“Companies that priced, marketed and sold on value earned operating profits 24% higher than the industry average” – John Hogan, 2009
LeveragePoint CEO Steven Forth will join sales coach extraordinaire Reg Nordman from Rocket Builders and PricingWire’s Chris Hopf for a panel discussion on how to get sales, marketing and product development aligned on pricing. The panel will take place on Wednesday, October 20 in Vancouver and is sponsored by the British Columbia Technology Industry Association (BCTIA). It will be held at the Segal School of Business, 500 Granville Street, Vancouver BC from 5:30 PM to 7:30 PM.
There is an interesting back story to this panel discussion. Nenad Furtula, VP Product Management at Bluestream, a member of Product Management peer group at BCTIA had read one of our blog posts and reached out to see if we would like to do a talk. When this concept was circulated, the Sales & Marketing peer group wanted to get involved as there was a general recognition that product development, sales and marketing all need to get aligned around value provided to the customer and that value-based approaches are the most powerful way to do this.
Why? The value-based approach to sales, marketing and pricing is based on the notion that value only exists in the eyes of the customer and that it is always relative to the alternatives available. The approach to value modeling first introduced by Tom Nagle provides a framework that can be used to identify the two-or-three key ways in which an offer is different from its next best competitive alternative and then use this to quantify (put a dollar value on) this difference for the customer. This differentiated value is the foundation for winning a price in B2B markets, at least in those markets where prices are negotiated between buyer and seller.
Pricing is one of the most powerful levers that management has to improve the bottom line. For a company with 10% margins, a one percent improvement in margin is equivalent to a 10% improvement in revenue. And a shift to value-based selling often leads to an improvement in both revenue and margin, as was found in a 2009 study by John Hogan. Companies that priced, marketed and sold on value earned operating profits 24% higher than the industry average.
We hope to see those of you in Vancouver on Wednesday, October 20th and look forward to good questions and a vigorous discussion. Topics covered will include recent pricing moves by Apple and RIM on tablets, the impact of SaaS on discounting in enterprise software, and war stories of how effective pricing strategies have helped and crippled sales efforts.