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Author: Mark Boundy

Are you happy with how much you're selling...and how much you're selling it for?  Improving both means getting your customers to perceive the value your offer provides them.

Do you know what value you provide for your customers? Don’t feel bad. According to McKinsey & Co., only about a quarter of directors on big company boards could describe their company’s value.

And yet, the purpose of a profitable business is providing more value to a customer than it costs to deliver.

Mark brings over three decades of sales, marketing, and corporate leadership experience to his clients all around the world.  His wide-ranging experience has given him a unique perspective into

Creating corporate cultures centered on customer-perceived value.

These cultures are built for long term success, increase customer satisfaction, employee engagement, and yes, increase shareholder value.

Mark uses simple tools and a common language of customer value you can use throughout your organization.  He has developed tools, training, an upcoming book, and coaching skills to make it easy to integrate.

If your company works in the business-to-business arena, we can combine world-class sales methodologies with a value-centric culture shift.  When sales, customer service, marketing, product development, engineering -- every aspect of your company –has a clear line of sight to "customer value ", your entire company can become value focused.  Visit www.boundyconsulting.com or contact Mark at mark@boundyconsulting.com, or 602.374.3020.|Are you happy with how much you're selling...and how much you're selling it for?  Improving both means getting your customers to perceive the value your offer provides them.

Do you know what value you provide for your customers? Don’t feel bad. According to McKinsey & Co., only about a quarter of directors on big company boards could describe their company’s value.

And yet, the purpose of a profitable business is providing more value to a customer than it costs to deliver.

Mark brings over three decades of sales, marketing, and corporate leadership experience to his clients all around the world.  His wide-ranging experience has given him a unique perspective into

Creating corporate cultures centered on customer-perceived value.

These cultures are built for long term success, increase customer satisfaction, employee engagement, and yes, increase shareholder value.

Mark uses simple tools and a common language of customer value you can use throughout your organization.  He has developed tools, training, an upcoming book, and coaching skills to make it easy to integrate.

If your company works in the business-to-business arena, we can combine world-class sales methodologies with a value-centric culture shift.  When sales, customer service, marketing, product development, engineering -- every aspect of your company –has a clear line of sight to "customer value ", your entire company can become value focused.  Visit www.boundyconsulting.com or contact Mark at mark@boundyconsulting.com, or 602.374.3020.|Are you happy with how much you're selling...and how much you're selling it for?  Improving both means getting your customers to perceive the value your offer provides them.

Do you know what value you provide for your customers? Don’t feel bad. According to McKinsey & Co., only about a quarter of directors on big company boards could describe their company’s value.

And yet, the purpose of a profitable business is providing more value to a customer than it costs to deliver.

Mark brings over three decades of sales, marketing, and corporate leadership experience to his clients all around the world.  His wide-ranging experience has given him a unique perspective into

Creating corporate cultures centered on customer-perceived value.

These cultures are built for long term success, increase customer satisfaction, employee engagement, and yes, increase shareholder value.

Mark uses simple tools and a common language of customer value you can use throughout your organization.  He has developed tools, training, an upcoming book, and coaching skills to make it easy to integrate.

If your company works in the business-to-business arena, we can combine world-class sales methodologies with a value-centric culture shift.  When sales, customer service, marketing, product development, engineering -- every aspect of your company –has a clear line of sight to "customer value ", your entire company can become value focused.  Visit www.boundyconsulting.com or contact Mark at mark@boundyconsulting.com, or 602.374.3020.

Categories
Best Practices Marketing Personal Development Sales

Trusted Advisors or Structured Sales: Pick One

Two B2B sales models have emerged over the last decade or so, without most of us knowing it.  In 2022, that divergence will become clearer. Both have their place, and each can be mis-applied.

One is “Divide and Optimize”, ably described in best-selling Predictable Revenue. Here, your selling process — emphasis on “selling”– is divided into subprocesses/components, and specialized job roles are optimized for efficiency and effectiveness.

  • Sales development & business development reps secure appointments for demo specialists/account executives, who close, relaying to customer success or account manager/farmers.
  • This model increasingly has a seller-centric feel, and various manipulations, especially discounting, get used – often in vain — to shorten sales cycles.

Second is a “Trusted Expert” model, emphasizing “buying process”. Goal: deeply understand each customer’s world & situation, then co-create desirable outcomes.  Specialist roles are used extensively, but in service of enhancing the customer journey, not selling process efficiency.

  • Business acumen is key. Sellers must follow up compelling datapoints with insightful business discussions.
  • Content is customer focused, and outcome-heavy. “Discovery” and “mutual fit” are emphasized over “qualification”. Demonstrations are shorter, focused on areas of customer-confirmed interest.

Buyer Research Points to Which Model Fits…and When

Research shows that buyers are increasingly willing to engage salespeople earlier  — sometimes much earlier — in their buying journey when the decision is:

  • New to me or my organization, particularly when the solution is innovative,
  • Risky to me or my organization. For instance: implementation, vendor, change management, executive visibility, strategic and other risks.

The vertical axis in the diagram represents increasing “willingness to engage” as you go up. “Willing to” is key.  Sellers still need to rise to the occasion. Customers don’t suffer fools or time wasters.

When to Choose the Divide and Optimize Model –and When Not To.

Lower down, customers feel self-sufficient.  They may have recently bought this type of product or service, and have well-developed buying criteria.  SDRs and BDRs are well-suited to uncover a customer’s known pain & gain points, and quickly move the sale to demos & evaluating [repetitive/consistent] decision criteria.  Conversely, few SDR/BDR organizations are able to cause a “trigger event” – that is, create dissatisfaction with the status quo.  Fewer still can conduct meaningful business conversations.

The obvious conclusion: the more confident a customer is in their decision-making, the better Divide and Optimize fits the situation.

Contacting high-willingness buyers with low-acumen SDRs?  You risk allowing a more trusted  competitor to guide those prospects through their journey.  Do you really want to re-engage near the end and compete based on the other guy’s features and your price?

When to Implement the Trusted Advisor Model

When the customer is under-experienced, and/or risk averse, the trusted expert model becomes the best fit.  Sellers with business acumen, who build value — who are the value — earn “valued consultant” status. Ideally, buyers and sellers co-create a shared future; they act like they’re already doing business together.

Success in the trusted expert model requires that sellers establish credibility from the first contact (today’s typical SDR or BDR can’t deliver the expertise a customer would welcome).  With credibility established, they are given liberty to help expand customer’s perception of outcomes or modify buying criteria.

Important: sometimes, an “low-willingness” prospect can change perceptions when a credible, collaborative, trusted expert opens their eyes to new possibilities. This textbook application of “challenging/perspective/insight selling” thrives with seller credibility; but without credibility, it backfires into “the annoying know-it-all sale”.  There’s an art to building enough credibility with these prospects that you have “permission to enlighten”.

Choose the Best Match For Your Customer, Not on “Availability of Automation Tools”.

The Divide and Optimize model is about selling process efficiency, and a majority of current Martech solutions (8000+ and counting) serve well here.  Many tools optimize your sellers quantity of:

  • Questions asked,
  • Seconds of listening vs. seconds of talking,
  • ..and streamline quantity of calls, texts, tweets, posts, video messages, emails spewed…

However, little current sales automation measures quality of:

  • Business insights offered (although big data is starting to be applied here)
  • Credibility built,
  • Questions to expand the customer’s concept of their problems or future
  • Number of additional “natural ally” buying influencers are added to the decision team
  • Business outcomes identified and quantified
  • Personal outcomes identified.

We’re Starting to Automate the Trusted Advisor Model:  a Huge Step Forward.

 Some big data tools now quickly synthesize data for trusted advisors, enabling genuine consultants to add value with clients…It’s becoming possible to know more about key parts of your customer’s business than they do.

There are also great value quantification tools, which help solidify value in a customer’s mind, minimizing price objections.

Business acumen (hired or developed) is a priority with trusted advisor organizations. Options used to be full-on MBA educations for sellers (at least one major enterprise software company opts for this) or dissatisfying “how to interpret financial statements”, or “SWOT analysis” tools. Training and tools in between those are becoming available.

 

Let Your Customer’s Situation Choose Your Selling Model.

 

Follow the research: asses at your customer’s typical buying situation. Figure out if buying from you is novel and/or risky for your customer.  Or, make it easy: ask me for my customer willingness assessment tool.

In 2022, if your company sells to high-willingness buyers…or want to…and you currently use a Divide and Optimize approach, you might want to switch models.  Heck, if every competitor in a Trusted Advisor market uses Divide and Optimize, there is a market opportunity for the first mover.  Be aware, though: execution requires investing in your people, their business acumen, and the types of content you generate, not your tech stack.

When you do, you’ll find that improves your pricing integrity – and profits, informs better marketing, and sharpens your product strategy.  I’m happy to help you figure out how to do it in your world, using your language.  You can get started by reading my book. ..or contact me.

To your Success!

Categories
Leadership Marketing Personal Development Sales

Your Value Focused Journey: What is Your Sales Reputation?

 

Now that you’ve closed out another quarter — possibly another year – it’s a good time to reflect. Now is a good time to ponder some big themes that will affect your, and your business results in this new year. It might be a good time to do a little self-assessment on your sales reputation.  If you’re in sales, this might mean your personal reputation.  If you lead a sales team or a company, it’s a good time to think about how customers think of your team and your company

The turning of a new decade reminds us that the world is changing (I know, if you’re a purist, that happens in a year, but some things are too important to put off that long). Customers are changing; their business is changing around them, and the way they buy is changing.  Invest a little time right now considering those changes, and what demands that change puts on you.

This past year, I watched a few reputations change.  Some for the better, some not.  The thing is, the ones that improved did so because people understood the stakes, and what was required to make positive changes.

As you consider your sales reputation, here are a few questions as food for thought.

The Mediocrity Merry-go-round:  Are You Riding it…Or Creating Your Own Journey?

Research has uncovered a self-defeating feedback loop that I call the mediocrity merry-go-round. It’s summarized below. Sellers don’t differentiate themselves and are therefore excluded by prospects as information resources.  Customers, therefore, self-diagnose to a greater degree, and multiple salespeople from different competitors respond to customer-prepared requirements.  This results in “multiple vendor presentations of the same solution”…and voila:  customers are proven right that salespeople aren’t worth consulting for more than price and delivery.

If you have a sales reputation as one of those “meet, but don’t exceed expectations” sellers, you are stuck on the merry-go-round.  The longer you ride it (and/or the more of your salespeople are riding it), the harder it is to hop off.  Worse, you can’t differentiate.  The more stuck you are on the merry-go-round, the more likely it is that you or your sales team discounts their way out of trouble rather than using your company’s differentiation.

Are You Responding to Customer RFPs or Shaping Them?

This question relates to being on the mediocrity merry-go-round but is directed at a specific marker: RFPs. If you have RFPs as a regular part of your business, you should be tracking pre-RFP engagement.  Major categories might look like:

  • An RFP that we didn’t know about before receipt.
  • An RFP that we knew about, but didn’t know what it contained
  • An RFP where we knew the contents before issuance but weren’t able to shape.
  • An RFP where we had substantial input in shaping before release.

Obviously, there are many other dimensions to consider in how actively you pursue an RFP (how much discovery is allowed prior to response, for instance), but the dimension of how effectively your sales team was able to get in front of an RFP isn’t just a predictor of success, but it’s an indicator of your reputation: whether you are trusted enough to be a resource to the customer as they define their own requirements.

Those selling opportunities in which you’ve been trusted to help shape requirements are those where your reputation is what it should be.  What percentage of your funnel does that last category represent?

Do You Have “Great Relationships”, or Are You a Valued Consultant?

We often hear the importance of relationships, but too few understand that “strong relationship” can mean liking: personal affinity, or trusting: credibility.  One is far more important than the other; your sales reputation relies more on credibility.  A seller with a reputation for insightful diagnosis of a customer’s situation and who builds personalized recommendations is going to be more successful than a seller who remembers a customer’s birthday. Some customers respond more strongly to the latter than others, but all customers appreciate the former more highly.

The research behind The Challenger Sale is just one data point that highlights the difference between the “personal affinity” side of the customer relationship and the “credibility” side. That research found that relationship-reliant personality types are not necessarily high producers, and (in a finding that combined the Challenger personality type with a credibility-building step that wasn’t covered) that forcing perspective moves the sales needle.  In a real-world finding that the Challenger research missed, half of the “Challenger” personality types are low performers who challenge without having built credibility. Successfully implementing Challenger means making sure that challenger type and challenging behavior is bolstered by a credible reputation. Business acumen, customer orientation, and empathy need to accompany the challenger type, otherwise, challengers are annoying know-it-alls who harm your reputation.

Are You a Discount-happy Order-Taker or a Profitable Producer?

Believe it or not, there are actually sales organizations filled with sales professionals who take pride in the margins of their won contracts. Unfortunately, many companies build reputations for discounting their way out bad selling situations.  Literally.  I mean situations caused by bad selling, not bad situations that mysteriously pop up during a sale.

Worse, if your company has developed a reputation as discount-dependent, you’ll find yourself not on a merry-go-round, but on a downward spiral. Customers are easily trained to expect, then demand discounting.  It’s much more difficult to train them that you have regained pricing discipline.

Worse still, companies who discount communicate, in the most convincing way possible, that their offer isn’t worth full price.  Price declares value.  I’ve seen companies whose offer regularly has ROIs in the hundreds of percent discounting to “win deals”.  I’ve got news:  with ROIs like that, the problem isn’t the “I”: the price. It’s whether an individual customer believes they’ll achieve the promised return…and discounting only adds to the doubt.

Perhaps worst of all: What does discounting do to your internal reputation?  If sales is the only department in the whole company which doesn’t seem to care about profitability, why should a sales leader expect a seat at the executive table?

Reputation Management: Analog Edition

Internet “reputation management” is a thing, but your sales reputation isn’t something you can hire an SEO expert or a reviews manager to fix.  You build a sales reputation one sales interaction at a time. Purposely, proactively, and consistently.  You’re building a reputation during each customer touchpoint.  Is it the one you want?

What is your sales reputation?  Want to talk about it? Want to do something about it? Contact me.

To your success!

P.S. If you want to read the rest of the series check out:

Part 2 – Organizational Alignment

Part 3 – Sell…and Price…at Elite Level

Part 4 – Enablement and Elite Customer Focus

Categories
Marketing Personal Development Sales

Your Value Focus Journey: Enablement and Elite Customer Focus

The last of a 4 part series

If you aren’t enabling a culture of continuously improving value focus, you’re falling behind some competitors.

In part one of this series, I introduced the idea that customer-perceived value is the kernel within “customer focus” that actually moves customer decisions, and you need to focus sharply on value. I also identified three domains in which any journey toward value focus should operate. In the second article, I discussed one domain, organizational alignment around customer value, and described successive achievement levels. Part 3 dealt with the second domain: your organization’s selling capability.

This installment: The enablement domain, which is any activity meant to improve the performance of the sales function. Generally, it encompasses talent strategy, training, coaching, and content services.  Your customer value focus journey needs to enable continuous improvement whether you have a formal enablement function in your organization or not.

Enablement improves with a number of services incorporated, depth of each service, and breadth: who is included. More importantly, maturity increases with transitioning from event focus, to process-focused, to closed-loop process.

  1. An event focus might look like “train and coast”, or “coaching sprint” then coast.
  2. The process looks like ongoing training or developing a consistent 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 from average to good 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

Like the other articles in this series, I describe telltale indicators of whether you’ve moved beyond average to Good, Great, or Elite, describing characteristic behaviors at each level.

I’m also grafting in some of the research basis for these three performance levels, using a highly respected research house.  Of the 12 organizational behaviors of world-class sales organizations identified by CSO Insights in their 2019 Sales Best Practices Study, (SBPS) five of them belong in this domain.

I’ll plug them in below with the note “CSOi 2019 SBPS”, then their description of the behavior they surveyed for.

Good Enablement Culture

Going from average enablement to good encompasses several capability upgrades.

First, and perhaps the most important aspect of up-leveling from average to good:  Spend time turning front line sales leaders into coaches, rather than just being super salesmen or deal saviors.  Deal savior-ism doesn’t scale, or build bench strength, and good companies know it. Coaching is the difference between “train and coast” and achieving behavior change. (CSOi 2019 SBPS:  Our sales managers effectively coach salespeople to higher levels of performance).

I’ve mentioned it elsewhere, but it bears repeating here.  In good companies, the enablement function becomes aligned with both sales and marketing, with a jointly-developed planning and execution cycle.

Additionally, to avoid the cost of bad hires, organizations focus on more effective hiring to get the right people in the right roles (CSOi 2019 SBPS:  Our talent strategy ensures we have the people capability to achieve our business goals).

As I described in part 3 on sales capability, at the good level, discounting is often still at an immature level.  Discounts are awarded based on subjective criteria such as salesperson nervousness.  Discounting is typically not even tracked, but there is a clear anecdotal pattern indicating that price exceptions are poorly controlled.  Enablement at the “good” level often considers discounting out-of scope.

Great Enablement Culture

Great enablement cultures understand the folly of “train and coast”. Learning starts to be viewed as an integral aspect of corporate life.

Coaching capability is put in place to ensure behavior change. Great companies realize that coaching isn’t a project, but an ongoing cadence…building into something that anchors a personal growth culture  (CSOi 2019 SBPS:  Our culture supports the continuous development of customer-facing professionals)

(CSOi 2019 SBPS:  We continually assess why top performers are successful)

I’ve mentioned it elsewhere, but it bears repeating here.  In good companies, the enablement function becomes aligned with both sales and marketing, ideally with a jointly-developed long-range plan for developing organizational capabilities. They share a vision for a continuous growth culture, emphasizing predictive selling behaviors.  After a while in this mode, the organization develops tolerance for, and may appreciate for continuous change.

Great companies manage and coach to predictive behaviors, not trailing results indicators, and develop analytics that track the big hitters. (CSOi 2019 SBPS:  We have a clear strategy for leveraging data (operational, customer) as an asset for sales

With adoption of sales methodology that aligns to personas & customer journey, forecasts can become more rigorous.  This happens when forecast probability is based on opportunity fit and customer engagement in the buying process, not just qualification and progress through a selling process (the norm at good companies).

Discounting/price exceptions mature a little at great companies.  There is an orderly process, often strictly followed, but there is often still no – or at least woefully inadequate tracking of “discount spend”. It’s typical that senior executives suspect, but can’t measure the problem because there are no metrics.

Elite Value Enablement Culture

Elite enablement cultures drive radical improvement in results by placing customer value at the hub of their strategies.

Elite enablement cultures close a bunch of loops.

  • They not only track sales performance analytics, but track coaching effectiveness.
  • Training and coaching everyone who touches the customer to uncover a wider set of value gaps, which feeds team selling, marketing efforts, and produces insightful product development ideas.
  • They track customer perceived value by outcome, to inform product training, content marketing, opportunity scoring.

Tracking customer value by opportunity informs a robust, objective discounting/price exception discipline – or value-based pricing for custom and semi-custom offers. Opportunity value also informs highly accurate forecasting, as the difference between value and price is a measure – in dollars –of customer preference.

Where Are You in Your Journey?  And How Far Would You Like to Go?

Enablement capability is one of three domains in your journey to an elite value focus.  It goes hand-in-hand with the other two: Company-wide alignment around value, and Value-focused sales capability…the topics of the prior two articles. I will go into much greater depth in my upcoming book, Radical Value, coming out in March (but I’m offering advance copies to reviewers).

Comment below, like, and/or share. As always, reach out if you have more in-depth questions, or read the accompanying articles…then call me. We can talk about where you are in your journey and where you’d like to go next.

To your success!

 

Categories
Investing Management Marketing Personal Development Sales

Your Value Focus Journey: Sell…and Price…At Elite Level

Part 3 of a 4 part series

The ability to sell the value of your offer–then price it–is what pays for all of the value your company works so hard to produce.

Customer value is the kernel within “customer focused” that moves customer decisions, and you need to focus sharply on value. In the first article in this series, I introduced three domains in which any journey toward value focus should operate. Last week, I discussed the first of those three domains, organizational alignment around customer value, and what different achievement levels look like.

Your customer value focus journey also needs to progress in a second domain: your organization’s selling capability. Working in the sales performance domain is coming up with answers to the question:

How well is everyone in your organization able to build, sell, and price customer value.

I use the term buyer enablement (walking the customer through their journey, a value-centric take on sales) domain.  As you progress from average to “elite value-based seller”, skills deepen, and the number of participating roles widens radically.  I use three key components of customer value engagement to describe this domain:

  • 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.

The most elite performers, those who employ radical value focus, are able to execute more sales at more profitable value-based pricing.

In this article, I describe the telltale indicators of whether you’ve moved beyond average to Good, Great, or Elite, describing characteristic behaviors at each level.

I’m also grafting in some of the research basis for these three performance levels, using a highly respected research house.  Of the 12 organizational behaviors of world-class sales organizations identified by CSO Insights in their 2019 Sales Best Practices Study, (SBPS) three of them belong in this domain.

I’ll plug them in below with the note “CSOi 2019 SBPS”, then their description of the behavior they surveyed for.

Good Sales Culture

Good sales organizations know that the sales process delivers more reliable results than “hire, onboard and hope”.  Good sales organizations develop playbooks and selling processes to track selling stages.

In addition, they implement a selling methodology to keep selling processes aligned with customer buying processes.

Perhaps more importantly, good performers consistently and proactively use — and preview — call plans to prepare for great sales calls. Call plans are one key marker beacon that you have a good sales culture. (CSOi 2019 SBPS:  We effectively use call planning tools to prepare for customer interactions).

Forecasting at good companies is based upon a combination of qualification criteria, gut feel, and progress through the selling process (increasing probability as an opportunity progresses through the sales funnel).

Profitable sales are usually not a point of emphasis in good companies. Pricing and discounting is seldom rigorously controlled. There is probably a nominal process, but the triggers for approving discounts/price exceptions are easy for certain salespeople to game. Companies at this level seldom formally track who is discounting, how much, and to which customers. As a result, they can’t even analyze the severity and scope of their discounting behavior. Compensation plans may include a profit component, but there is no formal system in place for sellers to be capable of consistently selling value.

Great Sales Culture

Where good companies use persona-based methodology tools as team selling tools, great companies make sure that all conversations add value to the customer’s buying process. (CSOi 2019 SBPS: We Consistently conduct mutually-beneficial sales calls with customers and prospects).

Great companies also leverage everything learned about each persona into handoff tools between (for example) sales and implementation teams – and/or account management.

Sophisticated account management methodologies, and executive interaction tools are used by great sales cultures to broaden and deepen relationships. (CSOi 2019 SBPS:  Our Sellers Effectively Communicate Value Messages that are relevant to buyer’s needs).

Forecasting rigor improves at this level: from feel and selling process completion to opportunity fit (varying degrees of precision here) and some estimate of customer engagement in their own buying process (CSOi 2019 SBPS:  We have a rigorous forecasting process that drives forecast accuracy).

Pricing and discounting rigor may develop at this level. There is probably a formal process, but discounts/price exceptions are probably still concentrated suspiciously. Even great companies seldom formally track who is discounting, how much, and to which customers, and it may not even be a point of emphasis. Compensation plans may include a profit component, but there is no formal system in place for sellers to be capable of consistently selling — then capturing (via price) — value.

Elite Sales Culture

In elite sales cultures, proactive call planning matures.

  • Instead of good sales calls only by salespeople, everyone who touches the customer is able to have at least a simple value discovery interaction.  Most companies find the idea of engaging all customer-facing roles in value discovery radical. Elite value cultures take advantage of the trusting relationships built throughout the customer organization.
  • Conversations are designed to facilitate a customer process of monetarily measuring the desirability of outcomes, then conducting win-win pricing dialogue. Such conversations inform value-based pricing, negotiation, and discounting/price exception processes. I can’t understand why this is so radical for so many organizations, but…it is.

Pricing and discounting rigor flourish at this level. There is a formal process in which discounts/price exception decisions are informed by accurate assessments of customer value. There is an objective system, understood by everyone in the company, for pricing decisions. Elite companies formally pricing/discounting behavior, with analytics on how much, to whom (which customers, which salespeople, which territories/regions, etc.) and on which types of opportunities pricing exceptions occur.  Compensation plans almost always include a profit component, and salespeople know how to maximize both their incomes and corporate profitability.

Underneath it all lies enough customer-world business insight so that your customers know that everyone who touches them understands their business and is trying to help them grow it.

Where Are You in Your Journey?  And Where Would You Like to Go?

Sales capability is one of three domains in your journey to elite value focus.  It goes hand-in-hand with the other two: Company-wide alignment around value and Value-focused Enablement…the topics of my other two articles.

Comment below, like, and/or share. As always, reach out if you have more in-depth questions, or read the accompanying articles…then call me. We can talk about where you are in your journey and where you’d like to go next.

To your success!

The value you create for your customers means nothing if they don’t know it…or if you can’t sell it…or if you can’t capture a price premium for it. Do all three, and you have a rare capability.

 

 

https://www.linkedin.com/pulse/selland-priceat-elite-level-your-value-focus-journey-mark-boundy

Categories
Best Practices Management Personal Development Sales

Your Value Focus Journey: Organizational Alignment

Part 2 of a 4 part series

In my last article, I declared that “customer focus” is too vague to measure and implement, but that “customer value focus” was the essence inside customer focus that you were unknowingly seeking. Then I introduced three domains in which any journey toward value focus should operate. In this article, I’ll talk about the first of those three domains, and what the journey looks like at three different levels.

Every customer value focus journey needs to include some organizational work: alignment between departments. This amounts to de-siloing your organization.  I’m all for developing robust expertise in many specialties, but the act of creating silos/departments also creates gaps for important stuff to fall through (it’s science. Anthropology, to be exact).

Working in this domain is coming up with answers to the question:

How well aligned is everyone in your organization to customer-perceived value.

Below, I describe some of the telltale indicators of whether you’ve moved beyond average to Good, Great, or Elite, describing characteristic behaviors at each level.

I’m also grafting in some of the research basis for these three performance levels, using a highly respected research house.  Of the 12 organizational behaviors of world-class sales organizations identified by CSO Insights in their 2019 Sales Best Practices Study, (SBPS) three of them belong in this domain.

I’ll plug them in below with the note “CSOi 2019 SBPS”, then their description of the behavior they surveyed for.

Good Organizational Alignment

Moving from average to good means that an organization started de-siloing. This tends to start as multiple two-department alignments. Think of water droplets on your car roof merging with each other, two at a time — on separate parts of the roof. The drops are getting bigger, but there is still no single organizing theme.

Here is a typical progression for one alignment “convergence”:

  • Sales and Marketing become aligned on leads, working toward a single definition of a lead rather than a large disconnect between MQLs and SQLs (marketing and sales qualified leads, respectively)
  • Sales and Marketing also begin aligning on content: advertising, sales support, customer education, sales training content and the lie – not necessarily all at once.  There is growing consensus between the two groups on definition, design, and utilization.
  • Customer service may be brought into the “team” as well, giving their input. (CSOi 2019 SBPS:  Sales, Marketing & Customer Service effectively aligned on customer needs/wants)

Another convergence often takes place between sales operations and sales management. This is common in good organizations but becomes more forward-looking and strategic at the good level. If a sales enablement organization exists in the organization, all 3 have begun to work to a unified set of strategic goals. (CSOi 2019 SBPS:  Sales Management, Sales Ops, Sales Enablement effectively aligned to drive results)

There will also be a customer experience (CX) initiative, which tries to capture every role who regularly touches the customer. This CX often starts as a level one CX initiative:  everyone working not to be the weak link in a customer’s total experience. Getting all parties aligned is significant progress, but the bar is set low, to “just don’t screw the relationship up”.

Great Organizational Alignment 

Where good companies have started interdepartmental alignment, great companies go even further.

Sales & marketing alignment gets deeper, and more focused:

  • Additional customer-facing organizations merge into the expanding island. At minimum, sales, marketing & customer service are engaged. (CSOi 2019 SBPS:  Sales, Marketing & Customer Service effectively aligned on customer needs/wants = known value gaps. )
  • Often, technical sales/sales engineering/application engineering, client success, and possibly technical support are included, at least occasionally.
  • Content strategies are now persona-based, and/or optimized for place in the customer journey. Real account-based marketing might come into use.
  • Lead scoring becomes even more sophisticated almost always well-linked to a collaboratively defined ideal customer profile. Lead scoring analytics capture telltale buyer behaviors, not just opens and clicks.
  • A voice of the customer function becomes more robust and influential, and begins informing content, and possibly lead definition

Customer experience management often progresses to level 2: emphasis shifts from “don’t screw anything up” to “figure out how to delight”. Customer-facing roles are almost always empowered to resolve customer issues within their own scope  — (CSOi 2019 SBPS:  Customers have consistently positive interactions in every channel they use to engage us).  In rare cases, if channels partners are used, CX initiatives try to pull them under the CX umbrella.

After some time operating at a “great alignment” level, the organization begins feeling like it values continuous growth culture, and develops a tolerance for continuous change.

Elite Organizational Value Alignment

Where great organizations bring more and more customer-facing roles into alignment with specific personas & are responsive to the customer journey, elite organizations turn several radical performance corners:

  • In one radical change, they all align to customer value, not just customer needs/wants.  The language of customer outcomes becomes the common denominator in alignment discussions and customer engagement strategies.
  • Everyone who touches the customer is proactively engaged…and enlisted in the process of value discovery. Everyone is a “value scout” who brings value gap discoveries back to the hive, for use by sales, marketing, products, production, implementation…every function of the company.
  • Lead scoring flows smoothly into opportunity scoring…up to and including the same scorecard through the entire customer journey.
  • With deeper insights into the customer world, focus on customer-described and customer-known needs/wants can graduate to predictably-recurring, but customer-unanticipated needs/wants, which often have higher value.  Because there are many customer-facing roles engaged in the process, outcomes associated with unanticipated value gaps are much easier to find, and their value easier to articulate.

In Elite organizations, value-based analytics go wider: from sales to every role.  Sales, marketing, product training, sales ops/enablement, leadership, and sales coaching are ALL focused in not just on customer features and benefits – but on value.

Customer experience goes to level 3: Beyond “delighting the customer” all customer-facing roles are actively engaged in uncovering…then delivering additional value

I Want More for You.  Radical, Elite Value Focus.

Cultural alignment is only one of three domains in your journey to elite value focus.  It goes hand-in-hand with the other two: Value-focused Sales Culture, and Value-focused Enablement…the topics of my next two articles.

Comment below, like, and/or share. As always, reach out if you have more in-depth questions, or read the next articles…then call me. We can talk about where you are in your journey and where you’d like to go next.

To your success!

 

 

 

 

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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!

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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!

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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!

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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!

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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!