27 March 2019

Why adopt a value-based business strategy in your organization?

Over the past two decades, economic forces such as Globalization, deregulation and mass production of innovative products have prompted many companies to adopt management methods that highlight the organization amongst its competitors.

 

The Business World and Economic Change

The rapidly changing economic balance in the business world has necessitated more extensive organizational differentiation between similar businesses, for preserving and enhancing positions of strength and survival.

This differentiation is expressed in different ways and many businesses have adopted management methods and technological tools that highlight them amongst their competitors. These methods and tools include:

  • Customer Relations Management (CRM)
  • Customer loyalty programs
  • Customer service planning (service, maintenance, additional sales)
  • Sales Knowledge Management (SKM)
  • Etc.

The ultimate aim - Increasing sales volumes and profits.


Does it work?

However, reliant on in-depth studies conducted by independent research companies, it appears that sales volumes have not improved.

For example:

A campaign that involved aggressive marketing and sales activity resulted in only 61% of sales teams meeting their sales goals, 41% of all offers (55% in the IT fields) were not closed because of “customer hesitancy.”

Furthermore, while average sales time is longer than in the past, the average business volume has declined, with more than 50% of companies having to initiate improved sales efficacy processes.

I.e. many good business ideas do not always meet customer expectations, while “traditional” sales methods, such as solution-based sales strategies, no longer suffice.

There are also, many other factors underline the need for fresh approaches to generating business and sales solutions.


Characteristics Involved in Business Reality

Understanding this ongoing material evolution is necessary for a calculated and erudite analysis of the situation and properly seeking the solution to a business issue, which would produce results.

Firstly, the real value of products and services is shrouded in doubt. According to survey data in 2018:

If, 20 years ago, prior to making investment decisions, in addition to a clear-cut, convincing business case  40% of business managers demanded a proven ROI (Return on Investment) as well, currently, over 80% of companies demand this.

Senior executives are also expected to get Board of Directors' approval for every significant expense, because the economy is shrinking, while corporate governance and regulations are intensifying

The modern daily reality in the business arena is more complex.

This reality faces senior executives, who are supposed to increase revenues, earnings, market shares, and customer satisfaction, with one growing concern regarding their supplier and partner:

Whether or not their offer will assist him to attain his targets.


How is expected growth accomplished?

Adopting advanced business strategies is a step in the direction of a breakthrough, reaching the anticipated dynamics and generating a smart business growth mechanism.

Market dynamics, the organization’s internal dynamics, rapid variations and understanding conduct are keys to a more expedient comprehension.

Here, using a fresh conception, advanced strategies, such as “value selling” manage to "get the ball rolling" for the following reasons:

The effect of specific or comprehensive solutions:  A perception that competition for the core business of each customer is greater than in the past.

Profit declines for certain separate components:   There have been declines in many fields, including hardware, software, maintenance repairs and [routine] maintenance.

The need to differentiate service expenses: The difference between internal and outsourcing costs.

Differentiating from competitors: intensifying competition followed by a perpetual need to differentiate from competitors.

The decision-making process: This process varies from the technical management level up to the financial division.

A desire to see results and an early ROI: Customer management necessitates an ROI during an early stage in the RFP (Request for Proposal) for solutions that they proposed.

Changes in investment costs: Customers want to transfer investment costs from CapEx to OpEx to the extent possible.

Conceptual change: Service providers realize that, now, more than ever, their customers understand the need for improving offers of value relating directly to the customers’ business affairs.


Bottom line

A “value-focused organization” is a company, which, on the one hand, operates in the market with the aforementioned requirements, while, on the other hand, focuses on implementing the value, while maintaining the investments already made.

The Advantages of an Organization Based on a Value Selling approach:

  • The sales are focused on the customer’s financial bottom line.
  • Service offers by service providers are consistent with customers “because they are directly related,   to the strategic businesses needs of the customer."
  • Larger transactions deriving from an ability to provide more comprehensive solutions.

 Amir Kahani, Auren Israel

 

 

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