In this Mucker Growth session, Mike Genstil with ValueCore delves into the concept of value selling and its application in enterprise sales.
Delivering value at every touchpoint of the customer journey is crucial. As a founder, ideally you want your sellers, marketers, and product leaders aligned in transforming product features into value-based messages to accelerate sales cycles and secure corporate deals. Quantifying pain and value, even early in the sales process, is shown to be beneficial, leading to higher win rates and deal sizes.
Know Your Customer's Pain Points
There are lots of challenges on the journey to closing an enterprise deal. Deals can slip due to a variety of reasons. Buyers may not be able to quantify their existing cost structures or full understand how new solutions can make a difference. Buyers may also struggle to justify investments in new purchases and to convince their leadership team of the worth. If the seller can help provide value to assist the potential buyer with those gaps, then the buyer's journey has less friction and involves less of a lift on the buyer's end.
Value selling includes practical actions to improve the sales process, including early introduction of value articulation, uncovering value drivers, creating calculations, and dealing with customer data sharing issues. The approach advocates for a proactive stance towards integrating value articulation throughout the sales process, starting from early stages like discovery.
Ideally, you as a seller are prepared from the beginning and avoid scrambling to justify pricing later in the process. You are already prepared with an understanding the customer's problem upfront, ensuring that proposed solutions align with their perceived value.
This involves both qualitative and quantitative elements, including identifying challenges, assessing current spending, and estimating potential revenue losses. The goal is to create a comprehensive understanding of the customer's existing environment to demonstrate the value proposition effectively.
Four Main Categories Where Pain Can change to Value.
1. Hard Cost
This refers to money spent outside the company on materials, software, technology, etc. Examples include buying software licenses, purchasing materials, or investing in technology solutions like cloud services.
2. Productivity
This involves assessing the efficiency of internal resources. It includes evaluating whether employees are spending their time on high-value activities or if there's potential for automation to improve productivity.
3. Revenue or Outcomes
Revenue loss can occur due to customer churn or inefficiencies in the sales funnel. It's about ensuring that the company is acquiring and retaining customers efficiently and effectively.
4. Risk
Risk encompasses events that cause financial or time-related losses, such as accounting errors, supply chain inefficiencies, or cybersecurity breaches. Minimizing these risks is essential for business stability and growth.
It's important to understand these categories and their impact on cost and benefit, irrespective of the product or sector. Creating visuals to display these value estimates across these categories can create a compelling case for the business sponsor. Starting with hard cost savings is recommended, as it can create a strong incentive for buyers to consider a solution seriously. By demonstrating potential savings compared to existing solutions, companies can build trust and credibility with their buyers. Examples of hard cost savings include: optimizing cloud spending, fuel savings through route optimization, and reducing cybersecurity-related expenses like fines and penalties.
Identify Potential Savings for Your Buyers
In order to identify potential savings for your buyers, you need to understand their current expenses and suggest solutions that could optimize or replace those existing expenditures. It's also important to know your target audience (the actual job title of the decision-maker) and the typical expenses they incur. This approach involves:
1. Identifying Categories of Spend
Create a list of expense categories relevant to the product being sold, such as cybersecurity solutions for a CISO. This could include security software, training, compliance, etc.
2. Conducting Discovery
During conversations with buyers, inquire about the solutions they currently have in place and who they work with. This helps build a framework to estimate their spending.
3. Estimating Potential Savings
Use back-of-the-envelope calculations based on factors like company size (e.g., number of employees) to estimate spending within each category. This provides a starting point for discussing potential savings.
4. Aligning Solution Value
Determine if the product can fully or partially replace existing solutions. This allows the vendor to suggest potential cost savings to the buyer.
5. Pricing Discussion
With an understanding of potential savings, engage in pricing discussions with the buyer, considering the value the product provides compared to its cost.
Once you know your potential buyer's current spending, you can identify areas where your solution can provide value, and engage in meaningful discussions around cost savings and pricing.
Help Improve Productivity for Your Buyer
Productivity is another value driver area. Most solutions aim to make the people they sell to more productive, but the key is to quantify this improvement. The process involves:
1. Identifying Functional Groups
Determine which functional groups the solution impacts. For example, if selling an HR tech solution for recruiting, identify how many people are involved in recruitment.
2. Estimating Time Spent
Estimate how much time individuals within these functional groups spend on specific activities. This can be done by counting activities like emails, phone calls, or interviews.
3. Estimating Value
Use tools like Sales Navigator to estimate company size and revenue per employee. This helps gauge the potential value of improving productivity within these groups.
Help Limit Revenue Loss for Your Buyer
Moving on to the third category, revenue loss:
1. Estimating Company Revenue
Use revenue per employee as a proxy to estimate company revenue, considering potential offshore employees not accounted for on LinkedIn.
2. Calculating Revenue Loss
Determine factors like churn rate and growth targets to estimate potential revenue loss due to churn or revenue gain through growth.
3. Visualizing Impact
Visualize the potential impact of the solution on revenue growth or churn reduction, which can be particularly compelling for subscription-based companies where valuation is tied to recurring revenue.
Help Mitigate Risk for Your Buyer
The final category where a pain point can be changed to a value proposition is risk. This category can be challenging to quantify due to reluctance from clients to disclose incidents. Potential risk events could include data breaches or errors in financial processes.
5 Steps to Deploying Value Selling
1. Start Small
2. Survey existing happy customers
3. Show vs. Tell
4. Use Data
5. Find an Internal Champion to drive success
Thanks to Mike Genstil for sharing this information.
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