Partner Education Series

1. Best Practices For Solution Provider Business DevelopmentModule 5:Calculating Real Business Value & Winning Without Discounts Partner Education Series

2. Introduction: Partner Education Series Module 5:Calculating Real Business Value & Winning Without Discounts • A believable approach to building value propositions that connect with customers and create a compelling advantage without resorting to deep discounts • Part 5 of an ongoing channel partner enablement program from DATTO & Morris Management Partners Business Practice Development Winning Without Discounts Finding & Hiring Top Performers

3. Calculating Real Business Value & Winning Without Deep Discounts

4. A Thought About Discounting • Q: Is It Required To Give A Discount When Selling Your Managed Services? NOT YET!!!

5. Understanding the Discount Cycle • Why Do Prices Go Down? • THEY MUST • Macro-economic reality … as markets mature, prices drop • Customers always want to get the best deal … translated as “best price” • PERCEPTION OF PRODUCT EQUALITY • The Principle of Most • 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 & PROCESSES • The *@?%! Purchasing department

6. Understanding Value vs. Price • Case In Point: BOSE Audio • Provides Essentially the Same Commodity “Service” to Customers: Audio Amplification • Average Selling Price = 4X – 10X the “Going Rate” in the Audio Component Market • WHY Is the Price HIGHER? • Better Quality (?) • Patented Technology • Customer Perception • Market Caché • No Apology for Price “The Bose Wave radio cannot compete with any serious stereo system with separate speakers and an FM tuner: housing both speakers in one cabinet greatly diminishes the stereo effect.” -- NY Times State of The Art Technology Review

7. Understanding Value vs. Price • Case In Point: Hyundai Motors • Fastest Growing Car Company in Overall World Sales – Unit Volume + Total Revenue • Average Selling Price = 20 – 30% Lower than Comparable Models in Each Category • WHY Is the Price LOWER? • Deliberate Strategy • Worse Quality (?) • Customer Perception • Lack of Market Caché • Selling Style / Process “When you mix healthy dollops of value, high-tech features and luxury you get the Hyundai Genesis. It’s a $34,000 vehicle, but it’s everything that a $55,000 upscale midsize car should be. When Hyundai said it was going to go upmarket, many foresaw a disastrous failure. However, after beating out rivals to take the “Car of the Year”, people began to realize there was something extraordinary about this new Hyundai.” -- US News “Best Cars Report”

8. Understanding Value vs. Price Car & Driver Car of the Year Consumer Reports Best Buy JD Power Initial Quality Rating 5-Star Award Why Don’t You Drive One? 429 HP V-8 Engine … More than 25% higher power output; 15% faster acceleration

9. Why Do We Discount? • We Sell To Customers Who Don’t Buy Value • We Sell Solutions That Do Not Provide Value • We Sell Low Priority / Non-Critical Solutions • We Are Not The Best Provider • We Are Not Well Known Or Trusted • We Don’t Sell The Value Effectively • We Don’t Negotiate Well • We Think There’s No Other Way • We Are Willing To Take Less [VOLUNTARY]

10. Important Point re: Discounts • Q: Is A Lower Price A Good Thing Or A Bad Thing For Your Business? • A: It Depends … On Whether It Reduces Your Total Financial Opportunity Total Financial Opportunity Retained Margin Opportunity Volume Predictable Flow In a perfect world … you would be in control of all three factors. In the real world … you must choose where you focus & where you flex.

11. Defined By Who You Sell To Defined By What You Sell Ability to Defend Premium Price Innovation Differentiation Strong Competition Commoditization Time / Market Maturity Create & Defend Pricing Power • Evolution of Market Pricing Power

12. Who Is Your Customer? Vertical Industry What business are they in? Business Size How big are they … and their challenges? Business Model What do they sell, and how do they get paid? Competitive Position What makes them better than everyone else? Strategic Position Where do they fit in their market?

13. … And What Do They Want? “L.O.B.” Leader “Solve My Operational Problem” User “Make My Job Easier and Effective” IT Dept. Leader “Provide The Best Technology Solution” Purchasing Agent “Provide The Best Value or Price” Senior Business Leader “Strategic Value, Minimum Risk”

14. What Do They Really, Really Want? Increase Revenue New Sales, Retain Customers, etc. Decrease Costs Eliminate Waste, Leverage Assets, etc. Accelerate Time To Market Process Efficiency, Automation, etc. Manage Business Risk Contingency, Redundancy, Compliance, etc. Competitive Advantage Win Where They Have Previously Lost

15. Building A Compelling Business Case • Beyond “Soft Benefits” … Can You Calculate the BUSINESS VALUE? • Incremental Value – Investment Costs = RETURN • Value = More wins + Higher ASPs + Faster Time • Costs = Products + Services + Processes + People How Much? • Time to Realize Return = PAYBACK • Cash Flow Payback = Time to First Revenue Impact • Profit Payback = Time to Total Investment Return How Soon? • Likelihood of Achieving Payback = CONFIDENCE • Risk vs. Reputation vs. Trust vs. Reward • Testimonials + Methodology + Guarantee / Warranty How Certain?

16. What Can You Do About It?

17. Sell On Value, Not On Price • Focus On Outcomes, Not Inputs • Results matter more than tactics. Products exist only for the purpose of achieving an objective. Customers are willing to pay for value. • Sell Integrated Solutions • Integrated solutions for business objectives are built on more than one product. Where products collide, margin can be found. • Emphasize The Value Of YOU • Expertise outweighs discounts whenever you justify the unique value of your skills. It’s not about products … it’s about maximization. • Never, Ever Respond To RFPs* • Invest your effort at the beginning of the solution process: needs analysis. Help customers identify net-new opportunities.

18. The X-Factors For WINNING • There is no such thing as “being better” than your competition. You must “do it better” … which requires the VERB vs. NOUN translation Know what you do, why you win, and don’t waste time where you aren’t on strategy Strategy & Focus Ensure all of your people buy in and are technically + emotionally able to do it well Alignment & Execution Stick to your guns … know your value, and insist on getting your value … or walk away Negotiation & Commitment Put your money where your strategy is … and be willing to go after it harder than others Resource & Risk Make sure the right customers know you and what you stand for … and have many options Presence & Quantity

19. Create & Defend Pricing Power • TRANSLATING IDEAS TO ACTION: The Only “Right” Strategy Is The One You’ll Actually Follow Through On Carve A Position Solve Valuable Challenges Build Your Brand Strictly Target & Qualify Fill The Pipeline Get In Early In The Decision Cycle Talk To Real Decision Makers Internalize Your value Add Value Design A Branded Method Create A Desirable Community Improve Value Selling Skills Develop Integrated Solutions Measure The Value Lock In Your Customers

20. rto@dattobackup.com Thank You!

21. For More Information … Ryan Morris Principal Consultant Morris Management Partners, Inc. Email:rmorris@morrismp.com Mobile: 303-618-9370