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Does Your Sales Approach Blow Off Profits?

Many experts agree that selling with perspective/insight improves selling performance, but most ignore the role played by business acumen.  Business expertise is foundational to perspective selling success. Ignoring it is a mistake; best case, you can win some more opportunities, but at suboptimal margins.  Worst case: your insight selling investment won’t get you anywhere.

Perspective selling can be a huge difference maker. CSO Insights found that companies who incorporated perspective into their approach had 12% higher win rates.  This rose to 23% higher win rates for companies who master perspective. The data was conspicuously silent on profit margins of those won deals. Thus, selling with perspective can be powerful, but your mileage can vary widely, depending on how you implement.

Unfortunately, some sales training companies cover business expertise with little more than a vague hand wave. Their treatment: “Take your business acumen…you know, that business acumen that you have (right?)…and use it to provide some valued perspective”.  Apparently, hope is a strategy.

Others tell us to apply our business acumen to expose an unrecognized problem, unrecognized solution, unforeseen opportunity, or to bring a third party’s capability to bear.  Those are great suggestions for how to use already-established business acumen.

Business Acumen is a Serious Discipline, not Some Buzz Word.

I’ve heard business acumen (for sellers) described as “understanding how your customers make money”.  That’s a great start.  Adding “to the point you know how your offer can help them make even more” should become the standard for every customer-facing person in your organization.

SWOT (strengths, weaknesses, opportunities, and threats) analysis is better than nothing but doesn’t help a seller develop very meaningful insights.  It doesn’t help your people meet the standard above.
“Understanding growth drivers” sounds helpful, but don’t you need business acumen to for that level of understanding?

Sellers need a set of tools which help them understand how business works well enough to look at a prospect company with a “mechanic’s eye”:  ability to diagnose what’s working well, what’s not, and how their offer can help.  My business acumen framework covers a business in enough depth to help sellers do just that.  Here’s a diagram of the major parts of a customer’s world: What elements of their environment shape a business, internal elements that shape their world view.  On the right, is a list of some of the major outcomes you might be able to help them change.

Customer's World Business Acumen copy

Because this framework is about your customer’s world, it works with any sales training system or methodology. Contact me if you’d like to learn more about this overview.

Business Acumen Shapes an Entire Pursuit, it isn’t Just a Process Step

I’ve seen leveraging business insights to “provide perspective” and “provide insight” as one step in the selling process.  I reject this; such a suggestion shows a fundamental misunderstanding of business perspective.

Business acumen helps a seller throughout the arc of the customer experience:

  • Secure an initial appointment by showing that the seller has valuable business advice to give.
  • Shape discovery by uncovering new value and expanding known ones.
  • Expand the decision ecosystem by connecting unanticipated outcomes with your offer.
  • Expand the total value of your offer by adding outcomes all over the company.
  • Earn executive meetings by connecting to executive-level concerns.
  • Negotiate win-win pricing by walking your customer through the monetary value of all of the outcomes you help them achieve.
  • Explore even more outcomes as all of your people engage with a customer post-sale.
  • Capturing all of these value insights helps your marketing team produce content that targets the customer outcomes that win most of your deals, generating leads that self-qualify for your differentiation.

That’s why I promote a company-wide “value culture”.  In a value-focused culture, a lot of roles participate and several loops get closed.

How Business Acumen Fits into a World Class Sales Culture

Business acumen is a backdrop to a phased process, each phase of which blends into the next. Thus, Business acumen is foundational to professional selling.

Perspective selling 3 circles2

Initially, a seller should uncover needs, value gaps, and potential customer outcomes.  I have a tool called value networks which helps guide this process more efficiently (these are company-specific).  In this phase, sellers need to envision all of the parts of a customer organization the selling company’s offer might impact. As customers have become more siloed, this job has become more challenging.  My value networks help make this easier, and work with any sales training system or methodology.

During this process, a seller should be able to develop value (build the desirability of various outcomes) in the mind of various buying personas.  The diagram in this middle circle reminds sellers that they need to develop value while they can.  Once a prospect has decided you’re on the shortlist, it gets increasingly difficult to “sell value”.

Ability to sell value vs discounting

To begin the closing process, a seller needs to connect their solution to customer-validated outcomes, recap the value of those outcomes, and then position the solution based on that value. Pricing – even premium pricing– should reflect the value of those outcomes and share a win-win philosophy.  I have often experienced higher customer preference at premium prices once the customer-validated value is used alongside the price for context. 

Venn Diagram

Selling with Perspective is Good.  Selling with Value Perspective is Profitable.

Perspective selling is powerful.  It increases close rates and strengthens customer relationships.  With a few simple additions, it can do all of those things more effectively…and more profitably.  That is, you can close more deals at a higher – and more customer-appreciated – price. Since pricing power is profit power, those small adjustments make a huge difference.

Comment below.  If you found this valuable, like this article and/or share with your network.  If you’d like to learn more, please contact me.

To your success!

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Best Practices Investing Management Personal Development Sales

Selling Value: It’s No Longer Enough

Selling value is great, but it isn’t the solution it used to be.  The world – and customers — have changed around static solutions, and now we need to rethink the whole idea of selling value.  Selling Value can no longer be the responsibility of any single corporate function.  It needs to become a company-wide culture.  Specifically, we need value-focused culture, or simply Value Culture.

There are four reasons why selling value is no longer good enough.

Sales Have Lost the Handle on Full Value

For many years, companies have delivered sales training to sales organizations, and salespeople have improved how they sell. The sales training industry has established “world class sales” is something that exists inside of the sales silo. Now, we have extensive research on what “World class sales performance” looks like…but only viewed within the arena of sales, sales ops, and sales enablement.

The business world has shifted around the sales performance industry, though.  For the past few decades, though, companies have splintered their customer interface into many specialized roles:

Sales (hunters), account management (farmers), business development, inside sales, technical sales, demo specialists, sales development (appointment setters), installation, customer success, tech support, customer support, operations, finance, underwriting…

Salespeople don’t contact — much less have credibility with – all of the customer personas these specialist roles work with constantly.  “Sophisticated” companies train their specialists to deliver a great “customer experience”: customer interactions which promote the brand promise— or at least, eliminate weak links in the customer arc.  That’s not remotely what’s needed. Customer experience training doesn’t equip anyone to discover any of the value gaps from their unique vantage point.

Any company not training every customer-facing role to uncover potential value is failing to leverage potential competitive advantages.

Selling Value Has Come To Mean Less and Less

Even for Selling organizations who haven’t splintered, selling value has become less and less effective.

Customers have splintered and siloed themselves as well.  Your product or service touches more customer specialties than it used to…even if it didn’t become more sophisticated and capable.  Dividing your total value proposition into narrower and narrower customer slivers can reduce the total value your salespeople sell.  Every specialty your sales people fail to bring into the buying decision represents less value offered.  Selling value doesn’t have the same impact it used to.

Sales organizations need to navigate more complex customer organizations.  Meeting this challenge means raising the level of business acumen in your selling organization to find more “value leverage points”.  Sellers need to combine business acumen with customer acumen to find those leverage points in each organization they encounter.

Value Selling Seldom Leads to Value-Based Pricing…

 Frankly, I’m not very impressed with many current “value selling” methodologies.  Average sales training teaches reps to apply benefits to each single persona. The best value selling methodologies only teach reps to sell beyond benefits, to customer outcomes…which is value. I haven’t run across any (OK, anyone else’s) value selling methodology which influences a customer to build their own cost impact statement of those outcomes.

Current value selling helps win sales, but is only short putt away from selling at a profitable price. I love winning a deal as much as the next guy, but I’ve help P&L responsibility: what’s the point of winning a barely-profitable deal?  Your company lives on profits:  a profit stream – not a revenue stream – is what funds innovation, investment, all of your fixed costs…and yes, commission checks.

Pricing is Profit.

If your value selling initiative doesn’t draw a clear, bright line to selling at a value-based price, you’re dropping out of the race with the lead…in the home stretch.

Hoarding Value Insights Cripples Your Company

Value uncovered by the sales organization …used to win sales…even at a value-based price…can represent a few open loops in a company.  An organization-wide value culture closes these loops.

Value insights gathered via value discovery need to inform many other organizations in your company:

  • Marketing. First, content can be tightly focused on the value your company is uniquely positioned to offer.  Clicks and opens relating to those value points are worth infinitely more than those on more generic click-bait content.  Leads that germinate from outcome-based content are gold.  Crap content generates crap leads.  Second, you have persona-focused value insights which can drive tightly targeted, highly relevant sales support content. Collaterals that focus on specific “buying journey sticking points” are deal-movers.
  • Product Management and product training. Product training that describes persona-specific outcomes is the gold standard that few organizations practice.  Roadmaps and product strategies informed by a rich database of value insights are also far too uncommon.
  • Innovation. The virtual call center, a staple of today’s world, was invented at a cost of zero (OK, we had to develop a few new powerpoint slides), simply by combining two products together.  The key to this innovation was a value insight.  When product developers have a deep well of value insights to draw from, inventions and innovation are radically improved.

Your World has Changed. How Will You Respond?

To combat these evolving challenges, you must establish a value-oriented corporate culture.  Culture crosses silo boundaries, countering the unintended consequences of specialization.  There are techniques, tools and technologies that can help.

If this resonated, or spurred some thoughts, like, comment or share. If you’d like to talk further, contact me.

To your success!

Categories
Best Practices Investing Personal Development Sales

Your 2019 Resolution: Control the Suck of Discounting Expense

There is almost nothing you can do for your business with a higher financial payback than getting your arms around your discounting practices. I want you to make a New Year’s resolution to put rigor and discipline around your discounting (some call it “pricing exceptions”) policy and processes.

Why is this so important for your business?  Simple math.  When you sell your product or service to a customer, your costs to fulfill your part of the deal are the same—regardless of whether you discounted or not.

Discounting changes only two lines on your P&L statement: the top line and the bottom line.

When you grant a discount, every dollar you surrendered comes off of your bottom line, and goes to the customer’s.

For an operating business, your profits are made at the top line.  A pricing and/or discounting decision is what drives profits.  Once you see a number on the bottom line, it’s too late to do anything about it.  Discount expense sucks the life out of companies.

Resolution Part #1. Take Stock of Your Current Discounting Practices.

I am thrilled to help my readers analyze where their discount dollars go and their system for allocating those dollars. Let’s examine how you make discounting decisions together.  If you’d like to prepare, or go through the exercise on your own.  Some of the questions we’ll go through:

How many discount dollars do you spend per year?

  • Formal, through an exception process?
  • Invisible, through salesperson autonomy?
  • Does everyone in your company know that discount dollars=profit dollars? Do they act like it?

What is your price exception/discount process now?

  • What are the steps?
  • Who are the players?
  • What information/documentation is used?
  • How is the discount justified?
    • Is customer value measured/characterized? How?
  • Do you always know what the customer thinks of yours andthe competitor’s value (or just their price)?
  • How consistently do your people follow your process?
  • Have you (or can we) analyze how discount dollars are distributed? Are there concentrations by territory/salesperson, region, customer, industry, time of year?  Can we explain any apparent anomalies?
  • What do we get in exchange for price concessions?Are there any salesperson/regional/market trends in that data?

What These Questions Uncover.

The first thing we’ll discover is how well you track discount dollars. Since every one of these dollars is also a profit dollar, you need to know where every one goes. If you don’t know where your discount dollars go, your business is leaking profits.

The questions above help both of us understand how you make pricing and discounting decisions, where the discount dollars go, and if there are any suspicious trends.

Are my discount dollars being over-allocated toward:

  • The whiniest salespeople?
  • The favorite salespeople?
  • The whiniest customers?
  • A certain market?
  • At a certain time of the month/quarter/year?

That last one frustrates the heck out of me: I’ve held P&L responsibility, and have never felt that an unprofitable booking this month beats a profitable booking next month.  I’d feel that way even without the perversion of what month-end discounting teaches my customers.

I also want to explore the basis of discounting (whether/how much) decisions.  Squeaky wheel?  Best at gaming the system?  Price-based? Or…value based?

The Gold Standard of Discount Systems:  Customer Value Based.

99% of the time you hear “your price is too high”, what the person is really saying is either “your value is too low”, or “I’m inviting you to help me understand your value”.  I specialize in helping my clients have those discussions effectively. I can point you to a methodology which will steer those conversations toward value and away from price…and certainly away from unnecessary discounts.

If you have a solid methodology for understanding customer value, some great things happen to your discounting practices:

  • Discounting is purposeful. It no longer feels as random or arbitrary.
    • Your people will understand the system and feel more fairly treated
    • You might quiet the squeaky wheels; the people who scream the loudest for discounts.
  • You will be confident in your discounting decisions.
    • You’ll make better decisions about product enhancements, market entries, even market exits.
  • You will discount less and profit more.
  • You will produce more accurate forecasts. Knowing customer value is the same as knowing customer motivation. When you truly know value, you are intimately engaged with the customer’s innermost buying decision dynamics.

Resolution Part #2. Build A Value Based Pricing/Discounting System.

I can help you if you want.  Here are some options:

1. I’m feeling pretty good about the latest draft of my book on the subject.  If you’ll give me merciless feedback on it, I’ll send you a .pdf copy to review.  The book will guide you toward developing a better pricing/discounting system.

2. Let’s talk. Reach out at mark@boundyconsulting.com.  If you want to work toward a system together, prepare for our call by looking through the “take stock” questions above, and  prepare any questions for me.

Whatever you do, and however you choose to get help, please do it. The road to failure is paved with poorly justified discounting decisions.  I want you on a better path.

To your success!

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