A critical element of any high impact sales process is “creating business justified solutions.” I’d venture a guess that fewer than 20% of the deals I review have even the most rudimentary business and financial justification. For too many, sales people provide a price, and maybe a list of features and benefits that might be translated to business value–but we encumber the customer with the job of justifying the solution themselves.
Everyday, I read blog post after blog post about dealing with “discounting and price shoppers.” Questions about pricing and discounting dominated discussion groups (probably second to finding qualified prospects). But we see very little discussion about the business and financial impacts of solutions for customers.
I cringe when someone finally does a rudimentary financial analysis, develops charts to present it, culminating in a closing chart proudly stating “The ROI on this project is 6 months.” (If you are wondering about this statement, please pick up a book on elementary financial analysis right away).
In some ways, this is not just a customer issue. Perhaps we have trained customers too well. Too many customers focus only on pricing and don’t demand a strong financial analysis. So they let sales people off the hook.
Let’s pile one more thing onto this steaming pile of issues: The lowest market research data I’ve seen on the number of highly qualified deals culminating in “No Decision Made” is 24%. In our audits of customers, we often find much higher numbers. We are astounded by the number of deals won at the departmental and functional level, only not to be approved at the executive level (despite all the great qualifying questions). The reasons behind virtually all of these is “the business case didn’t align with our corporate investment priorities.”
Customers need strong business justified solutions! Even if they aren’t asking for it, to get approval for the investment, a compelling business justification is mandatory!
A great business justification is too important to leave in the hands of the customer! They may not have the knowledge to do this well, they certainly don’t have the time. So it’s up to the sales person–it’s a mandatory part of our jobs to do this for every deal.
The reason we don’t do it–and our customers don’t do it, is that it’s tough work. It can also be dull, boring work. It requires attention to detail, lots of data collection, and great analysis. All of this is tough and takes time.
To develop a great business justification, we have to really understand what our products actually do–not how they work, not all the features and benefits, but how they help improve customer results. We have to understand our customers and how they work–at a detailed level. We have to understand their KPI’s and how we impact them. How do our solutions improve productivity, whose, how, how much, how do we measure the productivity improvement? Do they reduce costs, which costs, how much, how do we understand the impact of the cost reduction? Do they improve customer service, how, how much? Do they improve workflow, what does that mean in terms of cycle time, process savings, how do we implement, how do we track and measure? And on and on and on. We have to understand the current state of the customer’s operations. Then we have to gain agreement on the improvements they expect, showing the performance difference in clear business terms–as expressed in dollars, euros, pounds, yuan, yen—and all adjusted for risk.
We can’t do this alone, we need the customer engaged in this. They need to own the results of the analysis.
But that’s just the starting point. We have to tie this analysis to the strategic initiatives and impact to the organization? We have to engage the CFO’s staff. We have to understand the impact on the Balance Sheet, Income Statement, and Cashflow. We have to understand our customer’s investment strategies–how do they allocate funds and management attention to the various projects and initiatives competing for limited resources? Do we have the buy-in and support of the Financial organization?
Success, our customers’ and ours, mandates strong business and financial analysis. Are we developing and presenting compelling business value? Are we gaining the customer agreement on that business value? Are we aligned with the customer priorities?
Hi Dave,
As you say co-creation of the benefits has always been tough. Even tougher over the past few years as buyers KPI’s have evolved.
As we know B2B buyers differ from organization to organization, to generate that elusive business justification to include cost-benefit, risk, compliance, strategic fit and politics requires a really deep understanding of the behaviours and motivations behind the buyers KPI’s and buyer dashboards.
Regards
John
Wonderful observation John, thanks for adding it. Unless we expand the conversations, including the financial and other buyers, and engage them in real discussion about cost benefit, risk, compliance, strategic fit, etc; we never get them to understand the behaviors, motivations, WIIFM. politics, and other elements critical to understanding how they will make a decision. Thanks for the great reminder.
A very thought provoking article Dave. How salespeople work across various departments is a “sticky” thought for me; always near the top of my thought stream. All salespeople should have a level of business acumen to understand and speak intelligently about organizations’ financial structures and business plans.
The question I have this morning, in more complex sales do we want a dedicated business analyst assisting as we do with engineers, etc. so salespeople can prospect and engaging more? The answer is likely different for different sales companies.
My son and I had a conversation last night about his unique challenge. His company sells technology to banks heavily involving legal. After a sale is closed, their respective legal departments take over to re-close each sale. Even with the upfront due diligence, too many sales are lost.
Forgive me if i took this on a small tangent. With some selling becoming more complex, how do we support sales to manage these challenges and maximize customer face time?
Gary
Gary, these are great issues. As you point out, the real answer is “it depends.” I see some organizations putting specialized “value engineering” teams the sales people leverage to do much of this. There are also an emerging category of tools that help the sales people do this themselves–but this requires deep involvement of product management and marketing to help develop these tools. Additionally, all of this demands strong case studies to validate the business cases.
Having said all of this, it is incumbent on the sales person to understand and communicate the impact to key executives. This requires a much deeper level of business and financial acumen than I see in most sales people.
Finally, with respect to your son’s situation, without meaning to be nasty, I detect a little bit of “sales error.” If they know there are two simultaneous sales–the one to the user and one to legal, they should integrate this into their sales process, working with legal much earlier and involving them with the other decision makers. This actually isn’t an uncommon thing, and we’ve seen sales teams engage legal very early in the sales process.
Dave, I agree that salespeople must have the knowledge and skills to convey their business case and discuss the nuances, not merely present it as is. Teamwork is essential. Which leads me to my son’s company’s challenge.
I hesitated bringing up their case as an example, because of the lack of background. To keep in context with your post and not attempt to resolve their problems, let’s call it an alignment issue. Legal does get involved during the early stages behind a closed door, may or may not become involved in mid-stages, and comes in at the end behind a closed door with the client’s legal team. The sales and buying team are excluded. This, as explained to me, is a common industry practice. But does that make it acceptable? “This is the way it’s done” is not justifiable. Sales and Legal are on unfriendly terms. I blame leadership, not sales or legal.
As selling complexities increase, more decision makers requiring more specialists on the team elevates the potential for team misalignment. In most of the cases I’ve been exposed to, lack of good leadership leads to ownership of the win and blame for the loss finger-pointing.
When I sold machine tools, stories of our competitors salespeople battling with their own engineers in front of clients were common. Some sales organizations were infamous for their entertaining squabbles.
David, you are regularly involved with clients managing complex sales teams. How often do you find discord or lack of good leadership the culprit?
I’m inclined to believe that a good team captain whose interest is in winning the business for everyone, not for sales, engineers, analysts, or lawyers, makes the difference. What say ye?
Gary: It’s always difficult to comment based on such little understanding. I think it’s useful in reframing this as a customer buying process problem. Having two different buying teams working in parallel, but independently is fraught with all sorts of problems. For the customer to achieve what they are trying to achieve, they really need to align their efforts to a common goal. If the business buyer and legal buyer aren’t aligned, they will not produce the best results for the organization.
Sales can offer a lot of leadership in this. Sales needs to clearly help the customer understand how destructive this process is, and how they can be much more effective from an overall organizational point of view by working together to achieve the best outcomes for the organization.
In the separate case you describe, where sales teams are leveraging specialized resources to help the sales effort, it’s critical that we have clearly communicated and aligned roles, responsibilities, and metrics. Without this, the team isn’t as impactful as it can be–resulting in lots of finger pointing, and terrible results.
Management is responsible for assuring this alignment is in place. If they don’t, they aren’t fulfilling their responsibility for maximizing the performance of the organization.
As always Gary, your comments really illuminate the points I struggle to make in the posts. Thanks so much!
Good blog on Cost-Benefit Analysis.
Thank you
Excellent advice!
Thanks Phil!