How To Get From Cost Savings To Business Value

shutterstock_234789472This application management deal is a “must-win” deal. We have the best solution, we have a great relationship with the customer and we save them a lot of money with this new cloud-based service. We all know overconfident sales statements like this one, don’t we? But then, all of a sudden, the deal goes south. The customer makes a decision for a competitor. Why? Because this competitor offered a much bigger business impact, connected to the customer’s relevant financial metrics. It’s a disaster for the sales team, the funnel and the quarter.

Cost savings are a translation of features and functions into a financial equivalent. Cost savings don’t connect to the customer’s desired business results per se. They are a prerequisite for getting to their specific business value.

Cost savings are still in the category of what a product, a service or a solution IS (features and functions) and what it DOES (saving money), but not what these cost savings MEAN to the customer. The typical question of a CFO kind of role will be: “So what?” In our 2015 MHI Sales Best Practices Study, we identified critical customer behaviors. One of these behaviors is that customers decide how they calculate value. In this year’s study, 61% of the world-class sales performers indicated that their customers require formal calculations on business value (ROI, TCO, and specific business cases, etc.) before making a buying decision, compared to 39% the year before. Look at this huge hike from 2014 to 2015, and consider that only 35% of all respondents indicated the same customer requirement (versus 26% in 2014). Now, what are world-class sales performers doing differently?

World-class sales performers know that their products, services, and solutions are only one element in the customer’s approach to solving a problem or mastering a challenge.

Value always lies in the eyes of the beholder, the customer. As customers make every decision differently, every time, the customer’s desired business value has to be different from the provider’s product-oriented cost savings. There is a natural gap by definition. This gap is one of the reasons why traditional ROI calculators never impress a customer stakeholder who has a financial focus. Those ROI calculators are, most of the time, product-oriented, which means they only cover one element of the customer’s solution, the provider’s offerings.

World-class sales performers map their product’s cost savings to their customers’ broader business value calculation.

That means that in the customer’s business case, the offered product’s cost savings will often be only one line item. World-class sales performers know how their cost savings can impact other financial metrics in general. Their expertise in understanding the customer’s context and the stakeholders’ different concepts allows them to figure out which financial metrics are important for this buying team, this time. They also identify the strategic business initiatives and connect the dots between their product-based cost savings, the directly impacted financial metrics and their impact on the customer’s strategic business initiatives.

Understand your customer’s financial performance and identify financial metrics that matter to them

shutterstock_247774624Many sales professionals were trained to focus on their ROI and TCO as discussed above. That worked as long as (in our example of a cloud-based application management), IT departments and technical buyers made the decisions alone. Now, as we observe a huge shift to business buyers and cross-functional and complex buying teams, business value calculations become very different. Why is this the case? Because there are no IT projects anymore. Every IT project that exists has at least one business reason, why it exists. Consequently, business values are calculated differently. In general there is a switch from efficiency and budget optimization to effectiveness and investment thinking.

Understanding your customers’ current financial performance and their goals are the first step to identifying metrics that make a difference to them. Financial reports, analyst views, strategic initiatives are great sources to educate yourself. Learning additional financial metrics such as e.g. return on assets (ROA), return on equity (ROE), operating costs, cash flow, EBIT and EBITDA, as well as net and gross profit margins are essential to create outstanding value for your customers next time.

Create a value mapping chart for the entire buying team

Such a document includes the business reasons for every buyer, their desired solution and their desired tangible results and intangible wins, and how they measure success. Then, map back to the relevant metrics of the strategic initiatives, identify alignments, gaps and maybe inconsistencies. Then, come up with an overall approach to your customer’s business value calculation, integrating the stakeholders’ relevant metrics. Being prepared like this shows that you work backward from the customer’s context, and the stakeholders’ different concepts and that you made a lot of efforts to create extraordinary value for them. That’s the entry ticket to have effectiveness and investment focused conversations on eye-level. This is where you should be to win the next deals.

 


Related blog posts:

Providing Perspectives – A Dynamic Customer-Core Engagement Principle

Manage Mechanics, Navigate Dynamics

How Sales Professionals Create Value for Customers 

This article was initially written for the Top Sales Magazine June 30th, 2015

How To Avoid Seller And Buyer Misalignment: The Customer’s Journey Matters

The customer's journey mattersA few weeks ago, I signed up for a video conferencing service. The reason was simple: I was invited to a video meeting based on this service, so I needed an account. I signed up for a two-week free trial, the only option I had. I loved the service; the setup was easy, and the video service during the meeting worked pretty well. So far, so good. But then, the situation became strange. I got a message from a salesperson beginning with “Hey there” which is not my name, obviously. If the salesperson knows to whom he or she sends a message, why making it as impersonal as possible?

Then, a few nice sentences, followed by “I would be happy to assist with licensing options for you. Could you also answer a few questions so I may better understand your company?” A list of bullet points followed regarding the number of employees and technology workers (what’s that?), country headquarters, number of room video conferencing systems, collaboration tools used today and timeframe for making a purchasing decision. The message makes pretty clear that the salesperson assumed me to be in a buying process, without even questioning that.

Misinterpreting an individual interest for an organizational pain leads to misalignment and misunderstanding

Signing up for a free trial, or downloading a whitepaper are signs of an individual interest. Not more. Not less. At this point, nobody should even assume an individual pain, not to mention an organizational challenge that needs to be tackled. There is no proof point. Problem number one is making false assumptions such as putting a prospect in a buying process who didn’t even enter the awareness phase of the customer’s journey. Problem number two is not listening and not observing. Subscribers of free trials are normally tracked and monitored. In my case, it was easy to figure out that I used this service only once to be able to attend a specific video conference. Also here, the false assumption “a subscriber is always a prospect pretty close to making a buying decision” led to this misleading email message. Problem number three is not questioning these assumptions. In this specific case, the core mistake was not questioning my motivation to sign up for a free trial. I just had to attend a video meeting that was based on this service. I didn’t have a problem to solve, and I didn’t have an organizational challenge to master.

The buying process is one phase of the customer’s journey. Best practice is to identify the prospect’s position along the customer’s journey, not the buying process only.

The customer’s journey begins with an awareness phase in which a need, a challenge or a problem occurs. The situation is analyzed, diagnosed, and evaluated. The customers’ involved stakeholders must first decide that the situation is both important and urgent and need to be tackled. Next, they must have a vision of a better future state that will allow them to solve a problem, master a challenge and achieve or overachieve their goals. Only then will a decision to change the current state be made. Avoiding a risk can also be a reason to change. And this decision to change the current state for a better future state is the “must-have” prerequisite to entering any buying phase. No decision to change the current state, no buying process. It’s as simple as that.

In this case, world-class sales professionals would have tried to discover my real motivation, and my role in my organization to identify where I was along the customer’s journey and where my organization would probably be. The result would have been that I’m at the very beginning of the awareness phase, dealing with an individual issue that is not at all an organizational pain at this time. The best practice would have been to show me the business value of these services, to provide me with a potential future vision of success, but not proposing a solution with features and functions I didn’t even ask for.

Relationships matter – especially those that are based on the business issues that are relevant and valuable for the prospect

The salesperson not only missed the opportunity to discover my context and my motivation, but also to build a relationship, to create value for me and my organization. Creating value couldn’t happen as the salesperson did not invest time to discover what my specific situation was and what would have been valuable and relevant for me. Opportunities have to be created, and that’s work, often hard work. Opportunities don’t fall from heaven.
Furthermore, my experience was that I as a human being didn’t matter at all. Not my context, not my motivation, nothing. If they don’t care about me as a prospect, how will they treat me as a customer?

Customer-core engagement principles look differently. Providing Perspectives is a dynamic engagement and messaging principle that is based on the customer’s journey and the involved stakeholders as the main design point.

Related blog posts:

Providing Perspectives: A Dynamic Customer-Core Engagement Principle

Providing Perspectives: Customer-Core Principle

This article was initially written for the Top Sales Magazine May 26th, 2015

Manage Mechanics, Navigate Dynamics

Sailing the ocean requires mechanics and dynamics. What you learn as a sailor are various mechanics – what to do and how to do it on the ship. You have to become an experienced practitioner to be ready to sail the ocean. In addition, you learn the essentials of how to navigate, first in theory, later in practice. You build your sailing experience on all the things you can control – managing the sailing mechanics – and on your ability to navigate nature’s dynamics successfully.

Mechanics describe precisely in which way something is done or operated. Imagine the steps (mechanics) you take to create an opportunity in your CRM. Mechanics have a lot to do with “if/then” clauses. If all the required data are entered, an opportunity will be created in your CRM. Mechanics are predictable.

Dynamics are different. Dynamics are patterns or processes of change or growth. Dynamics include probability, possibility, and uncertainty in often complex environments. Imagine sailing the ocean, or having conversations with a group of B2B buyers. Predictable? Not that much. But the better you have learned your mechanics, the easier it will be to navigate the dynamics successfully.

Navigating change dynamics is essential to avoid stalled deals

Imagine the early stages of a customer’s journey. A situation gets analyzed, and options for tackling the challenge are discussed. Often, the customer stakeholders come from different functions and roles, and have different concepts of how to address the situation. The key question for them is, “Do we change the current state for a better future state: Yes or no?” Every customer makes every decision differently. Every time. Sales professionals have to deal with change dynamics;  this is what they have to navigate. As this change decision is made by a group of different people, there is no clear “if I present this case study, this will be their reaction” scenario. Those dynamics cannot be managed or controlled directly; they have to be navigated. Navigating can only be successful if the sales professionals do their homework. That means they have to understand the customer’s specific context, the stakeholders’ different approaches regarding how to tackle the situation and their desired results and wins. Only then can sales professionals provide tailored perspectives on how these customers can better achieve their desired results and wins. Only then will customers make a decision to change.

Navigating decision dynamics is key to closing deals

Change dynamics in the awareness phase are followed by decision dynamics in the actual buying phase. Often, the group of stakeholders changes when it comes to the actual buying process. Some senior executives may delegate the project. Procurement people may join the stakeholder network. Decision dynamics are concerned with making the best buying decision, and have different characteristics than the dynamics of the change decision. Decision dynamics are more focused on how to make this happen, how to make this a success with the best possible value and the lowest possible risks. A phased approach to get to the desired future state and exact financial calculations and business cases of the desired solution mapped to the customer’s relevant metrics are key to success. Also here, what makes the difference are the interactions with the stakeholder network to make the buying decision happen. And that’s navigating decision dynamics. What can be managed are those activities that have to be done to prepare those conversations, such as business cases, specifications, or proposals.

Navigating value dynamics is the foundation for future business with this customer

And it’s the same with the value dynamics in the implementation and adoption phase. The stakeholder network will perceive the delivered value differently, based on their perspectives. Navigating these value dynamics successfully – having “value confirmation conversations” with each of the relevant stakeholders, including the initial executive sponsors, is key to developing a long-term value based relationship. And it is the prerequisite to identifying and creating additional business with this customer.

Navigating the different stages of dynamics along the customer’s journey is what makes the difference in today’s complex B2B sales world.

Managing mechanics is the prerequisite to being perfectly prepared for navigating dynamics, to navigate the interactions with the customer stakeholders along their customer’s journey in their specific context.


Related blog posts:

Providing Perspectives: A Customer-Core Engagement Principle

How Sales Professionals Create Value For Their Customers

Excellence Happens In Iterations

Why Being An Expert Requires Expertise To Make A Difference

“The top experts in the world are ardent students.
The day you stop learning, you’re definitely not an expert.”
–Brendon Burchard

What is an expert in sales?  Often experts in sales are considered as people with in–depth knowledge about a provider’s products and capabilities. Experts in sales often have specific titles, such as solution sales, presales or sales engineers. What about the customer knowledge? How relevant are competencies to being an expert in sales?

In today’s complex and continuously changing world, defining what an expert in sales really means becomes a competitive necessity to make a difference. Defining experts in sales leads directly to a blueprint for required sales enablement services.

“An expert is a person who has made all the mistakes
that can be made in a narrow field.”
— Niels Bohr

Experts know a lot of details in a specific knowledge area. To become an expert in a specific knowledge area, lots of mistakes have to be made. That’s the prerequisite for learning what works and what doesn’t. Mistakes and continuous learning allow people to develop their knowledge and understanding to the next level. In sales, we shouldn’t work on the false assumption that an expert is only knowledgeable about a provider’s capabilities. This capability knowledge area is an entry ticket to open a door. But capability knowledge alone won’t be enough to have relevant and valuable conversations with prospects and customers. Additional areas of knowledge are equally important, such as knowledge about the market and its trends, the customer’s industry, as well as the internal landscape of methods, processes and tools.

Being an expert in products and solutions is important, but not enough. To create real value for customers, sales professionals have to be an expert in the customers’ specific business challenges

Based on the above-mentioned knowledge areas, sales professionals have to become experts in their customers’ environmental and specific context. The way to make a difference in conversations with potential buyers is knowing and understanding their specific context of business challenges, problems and opportunities and being able to connect the dots to the own capabilities. Knowing their context includes understanding their current and their desired financial performance as well as the performance indicators that are relevant and critical for them. It’s no longer enough to be knowledgeable about the ROI or TCO of a provider’s product or solution. The financial impact of the customer’s desired solution (your products and services often are only a part of their solution!) mapped to their relevant financial metrics; that’s what matters to them. Being able to provide perspectives on different approaches to creating an even higher financial impact; that makes a huge difference. Sometimes, this ability enables new providers to win deals over those who are established since years but who didn’t care enough about the specific customer’s business context.

In addition, being an expert means to understand the stakeholders’ different concepts o how to approach a challenge, how to fix a problem or how to avoid a risk. Based on the stakeholders’ functions and roles, identifying their preference to process information and their individual decision-making style makes a sales professional a true expert. Knowing and understanding the decision dynamics of a certain customer stakeholder group and being able to orchestrate these decision dynamics is often what makes the difference in complex deals. These are all requirements a sales professional, an expert in sales needs to provide perspectives for customers; relevant, valuable, creative perspectives that enable customers to achieve or overachieve their desired results and wins.

Knowing is not enough; we must apply.
Willing is not enough; we must do.
— Johann Wolfgang von Goethe

Being an expert requires applying the various knowledge areas, skills and strategies in specific customer situations. Expertise means to connect the dots between capabilities and customer knowledge, between skills, competencies and strategies.

Being an expert is the prerequisite for expertise.

Expertise means also to recognize when the own level of expertise won’t be enough to make a difference for the customer. Including another expert is not a weakness, it is a strength in a customer-core approach and a true sign of conscious collaboration in sales.

Last but not least – what about the “generalists”? Are they no longer required or are they experts in another area? Think about an executive account manager in a large strategic account, and think about a deal executive in a three digit outsourcing deal. These sales professionals are not necessarily experts in all the knowledge areas as described above, but they are also not generalists. They have to be experts in orchestrating large customer stakeholder communities, and they have to be experts in selling big deals in their own organizations. Additionally they have to be experts in allocating the right domain experts on their deals. Their expertise is understanding decision dynamics; their expertise is leadership and collaboration.

Do you have all the experts on board to make a difference for your customers?

Related blog posts:

How Sales Professionals Create Value for Customers

Providing Perspectives – A Dynamic Customer-Core Engagement Principle

 

Adaptive Competencies – Key Differentiator of World-Class Sales Performers

Did you watch the ski world cup in Vail, Colorado a few weeks ago? Try to put yourself in a world-class skier’s shoes and imagine being on the racing track and performing the downhill race. Knowing the racing track is one thing. Knowing that the weather and snow conditions will change while you wait for your turn is another thing. But being able to quickly adjust your decisions, strategies, tactics, actions, and behaviors to the new and changed conditions, and all of that without losing speed – that makes the difference. This is an excellent example of adaptive competencies in action. Now, what has skiing to do with professional selling? A lot.

Every customer makes every decision differently. Every time.

Customer situations, like skiing conditions, are never the same. Customers may be confronted with the same environmental context, but what counts is what it means to them. And that’s always specific. Every customer stakeholder group is different, especially the stakeholders’ different viewpoints on how to approach the situation. The customer’s desired results and wins are also different, every time. That does not mean that there are no clusters and patterns to work with. Of course, there are efficiency and growth challenges, transformational and effectiveness challenges, and the list goes on and on. Additionally, there are different, but formalized, buying processes. But the characteristics of each specific challenge and the related buying culture are different in each customer situation. And this uniqueness requires adaptive competencies to win business in a scalable way.

Selling approaches have to be relevant, valuable and differentiating – and that requires adaptive competencies

Whatever the methodology is you trained your sales force on, the difference between average and world-class goes beyond execution – it’s about salespeople’s adaptive competencies based on a learning culture. Adaptive competencies encompass the sales professional’s ability to adjust skills, shift knowledge and align strategies and behaviors to new, changing and complex customer situations. For sales professionals, that means being fluent in all relevant selling skills and competencies, and being fluent in various knowledge areas (customer and capability knowledge) and their specific area of expertise. Only on such a solid foundation can adaptive competencies be developed and then applied effectively. Only world-class ski athletes can win completely different races such as the Beaver Creek race and then the Kandahar race the following week. And that’s the same in sales with your A-Players.

Building adaptive competencies happens in iterations of training, practice, learning and coaching

Every sales force has different and specific challenges, a unique enablement and training history and, therefore, a different point of departure. Whatever your specific situation might be, a solid foundation of selling competencies, various knowledge areas, and customer management strategies has to be in place before adaptive competencies can be developed.  This foundation is mandatory. You don’t train a ski athlete on the Beaver Creek racing track before the athlete is a highly skilled and experienced skier.

Adaptive training sessions can consist of various highly interactive sessions, including real-world simulations. Those curriculums should consider cycles of training, practice, and learning, reinforced by coaching before the next cycle begins with training. Those cycles ensure that people can learn what works for them and adjust what didn’t work so far. This approach also requires that coaching is an integral part of reinforcing and building adaptive competencies. Integrating the frontline sales managers early builds the foundation for execution and reinforcement.

Key learning objectives should include situational awareness (the twin to adaptive competencies), applying principles instead of rules, and creativity as well as critical and strategic thinking.

Adaptive competencies, well applied on a solid foundation in a learning organization, reinforced by coaching, are a key differentiator in today’s complex, constantly changing B2B environment.

What Excellence And Buying Have In Common

Remember the last time you have written a blog post or an article. How did that go? I start with an idea and a mind map. Then I capture all my ideas as they flow, followed be rethinking the core idea. Once the focus of the core idea is sharp, I select a few sub-ideas that support the core message well. Then it’s time to write. Once the first version is written, a few more iterations will follow to get a version I’m happy with. Then, sharing to get feedback and in some cases working with a professional editor are next steps. A few more iterations will happen until the desired level of excellence has been reached.

Excellence happens in iterations – and buying too!

You may say “what?” Isn’t she always hammering home the idea of the customer’s journey? Correct. But let’s look what happens within the core phases of a customer’s journey.

In the awareness phase a problem, a challenge occurs. Imagine an organization that wants to change from an on-premise CRM to a cloud-based social CRM solution to lower IT costs and to increase sales performance. The stakeholder community gets established. People analyze the situation to understand the entire impact, to identify potential approaches to achieving the desired results and wins. They will gather data, opinions and expertise, inside and outside of their organization on private, public and other cloud service models. Of course, they will search as much relevant content as they can get. During this awareness phase, opinions will change, ideas are created, some will be dropped, and others will be honed. And the group of stakeholders can change as well. Some stakeholders may leave the group due to low impact; others will try to get into the group. With each next level of learning, other ideas will be prioritized, and approaches will be sharpened. With each new stakeholder, the group has to onboard the new stakeholder that often means to go back one or two iterations. And the outcome can change; again. The awareness phase is finished, when the stakeholder group has made a decision to change the current state for a better future state. Ideally a sales professional is already involved in this early phase to orchestrate the community to a shared vision of success.

So, you get the principle of iterations. In the actual buying phase, iterations happen as well. New stakeholders can show up, and they may question the entire approach. Another reason to go back and bring them on the same page. Additional iterations can happen until a business case, and contract are created, and the list goes on and on…

Understanding iterations means to understand decision dynamics

How organizations approach their challenges and problems happens along the customer’s journey. But within these phases of the customer’s journey, lots of iterations can happen for simple reasons – to identify the best future vision of success, to make the best buying decision and to make the best implementation. All that means striving for excellence. Excellence happens in iterations.

Understanding these iterations is essential for every sales professional. That requires understanding the decisions dynamics in every customer situation. Not only understanding each stakeholders’ role, function, power, and influence, but also their decision-making style is important to understand. And that’s the foundation to define a deal strategy to win their business. As every customer makes every decision differently, iterations and decision dynamics are also different in every situation.

As a prerequisite for “all things excellent”, excellence has to be an attitude and a level of ambition first. Excellence in complex sales requires a certain level of adaptive competencies and the willingness to learn constantly and improve from what has been practiced to achieve an excellent result.

Related blog posts:

How Sales Professionals Create Calue For Their Customers

Why World-Class Sales Performers Are Always Keen To Learn