 20
Nest Steps & Resources
• Additional Research and Insights
http://tricomb2b.com//about/b2b-buyer-research
http://tricomb2b.com/blog
http://tricomb2b.com//about/b2b-b http://www.fightfrugalnomics.com
Ask the ROI Guy FAQ Center
http://www.alinean.com/faq/
Dozens of TCO Tool examples
© 2011 Alinean, Inc. 21
Q&A
Chris Eifert, Principal Tom Pisello, Chairman & Founder
The ROI Guy