He explained me his business (manages a manufacturing company selling to direct customers and distributors), along his challenges, and shared many of the initiatives he implemented, without substantial results, to shift his organization toward VBP.
Also, he asked me what he could additionally do to make the change happen. My answer was more or less the following:
- Start from product managers. They need to learn how to sell value, not technical specification, both internally, to the Sales Team, and to customer. Ask them to think about how their products help the customer to optimize his total cost of ownership as they do not buy a product but the benefits this delivers. Customers' benefits can be grouped economical - e.g. increase customer revenues of decrease their costs, technical and emotional.
- Move to commercial teams. If they have been for too long with your company and negotiating discounts with their customers, they are not any more your salesforce, but your customer lawyers. You need to change their approach to negotiation and customer relationship management, they need to understand the value of your product and develop the ability to communicate it to the customer. Train, train, dismiss.
- Customers. They need to be educated about what your products' benefits are and how they impact the P&L. On top of sales, you need the support of marketing communication to deploy a communication plan supporting product sales managers.
- Hire a value evangelist with both strategic and operational experience to implement methodologies, support customer negotiations, provide analyses, measure and report targets, educate and train.
- Hire a change management expert to implement a change program and change your company culture.
Be patient, VBP implementation is not a 100 meters sprint, but rather a marathon. At the end, it is all about to sell the price of your product, not by price... isn't it?