Capital Equipment Consulting RED Selling

Learning – Single loop Problem Solving - developing alternative solutions Implementation Becomes routine Something tells us we have a problem or an opportunity to make an improvement Decision Making – choosing the best What is double loop learning?

Single Loop And Double Loop Learning Observe Implement Assess Design Frame- works Routines Existing mental models Single loop learning Frame- works Routines Revised Mental models Double loop learning Single loop learning a thermostat, Double loop learning changing the setting. Most business processes are single loop learning and are resistant to double loop which causes conflict. Managers try and resolve the conflict – they should not it is healthy. Paradigm Shift

Organisational Learning Observe Implement Assess Design Frame- works Routines Existing mental models Single loop learning Frame- works Routines Revised Mental models Double loop learning Paradigm Shift Other Department’s frameworks and routines Negotiation of Paradigm Shift Other Department’s frameworks and routines Other Department’s frameworks and routines Other Department’s frameworks and routines

Capital Equipment Consulting Assessing our customers requirements and how should we respond to them Look at the buying process through your customer’s eyes – RED buying – what are the processes he goes through Assessing our customers requirements and how should we respond to them Look at the buying process through your customer’s eyes – RED buying – what are the processes he goes through

Red Buying – Recognition of Need Logical Argument Emotional Appeal

Red Buying – Establishing criteria

Red Buying Decide Emotional Jump Is there a fourth stage for the seller?

Red Selling – Verifying the criteria 4 th stage

The RED buying and selling process – what is the difference between prospecting and an RFP? Now SituationFuture Situation Recognition of need Establishing the criteria for choosing the best solution Deciding the best alternative Help position this future Situation such that only we Can achieve it Help select the criteria That will rate us highly Help make it urgent, demonstrate the payback, provide the resources minimise the risk and show the consequences of not buying

RFP vs Prospecting RFPProspecting Start at the bottom and get stuck Start where you want and simultaneously Come in late when need and criteria decided Initiate the need Often it is speculative or budgetary We initiate the need They are already looking at others. Someone else is column A. We become the benchmark and position to our strengths

Red Selling – Perceptual Selling and Perceptual Pricing Benefits sought by customer Weight Wgtd score us Comp one Comp two Operator ease of use Compatibility with existing Service Delivery Speed Total of features % of ours Price differential justifiable from ours Perceptual Selling Perceptual Pricing Technology leader Close to the customer Operational efficiency

Pricing – Perceptual Pricing Pricing – Perceptual Pricing Perceived benefits Perceived Price Comp 2 Comp 1 Us Decreasing Value for money Band of indifference Us Revised Increasing value for money

Giving information Decide the best Getting commitment Getting information Recognition of need Getting Information Establishing Criteria Perceptual Selling

The Value Equation Cost of Solution Seriousness of problem or opportunity Don’t Buy Buy

Red Selling – Value Selling and Value Pricing Benefits sought by customer Weight Wgtd score us Comp one Comp two Value Justification of feature Operator ease of use Operator ease converts at 1 min/hr saving enables the operator to handle 2% more samples a day = £20/day = £4500/year Compatibility with existing £10,000 saving from not having to develop a new calibration Service Agreed service will keep machine within +/-3%. Each additional 1% drift will cost £10,000/year Delivery Speed Delivery delay of 1 week costs £2000 to have samples done outside Total of features % of ours Price differential justifiable from ours Value Selling Value Pricing Technology leader Close to the customer Operational efficiency

Value Selling Value Selling Closing with Value Decide the best Present a targeted Value Proposition Recognition of need Verifying and confirming value for customer Evaluation of options

Value Pricing Value Pricing Market Size £M Economic Value for a Triplex pump Reference Value of a high Speed centrifugal pump Economic Value Refinery Economic Value Offshore Oil Platform Economic value Pharmaceutical Plant Consultative selling

Critical success factors Perceptual and value Benefits sought by customer WeightWgtd score us Best Comp Us FinalValue Justification of feature Operator ease of use Operator ease converts at 1 min/hr saving enables the operator to handle 2% more samples a day = £20/day = £4500/year Compatibility with existing £10,000 saving from not having to develop a new calibration Service Agreed service will keep machine within +/- 3%. Each additional 1% drift will cost £10,000/year Delivery Speed Delivery delay of 1 week costs £2000 to have samples done outside Total of features % of ours Means that features account for 60% of the decision so comp 1 and 2 can stand a 15 and 7% price differential Perceptual Price differential justifiable from ours To help justify this we must develop quantifiable value justification that the customer accepts as his analysis Value Price difference10Features that develop a cost difference that can be quantified like power consumption Value adjusted price difference Price allowing for both perceptual and value benefits. NiceNeed

Contract Manufacturing 1. Managing Director – Risk of project being a failure, increased flexibility Notoriety within the Group 2. Marketing Director – Reduced manufacturing cost and delivery flexibility meet targets 3. Production Director – Continuation of a role for him and key subordinates 4. Finance Director – Reduction in working capital Notoriety within the group

Individual’s Criteria Decision Criteria% sayUsComp 1 Comp 2 Comp 3 Comments Price ! Not really sure about pricing can Our coach help us? Ease of use ! Judges us equal to 1 but we are better Flexibility Try and get him to speak to md of Alfa. Total ? No one has seen him Personal payoff Control of salesforce 7896 Have to persuade him ours gives control What personal benefits will he get from achieving the results focus first on results then ask attitude questions how they help (coach?)

Customer’s Decision Making Team NameType% say Veto or Specifie r UsComp 1 Comp 2 Comp 3 P Robertson Economic Follower 20 None S Tebbutt User Skeptic 40 Veto C Riseley User Charismatic 20 None A Langley User Controller 20 None S Perry Technical 0 None R Peters Sponsor 0 None Total

Number of People Involved in Industrial Purchasing Decisions Number of employees in company Average number in DMU Average number of contacts by sales people Under Over