Archive for December, 2004

Fighting the Commodity Trap – Value-Based Proposals

Competition is the basis of our economy. It can also be a major force eroding your profits. To avoid being reduced to a commodity where the low bid always wins, the buyer must see a difference between your offering and that of your competitor. That difference must improve the buyer’s situation in a way that is meaningful to them. There is a method for success, however, that simply involves identifying the right players, their motivation, your own strengths and weaknesses and presenting your findings.

Talk to ALL the right people
In a larger sale, there are three groups of buyers you must work with. While the economic buyer can write the check, the technical buyers and end users have the power to veto your bid if they’re not satisfied with it. The most common error is thinking that your strong relationship with the economic buyer will be enough. Your competitors are counting on you to overlook or alienate someone with veto power.

Why and how they buy
dollartrapNot everyone buys for the same reason. You must discover the objectives, standards of measure, value and current situation from the mindset of each buyer – in their own words, wherever possible.
The objectives identify what must be accomplished and the most important outcome driving the project. Is it net project cost, deadline or long-term maintenance cost? In addition, it is crucial to gain a perspective on the standards of measure – the means by which they will track progress and achievement of the objective. Examples include budget, delays to schedule, materials waste, rework or even flatness of the pour.

Understanding the personal and organizational value of achieving success is the next key component. If the objective is achieved, what profit will the company reap and how will operating costs be affected? How will success impact the buyer’s career? Finally, it is crucial to thoroughly understand the current situation with regard to achieving the objective. What resources do they currently have? What are the top factors putting the project at risk?

What do you bring to the table?
Where most fail in this assessment phase is in adhering to your own marketing copy and sales pitch without candid examination of the facts. The first step in assessment is to review your track record. Review your flagship successes to discover your strengths. Then assess the strengths and weaknesses of your competition and compare them to yours. Look for the differences that can give you the edge. Next, try to shoot down your own marketing claims. Keep only the claims that are backed up by facts. If you are not a strong candidate for this type of job, you might spend your time more profitably by focusing on your strengths.

Present your findings, with options
The final step is preparing a proposal that lays out what you’ve learned, your solution, and the investment required. A logical outline for the proposal starts with the current situation and then identifies the objectives, standards of measure, value, methods and options (to include your solution and unique strengths), joint accountabilities, timing, terms, acceptance and appendix (the perfect place for the detail that must be included in the contract but not material to the buying decision). If you have done your job, the various buyers (economic, technical and end-user) will work through the document, nodding in agreement as they go. Note that the pricing information should be included in the terms, after the reader has witnessed the full picture. At this point, the price should seem reasonable, given the expected return on investment laid out in the document.

Putting it into profitable practice
If taking a value-based approach to proposals appeals to you, and you really do have a unique strength in your marketplace, start small and try the method on a deal where the economic buyer, technical buyer and the end-user are all one person. On the other hand, if you are hard-pressed to find what makes your company unique in your market, and profits are stagnant, it might be time to rejuvenate it with a business strategy and plan to turn your company into the profitable success machine it can be.

Note: This article has also been published in the January, 2005 issue of Concrete Monthly,
and in Tilt-Up TODAY vol. 13 no. 4, 2005 pp 48-49, magazine of the Tilt-Up Concrete Association

About the author: Gary Ralston is a senior partner in Ralston Consulting Inc., where he helps clients across North America accelerate business growth, achieving industry award-winning results.

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Reflection and Rejuvenation ? Taking stock of 2004…

As the year draws to a close, the days short and cold, we often reflect on the year gone by. And in the natural pause that is our holiday season, we often plan for the future year and the warm sunshine of the spring.

Take time to reflect. Take stock of your year, your business successes, as well as your challenges. Would you make the same choices in 2005? Where can you simplify? Where can you be more effective?

Take time to focus. Assess what is most important in your life, your family, your business and your community, and direct your actions there. Realize the strength you gain from your friends, your families, your faith, your love.

Take time to dream about the coming year. As well as being good for the soul, dreaming is an important part of your business strategy. It is from dreams that we develop aspirations, goals, and the boldness to act.

‘Whatever you can do, or dream you can – begin it.

Boldness has genius, power and magic in it.’

- Goethe

What dream will you start toward in 2005?

Best of the season from Ann and Gary Ralston

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