Savings Beyond Price -Weekly eNewsletter – June 10, 2009

Robert T. Yokl

President & Chief Value Strategist

 

Dollarize to Save Big

Greetings,

One of the techniques that we teach in our advance value analysis training programs is to “dollarize to save big” so that you can, for the first time, negotiate out unwanted and unneeded functions and features on your customer’s requested new (or existing) products, services and technologies.  This is a powerful tactic that you need to understand and then consistently employ in all of your commodity negotiations with your customers.

Here’s an example of what I’m talking about!  There was a recent study conducted by J.D Power asking potential car buyers what functions and features they desired in their cars. This was done without showing them the price of these options. Naturally, one of the highest rated features (second on this list) was a navigation system, but when these same buyers were shown the cost of the navigation system ($1,500) their ranking for this option dropped from second to 10^th on their wish list.  

Why did this happen?  Because when you dollarize the functions or features for any commodity purchase you give your customers a REALITY CHECK to make sure that they absolutely, positively need it.  In most cases, they won’t select a high price option if they can’t value justify it in their own mind. 

Here’s another example?  If you would dollarize how many ports you clinicians need in your IV sets ($1.00 each), you will find most clinicians won’t select more ports then they actually need to get their job done. On the other hand, if you ask these same clinicians how many ports they require in their IV set without dollarizing, every one of them will select the maximum amount available. It’s just human nature to ask for more then you really need to give yourself a safety zone to work in. 

So, if you want to dramatically reduce the total cost of everything you are buying don’t forget to “dollarize to save big” when you are negotiating with your customers on the things that they say are really important to them. You will be pleasantly surprised at the savings results!

Your Partner In Savings Beyond Price™,

Robert T Yokl

Chief Value Strategist

Strategic Value Analysis® In Healthcare

Bobpres@strategicva.com

1-800-220-4274

 

P.S. Is it time to think about advanced training for your value analysis team/committee?  With many hospitals about to start a new Fiscal Year with more challenging savings goals than ever before, you may want to give your teams an added advantage with advanced value analysis training.