Rethinking Renewals

A big deal is in the funnel; a must win, a secure deal – it’s a renewal. This one will make the quarter a great success. We all know this situation and the feeling when such a “must win deal” is lost. Hectic win/loss reviews are conducted to understand what has happened. Often, a competitor came out of nowhere, changed the game and won the deal.

Every customer makes every decision differently – every time

Underestimating this fact – that every customer makes every decision differently, every time – can lead to four “renewal pitfalls,” especially in complex sales:

  • The sales team feels over-confident and doesn’t pay enough attention to the current buying situation. Copying the previous approach is a dangerous behavior. Every buying situation is different.
  • Sales managers don’t pay enough attention to renewals, especially in the early phases of the deal when coaching can have the most impact.
  • Sales professionals are not involved early enough, based on the false belief that there is no customer awareness phase in the renewal. That’s dangerous, too. The awareness phase for renewals exists, but it is different.
  • If the renewal is based on an RFP, many sales organizations have a tendency to declare the deal a must win deal and to announce executive sponsors. But that’s too late to make a real difference in terms of approach and value creation. The customers have already made up their minds how to approach the situation this time.

The lesson here is that a renewal is a deal, and it must be sold, just like any other deal.

Context matters, and context is different in every buying situation

The sales team has to engage with existing customers very early in their new customer’s journey. The key is to analyze the current customer’s context precisely, from an environmental and a situational perspective. What has changed and what hasn’t? Are the decision makers the same? What is different or no longer relevant to the customer? Is the capability being used to its full potential? How happy is the customer? Has the expected value been created? What are their desired results and wins this time? Analyzing the customer’s current financial situation and how it may have changed since the previous contract is an essential foundation. Understanding the current business strategy is another key element. The approach has to be connected to the customer’s business strategy and to their financial situation. Often, a deep understanding of these elements opens additional possibilities for creating new value for the customers. A renewal should be treated as a new opportunity with all the advantages of knowing the past and the ambition to create extraordinary value for the customers.

Orchestrating the customer community to build a shared vision of future success

In complex buying environments, sales teams have to orchestrate and lead many different stakeholders that build the customer community. If buying decisions involve different functions, such as technology and business, very different buyer roles with different concepts about this particular purchase have to be aligned. The challenge for any sales professional is to establish a shared vision of future success, together with the network of stakeholders, the customer community. Based on the unique context and understanding the stakeholders’ different concepts leads to a deeper understanding how this customer community is going to make a decision this time. Building a shared vision of future success requires a salesperson’s individual expertise to address each buyer role with content and messages they need to feel comfortable in their role to make a decision to change. Without this shared vision of success – that will be different from the last contract – the customer community will never make a buying decision. Some salespeople believe that a renewal has nothing to do with changing the current state or solving an issue. That’s not the case. If your services are not required to achieve a certain result or a better future state, customers will never buy. Why should they?

Developing a customer community by providing perspective

Developing a customer community doesn’t happen by accident. It’s based on a systematic customer core engagement and messaging principle called providing perspective. Dynamic value messages play a central role, tailored to each stage of the customer’s journey and to each buyer role. Sales enablement not only has to provide those value messages; it also has to make sure that salespeople learn how to apply those value messages effectively. Sales professionals who can successfully provide perspective bring to the table their experience and professionalism, their skills and competencies, their knowledge base and their adaptive competencies. They know how to quickly adjust behavior, activities and messages to a specific situation. That also includes addressing different buyer roles, even if it feels uncomfortable. Sales enablement’s job is to develop salespeople’s messaging capabilities to feel comfortable in those conversations. Applying providing perspectives as an engagement and messaging principle helps to establish a shared future vision of success and to win the customer’s business – again.

Change the renewal game on your own – before a competitor does!

The Inability To Communicate Value Messages – Biggest Inhibitor To Sales Success 2014

At the MHI Research Institute, we have asked this question in each of the past three years: What are the biggest inhibitors to sales success?
Our 2014 data delivers a consistent message: The “inability to communicate value messages” is again the biggest inhibitor to sales success, as it was in 2013 (22%) and in 2012 (23%). The second biggest inhibitor is the “inability to attract new clients” (16%) followed by “more complex buying requirements” (15%).

Value messaging needs a clear design point – the customer

Before the Internet existed, a salesperson could create value for customers by presenting functions, features and benefits. But now buyers can find all this information online, and value messaging has to change. Executive buyers in particular are not interested in what a product is and what it does; they need to know what it means for their business and their desired outcomes. This evolution in the buyer’s world changes the design point for value messaging. It’s no longer the product; it’s the customer. The customer’s journey and the different buyer roles along the entire customer’s journey are the main design point for value messaging.

Value messaging needs to be dynamic

The times when static value propositions were successful are gone. Value messaging has to be dynamic to address the customer’s different focal points along their customer’s journey. In the beginning of the customer’s journey, value messaging has to focus on the customer’s context and the stakeholders’ different concepts regarding how to fix a problem, how to avoid a risk or how to accomplish a goal. Salespeople can create significant value if they help customers to better understand their challenges, the root causes and the real business impact, and if they can provide tailored perspectives on how to approach the challenge in different ways to achieve the desired results. In these stages, there is no room for product-focused messages.

This changes in the actual buying phase. Here, the decision dynamics have to be orchestrated. Value messaging often has to address additional stakeholders with very purchase-focused concepts. Competitive and product-oriented messages are now more important, but must always be mapped to the customers’ desired results and wins. The goal in this phase is to be perceived as the buyer’s best option against all competitors to achieve their desired results and wins.

It changes again in the implementation and adoption phase. That’s right: value messaging doesn’t end when a deal is closed. Now, it is important that the value gets delivered as promised. Owning the customer’s outcome means making sure that they can achieve their desired results and wins. Furthermore, it’s important to orchestrate the value dynamics during this important phase. Different stakeholders will perceive value differently, based on their different roles and concepts. And often, projects are delegated for execution. So, it’s even more important to make sure that the stakeholders and the initial executive buyers know how the value was delivered and which customer results were achieved. Following these steps can easily open a window for new opportunities within this account.

Value messaging and creating new business

The inability to communicate value messages is not only the single most important challenge year after year; it’s also the underlying cause of at least two other inhibitors. Those are the inability to attract new clients, (reported by 16% or our survey respondents) and the inability to expand in existing accounts (7%). Taken together, these three factors comprise 48% of the inhibitors to sales success. This makes value messaging a top priority for every sales leader to care about.

Value messaging, sales enablement and homework

As described above, the secret to successful value messaging lies in a dynamic customer core approach. It is sales enablement’s responsibility to provide messaging frameworks that are easy to access and to customize. Sales enablement and sales training have to make sure that salespeople know how to use the messages effectively, and that they are trained to present messaging that’s focused on business issues rather than on product. Messaging training has a lot to do with role plays and simulations, ideally based on real opportunities. As in sports, it takes a while to get familiar with the basics of a new sport. It’s the same with new value messaging that’s focused on business issues. It requires a different language that addresses different patterns. New skills have to be learned to achieve a certain level of proficiency.

Furthermore, creating new business begins very early along the customer’s journey. First, your strategic account planning must lead to a solid account growth strategy. And the customer has strategic initiatives of their own; it’s essential to understand these and to connect the dots to your own capabilities. Identifying the right buyer roles within new accounts and also within existing accounts is critical to success. Then homework and research has to be done to identify a valid business reason for the first conversation, and all conversations must be prepared for in advance. At that point, value messaging can work successfully—if all other selling competencies are in place.

Related blog posts:

The Biggest Inhibitors to Sales Success

“The Expert” – Why Understanding The Customer Is Key To Provide Perspectives

Providing Perspective – A Customer Core Principle

 

Why Being A B2B Buyer Is Different – Consumerization Is A Poor Comparison

When buying a personal laptop, you know what you want, your budget, and your brand preferences. Then you make your online research to come up with a short list. Your best options get compared and you make a decision, placing the order online. That’s consumerization in the IT space. Reflect how you bought your first laptop and compare with how you do it now. Figuring out what you needed was maybe a time consuming process, often with iterations and mistakes. But having done that more than once, with more information available online, you know where to go, and who to trust when making your decision.

Now imagine yourself working for a large corporation.  – you are the final decision maker for the company’s new laptop generation. The CFO asks about the impact on cash flow, operating expenses and different “return on” metrics. The CEO wants to see the impact on productivity, the corporate IT board bothers you with a number of guidelines and policies, as well as procurement. Will you be following the same process as you would when buying a personal laptop to make a corporate buying decision? Most likely, no. The context is different, the impacted stakeholders are different, and what you buy is different, too. It’s always a specific, but complex buying situation.

Consumer and Business Buyers – don’t lump them together

People may argue that consumerization, makes all buyers the same. Buyers act as human beings. Whatever people learn in one area of their life has an impact on other areas. Your Mac at home is probably what you expect in the company. But for some reason, you won’t get a Mac there.

The buying context is different

The B2B buying situation is determined by the company’s current state, their desired results, their stakeholders, their budgets, etc. Their situational context is specific, even if the situation has common patterns, such as budget optimization challenges or effectiveness and investment challenges. As a buyer, you need to understand what different solutions mean to your area of responsibility in terms of business outcomes.

Many stakeholders – many different concepts

In a private role, you depend on your individual concept how to fix a problem, how to avoid a risk and how to achieve a goal. In an organization, you are confronted with different challenges. Therefore, your perspective how to approach those challenges are unique to your B2B role. Furthermore, other impacted stakeholders have their own, often different, concepts in mind, based on their perception of the situation.

Decision dynamic is different

While the buyer’s journey may look the same on a very high level, the decision dynamic is very different, every time. It’s true that consumerization, like our IT example, impacts people’s concepts and expectations regarding services and outcomes. But the decision criteria in a B2B situation will be different and they have to be agreed upon across the entire stakeholder network. There are people with more or less influence and power. Only a very few of them will have their skin in the game.  Imagine what happens, if a key stakeholder with lots of power and influence doesn’t prioritize your specific buying initiative? Let’s assume that all initiatives on the table have great financial impact. In this specific B2B buying situation, decision-making becomes political.

As B2B buying is different, so too is B2B sales. Understanding the buyers’ context and concepts, orchestrating their decision dynamic, to provide a value-creating perspective – that’s always unique. That’s why sales professionals exist – to create value for their customers, to help them to achieve their desired results and wins.

“The Expert” – Why Understanding Your Customer Is Key To Provide Perspective

If you have seven minutes to spare, I encourage you to watch “The Expert.” It’s absolutely worth your time. A customer and her design specialist have a meeting with a service provider, represented by a salesperson, a project manager and an expert. The customer has budget for a new marketing project on market penetration, brand loyalty and intangible assets. According to the customer, this project requires a drawing with seven red lines, which consists of two with red ink, two with green ink, and the rest with transparent ink – and all have to be perpendicular to each other. The rest of the conversation makes for hilarious parody on sales calls.

Understanding the customer’s context

The conversation offered many opportunities to get a deeper understanding of the customer’s specific context. But the salesperson did not use the opportunity to ask a few simple questions to understand the context at all. The salesperson’s primary focus should have been to discover this context and the project’s specific scope, to create a common foundation for all. Why and how should seven red lines serve the project’s goals? How should they fit into the overall picture? If the salesperson had used this time wisely, he could also have raised the question whether seven red lines were the right approach or not. Instead, they were all totally focused on the task – the seven red lines. Even worse, the salesperson and the project manager – who did not add any value at all – did a great job to blame the expert who seemed to be the only one who saw the ridiculousness of the request.

Understanding the customer’s concepts

What was it really that the customer and her design specialist tried to accomplish, fix or avoid? What about their desired personal wins? The only one who tried to understand their concepts was the expert. He did it according to his expert role from a solution perspective, not from an overall situational perspective. Also here, the salesperson should have established a common foundation before even bothering the expert with some seven red lines. Even the members of the customer team were not even aligned at all. The design specialist had no idea of the overall picture, she was only focused on the lines in the form of a kitten and how to inflate a balloon, surrounded by having no idea what perpendicularity means in the first place.

World Class sales performers

According to our Miller Heiman 2014 Sales Best Practices Study, world class sales performers don’t provide a solution before they clearly understand what the customer’s needs actually are. Additionally, World-class salespeople have a solid understanding of the customers’ business needs. That requires to make some research prior to the meeting, to define what needs to be accomplished in the meeting. As in so many sales conversations, salespeople focus directly on a solution without having accomplished a deep understanding of the customer’s specific context and their concepts. As we have seen here, those behaviors add no value and lead to nowhere. World-class sales performers lead a customer stakeholder network through such an awareness phase to be able to provide a unique valuable perspective that helps the customers to achieve their desired results. Then, it’s about discussing potential “seven red lines,” but not earlier.

 

 

The Buyer’s Dilemma in a Complex Environment

You are responsible for an IT organization and your main goal is to outsource your own function as part of a corporate EBIT optimization program, which means processing many different tasks and issues—fact-based and change-related—that are all connected to each other. You’ll also have conversations with providers who understand your situation and your desired outcomes as well as others who just want to sell cloud capacity. If you ask the latter about the impact on implementation and adoption, they may come back with a cheaper price. Who is the provider that creates add-on value with new approaches? Who can map your specific context and people’s different concepts to the specific situation to achieve tangible results?
Comparable scenarios could include buying new robot technology for an assembly line or buying a new enterprise software for core processes.

More data, information and content – but more meaning?

  • There is no such thing as the “well-informed, self-directed” buyer who is always prepared to make a good decision. Some buyers perform a lot of research, others don’t. A few conduct too much niche-only research, or in the wrong direction, and come up with ideas that are not suitable for solving the current problem. Shopping versus buying. Buyers are often still confused, but on a higher level.
  • Business impact can be difficult to determine from the content that’s provided in the public domain, even if the content is focused on business challenges and impact. The reason is that most ROI calculators determine the potential value of the provider’s solution, but not the ROI of the buyer’s desired solution, which requires more than typical data–it requires situational context.

Internal selling – the buyer’s most challenging job

  • Internal selling for buyers sounds strange, doesn’t it? But influencing and orchestrating across the buying community–selling your story, your future vision of success–to senior executive sponsors and to all sorts of committees to secure their buy-in is challenging and requires a lot of virtual leadership skills. •
  • Internal selling is also orchestrating potential partners. Where and how can a potential partner help you change a buying influence’s perspective? A partner’s specific knowledge and experience can be very valuable, especially regarding questions on ROI calculations and outcomes. A top sales professional’s value lies in helping you discover areas of potential value creation you didn’t see before. Involving potential partners at this point is helpful for getting to a better decision quicker.

Buyers in complex environments still have a dilemma, but it has changed. Before the Internet, they had an information deficit; now they are suffering from information overflow
and are looking for the specific value and meaning for their specific buying situation. Leadership and conscious collaboration are required on both sides–from the relevant decision maker whose job is to orchestrate the buying team and from the sales teams working with those buying teams.
Leading a buying team toward a future vision of success is the decision maker’s responsibility.
Orchestrating a buying team–understanding their context and concepts to be able to provide perspectives the buying team didn’t see before in order to help them achieve their desired outcomes–that’s a sales professional’s responsibility.

Related posts: Context Matters

Art, Science and Craftsmanship in Sales – What Does It Mean For Sales Enablement?

This post was published first @ TopSalesWorld – August Magazine.

Picture this – a sculpture from Michelangelo and a sculpture from a craftsman! In both cases, a lot of knowledge, skills, experience and attitude on how to work with marble or bronze are necessary. One produces sculptures, the other creates a piece of art. Isn’t the difference something that makes Michelangelo’s sculpture more meaningful, isn’t it the “je ne sais quoi” that’s touching people and they cannot say why?

Let’s define, what we are talking about: Science is defined as “a systematically organized body of knowledge on a particular subject” and craftsmanship as “the quality of design and work shown in something made by hand”. When it comes to art, we should build on Seth Godin’s definition: “Art is anything that’s creative, passionate, and personal. And great art resonates with the viewer, not only with the creator.

Isn’t that perfect for selling?

Selling is based on e.g. knowledge, skills, talent, experience and attitude. Knowledge covers e.g. knowing the customers and their challenges, knowing the own capabilities, knowing sales processes and selling methodologies. Knowledge is the foundation of what and how we are selling. Skills are the ability to do something well. Then, it’s about talent and attitude. If people have more talent regarding certain skills, they will develop mastery with ease, if their attitude is accordingly. Not only in sales, the own attitude is where it all begins. Additionally, selling means experience, intuition, gut feeling and the list goes on… We are talking about tangible and intangible things.

Now, let’s look at different selling scenarios:

  • Transactional: Let’s recap the crafted sculpture, a book, a software license, or a well-defined service. This kind of business is processed with inside sales teams, on line and often – without sales. But with customer service (see also Dan Pink’s “To Sell Is Human”). The customers drive this process, they find everything they need on line. Maybe, they contact the customer service hotline more often than the sales team. It’s a standardized, very efficient, optimized, sequenced process. In this sales scenario, we are talking more about science and craftsmanship, not so much about art.
  • Complex: Let’s look at an outsourcing deal. The customer’s stakeholders may all have the same challenge to solve, but they usually have different responsibilities and different view points how to get there, and they are measured differently. Even though these stakeholders analyzed a lot on line, very often, they are more confused than they would ever admit. Now, a sales person can create a lot of value by engaging with the stakeholders very early, ideally before the problem occurred or they are aware of the problem’s impact. That’s about sharing insights how to solve such a challenge, why they have to change now, to achieve their desired outcomes. Value creation from a sales perspective is also to provide context, to put things into perspective and to create a shared vision of success, a buying vision, a big picture, the whole stakeholder landscape can agree on.  What makes the difference in the buyer’s eyes? The creativity, the passion, the empathy, the commitment, the attitude of the sales person, the value that was created so far for the buyers   – all intangible things. Art makes the difference, but based on a solid foundation of science and craftsmanship.

Let’s sum it up:

  • Transactional selling: There is way more science and craftsmanship than art, due to the fact, that there is no longer an asymmetry between buyer and sellers. Success factors are efficient processes to create most effective results. Art is just icing on the cake.
  • Complex selling: Science and craftsmanship are the foundation, but art is the critical success factor in this scenario. It’s not about detailed processes and check lists, but about customer journey oriented milestones and core principles, that empower sales people and their managers in complex situations, and keep them accountable for their decisions and outcomes. Art in this context is creativity, imagination, bravery, boldness, passion – all the intangible skills and talents and a certain attitude of a sales person to own and to fight for the customer’s outcomes.

What does it mean for sales enablement?

In a transactional sales system, the world is complicated, but not complex and enablement is focused on science and craftsmanship. In a complex sales system, science and craftsmanship are a foundation, but enablement has to achieve more – to equip artists to make a real difference for the customer. So, enablement in a transactional environment is focused on scalable efficiency, but a complex sales system requires more, it requires also scalable learning to make a difference.

Examples:

  • Sales content, based on content management framework: In a transactional sales system, the content supports standardized product and services, mapped to customer challenges, tailored to buyer profiles – and can be automated in structured play books along the sales process, stage by stage. The need to customize content is low, it’s already tailored to the defined predictable number of typical buyer roles.In a complex sales system, content tailoring can get very complex along the customer’s journey, telling the story from the customer’s perspective and in different vertical colors. Content for different “why change now” scenarios is critical for success, tailored for a different set of stakeholders to create a shared vision of success.
  • Skill development: In a complex sales system, there are many more sales roles to be equipped than in a transactional sales system. Also, the focus is different: products and solutions are only a foundation. People in a complex sales system need business acumen, investment rather than efficiency  thinking as wellas principles how to navigate a complex customer stakeholder network, how to analyze the customer’s specific challenges, how to create a shared vision and how to map the own capabilities to specific situations.

To sum it up – enablement in a transactional sales system is focused on tangibles, enablement in a complex sales system has a stronger focus on the intangible things, on everything we call “art” – to make a real difference at the customer.