Benchmarking: An International Journal

Assessing value co-creation and value capture potential in services: a

management framework
Pekka Töytäri
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BIJ
22,2
Assessing value co-creation and
value capture potential in services:
a management framework
254 Pekka Töytäri
Received 31 July 2013
Business Innovation Technology Research Center, School of Science,
Revised 8 September 2013 Aalto University, Espoo, Finland
Accepted 10 October 2014

Abstract
Purpose – The purpose of this paper is to investigate the managerial practices to assess value
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creation and value capture potential in longitudinal buyer-seller relationships, and proposes a
framework for evaluating such potential for maximizing sales function efficiency.
Design/methodology/approach – The research is based on an exploratory multi-case study
with seven internationally operating companies from a variety of industries, with the aim of building
the framework for sales opportunity management. The framework is then refined in eight workshops
with 21 companies.
Findings – The findings suggest that industrial companies need to develop new capabilities to
efficiently manage value selling opportunities at different stages of the opportunity lifecycle.
Research limitations/implications – The underlying sales approach of the research is proactive
value selling in a service business context. The findings may not be generalizable into other sales contexts.
Practical implications – The paper provides practicing managers with an actionable sales
opportunity management framework for an effective management of sales quality.
Originality/value – The research contributes to a previously unexplored area of sales management,
and suggests a managerial practice linking strategy to implementation at the customer interface.
Keywords Sales management, Value creation, Customer value, Sales opportunity management,
Value capture, Value-based selling
Paper type Research paper

1. Introduction
Creating superior customer value is a key to a company’s success (Eggert et al., 2006;
Slater, 1997). The capability to consistently implement a customer value-based strategy
at the customer interface, by effective management and skillful development of value
selling opportunities, may be a source of competitive advantage (Slater, 1997). Recent
studies (Aberdeen, 2011; Vitasek et al., 2012) suggest that companies that successfully
leverage customer value in their customer approach are also relatively more successful
in capturing value and achieving high profitability. While industrial companies are
differentiating themselves from cost-driven competition by extending their offering
with services, solutions, and outsourcing to escape the commodity trap (Brady et al.,
2005; Matthyssens and Vandenbempt, 2008; Vandermerwe and Rada, 1988), their
capability to manage value sales opportunities successfully and effectively is lagging
behind. Existing managerial practices, skills, and knowledge are predominantly geared
toward the final stages of the customer’s buying and decision-making processes.
The existing practices reflect mature and commoditized exchange of goods and
Benchmarking: An International
Journal services, characterized by buyer power, comparable offerings, and reactive selling. The
Vol. 22 No. 2, 2015
pp. 254-274
new value-based strategies are built on proactively approaching customers (Aberdeen,
© Emerald Group Publishing Limited 2011; Adamson et al., 2012; Lay et al., 2009) to initiate and influence buying processes,
1463-5771
DOI 10.1108/BIJ-07-2013-0075 building a shared solution vision (Eades, 2004), linking a solution’s business impact to
 salient decision-maker goals (Anderson et al., 2006), quantifying and verifying value Value
created (Storbacka et al., 2011; Vitasek et al., 2012), capturing value based on value co-creation and
created (Hinterhuber, 2004), and often leading to a new division of roles and
responsibilities in the value co-creation process (Vandermerwe and Rada, 1988).
value capture
This change is fundamentally affecting the roles of the sales and sales management potential
functions (Storbacka et al., 2009, 2011).
A common textbook definition (e.g. Jobber and Lancaster, 2006) of the sales 255
management function of industrial companies includes elements such as resource
management, territory management, target-setting, coaching, and performance
management. These definitions largely reflect a view of sales as an order-taking
function (Storbacka et al., 2009, 2011), implementing a relatively straightforward
business process (Moncrief and Marshall, 2005). The prevailing sales management
capabilities and practices do not really meet the demands of the new situation, with
relatively longer sales cycles, suppliers’ ability to influence buying, and offerings
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tailored to specific customer situations.

The existing research on managerial practices focussing on the selection,
analysis, planning, and prioritizing of value sales opportunities is non-existent.
“There is minimal theory explaining how managers/firms transform resources to create
value“ (Sirmon et al., 2007, p. 273). Recent reviews of sales literature identified no
published research in this area (Geiger and Guenzi, 2009; Williams and Plouffe, 2007).
The existing sales research mostly addresses human resource-related management
issues; thus, research on the implementation of value-based strategies by the sales
function is clearly needed.
This study explores how parties aiming at dyadic value exchange assess the value
they, respectively, expect to receive from the longitudinal, relational value-exchange
process. The managerial process of selecting, reviewing, analyzing, and planning the
value selling opportunities is labeled as the sales opportunity management process.
The opportunity management capability of steering customer selection for strategic
fit, analysis of value creation and value appropriation potential, and analysis of
relationship value and risk may be a source of sustained competitive advantage,
owing to the complexity, cost, risk, and duration of the value selling opportunities.
The research question posed is:
RQ1. What managerial capabilities and practices are required for effective
management of value sales opportunities?
Our results contribute to research in previously unexplored areas, and suggest an
actionable management framework for practitioners.
The paper is structured as follows. After the introduction, literature relating
to customer value and organizational buying and selling is reviewed. The research
process and methodology are described in the next section, followed by a discussion
of the dimensions of customer value and their connection to sales opportunity
management. The sales opportunity management framework is presented next.
Finally, contributions, implications, limitations, and future research opportunities
are discussed.

2. Literature review
The sales opportunity management process manages the organizational value
selling process to drive the organizational buying process with the aim of creating and
capturing value.
 BIJ 2.1 Key characteristics and dimensions of customer value
22,2 Companies co-create and capture value in a value-exchange relationship. For the
relationship and the value exchange to be attractive, both parties need to perceive
the benefits received exceeding the sacrifices made (Anderson et al., 2007). For the
opportunity to be realized, the value captured by both parties must compare favorably
with alternative available opportunities for capturing value.
256 Influential stakeholders subjectively evaluate value in their specific context,
focussing on salient dimensions of value and comparing alternatives based on value.
Key characteristics of value relevant to the current study are described below. Value is
subjective: individual stakeholders assess the value offered to them, based on their
absorptive capacity (Cohen and Levinthal, 1990) and cognition (Walsh, 1995),
individual and organizational beliefs (Tripsas and Gavetti, 2000), institutional rules and
normative pressures (Zucker, 1987), values, shared industry norms (Spender, 1989), and
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goal alignment (Cyert and March, 1992). Value is context specific: value is determined
by the buying center (Bonoma, 2006; Johnston and Bonoma, 1981; Webster and Wind,
1972) in the customer’s context (Kowalkowski, 2011), based on the customer’s specific
business situation (Miles, 1972) and guided by institutional rules and belief systems
(Cyert and March, 1992). Value perceptions are relative to competition: value facilitates
comparisons between alternatives (Gale, 1994). Value is multi-faceted: when assessing
value creation and appropriation potential, different dimensions of value are subjectively
evaluated by influential stakeholders, and appreciated with different weights.

2.2 Organizational buying

Buying is an organizational decision-making process, in which organizations establish
needs for products and services and identify, evaluate, and choose among alternative
suppliers and solutions (Kotler et al., 2009). Organizational buying often involves
multiple decision makers, establishing a buying center with conflicting goals, varying
levels of power, rationality, cognition, knowledge, different decision criteria, and
varying process ( Johnston and Bonoma, 1981; Lau et al., 1999; Lewin and Donthu, 2005;
Webster and Wind, 1972). For many industrial organizations, buying is a key process
to manage efficiently, and has become better structured, more sophisticated, and
increasingly professional (Hunter et al., 2006). The buying process structure has been
widely researched (Eades, 2004; Jobber and Lancaster, 2006; Kotler et al., 2009;
Kotteaku et al., 1995; Laios and Moschuris, 2001; McWilliams et al., 1992; Rackham and
DeVincentis, 1999; Woodside and Samuel, 1981; Xideas and Moschuris, 1998). While
the buying process models proposed generally share the same structure, their level of
detail, focus, and aggregation logic of the key tasks varies (Johnston and Lewin, 1996).
We synthesize the buying process models into a four-stage process (e.g. Möller, 1985),
which are need identification and prioritization; solution vision development to satisfy
the requirements and constraints identified; search for and evaluation of the alternative
solutions; and commitment to the preferred choice after negotiations. The buyer focus
is on different concerns at the different stages of the buying process (Rackham and
DeVincentis, 1999), as summarized in Table I. Need identification and prioritization are
influenced by search behavior (Cyert and March, 1992; March, 1991), buyer attention
(Ocacio, 1997), industrial imitation (March, 1991), benchmarking and competitive
forces creating increasing pressure to adapt (Teece et al., 1997), and buying center
interactions ( Johnston and Bonoma, 1981). Once the perceived gap between current and
achievable performance grows sufficiently wide, the buyer focus moves on to
building a solution vision, by combining requirements, preferences, and constraints
 (Eades, 2004; Rackham and DeVincentis, 1999). During the search stage of the process, Value
at the latest, the buying becomes visible to potential sellers by invitations to tender and co-creation and
similar invitations to participate in the buying process. At this stage, buyers are
increasingly applying adversarial procurement practices, such as bidding contests and
value capture
reverse auctions, to ensure lowest price and highest value capture (Hunter et al., 2006) potential
and avoid dependence on one seller. Finally, the preferred seller is chosen as a result of
negotiation, guided by buyer risk management and value (Rackham and DeVincentis, 257
1999). Perceived risk has a major influence on the decision making (Cooper et al., 2006;
Hunter et al., 2004; Kim et al., 2008; Roselius, 1971).

2.3 From reactive to proactive influence

Commoditization increases buyer power, leading to a reduced scope of influence, a
lower share of the value created, and generally less attractive business conditions for
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the supplier (Matthyssens and Vandenbempt, 2008; Ulaga, 2003). Increasing buyer
power enables buying organizations to impose their buying and procurement process
on sellers and leverage bargaining power to capture a higher share of the value created.
Suppliers fight commoditization by product, process, (Bettencourt and Ulwick,
2008), and business model innovations (Nenonen and Storbacka, 2010; Teece, 2010).
Operating at the innovation end of the offering lifecycle process often provides the
seller with an opportunity to proactively approach customers with novel, value-based
messages to create urgency, initiate a buying process, and influence the solution vision
for differentiation and temporary monopoly (Adamson et al., 2012; Haas et al., 2012; Lay
et al., 2009). To improve sales efficiency, suppliers are increasingly using value-based
selling tactics (Terho et al., 2012; Vitasek et al., 2012) to make the business impact of
their offerings explicit and measurable in terms of the buyer’s business goals (Eades,
2004). Value-based selling thus supports proactive, early access into the buying
process, seller power, and higher profitability (Aberdeen, 2011; Vitasek et al., 2012).

2.4 Proactive value-based selling

In the context of sales research, organizational selling is commonly defined as a seven-
stage process (Moncrief and Marshall, 2005), which, despite updates with regard to
relationship and solution orientations, has remained largely unchanged since inception,
and views the sales process as a tool for the individual seller, rather than as an
organizational capability for mobilizing and managing the sales function. Research on
the sales process provides only limited advice on how to conduct selling at the activity
level, and is contextually positioned in a mature, product selling-dominated market
situation. However, there is evolving research (Storbacka et al., 2011; Terho et al., 2012)
and widely adopted managerial literature (Anderson et al., 2007; Eades, 2004) on value-
based selling and solution selling. Drawing on these, we can see that the organizational

Incentive Requirements Search Value and risk

Buyer Recognition Development of the Concretizing the buying Negotiating and
activity and solution vision to satisfy vision and doing the actual committing to
prioritization the needs within buying, comparing the best choice
of needs constraints alternatives Table I.
Buyer Reason and Solution requirements Alternative suppliers Risk and value Buying process
focus urgency to act appropriation structure and stages
 BIJ value selling capability is manifested by processes (e.g. instructions for customer
22,2 encounters, customer situation auditing instructions), routines (e.g. customer
selection guidelines, customer encounter planning, negotiation planning), documents
(e.g. reference stories), and tools (e.g. value calculation templates, checklists) (Storbacka,
2011; Töytäri et al., 2011). The changing paradigm of industrial selling toward
proactive value-based selling requires organizations to build new capabilities (Teece
258 et al., 1997) to help transform the sales function accordingly. The cost of sales increases
owing to longer sales cycles, customer analysis, and team-based selling.

3. Methodology
The research was conducted as a multi-case study between August 2009 and March
2013, in two phases, and applying an exploratory, abductive research approach (Dubois
and Gadde, 2002). The abductive research approach is especially useful for matching
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existing theory and literature with empirical observations and in guiding the research
process and case sampling.
During the pre-research period, an extensive literature review was conducted and
seven interviews carried out with carefully selected experts and managers from diverse
industries characterized by proactive selling of complex solutions. The companies
represented information technology, IT outsourcing, industrial services, and industrial
process management solutions. The companies participating in the pre-research, which
are described in Table II, were selected based on their proactive sales approach, high
cost of sales, and criticality of opportunity selection. The focus was on understanding
the managerial practices, processes, and criteria applied when initiating and qualifying
sales opportunities. Subsequent interviews were refined following purposive sampling
with a semi-structured interview approach (Eisenhardt, 1989; Yin, 2009). The outcome
of the interviews was the initial sales opportunity assessment framework. The framework
was constantly compared with the literature and discussed within the research team and
with industry experts.
During the second phase of the research, the opportunity assessment framework
was tested and refined in eight focus group workshops with 21 companies representing
ICT, industrial services and medical industries, proactively selling technology, service,
ICT solutions, and medical innovations.

Company Industry Sales management focus

Alpha Global IT solutions and Qualification of projects matching company strengths
outsourcing company
Beta European IT outsourcing Qualification of opportunities and level of sales activity
provider
Gamma Global industry automation Influencing the industrial investment process proactively
provider and early with value selling
Delta Global telecom solution Careful selection of projects with ability to differentiate
provider with solutions and value
Epsilon Global IT services and Careful qualification of projects matching company
Table II. outsourcing company strengths
Profiles of the Zeta Global minerals processing Large-scale sales transformation toward value-based
companies equipment company selling
participating in the Eta Industrial equipment and Early qualification of large-scale investment projects
pre-research phase services against price-leader competitors
 The focus group workshops were conducted by two researchers and went through Value
three stages. First, the opportunity management process was presented and discussed. co-creation and
Second, the participants were divided into three or four groups. Third, the groups were
assigned two tasks, one at a time. The first task was expressed as follows: “You have to
value capture
choose one of two sales opportunities, and drop the other one. What information would potential
you use to make your choice?” Answers to the first question were collected before the
second question was presented, in order to capture any novel insights. The groups were 259
then handed a description of opportunity assessment questions, and instructed: “Select
from a list of sales opportunity qualification questions the five most important
questions and the five least important questions, and justify your choices.” After the
workshops, the opportunity assessment questions were refined, based on the results,
until saturation was achieved.

3.1 Assessing trustworthiness, credibility, and reliability of the findings

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The unit of analysis of the research was an organizational sales opportunity management
capability, which allows companies to manage individual sales opportunities for
maximizing utilization of the sales function in achieving their strategic and economic goals.
The data were triangulated by applying complementary data collection approaches,
including interviews, analysis of sales collateral, and focus groups. Cross-case analysis
was carried out during the first phase of the research to preserve replication logic
(Eisenhardt and Graebner, 2007; Eisenhardt, 1989; Yin, 2009). We assessed the
reliability and validity of the study by applying two overlapping sets of criteria (Flint
et al., 2002). The criteria of fit, understanding, generality, and control from grounded
theory (Strauss and Corbin, 2007) were combined with credibility, transferability,
dependability, confirmability, and integrity (Hirschman, 1986; Strauss and Corbin,
2007; Wallendorf and Belk, 1989), as reflected in Table III.

4. Value creation and appropriation potential assessment

Central to the sales opportunity management is understanding how the parties
involved appreciate the potential for value creation and value capture during the
relationship. During the relational buyer-seller process, both parties exchange
information, build relationships, and make commitments. The perceived value is the
trade-off between benefits received and sacrifices made (Anderson and Wynstra, 2010;
Walter et al., 2001). Benefits and sacrifices are combinations of the different dimensions
of value (Kothandaraman and Wilson, 2001). Ideally, the benefits and sacrifices are
quantifiable and commensurable into a single measure of value such as money
(Anderson and Wynstra, 2010).
The existing literature suggests different taxonomies of value (Anderson et al., 2007;
Biggemann and Buttle, 2012; Ritter and Walter, 2012; Walter et al., 2001; Wilson and
Jantrania, 1994), classifying value dimensions as economic benefits, functional benefits,
relationship-related (direct) benefits (such as learning and innovation), and relationship-
enabled (indirect) benefits (such as credibility or access to new markets).

4.1 Economic benefits

Economic benefits are the direct economic gains expected from the exchange. For the
buyer, the potential direct economic benefits include an increase in revenue, a decrease
in lifecycle cost of operation, an improved return on capital invested, or reduced risk in
expected economic returns (Cornet et al., 2000; Vitasek et al., 2012). For the supplier, the
direct economic benefits include cash flow, to which buyers contribute with varying
 BIJ Criteria Explanation Method of assessment in this study
22,2
Credibility Extent to which the results Author has 10+ years of solution selling,
appear to be acceptable 10+ years of solution sales management
representations of the data and 10 years of sales management
consulting experience
260 Four years conducting interviews
in the field
Additional researchers, focus groups, and
researcher meetings reviewed analyses
and results
Transferability Extent to which findings Sampling across different positions and
from a study in one context business lines within one organization
will apply to other contexts Interviews conducted and results verified
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in six different industries

Dependability Extent to which the findings The findings across companies were highly
are unique to time and place; consistent; focus on different dimensions of
the stability or consistency of value was controlled by perceived market
explanations maturity
Confirmability Extent to which interpretations Results were audited by several key
are the result obtained from the stakeholders in many workshops across
participants and the different industries and market maturities
phenomenon, as opposed to Large number of companies taking part in
researcher biases the research
Confirmatory focus groups refined the
results until saturation
Integrity Extent to which interpretations Interviews were professional and
are influenced by anonymous
misinformation or evasions Participants were carefully selected to
by participants ensure knowledge and experience
Fit Extent to which findings Careful reliability and validity analysis
fit with the substantive area was made across very long duration of
under investigation research project
Case selection was conducted carefully to
give a complete picture of the area of
interest
Understanding Extent to which participants Interviewees were offered preliminary
buy into results as possible findings and asked to comment on them
representations of their worlds and verify them as accurate. Very large
number of industry representatives from
different professions have been reviewing
and verifying results
Generality Extent to which findings Six separate case studies from different
discover multiple aspects of the industries
phenomenon Interviews were long and open to capture
insights from a broader perspective
Table III. Interviewees were chosen to capture all the
Assessing viewpoints of the topic
trustworthiness, Control Extent to which organizations Participants had an opportunity to refine
reliability, and can influence aspects of the the theoretical suggestions
validity of the study theory
 profitability, volume, and stability (Walter et al., 2001) over the lifecycle of the Value
relationship (Venkatesan and Kumar, 2004). co-creation and
value capture
4.2 Functional benefits potential
For the buyer, the functional benefits are manifested by matching the solution with the
expectations. Solution fit reduces adaptation costs and change management effort, and
increases perceived solution quality[1] (Walter et al., 2001). For the supplier, the 261
functional benefits are manifested by lower risks, lower cost of sales, and faster sales
and delivery cycles.

4.3 Relationship benefits

Apart from the economic and functional benefits, what dimensions of value make one
relationship more attractive than another? For a buyer, the supplier may bring learning,
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skills and capabilities to improve internal efficiency, environmental adaptation (March,

1991), risk avoidance (Hunter et al., 2004), innovation, cooperation efficiency, social bonds
and trust, cultural fitness (Wilson and Jantrania, 1994), and motivation (Ritter and Walter,
2012). The relationship may also have negative consequences, such as erosion of own
capabilities, reluctance to adopt inputs, limited integration capacity, and risk to
competitive advantage by knowledge leakage (Ritter and Walter, 2012). The relationship
may also enable indirect benefits due to improved credibility or inclusion into a prestigious
community and strategic networks (Kothandaraman and Wilson, 2001). Indirect
relationship benefits are those that make the relationship attractive beyond immediate
economic or functional benefits, and help ensure long-term survival and profitability.
The positive consequences of a relationship described above apply to the supplier as
well. Additionally, some relationships may leverage the core capabilities (Prahalad and
Hamel, 1990) of the supplier more than others: “Creation of value depends on the ability
to deliver high performance on the benefits that are important to the customer”
(Kothandaraman and Wilson, 2001, p. 381). The supplier’s current presence in, business
understanding of, and expected growth in certain customer segments are also likely to
make such segments more appealing than others. Additional indirect benefits include
increased credibility, earned by a reputable reference customer that facilitates access to
new markets and customers (Ritter and Walter, 2012) with growth potential, and
shorter time to market (Wilson and Jantrania, 1994). Inclusion into strategic networks
benefits the supplier as well.

4.4 Value exchange

Figure 1 illustrates the flows of value received and value sacrificed. The labels “buyer”
and “seller” denote the buying center and the selling team, respectively.
Anderson and Wynstra (2010, p. 31) propose a definition for value exchange from
the buyer’s perspective: “Value in business markets is the worth in monetary terms of
the economic, technical, service, and social benefits a customer firm receives in

(4) (1) (3) Figure 1.

Different flows of
Seller Buyer value received and
(5) (2) (6) sacrificed between
buyer and seller
 BIJ exchange for the price it pays for a market offering. Benefits are net benefits, where any
22,2 costs[2] that the customer firm incurs in obtaining the sought benefits, apart from
purchase price, are included.” The buyer thus receives benefits from the seller (1) and
potentially from outside the dyad (6). The latter (indirect) benefits may include
improved credibility and employer motivation (Ritter and Walter, 2012). The buyer
makes sacrifices toward the seller (2), including price and relationship-related risks,
262 such as risks to reputation and knowledge leakage. The buyer also makes other
sacrifices (3), including internal and external change management costs, and accepts
the relationship management costs and risks (c.f. Walter et al., 2001, p. 366).
The seller, in turn, captures value (2) co-created with the buyer. The seller may
obtain other benefits (5) due to the value exchange, which are not directly related to it.
These benefits may include learning, internal efficiency improvements, and innovation
support. The seller makes other sacrifices (4) as well. The sacrifices made by the seller
(4) could include cost of sales, opportunity cost, cost of delivery, and cost of support.
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The influential stakeholders on both sides subjectively evaluate the different

dimensions of value-for-value appropriation potential, weighing benefits received
against sacrifices made, aggregating the different value elements by their perceived
weights, and assessing the risk associated with the value appropriation (the risk of
actually receiving the value) to arrive at resource allocation and “go-no go” decisions.

4.5 Proof of value, subjective evaluation, and the relationship process

4.5.1 Proof of value. Understanding and influencing the buyer’s subjective evaluation of
the benefits received from the seller is a crucially important capability for a value selling
company. A key goal of the value selling approach is to influence the evaluation by
providing compelling evidence and proof of value toward the decision maker’s business
goals (Anderson et al., 2007). Analyzing the target customer’s processes and activities to
identify opportunities for co-creation of value establishes such capability. Key activity
mapping (Bettencourt and Ulwick, 2008) and customer value research (Anderson et al.,
2006) provide a framework for such analysis. Based on the value research, customer
segment-specific value propositions can be crafted (Ballantyne et al., 2011; Storbacka, 2011;
Terho et al., 2012), designed to support value quantification (Storbacka, 2011). Value
quantification is a powerful approach to influencing the customer’s evaluation of value.
In increasing order of impact, the influencing capabilities include preparing and presenting
reference case stories, presenting quantified reference stories, performing value
quantification with the focal customer (Anderson et al., 2007), and verifying the value
created during the co-creation process at a later time (Storbacka, 2011).
4.5.2 Subjective evaluation. Both parties subjectively interpret the information
received, the relationships built, and the commitments achieved. The interpretation is
guided and influenced by the institutional rules and normative pressures (Zucker,
1987), industry recipe (Spender, 1989), cognition (Walsh, 1995), organizational beliefs
(Tripsas and Gavetti, 2000), search behavior (Cyert and March, 1992), and similar
guiding principles. The subjective evaluation of the different dimensions of value has a
great impact on the outcome of the process. Parties may appreciate the different
dimensions of value differently (Kothandaraman and Wilson, 2001). For instance,
a new venture company entering the market with an innovative new offering often
appreciates a credible reference and a learning opportunity more than immediate
economic value. Similarly, an established company may appreciate renewal, first mover
advantage, or new market access provided by an innovative offering.
 4.5.3 Relationship process. The evidence of value is assessed by a buying center of Value
decision makers ( Johnston and Lewin, 1996). Power wins battles of choice (Eisenhardt co-creation and
and Zbaracki, 1992). In order to understand and influence the decision making and
differentiate from alternatives with powerful relationships, the seller needs to deepen
value capture
the existing relationships and widen the number of relationships, ideally to cover the potential
entire buying center (Bonoma, 2006), with prudent consideration of the cost and
marginal benefit of doing so. Assessing the breadth of relationships and the depth and 263
power of individual relationships at the different stages of the opportunity
management process is a key task within the opportunity management process that
is discussed next.

5. Framework for sales opportunity management

The managerial framework for sales opportunity management includes four
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interlinked processes, labeled as organizational buying, organizational selling,

opportunity management, and funnel management processes, interacting as
illustrated in Figure 2. The buying organization and specifically the buying center
( Johnston and Bonoma, 1981) implement the buying process. The selling organization
manages the other three processes as part of the supplier’s overall business model
( Johnson et al., 2008; Teece, 2010; Zott and Amit, 2010):
(1) The value sales process seeks to influence the buying process during
longitudinal buyer-seller interactions. The buyer-seller interactions commence
when the buying and the selling processes engage. The engagement can take
place at any stage of the buying process, and, depending on the point of
engagement, different sales process models emerge (Adamson et al., 2012;
Kaario et al., 2003). Aligned with the buying process focus, the sales process
focus moves from creating an incentive to act to building a differentiated
solution vision, then to building powerful relationships, and finally to ensuring
value capture and management of risks. At every stage of the sales process, the
seller’s generic influencing routine follows a pattern “understand,” “create,” or
“influence.” What actually needs to be understood, created, or influenced is
stage specific, and will be discussed below. Trust and credibility mediate the
information exchange (Barney and Hansen, 1994) and the relationship building.
The information exchange helps both parties to evaluate the value
appropriation potential available in the relationship. The longitudinal buyer-
seller interactions take place within a relationship process, which seeks to
establish and deepen relationships to all members of the buying center, in
extent that is relevant and possible. Relationship development serves two
goals. Trust and social bonds facilitate the sales activities that aim to
understand, create, and influence the buying process, by providing improved
opportunities to influence and a better quality of knowledge. The relationship
Figure 2.
Interactions between
(6) (4) (1) buying, selling,
Funnel Opportunity opportunity
Buying management, and
management (5) management (3) Sales process (2) process funnel management
process process
processes
 BIJ contributes to the perceived value directly and indirectly. Hence, when the
22,2 value attributed to the solutions being compared may be deemed equal, the
relationship-attributed value may still differentiate alternatives. Best overall
value wins.
(2) The sales actions implemented by the value sales process result in knowledge,
relationship improvements, and commitments.
264
(3) The knowledge, relationship information, and commitments are evaluated against
stage-specific criteria and goals. Some of the case companies prepare formal and
IT-supported opportunity plans to manage opportunity information.
(4) The opportunity analysis results in sales actions to build influential
relationships, acquire missing information, manage risks, and seek
commitments as evidence of buyer’s intentions, agreement to mutual plans,
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and progressing the process. Some case companies label the commitments they
seek as “verifiable” commitments, highlighting the managerially important
criteria of reducing the subjectivity of the assessment in order to more
consistently identify the correct sales actions and improve sales forecasting
accuracy. The evaluation results in decisions by both parties to pursue or drop
the opportunity. When pursuing the opportunity, the information, relationship,
and commitment needs are identified and acted upon.
(5) The opportunity management process delivers opportunity analysis-based
information into a funnel management process (Kotler et al., 2006; Storbacka
et al., 2011), including a buying process stage, “likelihood-of-winning”
estimates, and an opportunity priority assessment.
(6) The funnel management process is a key top-level sales management process.
The funnel management process identifies the individual opportunities
requiring attention from the entire portfolio of sales opportunities. The case
companies apply varying criteria when selecting opportunities for
management attention, including strategic importance, expected revenue and
profit, buying process stage, and speed of progress (e.g. “not moving”) through
the sales process stages.
The sales process and the opportunity management processes are presented here as
logically separate processes. In organizational life, the ownership of these processes
may reside with the same sales resource, and the application of the sales process
and analysis of the results may be inseparable. However, the case companies
are increasingly establishing management models with an explicit focus on sales
opportunity management, driven by the increasing cost of sales and internal
collaboration needs.

5.1 Connecting buying, selling, and sales opportunity management

The stage-specific connections between buying, selling, and sales opportunity
management are discussed next. In Figure 2, the processes are connected and labeled
stage by stage. The processes may progress linearly, but may also experience
fluctuations and iterations between stages (Langley, 1999). For instance, new
information acquired during the buyer-seller interactions leads to learning. Buyers may
experience a need to revisit the earlier stages of the process to reconsider the incentive
to act, to amend requirements, and to implement a new search for alternatives owing to
 a failure to reach agreement with the preferred supplier. Sellers frequently wish Value
to push the buying process back to the requirements stage to rebuild the solution co-creation and
vision, which is biased toward the seller’s differentiators. At any time, it is clearly
important to understand where the buyer is in the buying process, in order to be able
value capture
to apply relevant actions to influence and progress the opportunity. Determining potential
the stage of the buying process becomes successively easier toward the end of the
buying process, while the customer is performing visible buying actions toward 265
the seller(s) (Figure 3).
During the relational buyer-seller process, both parties seek to understand the
available potential for value appropriation. Information is exchanged, commitments are
made, and relationships are built in a cumulative fashion. The case companies perform
sequential value assessment, based on the evidence available at the different stages of
the mutual process. The different dimensions of value are assessed against qualitative
criteria, based on the information acquired, commitments made, and relationships built.
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The evaluation focus shifts along with the progress of the processes, in line with the
previously stated principle that creating value is a prerequisite for capturing value
(Brandenburger and Stuart, 1996; Coff and Barney, 1999; Gosselin and Bauwen, 2006).
Put differently, both the buyer and the seller must become convinced that there is an
attractive opportunity for value appropriation. For the buyer to become convinced,
there must be a sufficiently strong incentive to act, a solution matching expectations,
trusting relationships, manageable risks and bargaining power. For the seller to find
the opportunity attractive, the customer profile must match customer selection
guidelines; the value creation potential needs to be sufficiently high; the buyer must
admit a pressure to act; the buyer and the seller need to share a solution vision; the
value, the solution vision, and the relationship together provide sufficient bargaining
power for profitability; and, finally, risks must be manageable. Each of the focus areas
connects to specific dimensions of value. The following discussion is developed from
the seller’s perspective.

5.2 Strategic fit

The initial focus of the opportunity management process is to ensure the right
customer selection in line with customer segmentation guidelines, and assess the

Incentive Requirements Search Value and risk

Sales activities to understand, create, and influence

Customer Goal and Differentiated

Preference Value and risk
selection urgency solution

Figure 3.
Management activities to analyze, prioritize, and determine right action The interconnected
buying, selling,
and opportunity
Relationship and management
Strategic fit Incentive to act Solution fit Value and risk
control processes
 BIJ potential to create and capture value. Three criteria affecting a seller’s ability to create
22,2 value for the target customers are identified:
(1) a value proposition (Anderson et al., 2006) is designed and directed toward an
influential decision maker’s salient business goals;
(2) the selling organization’s credibility and trustworthiness are sufficient to give
266 access to influential stakeholders (Barney and Hansen, 1994) to communicate
the value proposition; and
(3) the buyer’s category management approach (Kraljic, 1983) enables such access[3].

5.3 Incentive to act

During the incentive stage of the buying process, the buyer’s goal is to identify an
incentive to act and determine the urgency of action. High perceived value and internal
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and external pressures to adapt create urgency to act. The incentive to act is
subjectively evaluated by the buying center with difficult-to-predict outcomes because
of differing views and power relations. The organizational sales tasks are designed to
understand the (potentially) existing incentive to act. If none exists, specific sales tasks
are applied to create an incentive to act. If an incentive already exists, it may not fit the
seller’s capabilities, in which case the seller needs to influence the incentive toward the
seller’s capabilities. Incentives can be expressed and formulated as individual and
organizational goals (Bettencourt and Ulwick, 2008; Eades, 2004; Hinterhuber, 2004).
Examples of industrial goals include improving lifecycle cost, improving return on
capital employed, and achieving revenue targets (Vitasek et al., 2012). The proactive
value selling process employs artifacts, such as segment-specific value propositions,
quantified reference stories, and value calculators, to demonstrate the seller’s ability to
help buyers achieve specific goals (Ballantyne et al., 2011; Storbacka, 2011; Terho et al.,
2012). The opportunity management focus at the incentive stage is to determine that
there is a sufficiently compelling reason for the customer to act to justify investment of
the sales resources in the opportunity.

5.4 Solution fit

During the “solution fit” stage, the buyer focus is on developing a solution vision, the
seller focus is on influencing the solution vision, and the opportunity management
focus is on understanding if the resulting solution vision is differentiating for the seller.
The seller leverages the buyer-seller interactions and the relationship process to
understand the solution requirements (such as functionality, technical properties,
interfaces, and design), constraints (such as timetable, budget, and resources), and the
buyer’s solution preferences[4]. If no solution vision exists, the seller goes out to create
the solution vision based on the seller’s specific capabilities, products, and services for
competitive differentiation, and mainly focussing on functional value. The case
companies stress the importance of success at this stage, as a differentiated solution
vision may provide a temporary monopoly over the competing alternatives, effectively
reducing the number of available alternatives during the search stage of the buying
process. Offering evidence and proof of value is a particularly effective approach to
influence the solution vision (Adamson et al., 2012; Terho et al., 2012). Value provides a
tool by which to compare alternative solution visions (Vitasek et al., 2012). As an
example, many of the case companies effectively leverage the total-cost-of-ownership
analysis as a tool for influencing a customer’s solution vision, with the aim of
 convincing the buyer that the solution minimizing the customer’s lifecycle cost is the Value
best solution. The opportunity management focus at this stage is to assess the co-creation and
functional value and differentiation provided by the solution. A verifiable commitment
from the buyer at this stage is to agree on a solution vision.
value capture
potential
5.5 Relationship and control
During the relationship and control stage, the buyer focus is on identifying a number of 267
alternative solution suppliers with an ability to deliver the solution vision. The seller focus
is on building a competitive preference based on a business impact (economic value), a
solution (functional value), and the relationship (relationship value). The goal of both
parties is to implement their preferred buying and selling processes, respectively. These
processes are adapted for a mutually agreed process. The power balance between the
parties and the preparedness of the buying-selling processes determines how the mutual
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process unfolds. The case companies seek to achieve control of the mutual process by
agreeing on a shared plan of planning, evaluating, and decision-making activities and
milestones covering the remaining part of the buyer-seller process. A shared plan helps
the seller to control the buying process by shared activities and a flow of information to
influence the outcome. Similarly, buyers seek to control the process by imposing their
procurement process and category management practices (Kraljic, 1983) on sellers.
The goal of the opportunity management process at this stage is to achieve a
preferred supplier status. To evaluate the competitive status, the companies apply
two criteria:
(1) verify the success of the relationship process in building powerful relationships
with the buying center; and
(2) verify the success in agreeing on a shared plan of milestones (verifiable
commitment from customer).

5.6 Value and risk

During the final selection stage of the buyer-seller process, the mutual focus is on value
capture and risk management (Rackham and DeVincentis, 1999). Ultimately, the
bargaining power determines how the value co-created will be shared the parties
(Bowman and Ambrosini, 2000; Coff and Barney, 1999). Buyers build bargaining power
by finding competitive alternatives and arranging competitive biddings (Bello and Zhu,
2006; Kotteaku et al., 1995). Sellers build bargaining power by excluding competition
with differentiated solutions and best overall value. In the best case, the parties are
interested in and/or assign different weights to the different elements of value, in which
case a true win/win can be achieved. The perceived risk has a major influence on the
decision making (Cooper et al., 2006; Hunter et al., 2004; Webster and Wind, 1972).
The risk assessment covers all dimensions of value. The economic value expected can
be lost for a number of reasons, the solution may fail or the solution vision be found
lacking, and the relationship risks may be realized.
During the final stage of the opportunity management process, the focus is on
ensuring a profitable agreement, with identified and manageable risks.
Table IV illustrates the opportunity management maturity of the companies
participating in the pre-research. The usual order of development progresses from
defining and implementing a proactive sales process as a tool for the sales function, to
defining and implementing the opportunity and funnel management processes,
 BIJ defining and implementing the management system to mobilize the processes, and,
22,2 finally, to building an IT support for the processes. The depth of the IT support varies
from simple data management to sophisticated reporting and analytical tools.
The implementation maturity of the companies varies, but all companies are actively
progressing all the identified steps along the development path. Owing to the length of
the research period, most of the case companies made significant progress during the
268 research project toward an extensive implementation of all the elements of the
opportunity management framework.

6. Discussion
In this study, we have derived a value sales opportunity management framework,
grounded in customer value literature and empirical findings from a four-year study.
The research responds to calls to improve sales productivity (Ledingham et al., 2006),
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develop actionable managerial frameworks for practicing managers (Avlonitis and

Panagopoulos, 2010), provide insight into how managers leverage sales resources to
create value (Sirmon et al., 2007), and add to the research on managerial capabilities.
The transformation of businesses toward proactively approaching customers to avoid
the commodity trap (Brady et al., 2005; Matthyssens and Vandenbempt, 2008;
Vandermerwe and Rada, 1988) increases the costs, complexity, demands, and risks of
sales projects. The change requires careful selection of the right customers and right
opportunities, combined with skillful sales implementation and proactive management.

6.1 Contributions to theory

The research contributes to the strategic management, sales, and customer value
literature by investigating previously unexplored managerial capabilities and practices
in guiding the sales function in strategy implementation at the customer interface.
The research integrates the organizational buying, selling, and management processes
into an opportunity management framework, and illustrates the flows of information,
relationship processes, and commitments among the processes involved. The opportunity
management process derived and the embedded evaluation criteria, which were built by
systematically combining empirical evidence and literature, inform managers in the design
of company- and business-specific tools.

6.2 Managerial implications

Successful implementation of value selling at the sales force level is a major challenge
for case companies. Analysis and active coaching of individual sales opportunities are
effective managerial practices in enforcing best practices and right behaviors at the

Formal FM Formal OM IT support for Formal sales process Formal sales

Company process in use process in use OM/FM documented process in use
Alpha Varies Varies In progress Yes Varies
Beta Yes Yes Yes Yes Yes
Table IV. Gamma Yes Yes In progress Yes Yes
Opportunity Delta Yes Yes Yes Yes Yes
management Epsilon Yes Yes Yes Yes Yes
maturity of the case Zeta In progress In progress In progress In progress In progress
companies Eta Yes Yes In progress Yes In progress
 customer interface. In the light of the empirical evidence, opportunity management is Value
an underdeveloped area of managerial practices and capabilities. The existing co-creation and
managerial capabilities and practices are geared toward shorter and reactive sales
cycles and human resource management. The framework presented in this manuscript
value capture
provides tools for managers to link strategy and implementation. It offers guidelines to potential
ensure efficient use of the sales function to focus on the right customers, high-value
creation potential, differentiated solutions, powerful relationships, high-value 269
appropriation potential, and manageable risks.
Table V is an example of an opportunity assessment framework. The example is
laid out following the staging of the opportunity management process. Most case
companies apply a stage-gate model for opportunity planning, in which opportunities
are qualified against given criteria at every process stage to prioritize and justify
resource allocation decisions.
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6.3 Limitations and future research opportunities

The dominant business model of an industry likely affects the opportunity
management focus. For instance, Nenonen and Storbacka (2010) identify five classes
of business models. Research is needed to investigate the impact of the business model
on opportunity management.
This research focusses on the management of relatively long, proactive value sales
cycles that engage early with the buyer’s process. Anecdotal evidence implies that,

Stage Example evaluation questions

Right customer How good is the match with our customer selection criteria?
What is their supplier management approach and how are we positioned?
(What is their buying history?)
Incentive to act How compelling is their reason to buy? Is there a deadline for a decision?
Is the buying center in agreement on the incentive to act? How powerful is
the person who wants to act?
Can we provide evidence of value?
Solution fit Have we been able to influence the solution vision?
How good is the match between our solution and the solution vision?
Who is the competition and how do they compare to solution vision?
Can we quantify solution value?
How is our solution connecting the business goals of the buying center?
Does our solution have unique differentiators connecting to the business goals
of the buying center?
Relationships Who belongs to the buying center associated with this opportunity?
What is our relationship to every member of the buying center? Do we know their
individual business goals?
How is our relationship positioned against competition?
Control Can we agree on a shared plan to proceed? Whose plan is it?
Can we compete? (Do we have the resources and skills to meet the customer’s
requirements and timetable as laid out in the shared plan?)
Value What is the short-term and long-term economic value of the opportunity
(profitability, deal size, and lifecycle revenue)?
How strong is our bargaining position? Table V.
Risks What are the risks for profitability (bargaining position to capture value, A generic sample
cost of sales, cost of modifications, cost of delay, cost of delivery)? opportunity
What are the relationship-related risks (reputation, IPR)? assessment template
 BIJ when the seller engages the buying process late (“specification-based selling”), much of the
22,2 buying work and related decision making has already been completed. The opportunity
management focus is then on qualifying the existing incentive to act, solution vision, and
buying center relationships. Often, in these cases, the qualification reveals a non-matching
solution vision and shallow relationships. Research is needed to advise managers on
choosing the right route in such decision-making situations, i.e., whether to disengage,
270 proceed and accept the deficiencies, or attempt to influence the gaps.

Notes
1. Solution quality also contributes to economic benefits through lower lifecycle costs. It is clearly
possible that a less fit solution incurring higher adaptation and change management costs could
in turn bring higher economic benefits, making value optimization a less trivial exercise.
2. The sacrifices made by the buyer may include sacrifices other than pure costs, including
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risks for delivery, risks to reputation, and reduced negotiating power.

3. The category management is a structured approach to ensure supply network performance
(Kraljic, 1983). Buyers evaluate the attractiveness of potential suppliers by applying category
management criteria.
4. One area where the buyer’s solution preferences differ relates to the division of responsibilities
within the coalitition actually implementing the solution (typically the buying and the selling
organizations). The seller’s role may extend from simply providing products into the buyer’s
process to taking over the entire selling process in an outsourcing arrangement.

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Corresponding author
Pekka Töytäri can be contacted at: [email protected]

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