Boost your Pricing Power with Strategic Value Selling

In a dynamic environment, many companies are faced with increasing cost and price pressure. However, companies which offer unique added value in their customers´ eyes still manage to achieve above-average profits. They are successful, because they have 'pricing power' - their customers are prepared to pay higher prices and don´t immediately change providers when prices are increased. Pricing power can be systematically built through Strategic Value Selling. Strategic Value Selling goes beyond 'classic' Value Selling. Starting with a company's business model, it considers the entire marketing and value creation process that precedes the sales conversation. Thus, the company creates a basis on which the salesperson can build to develop unique solutions with measurable added value together with their customer partners. Strategic Value Selling comprises the following core steps Continuously evolve your business model as a foundation for value creation A company's business model is the foundation of its pricing power. A business model describes how value is created and monetized for defined target groups. The Swiss medium-sized company Bossard has continuously evolved its business model: From a supplier of 'interchangeable' C-parts, the company has transformed itself into an 'indispensable' service provider that optimizes its customers' processes. This measurably reduces their 'total cost of ownership'. Based on the resulting savings, Bossard implements value-based pricing.

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Value-oriented Selling and Pricing of Industrial Goods and Services

Is your company facing increasing price pressure? Then you are in good company: In a survey by the German Engineering Federation (VDMA), around 70 percent of machine builders cited growing price competition as a major future challenge (Commerzbank: Industry Report 'Mechanical Engineering in Germany', April 2021). What can be done about it? Basically, there are two strategic options: Either you try to survive on the market with lower prices than the competition or you offer innovative solutions with substantial added value. A low-price strategy always carries the risk that competitors will enter the market with even lower-priced offers and start a price war in which everyone loses in the end. Not every customer is prepared to pay for added value. It is therefore useful to segment customers based on their needs and willingness to pay. As a rule, two groups of customers emerge here: buyers who tend to purchase on the basis of value and who want a close personal relationship with the supplier, and customers who buy exclusively on the basis of price.

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Using Scenarios to develop successful Future Strategies

Do you have a plan for the future – a strategy which will keep your company still relevant 5 years from now? Admittedly, it is difficult, if not impossible, to make plans in a turbulent environment. Short-term survival is the first priority. But managing a business without a strategy is like flying blind without instruments: Upcoming dangers are not recognized in time and the imminent crash is pre-programmed!

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Building value-added partnerships through Co-Creation

Customer loyalty is high on the corporate agenda: Loyal customers buy bigger quantities, they buy more frequently and they recommend a company to others. This leads to recurring business and boosts financial success. Often, customer retention is unilaterally initiated by suppliers and it seems that they profit more from the relationship than their customers. However, a well functioning, long-term relationship is based on the same rules as a good partnership in private life: There must be trust and the relationship has to be considered fair. In a business context, fairness means that the resulting added value for both parties is financially quantified and equitably shared. Customers should not feel ´locked-in´ by a relationship, with only a small chance to escape, because they technologically or contractually depend on a supplier. Rather, both parties should aim to build a long-term partnership where they jointly create value.

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Implementing Strategy in Sales

When you ask salespeople if they know their company´s strategy, you often get mixed results: Some will cite objectives, such as ´growth´ or ´profit´ (instead of describing a strategy). Others often don´t know their company´s strategy at all. In many cases, there is a lack of clarity about what strategy is. Therefore, here is a pragmatic definition: A strategy is a plan. It includes clear decisions about what a company does (e.g. exclusively serving a luxury segment) and does not do (e.g. not serving a low-price segment.) Based on these decisions, strategic initiatives (actions) are initiated to build competitive advantage and reach growth goals (turnover, profit, market share). The sum of all decisions and strategic initiatives constitutes the strategy.

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Strategic Value Selling

Systematically create unique added value together with your customers - strengthen your pricing power – boost sales and profit!

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