Kauppakorkeakoulu | Rahoituksen laitos | Rahoitus | 2016
Tutkielman numero: 14613
Factors of value-based selling that explain company value
|Otsikko:||Factors of value-based selling that explain company value|
|Vuosi:||2016 Kieli: eng|
|Asiasanat:||rahoitus; financing; yrityksen arvo; company valuation; myynti; sales; strategia; strategy|
|Avainsanat:||value-based selling, sales strategy, firm value, business impact, key factors|
Research on the business impacts of value-based selling strongly suggest that value-based selling would be a beneficial addition to a company's strategy (Aberdeen Group, 2011; Hinterhuber, 2004; Liozu et al., 2012; Michael Moorman, Ruddell, & Sims, 2013; Terho et al., 2012). For example, the Aberdeen Group (2011) identified in their study that the top performers in value-based selling had impressive year-over-year growth figures for overall gross profitability (16.0%) and average sales deal size (11.7%). The average companies had slight growth in both (1.8% and 1.7%), while the bottom 30% of firms returned annual decreases of -1.9% and -3.7%. Furthermore, the Aberdeen Group (2011) reported significant increases in customer loyalty and sales effectiveness.
Based on these business impacts, it is justifiable to hypothesize a link between value-based selling and company value. However, there are no studies that would have investigated, how a value-oriented sales strategy and company value are linked. The objective of this exploratory study is to identify the factors of value-based selling that link the sales approach to firm value. This provides groundwork for future studies to examine the actual relation of the factors and company value in more detail.
A survey study was conducted among 140 listed companies engaging in industrial business-to-business exchange. 1600 company representatives were identified from key positions regarding knowledge on the sales strategy. The survey data (n=91) was examined in an exploratory factor analysis including various robustness checks in order to obtain robust key factors that link the sales strategy to firm value.
Eight factors arose from the survey data analysis: customer value creation, value proposition development, customer value innovation, sales management, value research, sales effectiveness, sales incentives, and management support. These factors link value-based selling to firm value, and should be studied more extensively to explain how they impact valuation.
The contributions of the study are mainly theoretical due to the exploratory nature. The key factors obtained from the survey study provide intriguing future research avenues for understanding the relation between the sales approach and firm value. However, based on the future research opportunities, the indirect managerial contributions of this thesis could include for example that it is beneficial for managers to communicate a value-oriented approach to business in an IPO prospectus or in a share issue.
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