Value Based Pricing

October 21st, 2019

calm leadershipAn overarching theme from our pricing and profits presentation relates to value based pricing. It was unanimous – every CEO believed that value based pricing was the best direction to go.  Yet, it became muddier in figuring out how to move towards value based pricing in his/her particular situation.

Let’s start by defining value based pricing. Simply stated: prices are based on the value the customer receives.

Everyone wins. The customer gains more value and you gain a higher price. Of course, that higher price should carry a higher margin.  It isn’t set up so that you win at the expense of your customer. Instead, both parties win with extra value and margin. So, if everyone wins, why don’t more of us utilize value based pricing? According to the CEOs, it isn’t simple. Yet we all agreed it is worth it.

Perhaps we’ll be talking about this for months and years to come as it can do something far more important than increase margins. It enhances customer value which can lead to customer engagement and loyalty. There are lots of statistics.  Suffice it to say, we will be much happier and are willing to spend more to do business with companies that deliver excellent customer service. And, more engaged and happy customers are dramatically more profitable.

After all, it can be 2 to 25 times more expensive to acquire a new customer than to keep a current one.

Start by figuring out the value of your product or service. Don’t listen solely to your R&D department, sales resources or anyone else while trying to understand value. Don’t even listen to your customers. Instead, think about your target customers and probe the value to these customers. Ask. Listen. Observe. When you ask questions, listen to what else they say. What would improve your customers’ situation? The value will emerge.

 



WARNING…The Apathy Of Success by Guest Blogger, Steve Weimar

October 19th, 2019

Time after time we see good companies, or what we thought of as good companies, experience major issues in their business health with some unable to pull out of their death spiral. What caused this and how could this have been prevented?

Apathy, or complacency, can be the root cause in many cases, especially in small to mid-sized businesses. Example…business is booming, everything we do seems to turn to gold. As you, Mr. CEO or business owner, are counting your stacks of cash and enjoying all the perks of your well-earned success you’ve failed to realize that your focus on every aspect of your business as you were growing has disappeared. This is what I refer to as going to sleep at the wheel while your business has been on cruise control for years. Would you do this while you’re driving a non-autonomous car, the answer is a resounding NO. Then why do this with your business? Aren’t the inherent risks the same, well not exactly because you won’t die by falling asleep at the wheel, but your business can succumb to the damage of that unexpected crash!

Think about your business for a few minutes and ask yourself this question “Is my business on cruise control and am I at risk of failure?” Are you thinking one of these 3?

  1. DENIAL: “No way is my business going to fail. I’ve worked 10, 20, 30 years building my business and we’re the leaders in our field and too big to fail!”
  2. GUILT: “Oh No, what have I done? Is it too late to recover?”
  3. AWARENESS: “I don’t believe so but I’m going to conduct a thorough examination of my business, from top to bottom, and identify where we can improve our processes and productivity!”

If you answered #3 then you are many steps ahead of the others. Owning a business and staying current and relevant doesn’t happen by accident. It’s the direct result of a commitment to succeed, a willingness to change and empowering your employees to be contributing and respected members of that success!

The old saying, You Can’t See the Forest Through the Trees, is very applicable to business and change. In some situations, a business owner and their team are so close to the company’s processes, its products and services, operations, marketing and more that they can’t see what’s wrong. While some business owners and their teams have the inherent ability to do identify and correct issues as a normal operating procedure, many can’t and that’s where you need to employ some different options like these.

  • Survey your customers to gain a better understanding of how they perceive the company, its products, your staff, the quality and reliability of your service and do they understand your Value Proposition, assuming you have one. Another key information point to uncover…Is your company easy and enjoyable to do business with?
  • Conduct internal discussions with your team and white board every idea that is presented and prioritize the top critical areas to change. Take each critical area and prepare a detailed Action Plan for the changes you desire and empower your staff to execute. Establish KPI’s (Key Performance Indicators) to track the results of the change and don’t be afraid to make additional changes as needed to succeed. Establish regular meetings to discuss your progress and enjoy the results.
  • Hire outside professionals who will look at your company from a different perspective and a fresh set of eyes. Make sure to have a detailed agreement on their scope of work and provide them with background on the company and the employees. Their sole purpose is to help you and your company succeed so be open to the issues they discover and embrace the changes they recommend.

One of the big things to keep in mind is you must embrace change and the pain that sometimes is part of the process. Remember the old saying, No Pain, No Gain? Well that statement is so true in business and in life. We can learn so much from our mistakes and those trials and tribulations help form the core of who we are.

You Don’t Know What You Don’t Know. So, I encourage you to take that giant leap of faith and learn what you don’t know about your business. No matter how successful you are there is always room for improvement, Always!

 

 

www.salesxceleration.com/advisors/steve-weimar/

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The Value of Export

October 18th, 2019

My colleague, Kusum Kavia recommended me for CIEDEC which is the Califorina Inland Empire District Export Council.  So, I attended a meeting as a guest. Export is a vast opportunity. Just consider a few facts:

  • 95% of potential customers are outside of the U.S.
  • 97% of exporters are outside of the U.S.
  • California is the #1 state in exports
  • Less than 1% of American companies export – this is quite shocking. The good news is our clients are clearly outside of the norm.
  • Canada and Mexico are the top two export countries.

Given these facts, looking at USMCA, the U.S. – Mexico – Canada agreement should be of keen interest. The CIEDEC has written letters of support to pass this agreement citing that it will better serve the interests of American workers, farmers, ranchers and businesses; and, it supports mutually beneficial trade leading to freer markets, fairer trade and robust economic growth in N.A. There were $43.6 billion of exports from California to Canada and Mexico in 2017.  The top exports were computer and electronic products, transportation equipment agricultural products, machinery and chemicals.

There is also a heightened interest in export based on Brookings research and the consortium for Advanced Manufacturing Excellence in the Inland Empire. We are excited about the future Are you exporting?

What Should We Consider and/or What Impacts Could Arise?
There is vast opportunity for California manufacturers to export. There are tremendous resources available for exploring markets for your products and services, as well as help in getting started. We have several significant exporters in the Inland Empire.  They have grown their businesses faster and more significantly than the average.

This will be one of several topics we’ll address in our consortium for advanced manufacturing. If you are an executive interested in participating in an advisory capacity on the steering committee for this initiative, please contact me.

Additionally, our APICS Inland Empire Chapter will be addressing this topic as a part of our upcoming executive panel and networking symposium on “Collaborating for Advanced Manufacturing & Supply Chain Success“.

Think about taking one step forward in evaluating whether adding or expanding exports could increase your revenue, profitability and success. Of course, export also provides potential in distributing your dependence on domestic revenue and profitability.  So, it could be another leg in creating a resilient supply chain.



A 98 Year Old’s Wisdom & the Toltek Agreements

October 16th, 2019

When visiting my best friend’s mother who is 98 years old, a challenging topic arose. She is the sharpest 98 year old (and can easily give any 20 or 30 year old a run for his/her money) I’ve met.  She has fabulous stories and spouts wisdom to boot! At this juncture, she brought up the 4 agreements of Toltek wisdom which turned out to be a great response.

The Toltek agreements are as follows (which, of course, she cited off the top of her head):
1) Be impeccable with your word.
2) Don’t take anything personally.
3) Don’t make assumptions.
4) Always do your best.

I thought these were brilliant in their simplicity. Don’t you? What makes the story even better is that my best friend’s late father found these in a book that he brought home from the alley. He just loved to find ‘gems’ in the alley in Balboa to give to family and friends, to fix up to give to the poor and to use/read.

One Tip to Implement This Week:
Growing up, my parents and especially my mom made it clear that so long as we did our best, that was what counted. Win or lose, it didn’t matter. I have always lived by this wisdom.  Now, I see that that it is Toltek wisdom! Beyond this piece of advice, I have to say that a lot of my success stems from all four of these agreements. So, it is something to ponder.

The next time you think your peer is creating extra work for you on purpose or isn’t returning your calls and ignoring you, remember the rule, “Don’t take it personally”. Most likely, it has absolutely nothing to do with you. We have all been there when we assume the worst.  I can say that 80%+ of the time I catch myself thinking these thoughts, they turn out to be only in my mind.

We have all heard the advice to not make assumptions but do we consciously think about what assumptions we make daily? Perhaps we should start! And how about speaking with integrity? We all think this is the rule. Yet, how often do we find colleagues we are confident speak impeccably? Not often enough! I found when in my VP of Operations & Supply Chain role that it is probably the #1 ingredient in success. Once my team knew they could count on what I said, they turned a corner to high productivity and engagement.

I think these topics relate to the skills gap. After all, how many leaders do we find with these attributes?

Please help us determine the current state of the skills gap by taking our survey

 



Hurricane Dorian & Your Supply Chain

October 13th, 2019

 

Hurricane Dorian certainly took over the news as it threatened devastation. I’ve included YouTube from USA Today of the storm. People were evacuating up and down the east coast. Although the impact on people’s lives is certainly more important, there is a dramatic impact on businesses, as well. As logical as it sounds for east coast manufacturers, distributors and other businesses to be impacted while preparations are underway and the storm passes, it also had a profound impact on customers, suppliers and their extended supply chains. Are you prepared to navigate these types of disruptions?

What Should We Consider and/or What Impacts Could Arise?When I was VP of Operations and Supply Chain for a mid-market manufacturer, a hurricane devastated Greenville, North Carolina, the location of our largest manufacturing facility. Luckily, since the facility used to be owned by P&G, they evaluated risks as a normal course of operations and the facility was on high ground and not affected.  Yet, the facility was closed and nothing could get in or out. That situation alone proved the importance of thinking ahead to key risks, managing proactively and creating a resilient supply chain.

An east coast issue is no longer an east coast issue. For example:

  • Do you use the same carriers that might be tied up on the east coast?
  • Are your servers on the east coast?
  • Do you have any suppliers or customers on the east coast?
  • Do you have suppliers who supply other customers on the east coast? Or do your customers have other suppliers or customers on the east coast? Most likely YES!

The bottom line is 80% of my clients are impacted directly (suppliers, customers, transportation partners) and 100% are impacted through their extended supply chain. At a minimum, don’t wait to think about disruptions until they are imminent. Build agility, flexibility and resilience in your business as well as within your extended supply chain. If there ever was a topic related to the resilient supply chain, this would be it! We have recently upgraded and added content to our resilient supply chain series.