Value calculators can simplify and speed your sales process by helping buyers understand the value of your solution in dollars and cents and in industry-specific terms. In addition to communicating how prospects can save money with your solution, value calculators also reveal any underlying processes and business issues that need attention.
Since 1988, our client IQS has provided manufacturers with enterprise systems for managing quality and industry compliance. The company serves general manufacturers and specific markets including automotive, aerospace, defense, medical devices, and oil and gas.
Over the last 12 years, we have helped IQS identify key ways their quality management systems deliver value and positively impact their customers’ bottom line. The approach we took with IQS can be applied to any B2B enterprise with equally positive results.
The Price of Buyer Indecision
Our first step was to identify manufacturing quality problems and the costs associated with them. A study by Aberdeen Group entitled “Closed Loop Quality Management” found that for a typical manufacturer, 7% of production did not meet specifications. This is a potentially significant number that can impact a company’s financials through:
- Lost sales revenue
- Increased cost of goods sold
- Increased cost of selling
Clearly, the quality management solutions offered by IQS could make a substantial bottom line contribution. By not moving forward with a purchase decision, IQS prospects perpetuate the cycle of lackluster sales and higher costs.
We then looked at how the cost of poor quality impacts manufacturers in specific ways:
- The need to carry extra inventory
- Higher equipment downtime
- Greater scrap and disposal costs
- Extra shipping and expediting costs
- Higher warranty costs
- More product returns
- Higher labor costs to rework off-spec material
Helping prospects understand the scope and magnitude of their problems can accelerate decision making and move them through the sales pipeline more quickly. For IQS, a diagram such as this shows prospects the complexity and impact of poor quality on profit and business processes:
Refining Your Value Proposition
After understanding the cost and impact of poor quality, we worked with IQS to identify how their systems mitigate or resolve its underlying causes. At the heart of their value proposition is the ability to reduce almost all errors in the manufacturing process. Additionally, IQS’s solutions allow companies to trace what happens during the manufacture of a particular product. If a problem is identified in the future, it can be traced back to its root cause and quickly corrected.
We worked with IQS to build a value calculator that quantifies the manufacturing-specific value their solutions deliver:
- Reduced direct material cost
- Reduced scrap material cost
- Reduced production labor cost
- Reduced inspection labor cost
- Reduced non-production labor cost
- Reduced maintenance cost
- Reduced warranty, recalls and returns
- Increased sales revenue
The enterprise quality management value calculator makes it easy for IQS to build a solid business case for their offerings. By employing this simple yet comprehensive tool, IQS helps prospective customers calculate the cost of their current problems and quantify how IQS quality and compliance management solutions can positively impact sales, profit and efficiency. And that’s the basis for developing a winning value proposition.