Not long ago, in speaking with a top executive, he expressed great frustration with all of the sales people trying to sell a major new system for his team.
Shaking his head, he said, “Dave, they just don’t understand what they are trying to do. All they keep talking about is how much money they are going to save me. I really don’t care about that, I want to know how they are going to help drive my revenue growth!”
It was an interesting situation. The team was an extremely high performance team. Every performance metric showed performance far ahead of competitors and the organizations they benchmarked the performance against.
I asked him, “Don’t you care about saving money?”
He said, “Well, yes and no. Our spending is under control. Our people are very productive, there isn’t a lot of overspending in the system. In fact, I’m not adverse to spending more. My biggest challenge is driving revenue growth. None of the sales people we are seeing will talk about how they will help our team grow and produce more revenue. All they talk about is how much they can save us at current performance levels! I care but I don’t care—revenue growth is my most important business driver!”
Reflecting on our conversation, it struck me that most “value propositions” and business justifications sales people develop focus on what the customer will save. Stated differently, they are almost all focused on expense reduction. That’s important in any organization, but sometimes it’s not the most critical strategy driver for the organization. As a result, our value propositions aren’t really aligned with what’s most important to the customer.
It’s critical to understand the key strategic priorities of the enterprises our customers work for, as well as the consequent priorities in their functions. Some organizations are driven by revenue growth, some by expense control/reduction, some by improved asset utilization, some by improved cash flow, some by improved shareholder value…….
Presenting an expense control/reduction business justification to an organization focused on driving growth is less impactful than changing your argument to demonstrate the growth your solution can drive. Expense control/reduction over the long term may not be as important to short term cashflow–particularly if there is a long/costly implementation cycle or long timeframes to results.
Sometimes the customer will have multiple priorities–grow revenue, cut costs. We need to understand what’s most important and how we present our value in the context of what they care about most.
So few sales people understand value, communicate and deliver value effectively. So few do rigorous business justifications as part of articulating the value the customer will derive from the solution. As a result it might seem crazy to critique anything a sales person might do in terms of presenting quantified savings, investments, ROI’s and so forth.
However to have most impact, we have to understand the strategic priorities of the organization. We have to connect our value propositions and business justification directly to how we help the customer achieve their objectives.
Very true. Growth is a much more exciting discussion topic than cost cutting!
Great to see you here Mark! Thanks for the great perspective!
Incredible as it seems, most of the ROI, value proposition, business value consultation, etc. practiced in the marketplace are about cost savings, not business outcomes.
And it’s the exact opposite of what business leaders want. Take security. The BoD of a company does not care about security utilities, they are obsessed with risk mitigation and improving the security profile of their companies.
Cost savings are for managers, business outcomes are for leaders. Both are good, but the latter is more important…and it isn’t close.
As always Jim, you get right to the point of what takes me a long time to say. Focusing on business outcomes is what creates real, sustainable value in in serving customers.
Hi Dave,
compelled to comment. Perhaps the challenge we are seeing is also a result of the drive for sales people to offer a value before they actually have a discussion with the customer. a la “The Challenger Sale”. There are many sales coaches who are espousing the strategy to find the value via alternate means – similar customers, news feeds about your prospect, assumptions about the goals of your customer….that suggest you can not get past the phone mail/email/gate keeper without a value proposition that hits the mark.
In many cases you will guess wrong, or be given the wrong direction from your product or marketing teams who are generalizing on the same assumptions.
I have to defend the poor sales people who are often sent out “naked” – forced to discover the KPI of the customer with good old fashioned questions (What are your challenges? How are you measuring success?) when their management and sales coaches are pointing them away from the “old fashioned approach”.
Natalie
Nathalie, it’s always nice to see you commenting. I think there’s some good news/bad news in your comments. I think it is great that sales people are trying to discuss specific value much earlier in the buying process than they have previously done (A la Challenger). As you point out, if sales people aren’t equipped to have the right conversations, they can be ineffective or backfire horribly. So it is critical they be equipped with the right tools/knowledge to engage the customer in the right conversation.
Too often, however, sales people don’t do their homework. They don’t take the time to visit the website to understand the strategy, they don’t look at financial reports, they don’t have the acumen to have an educated guess. For example, if I were prospecting TradeGecko, I would tend to lead with growth rather than savings, simply because of where you are in your life cycle. I may not be right, but I would probably be closer to right than not–that’s all you need for the initial conversations.
What was most concerning in this specific situation, was this was at the end of the buying cycle. Every vendor had failed to understand the corporate drivers, and emphasized savings rather than growth. In truth, most of all the business cases I see are savings focused and have very little to do with Business Outcomes. Jim Berryhill hit the nail on the head in his comment. Too much of the time, we focus training our people on savings, and don’t help them understand how to probe for and understand business outcomes, then develop a great case supporting those.
I tend to agree, except in the case of sales people too lazy to do the work. Mostly it’s a management challenge (sales, marketing, product management, executive). We need to equip our sales people to have the right conversations with customers.
Thanks for the great insight.