General Motors ran an ill-fated ad campaign in the late 80’s and early 90’s about The New Generation of Oldsmobile with a tag line “Not your Father’s Oldsmobile”*. They used hip music and video and got famous fathers like Ringo Starr, William Shatner and Leonard Nimoy with their daughters while promoting an imminently forgettable line of automobiles.
It was only about a decade later that Oldsmobile became a brand of the past.
“Dead’er than a beaver hat” I heard someone say.
NXT-GEN ROI cannot be a rehash of OLD-GEN ROI that companies have tried to use for the past 20 years. OLD-GEN ROI has the following characteristics with terrible consequences:
– Limited almost exclusively to the last ½ of a sales cycle
– Limited almost exclusively to a handful of a company’s largest deals
– Limited almost exclusively to skilled “value engineers” and “business value consultants”.
OLD-GEN ROI is like driving a 1989 Olds Calais with the terrible Quad 4 engine (oft thought to resemble Offenhauser’s design of the 1930’s) versus a brand-new, top of the line Tesla Model S.
In practice OLD-GEN ROI looks like this, limited to the bluish area in the top right. Perhaps the worst part is that OLD-GEN ROI is only practiced this “well” by about 9% of today’s companies:
The pain associated with OLD-GEN ROI is real. Low effectivity in marketing, lack of buyer connection and business alignment in early sales stages, forecasts vulnerable to losses as well as deal slippage and margin erosion for deals that are won, and churn with price pressure within the existing customer base. All because Value Selling is not a part of a company’s DNA.
Here’s what NXT-GEN ROI should look like, impacting the entire Customer Journey:
Over the next several posts, I’ll talk about the Identification, Position, Proposition and Realization impacts of NXT-GEN ROI across Marketing, Sales and Customer Care. Read here for a Harvard Business Review Study of business impact.
OLD-GEN ROI won’t go away anytime soon, but companies utilizing it will fail to achieve peak performance and be at a competitive disadvantage compared to those using NXT-GEN ROI.
*FWIW, if Olds and GM in general had stayed out front in the 80’s and 90’s with cars like the ‘58 Buick Roadmaster, ’66 Pontiac GTO, ’68 Chevy SS396 and ’72 Olds 442, they wouldn’t have gone through the 25 year hard times they did.
Is it worth it to create ROI analysis for your opportunities?
As a B2B sales professional, your decision whether or not to invest time in creating a business case depends on the amount of effort required versus your expected return. And since today’s prevailing paradigm is that creating a unique business case is a difficult task, most of your opportunities probably don’t have one.
On the other hand, your prospects have a limited amount of funds and they will (or should) only invest in those projects that promise the highest yield. They will always compare your proposal with a multitude of others, and if you do not discuss a financial justification with the decision maker then someone else will.
So how do we solve this dilemma? By disrupting the status quo and using technology to decrease the amount of effort required.
When you can generate detailed business case documents in a matter of minutes for all your opportunities, you will have better conversations at the highest levels and your close rate will increase.
The ROI of ROI then becomes undeniable.
I often struggle with the approaches of communicating value. I have seen really great examples of how value selling has changed a deal for the positive and I have seen examples where value selling has turned the deal on its side. In most cases, the reason for the conversation around value going sideways was because “the expert” wasn’t in the room and the sales team got out over their skis.
This can be for any number of reasons but the main reason I have seen is due to the model used to calculate value being too complex and hard to follow. Well if your sales team cannot communicate it, how on earth will the customer ever be able to take ownership of it and sell when you cannot be in the room? Let’s face it they can’t and herein lies the problem. As someone who spends every hour of the day helping companies move the ability to sell value into the sales team (and even the channel in many cases) I have spent many a sleepless night trying to come up with a solution to that specific problem.
SIMPLE, CONSISTENT, & TRANSPARENT
Regardless of the model, ROI Calculator, TCO Calculator, etc. If you do not keep the way you communicate value to the customer SIMPLE, CONSISTENT, AND TRANSPARENT, you run the risk of the having a sub-optimal outcome of all of your hard work. So how do we do this?
- Land on a consistent way of calculating value at a high level: Please comment and I would be happy to give you some thoughts on how I approach this part of the problem. If you can get to a point where anyone can understand you benefits, then you have accomplished the goal
- Stay the course: One of the biggest challenges to adoption is a moving target, especially when it comes to sales people. They do not have the time nor inclination to play “follow the bouncing ball” when it comes to their sales conversations
- No Black Box: I have seen this with many tools (home grown and commercial). The simple fact is if you cannot trace both the numbers and the rationale then you will never be able to survive without the “expert” to explain even the basics. That simply DOES NOT scale
If you do this correctly, you can have the experts focus on the truly challenging multi-million dollar or very strategic snowflake deals and transform you sales team into a force that can differentiate not just what they sell but how they sell it!
Competitive Differentiation – Uniques, Semi-Uniques and Me Too’s
Normally when we think of the unique attributes of what we sell, we are looking for something that establishes meaningful competitive differentiation. We do it, they don’t, it matters. Selling is so much better when you can hang your hat on real competitive differentiation. If I have it, the competitors don’t and it matters to the buyer, that’s the perfect selling storm.
However, the selling world rarely works that way. Buyers rarely believe in UNIQUE that way. This is a story of a competitive differentiator and how it turned a niche player into a leader.
So to level set, here are my definitions. These are the real world:
- UNIQUE – We do it, they don’t, it matters.
- SEMI-UNIQUE – We both do it, but there’s a meaningful differentiation in our capability.
- ME-TOO – We both do it and there’s no meaningful differentiation.
Realistically, the vast majority of value that sellers deliver are SEMI-UNIQUE and ME-TOO.
So here’s the story, it’s a great one. In the early 1980’s, the DBMS market was dominated by IBM, Cullinet, and Cincom, each with several thousand customers. ADR acquired an upstart technology branded Datacom, with about 200 customers. In addition to shoring up the Datacom’s “industrial strength”, we needed a differentiator to get us into opportunities. To change the rules of the game. If not, we’d be the 4th (or 5th) horse in a 2 or 3 horse race.
Otherwise known as irrelevant.
There was a technology “religious” war brewing around Relational DBMS, 4th Generation languages, end-user tools and other technological capabilities, a mind-numbing panoply (or quagmire) of technologies. But one of the biggest issues for database projects was you had to re-write your applications to get the benefits of the DBMS and wonderful new tools. Business executives wanted capabilities immediately, not in a year or 2 (or 3 or 4). So the great minds behind Datacom (see below!) built a disruptive technology call “VSAM Transparency”.
VSAM-T enabled organizations to move data for existing applications into Datacom/DB and then run those application programs unchanged. Indeed, the programs often ran faster!!!
In a matter of a couple months, a company could be using super-advanced tools and meeting business needs. While there was much wailing and gnashing of teeth from some database purists, VSAM-T was a game-changer, a pure UNIQUE differentiator for a couple of years.
And it helped put Datacom/DB on the map. In just a couple years, ADR caught up with IBM and Cullinet, and was a player in virtually every DBMS evaluation.
And for us sales reps, VSAM-T gave us a PROVOCATIVE, CHALLENGING, HYPOTHESIS capability to align to what business execs wanted, and to be this guy:
UNIQUES matter when you can find them, but SEMI-UNIQUE is more realistic, and has the same or similar impact. In a couple of years, IBM and Cullinet had VSAM-Transparency capabilities, and tried to make it a ME-TOO conversation. Before Lee Corso used the phrase, ADR responded with “not so fast my friend” and continued to build on the differentiated capabilities of our VSAM-T versus the competitors.
The key point: find UNIQUE or SEMI-UNIQUE competitive differentiators and tie them to value and outcomes for your customers. If you want to speak the language of business (it’s the only language that matters) that means converting them into – dollars, time and quality. When you do, you can go from not even being in the game, to the leader of the pack.
Click here for another success story about the quantified $$$ value of competitive differentiation and how it impacts renewals and upsell with existing customers.These are some of the incredible professionals who gave us Datacom and VSAM-T. If there’s a software hall of fame, they should be in it:
Chuck Orrin Kevin Joe Lynn
McCoy Stevens Shuma Not Pictured
Rest in Peace
PROTECT AND DEFEND WHAT IS MINE!
In a recent blog post, I talked about Selling Value to Existing Customers.
Selling to existing customers is fundamental to our businesses. Yet we often have pressure on those renewals either by a lack of understood value, budgetary pressures, or replacement efforts by competitors. Sometimes it’s one of the oldest plays in the sourcing/procurement book, to bait our competitors with the opportunity to “replace our incumbent if you get aggressive and really sharpen your pencil, etc., etc.” Or some combination of the above.
Sellers end up with customer churn, unnecessary
discounts and more.
But, if you communicate the “Value Realized” by customers, you have a fighting chance.
A DecisionLink customer had just such a situation with an existing client. It wasn’t just any client, it was a blue-chip company headquartered in the same city. Whether a ploy or not, the Champion at the client told them, “We’ve got significant budget pressure and one of your competitors has offered to replace you with a 50% price reduction”. Please help me!!!
Other than the Champion asking for help, that’s certainly not what any of us want to hear.
Focus on Value Realization
This threat was significant, a competitive loss in their hometown would be a disaster. The “upside” at this point was to meet or get close to the competitive price, knocking a 250K renewal down to 125K or so. Not good!
Our customer offered a “value assessment” which was quickly agreed. In the assessment, we determined the following (with agreement by the Champion):
- The client achieved over $1.25M in cost savings in the prior 12 months.
- Of that amount, almost $375K was competitively differentiated, that is, the $125K saved in subscription would equal $250K lost after netting out.
- They identified additional areas of value their client had not yet achieved, and put a plan in place to realize that value.
- They identified over $500K in additional value their client could achieve by upgrading to their premium offering (additional $155K subscription).
Reactions from the Prospect & The End Game
The champion was relieved, but also was able to make his case within the client organization which resulted in organizational esteem. Our customer gained valuable competitive insights they previously didn’t have. Best of all, our customer renewed the client at $405K (a 60% uplift over the projected renewal), established a framework of value with their client and sent the competitor packing.
One More Take-Away
Our customers like us, after all, they chose to do business with us. But how often does a seller treat a customer this way, helping them quantify, articulate and defend the choices and investments they made? Not often. Imagine the reference calls praising service and value after the sale, and the Net-Promoter scores that go along with that.
BTW, once again, these principles are not that different for selling a new prospect. That is what BUYERS want, and what CUSTOMERS also want. What is the value to ME?
Stay tuned for a blog about multiple customer/prospect personas. When we use the same conversation for Execs, LOB managers and evaluators, why are we surprised with some (or all) of them don’t connect so well!
The Heart of a Nxt-Gen ROI System – Selling Value to Existing Customers
Last post we discussed the 3 ways new opportunities get started:
1. Seller helps prospect identify need
2. Prospect identifies need on their own
3. Competition helps prospect identify need and how a Nxt-Gen ROI
system impacted all 3 in a material way.
Today the conversation is about your existing customers, specifically, keeping your customers, protecting margins, fending off competition and promoting cross-sell/up-sell.
Achieving those is the penultimate achievement of CUSTOMER CARE.
Imagine for your existing customers a scenario like this…6 months prior to a renewal, your company offers a complementary “health check-up” service. It’s short and sweet, you interview the customer staff and:
- Identify (and measure) areas of success,
- Identify areas that need improvement,
- Identify potential competitive threats, and
- Identify areas of new opportunity.
Several months before your renewal, you’ve done all of the above and provide the customer an assessment a few weeks later that lays the groundwork for your renewal.
What customer doesn’t want this kind of service from their vendors? Yet it is rarely provided. Simply put, your NxtGen-ROI system MUST facilitate this capability for your organization so that is standard practice, a part of your customer engagement DNA.
Outcomes? Lower churn rates, improved margins, and up-sell/cross-sell for more revenue.
It’s not theoretical, check out this week’s Value Selling Success Story for a prime example.
Ensuring your organization has a Nxt-Gen ROI capability unlocks the potential for all 4 ways that sales opportunities get started.