© 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 Series July, 2008

© 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. 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 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

© 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. Agenda Dynamics of Pricing Creating a Unique Business Value Position Changing the Conversation

© 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. 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

© 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. The Reality of Pricing vs. Value Lessons Learned in the Real World Price = What You Charge Price = What You Charge Value = What Your Customer Believes It’s Worth 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

© 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. Creating a Unique Business Value Position 6

© 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. 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

© 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. 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? Business Profile Business Drivers Business Initiatives CapabilitiesSolution Differen- tiation Compelling Events Unique Business Value 8

© 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. Capabilities—What Makes Us Unique and Superior? People (Who) People (Who) Processe s (How) Processe s (How) Products (What) Products (What) Intellectual capital Resource commitment Business partners Experience and expertise Support (before and after the sale) Culture Share best practices Education Implementation Account support Global presence Functionality Quality Innovation Technology Integration 9

© 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. 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

© 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. Changing the Conversation 11

© 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. Perception of Value Benefit Received Expected Benefit 12 When you have formed “partnerships” with strategic suppliers, what benefits did you expect and what did you actually receive?

© 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. Differentiating Your Value To the End Customer 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 13

© 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. Justifying Premium Pricing Through Value 14

© 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. Make the Translation: “Connect the Value!” From Technical Products WHAT YOU SELL Servers Printers Software Storage IP Telephony Virtualization 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 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 How Much, How Fast What will be impacted? Risk/Reward Total Available Benefit Based on Previous Success/Implementation 15