Value-based Bid Management - Holistic Approach for significantly higher Sales Performance

Detecon Executive Briefing Value-based Bid Management Holistic Approach for significantly higher Sales Performance Growing competition in Telco-Markets results in increasing costs for customer acquisition and retention. This puts operators in mature markets under considerable strain as these costs often account for more than 25% of the total OpEx. Today’s major challenge for operators is to spend their investments in a smarter way than their competitors. As a solution Value-based Sales Performance Management (VSPM) offers an integrated management approach with a defined value KPI system that helps operators to achieve a significantly higher and more sustainable sales performance. VSPM is expected to improve the long-term value of sales investment by up to 19%. This Executive Briefing discusses how Bid Management can be positioned in a VSPM framework. We make ICT strategies work Detecon Executive Briefing Background Challenge for Operators in Mature Markets The Detecon SPM Maturity Study 2010 shows that most surveyed operators act in mature markets with a medium to high competition intensity. The consequences are lower margins due to erosion of ARPU levels and increased spending on customer acquisition and retention. In mature markets these cost often account for more than 25% of the total operators’ OpEx. Today’s major challenge for operators is to spend these investments smarter than others – more effectively and sustainably. With the growing maturity of markets, operators need to focus their sales activities on value creation by optimizing the allocation of costs related to customer acquisition and retention. Value-orientation – instead of profit-orientation – is the sales strategy of choice for operators in mature markets whereas a profit-based strategy better fits to operators in emerging markets. Solution: Value-based Sales Performance Management VSPM offers solutions which link market investment decisions to their expected return over the entire customer lifetime, thus adding value and choosing the right market investments. Sales Organization Introducing VSPM Performance Impact Guidance Sales & Channel Mix Strategy EBITDA increasing Decisions Sales & Efficiency Sales Management Performance Transparency Sales Steering & Steering Logic ROMI Value Add Targeting Sales Operations & Incentives Picture 1: Overview Value-based Sales Performance Management concept VSPM considers all strategic and operational tiers of a sales organization providing transparency within and across sales channels as well as an integrated view on net revenue, volume, lifetime and costs as key levers. The combination of an integrated management approach with a defined value KPI system leads to a significantly higher and more sustainable sales performance. Detecon International GmbH  01/2011 2 www.detecon.com Detecon Executive Briefing Bid Management within VSPM During the production of a bid the previously verbally discussed agreements and regulations are defined and written down – often for the first time in the entire sales process. Therefore a bid usually contains the commercial and technical terms & conditions that substantially define the value of the contract during the delivery. Consequently the design and quality of the bid affect not only the success of the business opportunity but significantly determine the value of the business agreement over its entire lifetime. Due to its high influence on the operator’s value generation, Value-based Bid Management represents an important element within the VSPM concept. VSPM concept Delivery Sales Introducing Performance Organization VSPM Impact Value-based Bid Management Bid- Pre-Bid Post-Bid Production Bid Contract Value Value Definition Realization Bid Management Picture 2: Integrated Value-based Bid Management concept Value-based Bid Management is an integrated concept which takes into consideration not only – in contrast to traditional concepts – the bid production but also the pre and post bid phases. Furthermore it establishes strong links to the delivery organization. Measures and effects The measures in the three phases pre-bid, bid production and post-bid are carried out according to the key levers net revenue, volume, lifetime and costs aiming for a positive overall performance impact. The main measures and their effects are:  Pre-bid - Bid prioritization, bid strategy and value selling: Assessment of business opportunities and ranking of deals according to their lifetime value contribution; Defining strategic actions on how to generate and sell added benefit to the customer.  Bid production - Transformation, optimization and performance: Define the potential value correctly and transparently; Lower the potential for misunderstandings with the customer and reduce the risk of increasing costs or shrinking margins during delivery.  Post-bid - Transparency, up and cross selling: Keep the agreement with the customer up to date in order to avoid higher cost or reduced margins; Identify new business opportunities. Detecon International GmbH  01/2011 3 www.detecon.com Detecon Executive Briefing Introducing Value-based Bid Management Value-based Bid Management will be adapted to the specific needs of the operator. Existing structures will be analysed, solutions and improvements elaborated and implemented. An example of the three step approach used to improve the overall bid quality is shown below based on a reference project for a major European ICT service provider. Analysis Solution Implementation Maßnahmenvorschläge X Accountvertrieb Lösungsgeschäft Customer X Accountvertrieb Standar dgeschäft X Massenvertrieb Standardgeschäft Maßnahmenvorschläge X Accountvertrieb Lösungsgeschäft Tracking Freigabeprozess vereinfachen => Herr HaberederX Accountvertrieb Standar dgeschäft X Massenvertrieb Standardgeschäft Der Freigabeprozess läßt sich in die beiden Bestandteile kaufmännische Freigabe Maßnahmenvorschläge sowie die generelle Go/NoGo-Entscheidung (Quality Gate/Stage 6) trennen. Die X Accountvertrieb Lösungsgeschäft Results kaufmäniscFreigabeprozess vereinfachen => Herr Habereder Die Go/NoGo-Entscheidung wird im Quality Gate anhand definierter, vom Vertrieb X he Freigabe geschieht i.d.R .