Hey, Lets Do Value Selling

Over the past few months, a number of senior sales leaders have reached out for help, stating "we want to implement value selling."

They see value selling as a tool to unlock more value (revenue) or to improve their pipeline or to gain a competitive selling edge.

They are on the right path...value selling can certainly have a net positive impact on revenue, pipeline and competitiveness.

However, their perception of value selling and how it's implemented is a bit short sighted. Value selling is not a thing. You don't "implement value selling." 

Value Selling Is Not a Tool

First and foremost, value selling is not a tool; rather, it's a mindset. Value selling is a way of thinking about how to engage with customers and requires a broad organizational commitment to putting the customer first.

Value selling focuses on the customer's strategic business goals (not technology habits). It focuses on the firmagraphics (the culture) of the buying entity (first mover/late adopter, risk taker/risk adverse, etc). It considers the needs/wants/desires of the individual stakeholders and contributors to the buying process. Value selling requires a specific focus on the use of language to align with those entities.

As a result, value selling is not something easily boiled down to Step One, Step Two, Step Three...

Instead, a value selling approach should be baked into onboarding, selling preparation, communications, actions and activities. And it requires an organization-wide change management process.

Start With Opportunity and Account Planning

Opportunity planning and development, and its cousin, account planning, are great places to start. 

Traditional opportunity planning starts with a profile of the target customer (focusing on installed base and potential budget) and the questions "what can we sell them and how much share can we steal from a competitor?" As this approach is highly transactional and competitive, it leads to sales with low profitability and mediocre customer satisfaction ratings. Sound familiar?

Value centered opportunity planning also starts with a profile of the target customer, but with a focus on strategic business goals, the gaps between goals and capabilities and the motivations of the organization and the key stakeholders. Reps or teams consider how they can help the organization to achieve these goals, independent of any product or service offering (Solution development comes much later.)

Value selling involves co-creation with the customer, and in many, perhaps most cases, doesn't have much impact on existing vendor relationships. It tends to focus on net-new value creation, generating far larger impact and results than a simple vendor substitution might.

There's no comparison of vendors' TCO in value selling. It's just not relevant. That's pocket fluff in comparison to the impact true co-creation offers. Why focus on shaving 10% in operating costs if the project could lead to a 20% increase in customer satisfaction or manufacturing quality. Most of the senior executives, the decision makers in a strategic project, will focus on the latter.

The team must consider "are we well positioned to help the customer achieve their goals?"  Once the organizational goals are identified, the reps or teams develop an influence map that details the key stakeholders, the strength of the relationships, and an action plan to further develop those relationships.

Finally, the team develops powerful messaging that emphasizes alignment and ability of the team to help the organization achieve their strategic goals, and the ability of the individual stakeholders to meet their personal goals.

As with any strategic sales improvement project, the assistance of a knowledgeable sales enablement sherpa to provide direction and to carry the load is critical. If you don't get value selling right the first time, you won't get a second chance. Senior management...and the sales team...will move on to other shiny new objects.  

Thanks!

Lee

 

Abandoning the Hero Sale

When companies first get started, the founders may do most or all of the selling. They have the vision, the passion, the depth of knowledge of the service or product and connect well with early adopters.

At some point the Hero Sale risks becoming the Hero Fail. The challenge is that as the business expands, the founders (the heros) need to focus on running the business, managing the growth, courting investors, hiring managers, etc., and they have less time for selling.

So...they hire sales people. 

And they expect sales people to act and perform in their image, with the same depth of knowledge, passion, and ability to connect with mainstream customers.

I've seen and experienced it first-hand.

When I sold predictive analytics to some of the largest tech companies in the industry, the company president and founder expected the sales team to leverage his 100 page slide deck...to go deep into the technical details of the what and how of the platform. Much of our sales training focused on this technical deep dive, and only lightly touched on personas and messaging.

Conversely, my mainstream customers were only interested in the benefits of leveraging the platform - could they increase pipeline velocity, improve pipeline size and shape,  bolster their customer acquisition rates, meet their quota and revenue targets. The decision makers didn't care what was under the hood, only whether it would bolster their marketing results and how difficult it would be to integrate the predictive analytics platform and workflow into their existing marketing processes.

IBM wasn't even interested in the platform...they had their own...they were interested in our curated third party data. And we discovered this not through a detailed review of the CEO's slide deck, but in an extended white boarding session focusing on work flows. (White boards are my favorite selling tools.)

In talking with clients I hear many facing this same challenge...as the company grows, expected sales productivity fails to increase as experienced sales people are hired. And the founders question the new hires, the selection process, the target markets, everything but their own outsize influence in setting sales strategy.

Moving from a hero-driven revenue model to one that is sustainable and scalable requires a fundamental shift to a traditional selling model -- a formal selling methodology, selling processes, SFA and CRM platforms, formal onboarding activities. Dedicated sales managers will provide strong leverage for additional growth, particularly if a coaching methodology and mindset is part of the structure.

When I joined BAO, the outsourced inside sales organization, as its first sales leader, I implemented a formal selling methodology and spent a lot of time coaching my sales team on value selling techniques. Many had come from the delivery side of the organization and had been accustomed to a highly transactional sales approach...making up to 250 calls each day. The investment in time and effort paid off...we signed a number of key accounts that had been chased for fifteen years.

We also drove an increase in revenue of 75% over that first 18 month period.

Moving to this scalable selling model requires both support and patience from all of the key stakeholders. It won't happen all at once, and it does require a substantive shift in approach. The founders must step back and give the hired managers the space and time to do their job.

A formal approach to change management...and specifically...setting expectations with the key stakeholders will prove useful.

And maybe, just maybe, that hero can take their first vacation in four years.

Thanks!

Lee

Leading Sales Indicators

Selling a complex solution is a lot like running a marathon. To be successful, you can’t just walk up to the starting line and start running. Success in the marathon takes months of preparation. For each mile of the marathon, a runner might run 20-30 miles in direct preparation. Similarly, a good enterprise sales person will dedicate 10-20 hours of preparation (research, discovery, planning) for each hour of face to face with the prospect or customer.

The successful marathoner will have a comprehensive race plan, mapping out the goal pace for each mile. Many apply these plans as temporary “race tats” on their arms, so that they can keep track of their plan while on the road. Similarly, good enterprise sales people develop detailed opportunity or pursuit plans that include both their actions and those of their teammates (other sales people on the account, sales engineers, etc.).

Marathoners carefully watch the leading indicators that help them to determine whether the individual race will be worthy of a Personal Record (PR) or perhaps just a long, slow run. For the runner, some of these leading indicators include their Heart Rate Variance (HRV) and sleep patterns in the days leading up to the race, the temperature and humidity on race day, how they feel at the start line and more.

If the racer sticks to their race plan (slower pace in the first half of the race, faster in the second), a good day is possible. Toss that race plan, run too fast in the first half of the race, and all the prep in the world won’t save you. Trust me…I know!

Similar dynamics exist in the complex enterprise sales environment. While sales management typically watches portfolio coverage as a primary indicator, it is not a leading indicator. Pipeline coverage will tell you that you are in trouble. It won’t tell you why you are in trouble…and it doesn’t give sufficient warning for early correction.

The Acelera Group Sales Productivity Framework incorporates ten rep-focused leading indicators, along with a single first line sales manager (FLSM) indicator. These indicators provide the early warning signs for a decline in sales performance, at the rep, group and region level, and point strongly to specific actions to be taken for course correction.

The ratio of prep time versus face time, as mentioned earlier, is one of these leading indicators. Depending on the specific business problem, level of prior customer intimacy and complexity of the environment, the sweet spot may be 5 or 10 to 1. When reps (or teams) diverge from the sweet spot, we can expect a looming drop in sales results.

A second leading indicator – whether a business value analysis (BVA) has been conducted – holds a similar power of predictability. Curiously, despite its significant positive impact on customer intimacy and satisfaction, deal profitability and overall sales results, the BVA is not widely used.

Complex enterprise selling should not be an ad hoc series of unrelated activities. Good preparation and effective plan execution will help the runner to complete the race and the sales rep to drive great sales results.

What are your leading indicators telling you?

Thanks!

Got a Plan?

How Are You Treating Your Largest Accounts?

Strategic accounts warrant investment and relationship rigor. They spend more, have been customers longer, and have made specific long-lasting platform, technology and relationship commitments. A company’s top five customers alone may account for 22% of all revenues and 21% of  annual profits! (Source: Sales Executive Council).

Most large companies have a strategic account strategy, providing additional technical, business, product resources, and occasionally targeted investments in those accounts. Some provide “concierge” access to technical or development resources. Executive sponsors are assigned to these accounts.

Yet day to day management of the relationship is largely left to chance. Few companies hire true strategic account managers (SAMs), choosing instead to promote their “best” individual reps into a role that requires significant team and process management skills.

While SAMs may be compensated on multi-year revenue attainment, share of wallet gains and occasionally customer satisfaction scores, the other sales people on the account, called specialist, pillar, or portfolio sales people, typically retain their quarterly and annual quota targets, and frequently are re-assigned year to year.  These portfolio sales people don’t typically report to the SAM, usually have competing business imperatives for their own product sets and may even compete with one another, as multiple products from the vendor may solve individual business or technical problems.

In short, a primary driver of disappointment in strategic account programs is that the planning process typically focuses on sales planning rather than relationship planning. 

Developing a Plan Isn’t Sufficient

SAMs are typically expected to develop an annual account plan, and some collaborate with their portfolio sales people to do so. Others just wing it. In most cases, the output is indeed a plan…a written document that is revisited annually…an artifact that provides no guidance for the day-to-day governance of the account. It is a sales plan with detailed lists of potential opportunities, alignment of products to perceived business or technical problems. The plan typically lacks a thorough analysis of the influence map within the account or any plans to bolster relationships with important internal and external (partner) stakeholders.

A recent survey conducted by the Strategic Account Management Association (SAMA) found that, even within their membership, a mere 11% of account plans are “effectively executed.” That’s a pretty dismal adherence rate, given that these plans should be the primary pathway to better customer relationships and higher revenue generation! 

What to Do?

If your organization is serious about strategic accounts, the first step is to ensure corporate support for a multiyear investment in the process of account planning, management and governance. While results will appear almost immediately, the full impact of an effective strategic account program will not be seen until the second or third year of the program. If the program is maintained, those results should be long-lasting!

The next step is to set up a framework for success, including:

• Hiring SAMs with strong team management skills
• Developing programmatic analysis of customer financials, industry growth trends, key stakeholder profiles, installed base, competitive SOW and more…
• Enrolling management of each portfolio sales organization in the process and creating a consistent set of rules of engagement
• Developing a process for thoughtfully identifying the strategic opportunities and challenges within the customer organization
• Installing a team governance process to ensure success on an ongoing basis

Team Governance?

In my experience…and I’ve driven strategic planning for more than $2B in revenues…the last item in the framework is the real challenge. Teams gather to conduct the planning process…and then scatter to the wind. Individual reps receive conflicting directives from their management, sometimes in conflict with the team. Occasionally they go “rogue” in an effort to land revenue this quarter or fiscal year, upsetting a much larger, more strategic deal.

To address this issue with one very large software company, we established the concept of sales team “program management” for their Account Team Unit (ATU). Initially, the function of program management was handled by an existing team member, with the goal of providing dedicated headcount to take on that function as necessary. As we developed the strategic account program at another company, one core team member owned team facilitation and took on governance as necessary to support the strengths (and challenges) of the strategic account manager. 

Thing One – Visibility

The SAM must have visibility on the activities of each portfolio rep (and their sales consultants), ensuring consistent team/account messaging across all initiatives and engagement; and whether individual reps are engaged. That visibility would also help the SAM to know where a rep needs help with access or organizational support. Reps gravitate to where they see opportunity, leaving broken promises of supporting the SAM and the strategic account. “If it’s not closing this quarter, I’m not wasting my time pursuing it.” 

Thing Two – Customer Participation

However, even if your organization successfully designs and implements a strong planning and governance framework, this only provides the “inside-out” view. It’s a series of hypotheses around “what we think the customer might be interested in…” And here’s where most companies fail in their strategic account planning process. They neglect to include the single most important stakeholder in the process — the customer.

Sure…it can be challenging to include the customer in the process, and sometimes the customer’s strategic focus doesn’t align with what we want to sell. Go figure! Yet, deep engagement with the customer in the planning process leads to more involvement by the customer, better “time and access” for discovery and relationship building, faster decision cycles, larger, more profitable deals, and higher customer satisfaction. That planning process, by the way, is a cycle rather than an event…a series of regular engagements with relevant resources, and commitment to action and investment on an ongoing basis.

Many companies leave the participation of the customer to be handled by the SAM. A few formally drive a “co-creation” process with the customer, ensuring that the customer has a seat at the table in the planning process. I’ve facilitated strategic account planning in F100 customers’ boardrooms, with active participation of key customer stakeholders throughout the process. Their participation provided valuable direction for our sales investments and led to the identification of significant new opportunities. Once a good context is established for the joint team, everyone looks forward to the regular discussions. We’re helping our strategic stakeholders to address significant business challenges and they have a sense that we’re “in the boat” with them, that we are truly committed to their success. 

Strategic Account Planning and Governance as Competitive Advantage — Actions to Take

If you believe that your strategic account program could drive more value for your organization (and for your customer), a key area of focus is individual sales rep activity, messaging and governance. We are exploring a new approach to better manage this area and am interested in partnering with a couple of organizations to pilot that approach.

And the second key area is customer involvement. If you’re not actively, routinely involving your customer in the strategic planning process, you’re leaving significant money on the table and wasting valuable time and resources on unqualified opportunities.

Thanks!

Why Johnnie Can't Buy

Corporate IT buyers report that completing a typical enterprise IT purchase takes more than five months, two months more than they would prefer. While they blame their vendors for contributing to just over a quarter of the delay, they acknowledge that their own faulty buying processes contribute to two-thirds of the delay (source: IDC 2011 Buyer Experience Study).

What’s going on here? Why can’t buying teams be more efficient with their enterprise IT purchases?

It’s not their fault…mostly.

Many, perhaps most buying teams are assembled on an ad hoc basis to address a specific business issue. They may have little or no experience in working with one another and limited (if any) experience in evaluating, purchasing and implementing the specific product or application. After all, this is probably a one-time exercise for them. As a result, they lack the structure and processes necessary to identify and prioritize critical business requirements, application and service criteria, implementation challenges and more.

Typically, the members of the buying team with repeat buying experience include those from IT, Finance or Procurement. These participants tend to focus the discussions on either technical or cost details…not where most vendors want to focus (or where the buying team should focus!). Few buying teams include formal facilitators with deep process experience who can extract the critical business requirements and develop consensus among the members of the team.

Selling teams, on the other hand, engage with buying teams every day. They work with multiple organizations and handle the same set of questions, concerns and objections over and over. They see the patterns across these organizations. Based on these repeated experiences, the selling team should know what’s important to the individual buyer and be able to propose a well-thought out evaluation and decision framework.

While the selling team is in a unique position to guide their prospect through the consideration and evaluation process, most don’t. They either don’t believe that it’s their job to do so or out of habit they defer to the buyer’s (flawed) processes.

Top salespeople will identify the void in the buying team’s experience and assist them in identifying and prioritizing critical business requirements and in developing consensus among the members of the team. They do this naturally and without specific attachment to individual outcomes. If the fit isn’t right, they disqualify the prospect and move on to other opportunities. A few large vendor organizations incorporate engagement project managers on their enterprise account teams to help ensure this focus (and the delivery of the appropriate resources at the right time throughout the engagement process).

B and C level sales people, on the other hand, work within the buyer’s flawed processes, searching to match their assets with what appears to be important to the buyer. Since the critical business requirements are a moving target in this environment, the sales person will never really connect. Purchase decisions are made on faulty assumptions and the desired business results may never be reached.

Enterprise buyers place tremendous value on the consultative capability of their vendors. They know that their vendors work with a wide variety of organizations and can bring deep and broad implementation and business expertise to the table. It’s up to sales management to ensure that this expertise is developed and offered as a primary benefit of the relationship. It also requires a shift in focus from “solution selling” to true consultative selling. (See Buyers Don’t Want Solutions for a deeper discussion of why solution selling is bad.)

In adopting and fostering this consultative approach, the vendor will move from simple (and fungible) “vendor” to “trusted advisor” status and enjoy higher sales productivity, share of wallet and customer satisfaction.

Resources: I’d strongly suggest the book entitled Mastering the Complex Sale by Jeff Thull. Jeff has developed a formal process for managing consultative selling opportunities, one that helps to surface the key decision criteria and to gain consensus on the value and weight of those criteria.  You can purchase it here on Amazon.

I'd also recommend taking a look at the emerging vendor LeveragePoint. A spin-out of the Monitor Group, LeveragePoint provides an environment that assists sellers in surfacing and validating the handful of key decision criteria and in weighting those criteria to support optimized pricing on a deal-by-deal basis.

Thanks,

Lee

Buyers Don't Want Solutions

Given the amount of work spent on creating solutions this year, it seems that 2010 will be the “Year of the Solution Sale”.

Except we have two minor problems.

First, technology organizations have been talking about…and building…solutions as a marketing and sales strategy for several decades. In fact, John Patterson, of National Cash Register, may have invented the technique (or at least first published a solution-oriented sales Primer, see right), in the 1880s. So the concept of solution selling is nothing new.

Second, and more importantly, buyers don’t want solutions. They want whatever solves their problem. If a vendor’s particular bundle of products and services (their solution) solves the buyer’s problem, that’s fine. However, most buyers view solutions as “off-the-shelf” bundles of existing products that are convenient or profitable for the vendor to sell, but don’t necessarily solve the buyer’s business problem.

After all, how could a pre-configured bundle solve the unique problems of a given prospective buyer, with his or her unique set of challenges, internal issues, infrastructure, needs, wants, desires, timelines, budget constraints, goals, milestones, targets, partners, constraints and more?

In fact, buyers don’t even use the word “solutions” in their conversations. A few years ago at IDC, we analyzed buyers’ language and the word “solution” never appeared. Buyers just don’t think that way. And as one Fortune 100 CIO told me, when he hears the word solutions, he thinks “McDonalds’ happy meal”…a bundle of burger or chicken nuggets, fries, drink and toy that’s guaranteed to put a smile on every child’s face.

While happy meals may work in fast food, this formulaic approach to addressing buyers’ needs is simply not appropriate for engaging with buyers and addressing their complex problems.

Today, the savvy buyer wants an answer to the following question:

“Given what you know about my organization, with our specific set of challenges and opportunities, what should we do?”

Not what should we buy…but what should we do? The buyer wants assistance in co-creating the response to his specific problems. In a recent HBR article, Venkat Ramaswamy and Francis Gouillart state that over the past decade, dozens of companies, including Cisco, Dell, P&G, Sony, Starbucks & Unilever, “have embraced ‘customer co-creation.’” (“Building the Co-Creative Enterprise”, Harvard Business Review, October 2010). Co-creation as a selling process warrants a separate conversation; stay tuned.

Fortunately, for the knowledgeable sales person, most senior buyers are open to learning…to discovering not only what they don’t know, but what they don’t know that they don’t know. They do know that this new awareness can help them avoid significant business challenges or problems, challenges that would otherwise catch them both unaware and unprepared.

So we’ve arrived at the next level of selling. Some call it consultative selling; others refer to it as provocation-based selling, or selling with a Point of View. The sales person must be well-informed about the customer’s individual and industry problems and be willing to take a stand for the customer, whether or not the result is a sale of that sales person’s offerings.

Thanks,

Lee

Selling is Dead

A good friend of mine, a senior sales executive at an enterprise software company, questions the need for field sales people. And he’s right, the outdated activities carried on by many field reps no longer have a place in this new economic environment.

The selling function has gone bipolar, but not in the sense first conjured by that word. What we’ve seen over the past few years is that the interactions that assist a prospect in completing a transaction have polarized in one of two camps – value or convenience. High touch or high efficiency. Human or automated. Face to face or the web. In person or in pajamas.

When was the last time you went to a bookstore? If you know what book you want, it takes fewer than 50 keystrokes and perhaps 2 minutes of your time to summon the book to your doorstep or inbox. On the other hand, if you want assistance in selecting a new bicycle, you’ll invest a couple of hours at your local bike shop talking with an expert about the relative merits of carbon fiber versus titanium, Campy versus Shimano, DuraAce versus Ultegra or Record versus Chorus.

You’ll still do your homework on the web prior to venturing out to your LBS. You need to show up prepared, to look smart, to avoid being bamboozled by a fast talking sales rep pushing a spiffed product on Saturday afternoon. But once you get there, you will find a rep that you like, someone you’ve decided that you trust (using the elaborate methodology outlined by Malcolm Gladwell in Blink) and you’ll count on her to guide you through the decision making and implementation (fitting) process.

Even smart, well-informed buyers can benefit from experienced, value-adding salespeople. As a cyclist with 35 years and countless thousands of miles under my belt, I once took a vintage cyclocross frame to a local shop (Hot Tubes) to be repainted. When I asked Toby, the shop owner and builder, about painting alternatives, he pointed out that the frame was two sizes too large for me. I had mistakenly assumed that cyclocross frames fit just like road bike frames. The frame went back up on ebay and Toby built me a beautiful custom cyclocross frame, fitting me perfectly and finished in my favorite shade of blue.

As a consumer, I knew what I wanted and I thought I knew what I needed. Toby, as an expert sales person, didn’t go the easy route and accept the frame for painting. Instead, he educated me about proper fit and helped me to conduct a cost benefit analysis of refinishing my (poorly fitting) current frame versus engaging him to build a (properly fitted) new frame.

Buyers selecting sophisticated technology products or services fare no better. Many technology initiatives fail not because of the inadequacies of the product, but of the lack of preparedness of the organization. Buyers think they know what they’re getting into, but simply put, they don’t.

And many sales reps will book the order without helping the organization to understand the processes required to ensure success of the implementation. Most sales people manage to get away with this once with a particular organization; a few manage to do it twice. However, it’s the reputation of the vendor rather than the sales person that is tarnished in the process. And today few vendors can afford to book individual sales at the expense of their reputation and standing in the user community.

So What’s a Savvy Vendor to Do?
You must act now. With the economic pressures easing a bit and budgets starting to loosen somewhat, the imperative to change is lessening. In my research on organizational dynamics, I’ve found that it takes a “big bang event” to ensure the success of a strategic cultural change initiative. (It also takes role and behavior clarity, but that’s a separate conversation.)

The Sales Productivity Framework I developed at IDC incorporates five key productivity levers – people, management, methodology, sales enablement and customer intelligence. How would you assess the capabilities of your sales organization for each of those levers? Are you sending your sales people out unprepared or ill-informed? Are you forcing high value sales engagements on customers looking for simple acquisition efficiency?

Andy Grove, former CEO of Intel, said that only the paranoid survive. In my experience it’s the world class sales organizations who focus most on improvement. In contrast, most of those stuck in the middle of the pack continue to hope that things will get better. We all know that hope is not a strategy, and we further know that if you’re in the middle of the pack, and not moving up, sooner or later (and probably sooner) you’ll find yourself spit out the back.

Don’t Let this Perfectly Good Crisis Go to Waste

When we come out the other end of this recession, we are not going back to what we wistfully have been referring to as “normal.” Sketchy is the new normal. Uncertain is the new normal. Tight budgets is the new normal. Discerning prospects is the new normal. CFO or CEOs signing off on small projects is the new normal.

Your customers will have less patience for game playing, for unprepared sales resources, for timewasters, for uncertain ROI, for projects that don’t deliver on their explicit promises. If your message is not crisp, if your sales teams are not professional and polished and consultative, “below quota” will be the new normal. And nobody wants to live there.

Thanks,

Lee