© IPED, a division of Everything Channel, a United Business Media Company. All rights reserved. IPED materials may not be reproduced or redistributed without.

© IPED, a division of Everything Channel, a United Business Media Company. All rights reserved. IPED materials may not be reproduced or redistributed without the

express written consent of IPED.

Shifting the Conversation from Price to Value

Channel Elite Express Webinar SeriesJuly, 2008



Channel Consulting, Education and Market Intelligence

• Over 50 years of collective experience in the channel

• Thousands and thousands of

partner profiles in every geography worldwide

• More than 90,000 interviews

with Channel Partners and their customers annually

From CMP to… Everything Channel

2



Agenda

Dynamics of Pricing

Creating a Unique Business Value Position

Changing the Conversation



Dynamics of Pricing

Why Do Prices Go Down?• They Must

– Macro-economic reality … as markets mature, prices drop– Customers always want to get the best deal = “best price”

• Perception of Product Equality– Product capability exceeds customer capacity

• Competitive Undercutting– When products are equal, differentiation is based on

credibility and price– Lack of selling and negotiating skills accelerates the erosion

• Changing Customer Buying Patterns and Processes– Savvy buyers; ubiquity of shopping; vast choices; beyond IT

4



The Reality of Pricing vs. Value

Lessons Learned in the Real World

• Price = What You Charge

• Value = What Your Customer Believes It’s Worth

• There is VERY LITTLE Statistical Correlation Between Price & Value

• Price Will Always Be an Issue … Even when Value is Perceived

• If Your Customers aren’t Questioning the Price … You’re Not Charging Enough

• No Matter How Competitive a Market is, Some Players Can Almost Always Justify Premium Prices

5



Creating a UniqueBusiness Value Position

6



56.8%

45.1%

42.7%

30.6%

22.8%

20.4%

14.6%

13.1%

13.1%

12.6%

10.2%

Technical Expertise

Cost

Experience With Technology

Understanding Of My Business

Implementation Time

Breadth Of Product & Tech. Offerings

Market Awareness

Ability To Prove ROI

Creative Expertise

Strategic Business Expertise

Staff Size

Greatest Areas of Value, In Relationship w/ Partners

7



Unique Business Value

What is the specific or measurable business result that we will

deliver?

How does the client define value? How will they measure it?

How have we quantified this value in the client’s terms?

Has the client confirmed their understanding of the value we will

deliver?

How does this value differentiate us from our competitors?

BusinessProfile

BusinessDrivers

BusinessInitiatives

CapabilitiesSolutionDifferen-

tiation

CompellingEvents

UniqueBusiness

Value

8



Capabilities—What Makes Us Unique and Superior?

People(Who)

Processes

(How)

Products

(What)

Intellectual capitalResource commitmentBusiness partnersExperience and expertiseSupport (before and after the sale)Culture

Share best practicesEducationImplementationAccount supportGlobal presence

FunctionalityQualityInnovationTechnologyIntegration

9



Building an Effective Position and Message

Components of Your Value Proposition

• The “Much-ness”– How much value will you deliver to the business … in what

commodity?

• The “Soon-ness”– When will the value begin to pay back … and how long will it

continue?

• The “Sure-ness”– Why should the customer believe your claims?

– Testimonials / Case Studies– Methodology– Business Acumen– Guarantee / Warranty– Shared Risk / Shared Reward

10



Changing the Conversation

11



Perception of Value

Integrated in-formation sys-

tems

Commitment of dedicated personnel

Deeper in-sight into

product plans

Gain competi-tive advan-

tage

Sharing price/cost

risks

Reduce lead time for

product de-velopment

0%

10%

20%

30%

40%

50%

60%

70%

63%

47%

37%33% 32%

28%

23% 28% 11% 6% 11% 6%

Benefit Received

Expected Benefit

12

When you have formed “partnerships” with strategic suppliers, what benefits did you expect and what did you actually receive?



Differentiating Your Value To the End Customer

9%

12%

12%

15%

18%

19%

20%

25%

25%

32%

37%

41%

Trusted Advisor Relationship

Technical Support

Specialized technologies Knowledge

Turnaround/Delivery Speed

Proactively Manage Customer Risk/Cost

Vertical market Knowledge

Customer Geographical Proximity

Vendor/Partner Relationships

Vendor/Brand Reputation

Number of References

Most Aggressive Pricing

Certification and Credentials

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Justifying Premium Pricing Through ValueBusiness Critical

Provides significant

value to the business

and is directly

attached to GM or NI of the buyer

Client Dependenc

y

Client has little or no ability to

perform the service on their own, and the

service is critical to

the company

Urgency

Attached to customer

compelling event

Unique Skills

Based on a unique set

of skills that you have

and others don’t –

which are also

valuable to the

customer

Brand Equity

Reputation of the

provider justifies a premium

price based on the

customer’s perception of value

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Make the Translation: “Connect the Value!”

From Technical Products

WHAT YOU SELL

• Servers• Printers• Software• Storage

• IP Telephony• Virtualization

To Business Value

WHAT THEY WANT

• Increase Revenue• Decrease Costs• Faster Time To Market• Minimize Business Risk• Establish / Protect

Competitive Advantage

“What’s In It for Them?”

HOW TO TRANSLATE

• How Much, How Fast• What will be impacted?• Risk/Reward • Total Available Benefit• Based on Previous

Success/Implementation

15

© IPED, a division of Everything Channel, a United Business Media Company. All rights reserved. IPED materials may not be reproduced or redistributed without.

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