C-Suite Network™

Menu
Search
Close this search box.

Category: Capital

Categories
Best Practices Investing Management Marketing Personal Development Sales

How’s Your Customer Focus Journey Going?

 

Woman holiday journey travel relaxation

If you don’t know what “being customer-focused” means or can’t measure it, you can’t know if you’re doing it.  Many company leaders desire customer focus. Fewer know exactly what that term means. Fewer still can describe specific behaviors to know how far they’ve progressed on a journey toward customer focus. Let’s fix that in this article.

The term “customer focus” is too vague to measure accurately.  Let’s correct our target term to customer-perceived value.  Perceived value is what drives customer decisions. Perceived isn’t just a throwaway word: value only exists in the customer’s mind, and elite organizations don’t take chances with what is/isn’t perceived by a prospect.  Thus, customer-perceived value (I often shorten it to just “value” because there isn’t any other kind) is the core idea — the essence — within the cruder “customer focus”.  Value is the axis around which everything in your organization should move.

Your first task in grading your company’s “customer focus” is to use a measurable target.

Refine your focus to “customer value”.

Value is the desirability of customer outcomes. Customers buy outcomes, not our products and services. What they are willing to pay – value — depends on the desirability of those outcomes. Desirability can be measured in dollars.

As you focus on value, your journey takes place in three domains, described below.

For starters, let’s grade your performance using three levels beyond “average”: Good, Great, and Elite. I’ll be detailing what Good, Great, and Elite look like in three upcoming articles, one for each domain.  If you can’t wait, contact me, because those articles are already (mostly) written.  I’m also developing an assessment tool, which will be on my new website (a shameless tease for coming attractions).

Below, I want to describe the three domains:

1. How well is your organization aligned around Value

Alignment between departments amounts to de-siloing your organization.  I’m all for developing robust expertise in many specialties, but it is an established anthropological fact that silos also create gaps for important stuff to fall through. There is a constant push-pull between specialization and holistic/systems thinking in any organization.  Alignment is the process of purposeful coordination between silos.

Companies usually start by aligning islands of functions…say, sales and marketing…then maybe customer service.  In elite value focus (aka Radical Value focus, the title of my upcoming book) everyone wants to uncover new/better customer outcomes to increase value.

Customer experience (aka CX) management follows a similar track.  Radical not only means everyone delivers value but is constantly seeking additional customer’s -mind insights

2. How Well Do Your People Build, Sell and Price customer value?

This is the domain of customer engagement.  As you progress from “good at sales” to “elite value-based seller”, the skills deepen, and the number of people in the organization participating widens.  I use three key components of the selling process to describe value-based selling:

  • Build: Uncovering and discovering value gaps, expanding them, and causing the customer to envision outcomes of having those gaps resolved.
  • Sell: Aligning the seller’s solution with desired customer outcomes.
  • Price: Facilitating the customer process of monetarily measuring the desirability of outcomes, then conducting a win-win pricing dialogue.

Elite performers, those who have radical focus, are able to execute sales at more profitable value-based pricing.

How Well Do You Enable Everyone in the Organization to Perform at an Elite Level?

Enablement consists of hiring, training, coaching, and content services.  Maturity level increases with the number of services, who is included, and breadth/depth of service. More importantly, maturity increases with transitioning from event focus, to process-focused, to closed-loop process.

  1. Event might mean train and coast, or coaching “burst”, then coast.
  2. Process looks like ongoing training; developing a coaching cadence.
  3. Loops close when coaching drives changed training when sales insights are captured for improved content and product innovation.  The more loops closed, the more elite.

One way the journey starts is when a company realizes that front line sales managers performing as “super salespeople” or “deal saviors” doesn’t scale — or build bench strength — nearly as well as coaching everyone to save their own deals. Another key indicator of maturity is the organization’s discounting process and behavior, from subjective/”squeaky wheel” management to objective, value-focused and tracked/analyzed

Research Backs This Up.

CSO Insights (CSOi) has defined 12 behaviors of great companies (their term: “world-class”). “Great” organizations practice all 12.   I’ve organized the 12 behaviors into these three domains.   (Source: CSO Insights’ 2019 Sales Best Practices Study)

The difference between CSOi’s results and the elite behaviors I’ll be sharing in coming articles: CSOi never even asked about elite behaviors, and thus never correlated elite behaviors to results.  The CSOi 12 behaviors figure prominently in the good and great levels of value focus, but are largely absent from the elite level.

  • Do you want to win more opportunities than most? CSOi’s results show that practicing these 12 behaviors correlates strongly to that type of outcome.
  • Do you want to win with higher customer preference?  CSOi didn’t ask; their results are silent here. It neither corroborates nor refutes that higher perceived value correlates with higher preference.  Other research (and common sense) will back this up, though.
  • How about winning with higher value, driving deeper customer relationships? CSOi didn’t ask.  Other research declares this a worthy pursuit, however.
  • Selling at higher win-win prices?  CSOi didn’t ask. There’s a sad story, here. Ask me about it sometime.

I Want More for You.  Radically Elite Value Focus.

These are the three domains for a journey to elite value focus.  In follow-on articles, I describe what makes up good, great, and elite performers.

Comment below, like, and/or share. As I said, reach out if you have more in-depth questions, or read the next three articles.

To your success!

Categories
Accounting Best Practices Culture Economics Growth Industries Investing Management Personal Development Technology

The Cybersecurity of Banking and Finance

I’ve discussed the importance of cybersecurity in healthcare due to the extremely sensitive personal data and the loss of trust if hacked. If healthcare data and a patient’s trust is as sensitive as research shows, then it’s no surprise that the banking and financial industry is in serious need for anticipatory cybersecurity and digital data protection.

Banking Evolution

Up until the early eighties, transactions at financial institutions were handwritten, calculated long-hand, and done without the aid of a computer or calculator. Fast forward many years and not only can we make deposits and automate our bills to be paid online, but many employees of financial institutions are starting to work remotely as well.

Additionally, cash-out technology is replacing physical cash and check exchange. PayPal, Venmo, Zelle Pay, Apple Pay and many more make the exchange of money a social network of sorts with minimal or no fees, depositing straight into your bank account digitally without the bank’s physical presence or involvement.

A Breach of Banking Security

Whether you drive to a bank to withdraw cash or log into your Venmo account and deposit cash digitally, banking is a personal and serious subject. Keep in mind, a financial institution has every last little detail about our financial situations.

Historically, a security breach in a bank was a takeover robbery. These now pale in comparison to cyber crimes committed against financial institutions, where they take sensitive information and even your identity. Much like the healthcare industry, financial institutions are faced with thousands of cyberattacks every single day, with ]the financial reward much greater than cash.

One example of a big bank that suffered a massive attack was Capital One. A single weak spot in cybersecurity allowed cybercriminals to capture the personal information of over 100 million people and leak it to the world.

In the past year, there have been over 3,000 known successful cyber attacks against financial institutions according to the Treasury Department’s Financial Crimes Enforcement Network. In the case of the Capital One hack, their system flaw was described as a “configuration vulnerability” in its security software that compares to the tellers and security guards in past banking years all going to lunch with the vault wide open and a lobby full of people.

Time for a Change!

Anticipatory cybersecurity measures should be elevated at financial institutions much like the healthcare industry. Capital One’s hack is not the only large scale financial institution that succumb to hacking, as we saw with companies like Equifax and Morgan Stanley being attacked as well.

Banks and financial institutions implement cyber protection, but are they really safe? I know of several cyber companies that test for vulnerabilities in this industry and within 48 hours they gain access to everything the bank “assumed” was protected and safe. But cyber protection is ever-changing and in need of constant testing for new vulnerabilities, and unfortunately, the vast majority of current cybersecurity strategies is about reacting quickly after the problem occurs rather than an anticipatory one.

The Hard Trend that cybercriminals continuously find a way to outsmart the institutions should be used by banks to pre-solve hacking problems before they become a nationally reported disaster, and be anticipatory by using behavior analytics and other anticipatory tools to prevent a breach of security and the breach of trust.

Cyber Solutions

When hacking occurs repeatedly in an industry, trust breaks because the customer does not feel their personal information is truly valued by the institution.

Hackers love to take advantage of weak passwords or use emails loaded with malicious computer code that lets them get inside the network while others scan for out-of-date hardware and software missing the latest security fixes. Likewise, cybercriminals work around the clock, therefore the IT firm or internal IT department must be in place to do the same.

Anticipatory cyber strategies put the cyber education of employees as a priority, with an outside firm doing security scans on everything before the problem occurs, having all software scanned and updated regularly, and making sure spam filters are adequate in your company’s email system.

Free Perimeter Test

Because we see cybersecurity as a strategic imperative in protecting your future brand and reputation, we have identified best-in-class cyber testing companies that will provide a free perimeter test of your organization to check for vulnerabilities in your cybersecurity defense system, provide the results of their tests and recommend immediate actions that can be taken to stop any uncovered leaks in your system. If you would like a free perimeter test to check for vulnerabilities in your cybersecurity defense system, please contact us.

Ask for your free perimeter test at: https://www.burrus.com/perimteter-test-request/

Categories
Best Practices Entrepreneurship Investing Management Marketing Personal Development Sales

Using Value Networks to Grow Your Business

 

The craft of sales is one of increasing the overlap between what outcomes a customer desires for themselves, and what outcomes the seller’s offer can deliver.

Increasing that overlap requires the seller to:

  1. Conduct insightful discovery into the customer’s business and personal situation to increase the range of desired outcomes.
  2. Identifying an exhaustive list of seller’s capabilities, then translating those into customer business outcomes.
  3. Articulate unmet value gaps to product/service innovators, who develop high-impact differentiation.

Most commercially available sales training addresses the first item. Almost all leave the second item up to an internal product training function. By “leaving it to the product trainer”, I mean ignore completely. No good framework to fill this gap has been introduced.

Introducing the Value Network.

The Value Network is a great tool.  It:

  • Captures deal-winning gold from top sellers for use by the whole team
  • Helps everyone in B2B sales teams sell more widely and deeply
  • Ramps new sellers up more rapidly
  • Guides more impactful executive conversations
  • Shapes more impactful marketing
  • Informs superior new product idea generation
  • Helps non-sales, but still customer-facing roles uncover new value.
  • Serves as a central point of truth for competitive positioning.
  • It is easy to learn and intuitive to use.

…so why don’t you know what a Value Network is?

A value network diagrams all of the possible customer outcomes your differentiation can drive for a customer. The diagram at the top of this article is a partial value network: it illustrates the client outcomes from adopting the kind of value-focused culture I propose in my upcoming book, Radical Value.

Building A Value Network

Start by describing an area of differentiation. In the example above, I promote building a company culture focused on value to the customer (yes this is different from many organizations, surprisingly.  Companies focus their cultures on lots of other things when value is what they should use as the hub around which everything else rotates).

From that differentiation (drawn above in a rectangle), describe all of the customer outcomes that result…and the outcomes those outcomes deliver, and so on. Draw those customer outcomes in ovals with arrows representing cause/effect (you’ll notice a few bidirectional arrows on this diagram, which shows mutual reinforcement loops) The resulting network represents all of the potential value your differentiation could deliver to a customer.

In the current vernacular, these might be called themes for value messages.  That is, they could be likely hypotheses that one could deliver to a prospect (or use as a justification for a meeting) – but then validate through dialogue.

For this article, I’ve outlined in blue where the use of a value network fits in a value-focused culture.  It enables or drives more insightful business discussions: by not just salespeople, but every person who comes in contact with your customer.  It clarifies innovation in business cases. It

Next Step:  Make Each Outcome Personal.

To keep the diagram above clean, I didn’t perform this step, but here’s what to do next.  Next to each oval, list the customer personas most likely to desire that outcome.  Here’s an example in closeup from a different value network:

Notice that Facilities is likely to find value in both of these outcomes, but affected department managers are only likely to care about one of the two.  This targeting analysis guides meeting plans, sales conversations, account-based marketing content, product innovation, and more. It also helps guide executive selling efforts by identifying executive-worthy conversations.

Making the Complex Simple

Building customer-perceived value is the selling behavior that most affects customer buying decisions.  Value is defined as the desirability of customer outcomes and is built off of differentiation. A Value Network is a tool that articulates all of the possible business outcomes your offer could produce for a customer.

Depending on what it is your company sells (product, service or solution), being able to efficiently identify all customer impacts is where the great sales conversation training (the one you’ve probably already invested in) begins. In my work with hundreds of B2B companies, I can confidently tell you that there is room for improvement in refining your “product” (which includes service) training. Value Networks can help everyone involved craft a simple set of training, content, and other materials guaranteed to improve the quality of your customer conversations, supporting higher win rates at more mutually-beneficial prices.

Here’s An Exercise For You to Apply This Article

The diagram at the top of this article was purposely left incomplete. Extend it using the bullet point statements under the section titled “Introducing the Value Network” plus any others you can think of. Now, study the bigger Value Network and consider what each of these outcomes means to you in your role: both professionally and personally. What would developing a company-wide focus on customer value do for you and your organization?

Comment below, or contact me if you’d like to learn more about this simple, powerful tool.  Or get on the waiting list for my upcoming book, where I’ll go into even more detail on how-to and use of Value Networks.

To Your Success!

Categories
Best Practices Investing Management Marketing Personal Development Sales

When Sales isn’t Paid on Profits — You Get What You Pay For

If your sales compensation plan fails to reward building value — and then pricing to it — you’ll get exactly what you ask from your salespeople. And all the bad things that come with it —especially if you’re a sales leader.  Let’s explore the implications.

While you’re reading this, you have salespeople working hard to win business that you don’t want. A lot of that is because of your incentive plan. When your people aren’t paid to increase deal profitability, many won’t bother. Sadly, this is the sales leader’s fault.  Salespeople may not be fully coin-operated, and they certainly aren’t bad or lazy…but they’re also not stupid. A comp plan that promises that you won’t push them to work any harder for a deal than they have to, they’ll win deals the easy way: by discounting.

The Obvious Outcome: Profits

We’ve all heard that “Nothing starts until a sale is made”. Curiously, nobody brings up that “Everything ends when sales aren’t profitable”. I just painfully watched this outcome at a formerly-great company.  What a shame.

For those who have never managed a P&L, let me make it simple.  Every top-line dollar discounted off a sale drops off the bottom line as well (there is no change in any of your cost lines).  Pricing dollars are profit dollars.

Think about it another way: in a price war, the only party who wins is the lowest-cost competitor (and no, customers don’t win. Very few of them actually want the low-cost option). If that lowest-cost provider isn’t you, stop playing a game that you can’t win.   That means stop compensating discounting dysfunction.

If you don’t reward pricing to value, you’ll get exactly the profitability you’re asking for.

The Next Outcome:  Affording Differentiation.

Customers choose suppliers based on differentiation, which makes differentiation the lifeblood of business, sales…and the currency of every sales organization. It’s as simple as that.

Your company can differentiate in multiple ways:

  • Product/service fitness for use,
  • Product/service image,
  • Post-sale (I call it between-sales) service,
  • Availability/convenience,
  • Saving one or more customer costs,
  • Making the customer more competitive,
  • etc.
  • OK, and the lowest price.

Look back at that list. They all require resource investments to develop. Yes, even achieving long-term cost advantage (operational efficiency) consumes resources. Differentiation isn’t free, it’s purchased. If your profit streams don’t feed the investments that build on your differentiation, you’re hollowing out your company.

If you don’t reward pricing to differentiated value, you’ll eventually get exactly the level of differentiation you can afford.

Another Bad Outcome:  Sales’ Place at the Table

I hear sales leaders complain that they and/or their function doesn’t get the respect it deserves. As a sales leader, did you ever ask if you’re getting exactly the respect you’ve built?

Imagine people in any other department of your company, all of whom work hard to maximize profit.  Now imagine them hearing some knucklehead in sales saying “it’s the company’s job to make a profit at this price”…then then being backed by the sales leader (no, this isn’t hypothetical.  It happens.). If sales don’t work toward the same thing (profit) as everyone else in the company, why would their sales leader “get a seat at the leadership table”?

I’ve heard sales complain that it is “unfair to pay us on profitability”.  Remember: sales not only works with an unobstructed view to customer value — it’s the main job is building value in customers’ minds. Given these facts, does this “unfairness” complaint — from the one function charged with building and capturing value — earn the company’s trust? Executives’ trust?  Would an executive dare to bring anyone who claimed that “unfairness” in front of their board? Should such a sales leader be anywhere on the succession plan?

Conversely, imagine this alternate reality: Sales is the function consistently bringing new customer value insights back to the hive for commercialization: driving focused innovation, powerful differentiation, impactful marketing strategies, and confidently capturing profitable pricing that pays for it all.  Would a leader of such a sales function deserve “a seat at the table”?

If you don’t reward pricing to value, you’ll get exactly the respect you’ve earned.

Perhaps Worst of All:  You’ll Get the Customers You Deserve.

Price-sensitive customers are the least loyal.  Often they’re the most demanding, most costly, hardest to service, make your people the most miserable and stressed, and consume disproportionate resources. If your people aren’t able to — or aren’t paid to — capture value, you’ll find yourself winning the worst customers…the ones your smarter competitors are thrilled to let you win…and Barry Trailer will be right again.

If your salespeople aren’t paid to co-create value, they’ll end up co-creating apathy.

How Bad Is It, Really?

The odds are, you don’t even know how bad your problem is.

It seems that only a quarter of sales teams have any profitability component in their comp plans. And that’s only the top level of the problem.

Every company should have deep analytics that tracks pricing/discounting behavior, and very few do. The overwhelming majority of companies don’t even track how much they give away in discounts every year, much less how/where discount dollars are allocated.  Even fewer have a robust price exception/ discounting system. For instance, can you answer this for your own company: Are pricing exceptions based on objectively measured customer value, the whiniest salesperson (OK, the salesperson best able to game your system), most politically connected regional manager, or something else?

CEOs and CFOs:  Do you even track how many discount dollars you spend, and how they are distributed? Can you break down how discounting dollars (or gross margins) are distributed by salesperson, sales manager, customer, region, etc.  If not, you’re probably bleeding profit dollars without knowing it. Your cost of sales may be twice what you think it is.

If you don’t measure your pricing practices, you don’t understand them…and you don’t know how much they’re costing you.

Rewarding it vs. Doing Something About it

This article focuses on your compensation plan, but it should be apparent that comp is only one leg of a stool.  The stool topples without a solid comp plan, but also can’t stand if comp is the only issue you solve.

Other legs of the stool are more directly focused on how to sell value – the behaviors getting rewarded under the right comp plan.  Chief among these are training and ongoing coaching: enablement, in the current vernacular.

Once your sales team wants to consistently build, measure – and capture — customer value, a lot of powerful outcomes materialize.

  • More sales at more profitable prices, which funds even more differentiation.
  • Sales opportunity reviews that discuss customer value display selling expertise, which drives the credibility of the sales organization.
  • Clear & objective measurement of customer value can drive objective, precise pricing and discounting decisions. Your whole company can objectively see why a given discount was needed.
  • More accurate forecasts, which of course drives credibility of the sales organization

Want to talk about anything in this article?  Post it below, or if you want to have a deeper dialogue, contact me. As always, please like and/or share it with your networks.

To Your Success!

Categories
Growth Human Resources Leadership Personal Development Taxes

What’s Going to Save you From the Mid-Year Tax Changes?

The 2019 Mid-Year Tax changes eliminated or drastically reduced tax incentives and deductions that businesses depend on. Some of the tax changes took effect in 2018 and also impact the filing of 2019 taxes. In particular, The Tax Cuts and Jobs Act (TCJA) added dozens of tax changes that directly affect businesses. These changes are incentives and deductions that firms use to offset their tax liability.

Although, according to the IRS, “The new law changed tax rates and brackets, revised business expense deductions, increased the standard deduction, removed personal exemptions, increased the Child Tax Credit and limited or discontinued certain deductions.” www.irs.gov. Those deductions are what businesses have counted on for years.

Making it to the chopping block, here are a few deductions that have been eliminated:

Moving expenses deduction, Mileage rebated deduction, Entertainment deductions, Transportation fringe benefits, Corporate AMT, and NOL carryover, to name a few. Not only do we lose them, but we have to discover what each of them proposes.

Here is an example pertaining to entertainment. “The new law generally eliminated the deduction for entertainment, amusement or recreation expenses. But, taxpayers can continue to deduct 50 percent of the cost of business meals if an employee of the taxpayer — is present and the food or beverages aren’t lavish or extravagant.” www.irs.gov. We are noticing terms like those being used more often. What is considered lavish, extravagant, or a fringe benefit? It’s our responsibility to ascertain how the IRS defines them.

Now let’s look at what has been drastically reduced:

Tax brackets, Standard deductions, Charitable contribution deductions, State and local tax deduction capped at $10k from unlimited, Office snacks and meals, Like-kind exchange, Excess business loss limitations, Depreciation for luxury vehicles and more. Again, how does the IRS define what each means? How much is a business going to have to make up for from losing these deductions? These changes will affect the filing of 2019 and future returns and don’t count on any of them coming back.

Keeping up with all the changes requires experts that specifically focus on the monumental amount of information in over 74,000 pages of the Federal Tax Code. Your CPA and Accountant are not able to and don’t want to know all the ins and outs of the tax laws for this year. They would need to hire experts who are proficient in each of the myriad of fields. That means they hire more people and charge their clients higher rates. CPAs have 73% of their clients with one foot out the door so they don’t want to raise their prices.

Let’s turn this around. What didn’t go away? The Tax Payer Certainty and Disaster Relief Act, coming in under the Ways and Means Committee, extended WOTC (Worker’s Opportunity Tax Credit) through 2020. What also remained is Cost Segregation and R&D Mitigation. These are tools that will help offset the tax pain businesses will face in 2020.

Through these 3 programs, businesses get to keep the money instead of splitting it with the IRS. Having an engineered Cost Segregation Study executed, which is what the IRS recommends, a business can receive a sizable amount of benefit. My definition of sizable can be hundreds of thousands of dollars.

Accordingly, WOTC benefits have increased. Along with Cost Seg and WOTC, the biggest change of all comes from R&D mitigation, where tens of thousands of dollars are available in manufacturing of all kinds.

It’s ridiculous to pay the IRS more than we are required. It’s absurd not taking advantage of all the benefits, the money, that’s earmarked for businesses and just let it sit. The answer is before you. Have an engineered Cost Segregation Study completed, take advantage of WOTC, and realize what an R&D Mitigation can do for you.

Property Tax Credits

Hiring Incentives

Savings Examples

Categories
Investing Marketing Personal Development Sales

Build Your Sales Capability From the Most Important Core

Every sales performance expert learns that adding rigor and process to average selling improves results.  Not nearly as many know what rigor and process won’t accomplish the most important thing.  The detail and rigor that methodology adds often diverts attention and management energy away from the real work of selling: getting a buyer to see value in your proposal.

I sold sales skills and methodologies for almost a decade, and have helped many companies implement them. I have lived in a methodology for a quarter-century. I’m rock solid in my support these tools, but I have also come to learn what they can’t – and don’t—do. Typically, they allocate training time and coaching energy about as shown on this inverted pyramid:

The bottom two represent selling progress.  Without that, everything else is selling motion: activity — with or without progress.  If your people are already good at the bottom two, the top items are a great refinement. If they stink at the last two, fix that before investing in process rigor. In fairness, some people think that building customer value is a skillset reserved for product training.  Not really, although there are some elements of product training that will help a salesperson build customer value.

That Sounds Radical, Mark. Can You Back It Up?

Let’s look at some research:

CSO Insights has just updated its list of the twelve behaviors that correlate with the highest-performing sales organizations (World Class Sales Organizations, or WCSOs for short). WCSOs are elite performers, with 23% higher win rates, 23% higher rates of quota attainment (they achieve success more widely across the sales force), retention is 7% higher, and they make revenue plan at a 5% higher rate.  Summary:  you want your organization to be one of these WCSOs.

Here are the 12 behaviors of WCSOs.  The organization scheme is my own.

Organizational alignment around the customer journey:

  • Sales, Marketing, & Services
  • Sales Operations, Sales Enablement, & Sales Management
  • Consistency Across Channels
  • Data strategy that aligns and coordinates all functions

Value Focused selling:

  • Mutually-valuable customer conversations
  • Purposeful, [value-evoking — my emphasis] customer conversations, using a call planning tool
  • Effective value messaging

Their People are a Priority:

  • A quality talent strategy
  • Use of formal assessments in hiring and performance management
  • Effective sales coaching
  • A culture of continuous development (vs. “train-and-coast”)

Plus one outlier:

  • A rigorous forecasting process. (I happen to believe in one particular kind of rigor: value-informed forecasting, but that is only a subcategory of this more general behavior CSOi describes).

Look at that list again:  Sales process and methodology don’t make the top 12 behaviors of world-class sales organizations. Playbooks aren’t there either. Your marketing stack is only a subset of value messaging. I’d venture to say that every one of those world-class organizations uses process and methodology, but so do average-performing organizations. The results as I see them:  customer value focus dominates the mix of WCSO indicators: it forms the backbone of at least nine of the behaviors and informs the rest.

Here’s another research tidbit specifically on value-building:  Rain Group has found that Value-Driving sales organizations have 20% higher win rates, and are 25% more likely to grow revenue.  There’s more, but you get the idea.

Bottom line: value-focused selling is more highly correlated with sales excellence than a fine consensus selling methodology.  Sales leaders, and sales enablement pros: what does that mean to you in your role? How might it affect your plans for 2020?

What’s at the Core of Sales?

Value is the basis—it’s at the core — of all commerce.  And sales. Perceived value determines if a prospect will open an email, click on a link, accept an invitation to meet, sit through a demo…or choose your proposal over the status quo. Insufficient value is what prevents transactions.

Since value is at the core of sales, you need to audit how effectively your salespeople build it in your customers’ minds.  I have bad news. Most salespeople are good at going through the motions you trained them to perform, but are not that good at building value in your customers’ minds.

Practitioners of multiple sales methodologies have told me the same thing over and over (and I’ve experienced first-hand in almost a decade of work with one leading B2B methodology).  Salespeople are pretty good at the methodology details (the vast majority of top-of-inverted-pyramid training/coaching time and energy you drilled into their heads…after which they somehow got the impression is the most important), but are sloppy about understanding customer-perceived value…the core.  Sure, each methodology labels it differently, but the failure point is the same: understanding, then building value inside a prospect’s mind.

Every sales force has the same challenge…so do probably most of your competitors.  What does that mean to you in your role? How might it affect your plans for 2020?

Put the Pyramid Right-Side-Up: Value As The Strong Foundation

The foundation of selling is changing perceived value of your offer as compared to any other option, including status quo. Don’t build sales process and methodology on a weak foundation.  Make you salespeople superior at understanding – then building — customer value. Build from there.  Methodology then becomes a force multiplier.

Oh yeah.  Once they are good at building value, they’ll be better at avoiding discounts. VPs of Sales, CFOs, CEOs and board members:  what does that mean to you in your role? How might it affect your plans for 2020?

I’m not anti-methodology.  I’m for getting the biggest bang for your buck.  I’m for adding value to your sales team’s adding value. What are you for?

Like or share if this resonates with you.  Comment below if the mood strikes you. Contact me if we should talk.

To your success!

Categories
Best Practices Economics Marketing Personal Development Sales

The Challenge of Pricing Disruptive Technologies

This month, I attended a couple of entrepreneur and investor events.  The term “disruptive technology” appeared frequently and prominently – as it should.  What figured less prominently was an understanding of how to capture the value of disruptive technology in the form of price.

If you’re disrupting, you’re delivering value differently….often enabling value differently.  You need to be paid for your creativity…That’s the market imperative. After all, it costs money for a company to build new, highly differentiated value…and the price is how that all gets paid for.

My Lens on the World: Value-based pricing.

Full disclosure: when I call myself a sales, value, and pricing expert, I mean I am an expert on helping companies achieve win-win, value-based pricing.  Customers use price as a comparison point against perceived value. If I can help your B2B salespeople regularly build enough value, customers will have stronger buying preference, at higher prices.

I’ve heard several good definitions of value, but for our purposes, I’d like to use this one:

Value is the desirability of outcomes your products or services deliver to a customer.

This definition gives insight into how value forms and builds in the customer’s mind.  It guides to sales and marketing organizations working to build – then objectively price – a disruptive innovation.

Outcome-based Value Analysis.

Customers don’t buy your offer; they buy their own outcomes/results.  What they are willing to pay for your offer is how strongly they desire results.

Human buying behavior around price is pretty consistent.  Customers:

  1. Compare noticeable differences between options (almost always the top two).
  2. Translate differences into personal and business outcomes. Any outcomes not envisioned are ignored.
  3. Assign value to all outcomes. “Assigning value” can be gut feel, emotional desirability…all the way to a formal analysis of business impacts.
  4. Compare the value of outcomes to the relative prices, and buy according to this calculation

The good news:  This is how customers operate intuitively. It’s no work at all to get a customer to engage in this mental process. Did you ever pay more for gas because a station is easier to get to? How much work went into getting you do decide?

The bad news: contrary to what “rational buyer” economic theory predicts, customers only think as hard as they need to (read those four steps again to see how mental shortcuts could form). It’s not particularly hard to force more detail on their process, it simply takes purposeful selling and marketing effort at the right time.

For established products, salespeople must either walk a prospect through more detail in analysis…or hope that the customer makes perfect value assessments unguided. Hint: they almost never do. I have a secure income helping “established product/service” companies sell at better prices.

For disruptive products, value-building must be even more purposeful. Each customer is walking an unfamiliar path.  They require more detailed guidance all along the way: comprehending novel outcomes, envisioning those outcomes for themselves, belief/confidence in realizing outcomes, valuing outcomes, and more.

Penetration / Skim pricing: a Myth?

The Internet age has introduced us to the idea of buying profitless market share and figuring things out later: penetration pricing is the new false idol of business.

You can — and people do– price disruptive technology for profitable penetration.  The key:  be in a winner-take-most (WTM) market.  Only buy market share in WTM markets….and either have deep pockets or patient money.  Any company bringing a disruptive offer to a normal market is at risk with a penetration pricing strategy.  You’re far more likely to end up as roadkill than as the next Amazon.

As long as your price is less than your value, the idea of charging less to sell more is a myth (the topic of one of my most popular posts ever).  The demand curve you learned in econ class is based upon several unrealistic assumptions – assumptions made so that the math works more easily, not to explain real-world buyer behavior. For one thing, the math assumes little to no differentiation.  In contrast, the whole point of disruption is differentiation.

Pricing Is Profit

Regardless of the price you charge for a piece of business, your production costs don’t change.  That means that an additional price dollar is a bottom-line dollar.  Conversely, every dollar you don’t charge (or discount away) is a profit dollar you just donated to a customer.

Those profit dollars?  You need them for disrupting, innovating, customer education, etc. Whether you do subscription pricing (or its economic cousin, leasing), or whether your offer involves Uber-style distributed asset ownership (or its economic cousin, franchising)…understanding who receives what outcome/value is the key to a successful pricing strategy.

You Can’t Price The Value You Haven’t Built

If your disruptive offer generates value, you need to have a system for causing that value to come into being in the customer’s mind.  In consumer markets, this might come via media-delivered content.  In a complex/consensus B2B environment, the mix will shift to include more human-to-human value-building customer conversations: that’s my thing.

Disruptive Change and Value

Value only exists in a customer’s mind.  Value for something disruptive often involves a little more commercial teaching work — getting a customer to wrap their mind around a novel outcome.  Unless the outcome is unusually intuitive, that takes some sort of value building communication. That value building is rewarded by a higher, value-based price.

I hope this helps.  If you’d like to talk in greater depth, please feel free to reach out. Also, I’d appreciate your liking, commenting, or sharing with your networks, or with colleagues who it might resonate with.

To your success!

Categories
Entrepreneurship Human Resources Investing Management Marketing Negotiations Sales Skills Women In Business

“Reflection – Negotiation – What Is The Expiration On A Promise” – Negotiation Insight

 

“All promises have expiration dates. Don’t let yours expire without reaping its rewards.” – Greg Williams, The Master Negotiator & Body Language Expert (Click here to Tweet)

 

 

Click here to get the book!

“Reflection – Negotiation – What Is The Expiration On A Promise”

 

… They needed to increase their perception of power. So, they sought an ally to enhance that perception. They made a promise to support that ally’s efforts from that point into the future.

But when a new leader gained power, he abandoned his ally. The ally, upon reflection, realized they were pawns in their former partner’s game. They’d been betrayed and sold out because they no longer had the value they once possessed. Within their ranks, they asked the question, what is the expiration on a promise?

That question is one that you should ponder about every situation. Things constantly change. And thus, parameters formed in one alliance can alter a promise when people form other partnerships. So, if you feel the ground shifting, take note of where it’s flowing. That noted change will signal the possible need to develop new alliances. A promise will only last as long as it serves a purpose. To assess when it may begin to lose its commitment, consider the following.

 

Where you were

Knowing the environment a promise was made in, and the surrounding circumstances that led to its creation will give you a starting point from which to monitor its party’s commitment. Consider who the players were that entered into the alignment that made the promise. And, consider their source of power moving into the future. Making that assessment can serve as a bell-weather that indicates when you should consider forming new alliances. Being blind to such occurrences can leave you in a darkness that’s fraught with danger.

 

Your journey

As you reflect on the dilemma of lost trust, due to broken promises, think of the path that you and your allies have traveled. Consider what might have led or is leading to a separation of support you’ve provided for each other. Partnerships don’t dissolve overnight. There are always pending signs of potential danger. Look for them and heed warning signs on your path. Think about the variables that transpired that you possibly ignored due to circumstances that you didn’t want to consider or those that you intentionally chose to ignore. The purpose of that is to assess the mindset that you and your ally had as you traveled to the place that you now find the relationship. Ask yourself, what can I do now to increase my perceived value? Who might I align with to improve my position? And where might that alignment lead? You need firm footing to escape a slippery slope. Connecting with those that can extend support might be the support required to do just that.

 

Where you are

Now, you’re in a very precarious situation. Your most reliable ally has deserted you. And, you’re left surrounded by your enemies. What do you do? To survive, you must create new alliances. And you have to consider the trust factor. And you must ask, how long might a promise they make last? The answer that echoes back is, now is not the time to worry about that. You’re in survival mode.

If you want to survive, you must do whatever is required to sustain yourself. That may even include making alliances with the devil. Meaning, you may have to stretch very far outside of your comfort zone. But if survival is meaningful to you, you’ll do what it takes to prevent you from being taken by what you do.

 

Reflection

When you find yourself in a less than tenable position, due to broken promises, don’t be Pollyannaish. Look at your dilemma for what it is, not necessarily the way you want it to be. Everything changes. And as they do, they don’t have to leave you in a lurch. You can prevent that from occurring by being aware of shifting alliances and making sure that you’re aligned with powers that will remain powerful. Do that as long as an association serves your needs, and you’ll be less likely to be broken by broken promises … and everything will be right with the world.

 

Remember, you’re always negotiating!

 

Listen to Greg’s podcast at https://anchor.fm/themasternegotiator

 

After reading this article, what are you thinking? I’d like to know. Reach me at Greg@TheMasterNegotiator.com

 

To receive Greg’s free “Negotiation Tip of the Week” and the “Sunday Negotiation Insight” click here https://www.themasternegotiator.com/greg-williams/

 

 

#Promise #Expiration #Reflection #Negotiate #Business #SmallBusiness #Negotiation #Negotiator #NegotiatingWithABully #Power #Perception #emotionalcontrol #relationships #BodyLanguageExpert #HowToNegotiateBetter #CSuite #TheMasterNegotiator #ControlEmotions #GregWilliams #success #negotiation examples #Negotiation strategies #negotiation process #negotiation skills training #negotiation types #negotiation psychology #Howtowinmore #self-improvement #howtodealwithdifficultpeople #Self-development #Howtocontrolanegotiation #howtobesuccessful #HowToImproveyourself

 

 

 

Categories
Best Practices Investing Marketing Personal Development Sales

The Time Value of Selling Value

You are probably aware of the time value of money, but did you know that there is also a time value of selling value?

In the finance world, when someone talks about the time value of money, they mean that a dollar received now is worth more than a dollar received in the future.  This is true even when that future dollar is absolutely a sure thing.  The idea is that you could invest today’s dollar and have more money than if you had gotten one dollar in the future.

In the sales world, building value early in your customer’s buying process pays more than building value late.  A customer’s mind is more receptive to placing value on a solution before they have started on the price justification/negotiation stage of their buying process.  The time value of selling value holds true even if your solution is not fully defined, as long as an outcome they will achieve is.

Let’s unpack this by looking at how value builds in the customer’s mind.

Value is About Differentiated Outcomes

Customers don’t buy your product or service.  They buy outcomes.  Customers buy for their own reasons, not necessarily the ones you gave them to buy.

Every purchase decision depends upon a customer connecting an offer to an outcome they desire. No outcome, sale.

There are four kinds of outcomes, illustrated below:  Outcomes are either negative (pain) or positive (opportunities).  There are known/expected outcomes and those a customer hasn’t envisioned yet (but which a trusted advisor might open their eyes to). The old sales training advice about “uncovering pain points” covers only one of the four quadrants above (top left). Think of all the potential value you miss when all your salespeople do is go after this low-hanging fruit.   As bad as that sounds, it gets worse.  This quadrant is where all of your competitors swarm.  Differentiation is often minimal here.  When all competitors look the same, guess what the customer’s decision comes down to (spoiler alert: it involves getting ground down mercilessly on price).

Value is About Expected Outcomes

Also, customers don’t buy “you” (I get the value of credibility, but if your offer doesn’t accomplish anything for a customer, it doesn’t matter how much they “know, like, and trust” you).  Customers buy an expected result.  Thus, “expected” is where your credibility comes in.  Value, therefore, grows as faith in an outcome grows. Personal credibility and proof documentation helps builds belief/faith in an outcome…no more, no less.

Value also grows as the picture of that outcome becomes more clear and detailed — in the customer’s mind. Contrary to what “rational model” economic theory predicts, real customers don’t automatically hear an outcome described and engage in detailed self-analysis of all financial impacts of any individual outcome…much less all of the outcomes available.  Accomplished value sellers help prospects build detailed mental pictures…envisioning themselves achieving outcomes and follow-on outcomes. Some trainers call this “selling beyond the sale”.  Telling stories is a great way to kickstart this process, but personalization should follow.

Value, by Definition, is Desirability of Expected Outcomes

After envisioning comes evaluating the desirability of outcomes. Desire is good.  Strong desire is better.  Desire one can justify to one’s peers in a complex sale is…power.  Specifically, it’s pricing power.

Elite selling involves guiding a customer through a process of measuring the desire for an outcome monetarily.  Once desirability is measured in dollars, euros, yen, etc., value comes into full form.  You and your customer can confidently discuss price against a known, quantified value. Discounting is less frequent. More importantly, your price exception/discounting process becomes more disciplined and objective.

Timing is Everything in Selling Value

Selling value is the art of building a detailed, monetized picture of outcomes in each prospect’s mind.  Let’s look at the components of value-building at different stages in the customer’s buying process (aka the customer journey).

  • Imagine building credibility near the beginning of the customer’s buying journey.  Now imagine trying to build it late.
  • Imagine helping them envision unexpected outcomes early.  Now imagine trying to do it while they are comparing proposals against each other.
  • Imagine showing proof of an outcome early…versus doing it to combat discounting pressure.
  • Imagine asking them to envision all of the follow-on/related results early…versus late.
  • Imagine talking to a customer about the annual cost impact of some challenges they are experiencing. What does that feel like to a customer during discovery…and what does it feel like if you start exploring it during price negotiations?

How many opportunities in your funnel right now are you feeling worse about? Did this just make you second-guess your forecast?  If we could get your salespeople to build value early, what do you think would happen to 1) probability of winning 2) need to discount?

The graph above illustrates that the opportunity to build value for your offer has pretty much passed right when customers start comparing offers and negotiating price.

Can you see why there is a time value to selling value?

Good News/Bad News

Ask your salespeople “what value does this customer see in our solution” as a sales coaching question. If your salespeople can articulate detailed value, they’ve covered all the steps above really well.  In fact, you can probably enter a highly accurate forecast for that opportunity by looking at the total customer value versus your price.

It the salesperson can’t articulate clear value, they either haven’t sold value or your offer doesn’t have any (to that customer in that opportunity).  In the former case, some high-impact coaching might rescue the deal if it’s early enough. In either case, a low-to-lost deal forecast might be the right course of action.

Want to talk about how to apply these principles in your sales team?  Contact me.  Also, feel free to like, share, or comment below.

To your success!

Categories
Best Practices Investing Marketing Personal Development Sales

“Sales Isn’t Brain Surgery”…Or Is It?

While a sales career doesn’t require the extensive education and licensing as a surgical career, a great sales professional shares some similar traits.

My wife is a surgeon…she performs advanced procedures through tiny incisions, accomplishing radical changes in her patients’ bodies and lives through tiny keyhole-sized openings.  I’m in awe of what she can do, and its impact.  I’m crazy proud of her and what she does and try every day to rise to her elite level in my very different field.

A truly great – buyer-focused — sales professional will find several similarities.  Top tier salespeople actually perform non-contact brain surgery. mandate

Big Impacts Through a Narrow Field of View

While I don’t save lives for a living, what I do is still pretty cool. I am an expert on customer value…something that exists only inside the customer; specifically, in a customer/client’s mind. I help salespeople open their clients’ minds to previously unconsidered – yet strongly appreciated — outcomes.

Like a minimally-invasive surgeon operating through a ‘scope, salespeople only have a tunnel-vision view into what’s going on in a customer’s mind.  My specialty is teaching sales professionals how to affect customer’s minds, businesses, and lives through that small window between seller and customer’s mind.

The Role of Generalist Expertise and Acumen

Surgeon and sales consultants are both more effective when we are genuine experts in the whole patient/client.  One of us learned anatomy, biochemistry, and physiology to help understand what a patient’s symptoms and labs really mean. The other of us learned economics, earned a top business degree, has managed a P&L, and grown successful ground-breaking businesses…and has been involved in failure or two. My value to my clients is the ability to interpret my clients’ symptoms through a deep/wide business acumen.

Likewise, customer-centric selling requires that sellers provide valued consultant-like insights for their prospects and customers.  A salesperson can’t provide insight/perspective into something they don’t understand.  I’m passionate about providing sales forces next-level business acumen, so they can position themselves ahead of their competitors.

Domain Expertise and Situational Mastery

My wife is an expert in one area of the body, and various ways to fix things when that part of the body is injured or diseased.  When she’s operating through a ‘scope, she knows exactly what all that confusing jumble of stuff is, where she needs to cut, and what she needs to preserve.  She knows what’s coming next, and what lies beneath the part she’s working on, just out of sight.  When things don’t look “textbook”, she’s either seen that anomaly before or can confidently deal with it.  Each operation is individualized to the patient, not the other way around.

I do the same thing, with organizations, not organisms.

Value-focused organizations put their salespeople in a position to either be expert, to anticipate, to accommodate, and/or to seamlessly call in needed expertise as-needed, when-needed.  Facilitating a buying process the customer is usually inexperienced in, helping them through the tough parts by virtue of the sales person’s experience in that domain.

Another thing:  great salespeople don’t blindly shove canned (even brilliantly persona-tailored, technologically sharpened) value messages into every patient’s — oops, prospect’s — brain.  I teach clients to apply value messages surgically:  confirming first whether application caused any value to form between the prospect’s ears, and then what kind and how much.

Closing is Only the End of the Beginning. Focus on Outcomes

My wife’s complication rates and patient outcomes are far superior to peer and industry averages.  This isn’t just because of her technique in the OR, but about her mastery of patient counseling, recovery, and post-op care, and how she develops an exceptionally de-siloed care pathway…focused on patient success.  She knows what world-class looks like and helps those around the patient deliver the care that ensures great outcomes.

I help my clients think not just until the close, but to plan seamlessly to customer success.  I harp on the mantra that there is no after-sale care, but between-sales care.

Customer-focused sellers know that signing the contract is the moment when the pressure to perform starts for your customer. There are several good ways to handle the transition and a bunch of wrong ones. If your business involves repeat-, cross-, or upselling, a world-class approach to implementation and outcome assurance is your only option.

Passion for the Profession

I don’t get called in for emergency life-saving surgery in the middle of the night, but we both love what we do for our respective patients/clients.

I want my clients to learn to walk, then run without me over their shoulder. This doesn’t happen by pushing them out on their own too soon…but it also means aggressive support in the early going so that they leave the hospital, umm…engagement, prepared for their own development.

Unlike a surgeon like my wife, my ideal client is one who is doing OK, but knows they could be doing better.  Are you and your salespeople treating opportunities like everyday complex selling situations, when you know in your heart that what you sell could be elevated to mission-critical for your customers?  Perhaps we need to set a time for a consultation.

To Your Success!