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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!

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Best Practices Investing Management Marketing Personal Development Sales

The Secret of Selling … and Business: Mind the Value Gaps

Selling — and business — isn’t about what your customer says they want as much as it’s about what they value. Sure, translating from the first to the second takes skill, but that’s the reality. Customer value is at the heart of sales, marketing, customer experience, innovation, operations…everything in your business.

Value is the energy – the unseen force behind all business. Without value received in each direction, no transaction would take place. More profoundly, it drives every part of a customer’s buying process, like reading an advertisement, clicking on a web link, or agreeing to take a sales call. Nothing happens unless a prospect considers each next step worth his/her time. That is, they perceive a value gap: the expectation of a desirable outcome.

For most of the past decade, I’ve taken a deep dive into the craft of selling. However, I’ve always viewed selling not as a siloed corporate function but as a part of a bigger whole, combining my general management, value and pricing expertise with knowledge in sales and marketing. When you treat sales as its own silo, you leave a lot of potential growth and profits on the table.

Customers Buy…to Fill Value Gaps 

Selling skills and methodology training all takes different paths to the same goal: uncovering value gaps, then showing the customer to fill them. These could be gaps the customer understands and describes…or those they don’t know to ask for. The sellers that confine themselves to customer-described value gaps are the ones that look –and sell — like everyone else…and compete on price.

Your expertise in your product or solution means nothing if you aren’t also an expert in your customer’s business. Only then can you help your customer achieve creative, differentiated outcomes.

The Way We Sell Today Leaves Value Gaps Ignored.

Companies silo themselves into functions. This is both good and bad. Silos are centers of specialized expertise, but they are also fertile ground for tribal dysfunction (according to anthropologists who study organizations). Think of all of the functions in your own company who regularly contact your customer. Now think about how many value gaps those “non-sales” roles uncover on a daily basis, but don’t do anything with. Finally, ask yourself what value-creation opportunities you are wasting.

Everyone who comes in contact with a customer should be considered a seller. Then, every seller in your company needs to be attuned to looking for value gaps. More important than closing such gaps when they can: carrying any/all value insights “back to the hive”. When your organization gathers a more holistic view of a customer – and all their value gaps – you put yourself in a better position to compete.

Customers Don’t Help.

Selling companies aren’t the only ones who silo themselves. Even more important, customers try to buy in silos. For example, a piece of hospital lab equipment might be sold to the lab silo, assisted by resources in purchasing, contracting, and perhaps facilities. However, if that piece of equipment fails – or even worse, starts giving incorrect results – think of all of the silos who are impacted. The list includes doctors, nurses, patient records, billing, legal, scheduling (for re-tests), loss prevention, finance, administration…and of course, purchasing, contracting, and the lab silo. Think about it this way: when that equipment is running properly, all those departments are still impacted and are potential areas for innovation and value creation.

Most B2B offers deliver value company-wide, but many sellers are oblivious to anything outside of the conventional selling box. Business acumen helps sellers analyze how an offer benefits to other areas of the company. When all of your sellers have business acumen, they’re equipped to sell outside of a customer’s compartmentalized buying mentality.

Even if you don’t buy into lofty goals like feeding customer-focused innovation, think narrowly and tactically. Silo-limited customers with narrow buying processes lock salespeople into poorly differentiated selling processes. The same organization scheme that focuses on expertise and drives efficiency restricts a broad exploration of solution impacts. If your offer delivers out-of-single-silo results (most do), limiting yourself to within-silo selling is an act of self-commoditization.

If You Invest in Differentiating Your Product/Service, You Gotta Pay for it

When a business generates value for a customer through a differentiated offer (product, service, or solution), a sale is made. Generate enough value and the seller can charge more than their costs. They can then reward their employees for building differentiated products, forge strong relationships with valued suppliers, invest in even more differentiation, and yes, share profits with investors.

As you can see, focusing on value gaps closes a lot of loops in an organization. Your sales silo can strengthen those loops or break them. Unfortunately, some metrics make a sales organization still look good while still delivering profit/value dysfunction. I regularly see scoring systems which focus inside-the-sales-silo only, instead of holistically.

It’s About Uncovering and Closing Value Gaps.

By “it”, I don’t just mean sales. I mean “a world-class business”. All sellers (everyone who touches a customer) should participate in uncovering gaps. Every function in your company participates in closing gaps. Don’t let how you’ve siloed your organization stands in the way. And don’t let your customer’s silos limit the value you bring.

If you want to talk about it some more, contact me. As always, share and/or like if you found this article worth your time.

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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