CREATING THE B2B CUSTOMER

Alan/Anthony, Inc. - Summer 2007

"Value-Added?"  See Picasso, Pablo

By Louis Zacharilla, Senior Partner, Alan/Anthony

There is an old story about the Paris days of Pablo Picasso, the famous Spanish painter, which shines a light on a much-used but little-understood phrase.  True or not, the story goes like this.  

After eating and drinking for hours at a café with a group of friends and patrons, Picasso was presented with the check.  He was enjoying relative affluence at that point, but Picasso's momma raised no fools when it came to money.  After looking over the bill, he took out his pencil, turned the bill over on the table and, with the puzzled waiter standing over him, made a remarkable drawing in the abstract style that had become world-famous.  He signed his name to it, handed the bill to the dumbfounded waiter, and said, "Please my friend, keep the change." 

Did the waiter accept the Picasso original?  Did he or his boss demand hard cash instead?  Legend is silent on the outcome.  But one thing is clear.  The outcome depends entirely on what the waiter and his boss thought they were getting from the famous artist.  It depended, in other words, on what value they believed Picasso had added to that scrap of paper. 

The Elusive Idea of Value-Added

"Value-added" has become a business cliché.  Which is a shame, because it is a very important idea, even though most of us use it so loosely.  According to Wikipedia, "value-added refers to the additional value created at a particular stage of production or through image and marketing."  Intuitively that makes sense.  If you put steel, aluminum, plastic, rubber and glass into one end of a factory and get a car out the other end, clearly value has been added along the way. 

You can actually measure the value added by the car factory.  Just subtract the cost of the materials from the wholesale price of the car.  The difference is the value added in design and manufacturing.  So far so good.  But here's a trickier issue: what make and model of car is rolling out the factory door?  Is it a Mercedes or Lexus?  Or is it a Kia Rio or Ford Focus?  The wholesale price is determined by the answer to that question and not by the cost of the materials that went into the factory. 

In other words, value-added is not a fixed thing.  It is ultimately in the eye of the buyer.  If your company aims to charge a price that produces a healthy margin, it urgently needs to do two things.   You must deliver an end-to-end customer experience that actually is better than market average.  You must also devote significant time and money to explaining what you do and how you do it - aka, marketing.  A reputation for quality, innovation and skilled execution - both earned in practice and created by effective marketing - is what distinguishes a Mercedes or Lexus from the Rio or Focus.   

To quote from another source - our book B2B Without the BS - "If customers balk at our price, it is because the value we deliver does not justify the price for that particular set of customers.  We may think we are selling a premium-quality service or product, but the potential buyer may see it as a commodity.  Which makes our premium-quality price look outrageous.   But a potential customer who shares our view of the premium quality will find the price reasonable.  In the universe of possible buyers there should be a group that values what we do, because it contributes to an area of vital importance in their operations.  Marketing isn't about coming up with the next clever gimmick - it focuses on adding value to products and services, and communicating that value to the right audience.  Selling isn't about talking fast - it's about locating prospects who value our products or services enough to pay our price, and turning them into customers."

See what you can learn from a visit to the art museum?  Picasso had a very clear idea of the value he added to that scrap of paper.   But if he got away without pulling francs from his pocket, it was because he was dealing with the right set of buyers.

News Briefs

Keith Buckley, the former president of Juke Systems and a veteran communications industry sales executive, has teamed with Alan/Anthony to provide clients with M&A advisory services, venture funding facilitation and sales force development consulting.  Keith has 20 years of experience as a senior sales manager, entrepreneur and investment banker and financial advisor. For highlights of his career, visit www.alananthony.com and click on Our People. 

Recently, Senior Partner Louis Zacharilla -

On June 12, Senior Partner Louis Zacharilla delivered the keynote address at the annual conference of the Municipal Information Systems Association (MISA) in Waterloo, Ontario, home of the BlackBerry.  Mr. Zacharilla, speaking as the co-founder of the Intelligent Community Forum think tank, addressed the issue of balance in establishing a broadband society.   The following day he was introduced by Open Text founder Tom Jenkins prior to moderating a panel of Canadian community leaders. Will lead a panel session on September 6 at the 11th Annual World Satellite Business Week conference in Paris.  The panelists from major technology providers around the world will discuss the impact of broadband and market forecasts.

Senior Partner Robert Bell -

Will moderate a panel session on October 10 at SATCON 2007 in New York titled "Hands Off My Spectrum! Terrestrial Threats to Satellite Communications," featuring Mary Ann Elliott, Chairman and CEO, Arrowhead Global Communications; Michael Chiarulli, Director, Telecommunications & Distribution Services, ABC Television Network; Matthew W. Botwin, Chair, GVF Regulatory Working Group; and Paige Atkins, Director, Defense Spectrum Organization at the Defense Information Systems Agency.

Ready to Grow Your Business this Summer?  B2B Without the BS, by Alan/Anthony's senior partners Robert Bell and Louis Zacharilla continues its romp as a popular, fast-reading guide to successful marketing strategies, tactics and sales management in the the B2B space.  To see what the president of one of the satellite industry's leading engineering companies has to say about it, read his review on  Amazon.com.

For more information on effective B2B sales and marketing, contact Alan/Anthony at lzacharilla@alananthony.com or call +1 212-825-1582 ext 102. Complete information on Alan/Anthony's services is available at www.alananthony.com.  Click here to unsubscribe.