Creating Exceptional Value. by Tim Meyer & David Solberg

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1 Creating Exceptional Value by Tim Meyer & David Solberg

2 Client Confusion

3 There are 50 different senior designators currently used by financial advisors Client Confusion Who should we contact to help us with our problem?

4 Technology Noise What is your technology personality type?

5 Great Organizations Fail for 2 Reasons They can t escape the past They can t invent (see) the future

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7 Client Information Become the conveyor of financial truth Become the trusted advisor Be interested vs. interesting K.I.S.S.

8 Trust takes year to build, seconds to break, and forever to repair

9 Defining Value As A Concept

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11 Value as a Basic Concept Fundamental exchange theory tells us that people expect an equal exchange, meaning: Price = Value (The price they pay equals the value they receive) However, if customers receive more of what they value, they are often willing to do business for a fair price: Product + Service + Attitude/Image Price = Value

12 Value is Defined by the client directly or indirectly Interpreted, refined and delivered by the seller/agent

13 Two Types of Value There are many ways to define, measure, and enhance value let s focus on two types of value: Tangible Value Intangible Value

14 Tangible Value Offerings which are concrete and easily measured such as: Actual products and services Complaint handling, regulatory or compliance issues Detailed investing guidelines Some of these you charge for and some you don t

15 Intangible Value What is intangible value? An Apple MacBook Pro13 may not last longer or do more than a Dell XPS13 but some people pay more for it anyway Why?

16 Intangible Value Why? Because the Apple MacBook Pro13 image creates a perception of value in the buyer s mind strong enough to command several hundred more dollars in price. Image drives the perception of greater value

17 Key Intangible Value Point: The image of greater value must be consciously created and reinforced over and over again

18 The Use of Value Value becomes a useful concept when you can: Uncover its components with key clients What does the client value probe patiently and conversationally Orchestrate its delivery What if you don t have what they value and want? Measure its impact on the client Are you moving away from transactional and on to a trusted partnership? Begin the whole process again The concept of VALUE is not static

19 Price is what you pay, value is what you get. -Warren Buffet

20 7 Key Points About Value Value is perception dependent How clients feel about your business capabilities is more important than your actual capabilities Value is more than price If clients receive more of what they value, they are often willing to do business for a fair price If clients perceive value is significantly different than the price paid, loyalty and repeat business will drop Value is something salespeople are responsible for Sales people are responsible for uncovering value factors clients are not responsible for volunteering them Value is something every client determines Every client values something salespeople must discover unique value factors for each client and deliver those better than anyone else

21 7 Key Points About Value Value is always changing What is valued today may become tomorrow s expectation Value is a relative phenomenon Clients often have different gauges for measuring value, depending on competitive alternatives and their own knowledge and sophistication Value is what sets the price you charge The price you charge must be influenced by client value at least as much as by cost

22 What you offer is only worth something if it helps clients get where they want to go.

23 Human Knowledge University of Houston Brief History of Training & HRD Years Information Doubles Years Knowledge Doubles Years Knowledge Doubles Estimates now have the sum of all human information doubling at a rate of every months

24 Intellectual Capital The Agent/Sellers Differentiator There are no traffic jams along the extra mile. Roger Staubach, Dallas Cowboys

25 The Value Ladder Potential Product Products become secondary to the relationship Value-Added Both the client and the agent focus on the relationship Expectations All things clients expect beyond basic quality products Product Client satisfaction begins with quality products

26 The Value Ladder Product Potential Product Value-Added Expectations Product Client satisfaction begins with a quality product Without a quality product, clients have no reason to even consider you in their buying decision Basic level of value: Minimum quality specifications What s needed to be considered by most clients Includes basic transactional selling skills

27 The Value Ladder Expectations Potential Product Value-Added Expectations Product Expectations are all those things clients expect above the basic product attributes Consistent Coverage/Returns Fair pricing/reasonable commissions Timely portfolio assessments While expectations cannot create a differential advantage, they can result in client dissatisfaction if they are not met A perception of value may attract clients The sense of satisfaction through fulfilled expectations is what keeps them Clients buy much more than a physical product they buy an organizations total product

28 The Value Ladder Expectations Potential Product Value-Added Expectations Product What better organizations offer Elements that once added value but are now common Timely news and insights Guidance and retirement Investments Retirement planning Wealth management Estate planning Saving for college Life insurance and long-term care Calculators and tools Includes excellent transactional selling skills

29 The Value Ladder Value-Added Potential Product Value-Added Expectations Product At this level, the product the client buys is no longer the focus, although it definitely plays a part Instead, both the client and the seller focus on the whole relationship Position yourself as a consultant/partner rather than a salesperson, first in your own mind and then in the mind of the client the TRUST factor You build a solid client relationship by showing you re the lowrisk, easiest person to do business with When effective, will be imitated

30 The Value Ladder Potential Product Potential Product Value-Added Expectations Product At the potential product level, the product becomes secondary to the relationship between the buyer and seller Buyer and seller are so intertwined, fulfilling mutual needs, that it may be hard to see the line between them Combined worth of you, your business, and your product and services to your client Basis for lifetime client relationship Results in consistent consultative selling The potential emerges when: Both see their relationship as a chance to create a mutual competitive advantage Client and seller share risk and rewards

31 Product Life Cycle Introduction Growth Maturity Decline Time Market Skimming Market Penetration High margins and prices Low profits High margins and prices Highest profits Lowest margins and prices Falling prices Falling prices

32 What is Value Destruction? A product or service that was, at one time, considered quite valuable but is no longer viewed as valuable Could be a result of several factors: No longer unique Outdated Not priced appropriately Branded alternatives Generic alternatives The ECONOMY Many companies across a variety of industries strategically plan for value destruction of their own products: Apple Nike Samsung

33 Important Value Points DO NOT let the client take your value-adds for granted DO NOT let this year s value-add turn into next year s value destruction example Continually analyze the value of your offerings to your clients (DO NOT assume) What does this client VALUE that I can offer consistently and inexpensively

34 Understanding Client Segmentation

35 What is Segmentation? Segmentation is the process of separating large groups of buyers into smaller groups who share common qualities.

36 Market Segmentation 3 Common approaches to segmenting a marketplace: Demographic segmentation: Size, age, education, and/or geographic location Client value: Annual dollar volume, annual margins, lifetime value Psychographic characteristics: Common attitudes, attributes, values, behaviors

37 Segmenting Client Characteristics Research consistently shows us three different buyer segments: Business Buyers Relationship Buyers Price Buyers

38 Business Buyer Values Comparative worksheets Customized analysis Options and data New services with examples of success Expertise Low-risk expansion opportunities Desire facts Switch based on ROI

39 Relationship Buyer Values Likes regular contact formal and informal Consistency in personnel Implementation assistance Agent to participate in decisions High agent loyalty seldom switches Less price conscious if trust exists

40 Price Buyer Values No-frills options Brief, factual information Dependable information Only what they need Reduced cost Not interested in service Little or no agency loyalty Highly self-reliant The cheapest price possible

41 Buyer Type Summary While an individual is likely to have a primary buying style, individuals use different styles for different purchases The same person might use: A business style when contracting for an addition to your home A relationship style when buying insurance An economic style when buying wall-to-wall carpet

42 Buyer Type Summary Each buyer segment values different things, and therefore, look for different things when deciding where and what to buy: Price Buyer: price, price, service, price Business Buyer: price + quality, service, expertise Relationship Buyer: service, relationship, expertise, price How does your value offer change with the various client segments?

43 Value Disciplines

44 The Value Pyramid Treacy & Wiersma Harvard Business Review Image What s the image of your business? Products II Delivery What Tangible Value How Intangible Value

45 The Value Pyramid Treacy & Wiersma Harvard Business Review Image Your people, logo, printed materials, web presence, social media, physical presence, products, and services. Products II Delivery What Tangible Value How Intangible Value

46 3 Common Value Disciplines Product Leadership (State of the Art Technology) Treacy & Wiersma Harvard Business Review Successful Companies Excel in One Discipline and Meet Minimum Standards in Others (Alone or Through Alliances) What s discipline do you excel in? Client Intimacy (Tailor Offerings for Individual Clients) Operational Excellence (Lead in Price & Convenience)

47 3 Common Value Disciplines Product Leadership (State of the Art Technology) Treacy & Wiersma Harvard Business Review Apple Nike Google Sears Kmart Samsung? What s discipline do you excel in? Nordstrom s Home Depot Victoria s Secret Client Intimacy (Tailor Offerings for Individual Clients) Amazon? Walmart McDonalds Operational Excellence (Lead in Price & Convenience)

48 3 Common Value Disciplines Treacy & Wiersma Harvard Business Review Products (R&D, Brand Promotion) Product Leadership What do you think about most days? Client Intimacy Clients (Understanding Needs, Finding Solutions) Operational Excellence Costs (Optimal Processes, High Efficiency)

49 Common Pricing Approaches Premium Pricing (Manufacturer Perceived Benefits Value to Client) Treacy & Wiersma Harvard Business Review Product Leadership Client Intimacy Variable Pricing (Client Perceived Value) Operational Excellence Aggressive Pricing (Low Price Drives Volume Up)

50 A school in Virginia had trouble filling a course called Home Economics for Boys. Considering the title, this isn t too surprising. Putting themselves in the place of the students, the school renamed the class Bachelor Living and 120 boys immediately signed up. - Guy Kawasaki - How to Drive Your Competition Crazy

51 Getting clients to walk through your door is the challenge, getting them to come back is the reward.

52 It s a promise by an agency/agent to the client. It s also a belief from the client about how value (benefit) will be delivered, experienced and acquired. It s a promise of value to be delivered, communicated and acknowledged. It communicates the number one reason why a product or service is best suited for a client segment.

53 Value Proposition Plan Determine what target client s value Rate yourself vs. your competition Decide where you can cost-effectively add value Consider the value of the service you add

54 Your Value Proposition Must: Address a client need real or perceived Define a solution Differentiate your solution from the competitive solution the client benefit Answer the client question: What makes your agency/business different and/or better than the competition?

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57 Enough Already