The Increased Focus on Value Management – and ROI – by Leading CROs in 2021

Since the early 2000s, there has been an interesting trend, especially in the technology industry, to install a Chief Revenue Office instead of a CSO. It started off as a largely, but by no means exclusively, Silicon Valley trend and focused on SaaS providers. Most SaaS start-ups were led by CEOs with product and engineering backgrounds and many of them quickly realized (or were advised so by their investors) that they needed further executive leadership with revenue and customer DNA to complement those skills and interests — but more than just a sales leader because SaaS success is about more than just an initial sale – it is about an ongoing relationship with your customer over time.

So, while all CROs have purview over sales, many also oversee customer success, overseeing the full lifecycle of a customer. A small number even manage the marketing function, too. Some CROs act more like a COO, getting involved in product, business operations, finance, sales operations, business development processes.

Why is this? Well, ultimately, the CRO’s purpose is to align and optimize the entire customer experience with the aim of increasing revenue and many have discovered that the customer experience is often broken during the operational business processes – a badly-toned dunning letter, poor delivery management, whatever.

If anything, this last year has dramatically amplified the CRO’s contribution their organization. Most vendors and SaaS providers have learned that managing and maintaining a long-term customer relationship is more valuable to their business than a pure growth strategy. And the CRO’s role, looking at ways to generate and retain revenue across multiple channels with a long-term perspective, rather than the short-term horizon usually embraced by sales departments, has become mission-critical.

So, with COVID-19, the shift to virtual sales motions, and the growth of the SaaS economy, where contracts are up for renewal every year or two, forward-thinking CROs are promoting Customer Lifetime Value as a critical component for growth and success. These CROs are helping their businesses to create new differentiation based upon value achieved from using a solution, which in turn increases margins, improves customer experiences, and creates long term stickiness.

They are also stressing the importance of tracking, measuring and communicating customer value. One benefit of an “as-a-service” offering is that the value can be monitored continually as usage and deployment of the service fluctuates over time. ROI is no longer a one-off forecast based upon estimates and assumptions, it can be modeled tracked over time in a system, enabling customer success teams to track economic impact on an ongoing basis.

In our 2021 Predictions for Sales Leaders: THE YEAR OF VALUE whitepaper, we share 5 predictions for sales leaders in the coming year. One of which, is that CROs will begin to track a new KPI called “Return on Value Management,” a measure of how a company’s value selling efforts impact the business over time, including improvements in the number of business cases developed, pipeline generated, close rate improvement, revenue growth and EPS and cash.

In the coming year, the leading CROs will be able to easily articulate to both company leadership and their Board of Directors the economic impact of their investments in all customer-facing activities, and with it, establish themselves as true partners and trusted advisors to their customers, by ensuring conversations across the organization – in marketing, sales and customer success – are consistent and rooted in value delivery.

DecisionLink and Challenger Partner to Quantify the Cost of ‘No Decision’ for CSOs

How the company behind The Challenger Sale uses DecisionLink tools to take control of their own customer conversations.

Win/Loss analysis is a great way for a Chief Sales Officer to understand where barriers to growth might be hidden. But progressive CSOs are starting to pay closer attention to one type of loss in particular – ‘no decision’.

Recent research from Challenger revealed that 38% of B2B purchase attempts end in ‘no decision’. Looking at this number from a seller’s perspective, that’s more than a third of would-be customers taking calls, attending demos, putting out RFPs, and potentially even budgeting for purchase… who ultimately choose…not to make a purchase at all.

For over a decade, Challenger has helped hundreds of clients around the world transform their sales approach, improving seller performance and productivity.  In late 2020, they engaged DecisionLink to help them build what they refer to as “confront” content.

  • Confront Content: web-based tools that allow customers, as part of a learning journey, to calculate or assess the size and scope of a particular business problem or risk.

Appropriately confronting customers around their status quo thinking is central to the Challenger approach. Rather than lead with information about their products and company, high performing, “Challenger” sellers provide their customers with surprising insights about how they, the customer, can save or make money.

In this case, Challenger aims to share surprising insights with their customers (CSOs), who should be but are often not, focused on quantifying the full cost of a ‘no decision’ buying journey.

“The 38% ‘no decision’ stat is a troubling finding.” says Mike Randazzo, Sr. Marketing Director at Challenger. “A ‘No Decision’ loss reason in a CRM is common and is generally viewed as a cost of doing business for most companies. But the reality is that most ‘no decision’ cycles take nearly as long to close as a win but without a payoff. It’s pure cost. When you add up the prep, calls, requests for solutions engineering support, manager oversight, marketing support, product team support…the cost to pursue goes through the roof. Many sales leaders don’t consider what these hidden costs due to margin, cost of sale, EBTIDA – all the critical measures in this environment.”

With today’s virtual sales motion, every prospect interaction counts. The ValueCloud® Web Value Calculator from DecisionLink helps both sides of a sale, giving prospects the tools they need to quantify their pain points, understand a seller’s unique differentiation in the market, and set the foundation for a value-based conversation. On the selling side, engagement with the Web Value Calculator results in a more qualified lead, a more seamless handoff from marketing to business development and sales, and more effective and productive conversations with buyers.

ValueCloud® Web Value Calculator is a web-based, interactive value selling tool that is customizable based on a company’s unique selling situation. Prospects can generate a quantifiable report (like in the case of Challenger) that demonstrates the cost of maintaining the status quo or can quantify a project’s ROI, cost reduction, productivity improvement, or revenue growth.

All it takes are four simple inputs into Challenger’s Cost of No Decision Calculator (total # of sellers, Avg. annual bookings goal, Avg. deal size, and Avg. opportunity win rate) for the ValueCloud® Web Value Calculator to reveal the total pipeline needed to hit a revenue target…and how much of that pipeline will likely be closed-lost ‘no decision’ without some form of intervention.  A custom report further breaks down the pipeline impact and total cost and provides recommendations on how to mitigate the impact. This usually involves helping sales leaders scale skills, behaviors, knowledge, and strategy to win today’s complex sale across their teams..

“High-performing sellers are more effective at pursuing the right deals and creating the right amount of urgency in the buying process to drive customer decision-making. But the average seller can struggle to build a compelling business case,” says Mike Randazzo. “That’s when you see customers revert to status quo and decline to make a decision. The cost of the solution was still greater than the perceived cost of the problem. DecisionLink allows us to better quantify and prove that status quo, accepting 38% of pipeline lost to no decision, is no longer acceptable.”

Jim Berryhill, CEO of DecisionLink, says, “Companies need to understand that they have to win two sales to win a deal. First, they must beat their competitors. Next, they have to win the internal competition. If a company has ten internal projects under consideration but can only do three, which three will they do? The one that brings the most value to the business. So, marketing and sales have to be better. Better means aligned to customers, to the value achieved, and the potential your solutions bring, and the value they lose by continuing to operate business as usual. If you can quantify that for the buyer early in the sales cycle, the business case speaks for itself.”

Are you a sales leader interested in learning how ‘no decision’ affects your pipeline? Check out Challenger’s Cost of No Decision Calculator, powered by DecisionLink, to download a free custom results report.

 

Challenger is dedicated to driving exceptional growth by changing behaviors in Sales, Marketing, and Service teams. Their commercial transformation programs, including message creation, skill development, and implementation support, have provided performance improvements and significant financial results to hundreds of clients around the world. Each program is supported by ongoing research and backed by our best-selling books The Challenger Sale, The Challenger Customer and The Effortless Experience.

DecisionLink’s ValueCloud® is the leading customer value management platform that supports end-to-end customer lifetime value management – from initial sales call, to realization, to renewal and beyond. The ValueCloud® self-service interface helps sales and marketing teams establish value metrics at the top of the funnel and during initial sales engagements, empowering sellers to refine, measure, track, and communicate customer value throughout the customer journey. Trusted by companies like ServiceNow, DocuSign, Marketo, VMware, CrowdStrike, and Caterpillar, DecisionLink turns customer value into a strategic asset.

 

Scaling Value to Grow Customer Lifetime Value

two men talking about customer lifetime value

By Joanne Moretti and Mike Maxey

For our combined 45+ years in sales and marketing, the focus of sales leadership has consistently been firmly planted in the front end of client engagement, i.e., customer acquisition.

The majority of investments we made were on customer intelligence tools, lists, lead generation tools and channels, marketing automation tools, sales training and selling methodologies, CRM systems, sales operations, content management systems, value engineers, proposal development, systems engineers and of course systems integration efforts, more recently, to bring these pieces together in a cohesive revenue operations infrastructure.

Huge amounts of investment, time, and energy have been concentrated squarely on early-stage activities. In fact, according to IDC, this market is now in the multi-billion-dollar range. Depending on which analyst firm you speak to and how they size the market, it ranges anywhere between 50B and 90B dollars. And the market is extremely fragmented, just brimming with players who do parts or pieces of the sales enablement spectrum.

To use a page of Gerry Murray’s research, Sales & Marketing Research Director at IDC, he does a nice job of unpacking the market into four main layers:

  • Layer 1: Sales Force Automation (SFA) and Customer Databases/CRM Systems.
  • Layer 2: Sales Enablement tools, Proactive Guidance, and Sales Analytics tools
  • Layer 3: Proposal Building, quoting, and contracting aids
  • Layer 4: Sales Engagement and Marketing Tools

IDC Market Glance: Sales Force Productivity and Management

Layer 1

Layer 2

Layer  3

Layer  4

These tools, in and of themselves, do a great job of delivering a discrete sales support function at various times in the earlier stages of a client engagement. And together, if integrated properly, do a really nice job of automating and digitizing the entire “front end”, of the customer acquisition phase. In fact, some high-tech companies have done this so well that, depending on product complexity and ASP, a transaction can be completely automated and executed in a frictionless way, with no human intervention whatsoever.

Yes. Things have gotten quite sophisticated in SalesTech and MarTech land.

All that said, the biggest missing links we see are two-fold: 1) customer benefits proposed, iterated, then delivered and 2) bringing automation and self-service to that data to facilitate retaining customers for life.

In other words, a platform that creates a single source of “customer value” truth, and the ability to “democratize that truth” at any point on the customer journey, from acquisition to retention to expansion to advocacy. We believe leveraging this type of customer benefit data builds trust, and ultimately helps solidify relationships to grow customer lifetime value. And frankly, that’s when the real uptick in high-margin business occurs – downstream in the relationship.

Our POV

Our belief is that value needs to be established and OMNIPRESENT from the outset and continually refined and reinforced all the way through the entire customer lifetime.

We believe that a ‘thread of value’ can and should turn into a ‘chain of trust’ that pulls buyers and sellers much closer together in a relationship. And when this happens your relationship grows beyond supplier status; you move into trusted advisor territory and ultimately customers for life.

Why so many of these tools, in fact all of them, neglect the “value” element, is beyond us, but we recognized this underserved need to help our clients establish value at the customer acquisition stage, and as a result they told us their win rates went up 2-3-fold; at renewal time, and they told us their churn rates went down, and at the cross-sell/up-sell stage and their share of wallet went up as did their profitable revenue.

For these reasons, we continue to pursue our vision of delivering the world’s first and most advanced digitally-enabled Customer Value Management platform for our clients. One that delivers insights and customer-facing outputs that quantify and establish your value at any stage of the customer journey. And frankly, this isn’t a moment too soon. Today’s modern CRO is measured on Customer Lifetime Value.

Who Benefits and When?

To break it down for you, this simple diagram below outlines the buyer relationship and touchpoints with everyone on your team. We have designed our platform so that value enriches each one of these engagement milestones (wide) and helps to build credibility and trust at every level of your organization (deep). This type of wide and deep coverage of “value enrichment” will make your organization virtually untouchable by any competitor at any time and will ensure customer lifetime value is maintained in the long run.

What’s important is that value must be easy to access, easy to model and easy to communicate – with no MBA required to have these conversations at every stage.

And that was the overall design principle of the ValueCloud platform: easy to access/easy to use customer value management, to the point where customer value becomes a strategic asset and moreover a competitive differentiator for you. Your customers will immediately sense and see the focus on value in your organization.

In addition to turning value into a strategic asset for your company and enabling a value thread to connect every stage of the customer lifetime journey for you, the platform was designed to support complex value engineering in a multitude of combinations and permutations. Whether you are calculating value based on industry type, size of organization, a variety of benefit types, like time to market, inventory turns, process improvements, a variety of solution types or even custom solutions, the powerful computational engine of the ValueCloud® provides marketers, sellers (direct or indirect) and customer success teams a self-service engine that can handle any amount of variability you can throw at it.

Summary

In summary, a cloud-based, self-service, flexible platform, that covers your entire customer entire journey, and deeply into your organizations and their touchpoints with clients, is a must for any customer value management solution worth its salt.

And it’s a must for anyone selling in this remote work environment where it’s become difficult to build trust and where every proposal is heavily scrutinized by the CFO for ROI, TCO and in some cases the impact to financial metrics like ROIC, EPS, EBITDA and FCF.

Value Management across the entire team, on every deal is no longer a nice to have, it’s a have to have.