ABSTRACT
Todd Snelgrove, the former chief value officer at SKF, highlights the role of quantified value propositions in the context of value-based selling and value-based pricing. In “Implementing pricing strategies via quantified value propositions,” Snelgrove emphasizes that quantified value propositions are a key element to shift business-to-business (B2B)purchasers from price to value. Quantified value propositions are either total value of ownership calculations or value quantification tools. For sales managers, value-based selling requires two conditions: ability and motivation. The ability to sell value depends on the ability to conceptualize value in a way that resonates with customers, on processes encouraging a focus on value, on the availability of value-selling tools, on initial training, and on ongoing experience in value selling. The motivation to sell value is a function of sales force compensation, of the ability to build long-term collaborative relationships with customers where both parties are committed to creating mutually beneficial value, of a company culture led by a strong CEO committed to value-based selling, and, finally, of customers that recognize the opportunity to work collaboratively with suppliers. This chapter thus explores the multiple facets that companies can and should control in order to implement value-based selling and value quantification. The chapter also vividly illustrates the difference between a given price savings and total cost of ownership savings of equal amount. If total cost of ownership savings occur year after year and if price savings occur just once, then the effect of the former will by far outweigh the benefits of the latter.
