The Dollarization Discipline: How Smart Companies Create Customer Value...and Profit from It

Our lives as humans are linear. Despite our best attempts and illusions to multi-task, we can only do one thing at a time and be in one place at a time. The idea that there are other things you would rather be doing, is the core of the financing principle of "opportunity costs," which simply means there are tangible and intangible costs associated with virtually all activities. So, say you spend $100 to pay your heating bill - you'll benefit from keeping the heat on in your home and not having a past due bill go to collections. However, once that $100 is spent you can't use it to secure the benefits of buying food, a birthday gift for your daughter or paying down your credit cards - those missed "opportunities" are opportunity costs. Soundview highly recommends the book titled - "The Dollarization Discipline" - because it shows us how to value the various benefits and costs of nearly every economic decision. While the book focuses on the need for businesses to engage in this practice, it's a skill that any individual can develop as well. From buying a home to buying a piece of manufacturing equipment, understanding the "total cost of ownership" is an opportunity cost that everyone should be willing to incur.

Dollarization "is figuring out what your offering is really worth - in dollars and cents - to your customer." The book discusses the role of dollarization in sales, marketing, and product development. Rather than saying your product reduces downtime, demonstrate that the product can save $15,000 by reducing 30 minutes of downtime at $500 per minute. If the price is sufficiently less than the dollarized benefit, it's easy for the customer to justify the purchase. Chapter 20 includes five steps to dollarization: 1. Determine who is your competition. 2. Articulate your differentiating features. 3. State your benefit. 4. Quantify your benefit (convert words to numbers). 5. Dollarize the quantified benefit. Dollarization is especially suited for business-to-business (B2B) selling because all businesses are motivated by profit. Most examples in the book involve component or maintenance suppliers selling to industrial customers. There is one chapter on selling services. There is also a chapter on business-to-consumer (B2C) marketing. Customers buy for one of two reasons, to feel good or to solve a problem. Dollarization can only be used with the latter. For example, the cost advantages of a water filter could be demonstrated, compared with the annual cost of bottled water. I think in some situations it may be less obvious how to apply this principle, or difficult to obtain good data. Nonetheless, I think this is an excellent book.

In The Dollarization Discipline, Jeffrey Fox explains in detail what was explained briefly in his previous book "How to Become a Rainmaker". The idea of "dollarizing", which is translating to the prospect the value received in dollars, is a powerful idea. If you are running a business, selling a product or service and are NOT using this principle I can guarantee you are loosing sales. Successful companies know that although people often buy emotionally, they tend to justify their purchases intellectually. Leaving the scene of a sale without leaving the customer with the "dollarization" value (intellectual justification) is, in my opinion, a big mistake. The concept is powerful and the book is worth reading. My only complaint is that Mr. Fox could have explained the principle in half the pages. Buy this book and begin dollarizing like so many successful companies and salespersons are already doing. Enjoy!

How to sell anything, and what kind of market is out there in the 21st century. Dollarization is all about "the financial impacts a product or service has on its buyer." In other words, how to express your product's value in customer's dollars so s/he sees that the purchase saves or makes money for the customer. Read together with Mass Affluence by Nunes and Johnson. (Review based on reading commercial executive summary.)

As Fox and Gregory clearly demonstrate, it really does take rigorous discipline to "dollarize" one's impact on a business relationship, both directly with a customer and indirectly with that customer's own customers. They have devised a concept, Dollarization, which they define as "the translation of the benefits a product or service delivers to a customer into the dollars-and-cents financial impact to that customer." They assert that the primary objective of a company should be to create value for its owners, and, that the best way to achieve that objective is to create maximum value for each customer. In other words, marketers and sellers tend to talk "value" but few actually understand and then sell their true financial value. Most marketers allow customers to make price the most important factor in a purchase decision. On the contrary, price should be considered as just ONE of the many costs involved in buying a product. For example, the purchase price of a car is obviously one factor to consider. However, fuel economy, maintenance costs, resale value, insurance, etc. should also be taken into full account while making the purchase decision. Those who master the Dollarization Discipline are prepared to explain all this to each prospective buyer. In Section 1, Fox and Gregory introduce the Dollarization concept (e.g., Why Dollarize?); in Section 2, they identify and explain correlations between Dollarization and selling (e.g. How to shorten the sales cycle?); in Section 3, they do the same for Dollarization and marketing (e.g. How to price new products?); and then in Section 4, they recommend a number of strategies and tactics by which to apply various Dollarization techniques (e.g. constructing the Customer Value File). Once having read these separate but interconnected Sections, the reader is then introduced to "The Dollarization Doctrine: Ten Rules to Successful Dollarization." I presume to recommend that this Appendix (pages 249-251) be read before Section 1 and then re-read before reading each of the following three Sections. Presumably careful readers will highlight or underline key passages for purposes of review later. So I also presume to recommend that each review begin with a re-reading of the Appendix. The Rules which Fox and Gregory offer can -- and should -- guide and inform application of the Dollarization Discipline to any competitive marketplace. Throughout the narrative, Fox and Gregory include specific advice. For example, when beginning to determine the value created for a single customer or for an entire population of customers, follow these five steps: Identify your direct competition, articulate what differentiates you from the competition, identify all the ways your differentiating features benefit your customer, determine how to quantify those benefits, and then determine how the quantified benefits result in dollars-and-cents savings for the customer. (See Table 20.1 on page 207). Here is another example of how t