How To Get From Cost Savings To Business Value

shutterstock_234789472This application management deal is a “must-win” deal. We have the best solution, we have a great relationship with the customer and we save them a lot of money with this new cloud-based service. We all know overconfident sales statements like this one, don’t we? But then, all of a sudden, the deal goes south. The customer makes a decision for a competitor. Why? Because this competitor offered a much bigger business impact, connected to the customer’s relevant financial metrics. It’s a disaster for the sales team, the funnel and the quarter.

Cost savings are a translation of features and functions into a financial equivalent. Cost savings don’t connect to the customer’s desired business results per se. They are a prerequisite for getting to their specific business value.

Cost savings are still in the category of what a product, a service or a solution IS (features and functions) and what it DOES (saving money), but not what these cost savings MEAN to the customer. The typical question of a CFO kind of role will be: “So what?” In our 2015 MHI Sales Best Practices Study, we identified critical customer behaviors. One of these behaviors is that customers decide how they calculate value. In this year’s study, 61% of the world-class sales performers indicated that their customers require formal calculations on business value (ROI, TCO, and specific business cases, etc.) before making a buying decision, compared to 39% the year before. Look at this huge hike from 2014 to 2015, and consider that only 35% of all respondents indicated the same customer requirement (versus 26% in 2014). Now, what are world-class sales performers doing differently?

World-class sales performers know that their products, services, and solutions are only one element in the customer’s approach to solving a problem or mastering a challenge.

Value always lies in the eyes of the beholder, the customer. As customers make every decision differently, every time, the customer’s desired business value has to be different from the provider’s product-oriented cost savings. There is a natural gap by definition. This gap is one of the reasons why traditional ROI calculators never impress a customer stakeholder who has a financial focus. Those ROI calculators are, most of the time, product-oriented, which means they only cover one element of the customer’s solution, the provider’s offerings.

World-class sales performers map their product’s cost savings to their customers’ broader business value calculation.

That means that in the customer’s business case, the offered product’s cost savings will often be only one line item. World-class sales performers know how their cost savings can impact other financial metrics in general. Their expertise in understanding the customer’s context and the stakeholders’ different concepts allows them to figure out which financial metrics are important for this buying team, this time. They also identify the strategic business initiatives and connect the dots between their product-based cost savings, the directly impacted financial metrics and their impact on the customer’s strategic business initiatives.

Understand your customer’s financial performance and identify financial metrics that matter to them

shutterstock_247774624Many sales professionals were trained to focus on their ROI and TCO as discussed above. That worked as long as (in our example of a cloud-based application management), IT departments and technical buyers made the decisions alone. Now, as we observe a huge shift to business buyers and cross-functional and complex buying teams, business value calculations become very different. Why is this the case? Because there are no IT projects anymore. Every IT project that exists has at least one business reason, why it exists. Consequently, business values are calculated differently. In general there is a switch from efficiency and budget optimization to effectiveness and investment thinking.

Understanding your customers’ current financial performance and their goals are the first step to identifying metrics that make a difference to them. Financial reports, analyst views, strategic initiatives are great sources to educate yourself. Learning additional financial metrics such as e.g. return on assets (ROA), return on equity (ROE), operating costs, cash flow, EBIT and EBITDA, as well as net and gross profit margins are essential to create outstanding value for your customers next time.

Create a value mapping chart for the entire buying team

Such a document includes the business reasons for every buyer, their desired solution and their desired tangible results and intangible wins, and how they measure success. Then, map back to the relevant metrics of the strategic initiatives, identify alignments, gaps and maybe inconsistencies. Then, come up with an overall approach to your customer’s business value calculation, integrating the stakeholders’ relevant metrics. Being prepared like this shows that you work backward from the customer’s context, and the stakeholders’ different concepts and that you made a lot of efforts to create extraordinary value for them. That’s the entry ticket to have effectiveness and investment focused conversations on eye-level. This is where you should be to win the next deals.

 


Related blog posts:

Providing Perspectives – A Dynamic Customer-Core Engagement Principle

Manage Mechanics, Navigate Dynamics

How Sales Professionals Create Value for Customers 

This article was initially written for the Top Sales Magazine June 30th, 2015

Coach, Leader And Business Manager: Frontline Sales Managers Need Enablement | See You In London, June 18!

shutterstock_217269409Frontline sales managers (FSMs) are the most important role in any sales organization when it comes to sales execution and driving sales force transformation. Just think about their span of control in your organization. This role can decide what sales professionals sell, where they sell, to whom they sell, and how they sell. This is why frontline sales managers have such a huge leverage effect, why it makes good sense to invest in developing their effectiveness and their productivity.

However, our research shows that developing frontline sales mangers is still not a high-priority investment in sales productivity. Only 55% of sales productivity investments (data from our 2014 MHI Sales Performance and Productivity Study) are dedicated to developing frontline sales managers. At the top of the list (82%) are still investments in the skills, competencies and knowledge bases of individual contributors.

This disconnect has to be solved with holistic frameworks that address the FSMs’ challenging role, where the three key areas of customers, people and business compete for their attention. Our FSM Triangle is one such framework that has proved to be effective in frontline sales manager development. Our FSM Mantra is another valuable framework; it helps shift the frontline sales manager’s focus to what really matters and what they can control directly in their role. And that’s all about managing the right set of activities and coaching the related behaviors. FSMs often feel like they are on a motorway without speed limits: How should they divide their attention between looking ahead and looking behind? So, we will talk about “rear view mirrors and windscreens” – when and where to focus.

Developing frontline sales managers can be done in different phases. But the most important capability that has to be developed right away is coaching. Coaching is a capability that’s not required in a sales role, but it’s the must-have capability that makes all the difference. Not many people are born coaches, but many have become great coaches. To do that, there is conceptual homework to be done; ideally by enablement and training teams to define a coaching framework and coaching guidelines. And the homework has to be implemented successfully.

And then, it’s about enablement technology that can advance coaching capabilities to the next level. Technology can provide leading indicators for FSMs, to help them to understand what activities work or don’t work. Furthermore – and this is state-of-the-art technology – FSMs can see what interactions salespeople have with clients and prospects and how these prospects and clients interact with their salespeople. It’s another very valuable way to adjust activities immediately and focus coaching on the behaviors that have to be improved to ensure sustainable and scalable sales results.

Enabling frontline sales managers is one of the four pillars that lead to the next level of sales enablement, sales force enablement.

Have a look at this webinar or the related slide deck, where I discuss these pillars in a joint presentation with Showpad.

MHI Global Sales Leadership Forum

 

 

 

Join us in London for our MHI Global Sales Leadership Forum, June 18; in association with Top Sales World, sponsored by White Springs and ShowpadI will deliver a keynote on the frontline sales managers’ dilemma and how to solve it, and Pieterjan Bouten, Showpad’s CEO, will show how enablement technology can drive the FSM’s coaching capability to the next level of FSM effectiveness.

Have a look at our Agenda, and check out the additional key notes by Top Sales World’s CEO Dr. Jonathan Farrington and White Springs’ CEO Gary White as well as highly relevant “how to” workshops on funnel management and coaching.

Register here!
See you in London, June 18th!

PS: Jonathan Farrington and I discussed the frontline sales manager issues, prior to our event. Click here to listen!

How To Avoid Seller And Buyer Misalignment: The Customer’s Journey Matters

The customer's journey mattersA few weeks ago, I signed up for a video conferencing service. The reason was simple: I was invited to a video meeting based on this service, so I needed an account. I signed up for a two-week free trial, the only option I had. I loved the service; the setup was easy, and the video service during the meeting worked pretty well. So far, so good. But then, the situation became strange. I got a message from a salesperson beginning with “Hey there” which is not my name, obviously. If the salesperson knows to whom he or she sends a message, why making it as impersonal as possible?

Then, a few nice sentences, followed by “I would be happy to assist with licensing options for you. Could you also answer a few questions so I may better understand your company?” A list of bullet points followed regarding the number of employees and technology workers (what’s that?), country headquarters, number of room video conferencing systems, collaboration tools used today and timeframe for making a purchasing decision. The message makes pretty clear that the salesperson assumed me to be in a buying process, without even questioning that.

Misinterpreting an individual interest for an organizational pain leads to misalignment and misunderstanding

Signing up for a free trial, or downloading a whitepaper are signs of an individual interest. Not more. Not less. At this point, nobody should even assume an individual pain, not to mention an organizational challenge that needs to be tackled. There is no proof point. Problem number one is making false assumptions such as putting a prospect in a buying process who didn’t even enter the awareness phase of the customer’s journey. Problem number two is not listening and not observing. Subscribers of free trials are normally tracked and monitored. In my case, it was easy to figure out that I used this service only once to be able to attend a specific video conference. Also here, the false assumption “a subscriber is always a prospect pretty close to making a buying decision” led to this misleading email message. Problem number three is not questioning these assumptions. In this specific case, the core mistake was not questioning my motivation to sign up for a free trial. I just had to attend a video meeting that was based on this service. I didn’t have a problem to solve, and I didn’t have an organizational challenge to master.

The buying process is one phase of the customer’s journey. Best practice is to identify the prospect’s position along the customer’s journey, not the buying process only.

The customer’s journey begins with an awareness phase in which a need, a challenge or a problem occurs. The situation is analyzed, diagnosed, and evaluated. The customers’ involved stakeholders must first decide that the situation is both important and urgent and need to be tackled. Next, they must have a vision of a better future state that will allow them to solve a problem, master a challenge and achieve or overachieve their goals. Only then will a decision to change the current state be made. Avoiding a risk can also be a reason to change. And this decision to change the current state for a better future state is the “must-have” prerequisite to entering any buying phase. No decision to change the current state, no buying process. It’s as simple as that.

In this case, world-class sales professionals would have tried to discover my real motivation, and my role in my organization to identify where I was along the customer’s journey and where my organization would probably be. The result would have been that I’m at the very beginning of the awareness phase, dealing with an individual issue that is not at all an organizational pain at this time. The best practice would have been to show me the business value of these services, to provide me with a potential future vision of success, but not proposing a solution with features and functions I didn’t even ask for.

Relationships matter – especially those that are based on the business issues that are relevant and valuable for the prospect

The salesperson not only missed the opportunity to discover my context and my motivation, but also to build a relationship, to create value for me and my organization. Creating value couldn’t happen as the salesperson did not invest time to discover what my specific situation was and what would have been valuable and relevant for me. Opportunities have to be created, and that’s work, often hard work. Opportunities don’t fall from heaven.
Furthermore, my experience was that I as a human being didn’t matter at all. Not my context, not my motivation, nothing. If they don’t care about me as a prospect, how will they treat me as a customer?

Customer-core engagement principles look differently. Providing Perspectives is a dynamic engagement and messaging principle that is based on the customer’s journey and the involved stakeholders as the main design point.

Related blog posts:

Providing Perspectives: A Dynamic Customer-Core Engagement Principle

Providing Perspectives: Customer-Core Principle

This article was initially written for the Top Sales Magazine May 26th, 2015

What If Efficiency Is Not Your Problem?

shutterstock_216328822Training sessions that make sense for marathon runners are clearly not appropriate for sprinters, even if both want to win an Olympic gold medal. The disciplines are different. The athletes’ objectives determine their activities.

That’s the same in professional B2B selling. The business results and sales objectives determine the appropriateness of various sales activities. World-class sales performers take this practice to heart. Our 2015 MHI Sales Best Practices Study shows that the world-class segment clearly defines the activities that are required for each stage of the sales process to achieve their sales objectives (95% compared to only 43% in the “all respondents” category). This trend has increased from 2014 to 2015 by 13% in the world-class segment, but only by 7% in the all respondents category. Having a strategy and knowing the right things to do seems to be a huge differentiator between top performers and others.

Effectiveness comes first. Efficiency without effectiveness does not know what’s right or wrong.

Imagine that your frontline sales managers are focused on a certain number of prospecting calls per salesperson per day to achieve a stretch revenue goal in a few selected industries. But somehow, the conversion rates don’t improve even if the number of calls increases. Let’s assume that the organization has invested in CRM technology, in lean processes, in customer data, in targeted value messaging, etc. But were they effective? Apparently not.

FSM’s mantra part 1: Manage the right set of activities

Efficiency is clearly not the problem here. Effectiveness is. Question number one, which is in the DNA of world-class sales managers, should be, “Are prospecting calls like these the right activity to achieve our sales objectives?” They don’t ask, “How can we make these prospecting calls better, faster, cheaper?” until they are completely convinced that this is the right thing to do to achieve their desired sales objectives. As we know from Albert Einstein, we cannot continue to do the same things over and over again, but expecting different results. It cannot be emphasized often enough that questioning the current state is a fundamental sales leadership approach to developing high-performance sales teams. It’s absolutely essential. It requires sales managers to hold on for a moment, to put themselves next to the situation and to observe and analyze what’s going on and to question if these sales activities are still the right activities to achieve the desired sales objectives. Maybe it was the right approach last year, but is it still the right thing to do?

FSM’s mantra part 2: Coach the related behaviors

In this situation, the “questioning process” can reach the conclusion that the activity itself is still the right one, but it isn’t being executed with the right level of quality. Or the questioning process can come to the conclusion that the activities are no longer the right ones to achieve the desired sales objectives. Whatever the conclusion is, it has to be driven by facts and data. Maybe the salespeople had only a foundational training, but not enough practice and no regular coaching to improve the quality and the outcome of the calls? Then that’s what we have: a probably efficient activity that leads nowhere. Activities have to be connected to the desired outcomes to develop a performance culture. Therefore we need to establish a culture of learning and coaching first. In the example above – after the initial questioning process – the sales managers measure and analyze the results of the prospecting calls with leading indicators. And they share the results with the sales team. What did salespeople who had success do differently compared to those who were not successful? Analyzing the leading indicators, e.g., conversation rates or percentage of follow-up calls, with salespeople’s positive and negative experiences should lead to a tailored coaching approach that’s specific to each individual on the sales team. World-class sales managers also make sure that the best practices of top performers are leveraged to improve everyone else. Eighty-one percent of the world-class segment executes this behavior consistently and collectively, while only 32% of the all respondents segment does, according to the data of our 2015 MHI Sales Best Practices Study.

World-class frontline sales managers put it all together – in iterations

World-class frontline sales managers analyze sales activities based on leading indicators as they are happening. They are open to recognizing patterns, learning, adjusting the activities and coaching the related behaviors. And they understand that they are in ongoing iterations of analyzing, learning, adjusting and coaching. World-class frontline sales managers are brave enough to stop an activity if the facts show that it is not the best one to achieve certain sales objectives.

Executing the FSM’s mantra “managing the right set of activities, coaching the related behaviors” leads to what sales leaders are looking for: increasing sales results and productivity to achieve ambitious revenue and growth targets.

This article was initially written for Top Sales Magazine, May 5th, 2015.

Related blog posts:

Frontline Sales Manager’s Mantra: Managing Activities and Coaching Behaviors
Frontline Sales Managers – Balancing Various Priorities
Frontline Sales Managers: Key Role, but Poorly Developed and Enabled

All Things Frontline Sales Managers: See you at the Sales Innovation Expo in London 13-14 May 2015!

Keynote Banner Tamara SchenkFrontline sales managers have a greater impact on sales execution, sales productivity, and sales transformation than any other role. What makes their role so demanding and complex is the continuous challenge to balance between three often competing areas; customer, business, and people. Having been the best salesperson does not qualify an individual to be a stand-up top frontline sales manager. Poorly developed frontline sales managers drive top performers out of the organisation and promote mediocre performance from those who remain. This is an untenable situation for any sales leader with ambitious performance goals.

World-class sales organisations understand that frontline sales managers are not born. They develop their frontline sales managers with an integrated programme that allows them to grow in the role of a leader, a coach, and a business manager. They know it`s not about adding costs to the bottom line, but adding growth and effectiveness to the top line. They understand that the cost of doing nothing is much greater.

In my keynote seminar “Frontline Sales Manager’s Dilemma – Coach, Leader and Business Manager” on May 13th, I will share our latest research on frontline sales management and what to do with it. I will discuss what triangles have to do with frontline sales managers and their individual effectiveness. And we will discuss why frontline sales managers should benefit from applying a specific mantra that helps them to focus on what really matters in their role.

In addition, I will lead a workshop session called “Mastering the Frontline Sales Managers dilemma: with a triangle, a sharpened focus, and a capability framework”; two times on May 13th and two times on May 14th as part of our MHI Global Sales Performance Masterclass. During this session, I will discuss the latest research on frontline sales managers from the MHI Research Institute. Building on these data points, we will discuss the frontline sales manager triangle and how to use it to balance better various priorities with simple principles. The triangle is about shifting complexity from the unconscious mind to the conscious mind to driving the frontline sales managers’ decision-making quality and their individual effectiveness. Sharpening the FSMs` focus on those activities and behaviours that really matter is the second concept that we will share and discuss how to apply it. Last but not least, we will discuss how a capability framework can enable you to reviewing, adjusting, and designing your own frontline sales manager development programmes.

I’m looking forward to seeing you next week at the Sales Innovation Expo in London!

 

Related blog posts:

What Triangles Have To Do With Frontline Sales Managers

Frontline Sales Manager’s Mantra: Managing Activities and Coaching Behaviors

Frontline Sales Managers: Key Role, but Poorly Developed and Enabled

Frontline Sales Managers: What Are Their Key Capabilities?

Frontline Sales Managers – Balancing Various Priorities