Effectiveness
Efficiency is doing things right. Most salespeople only sell efficiency. “My offering will help you do your job faster, better, cheaper”.
As we covered in our prior Compass newsletter, selling with an efficiency strategy is fine but it comes with several risks:
Timing – it can be a ‘nice to have’ hence these deal’s close date frequently gets delayed.
Funding – these budgeted projects can get ‘raided’ by higher value projects.
Discounting – there is always a lot of pressure to discount at this value level.
Competition – this is the most common type of value so there can be a lot of competition at this level engaged in feature / function battles.
You can’t automate bad process and expect better business results.
To manage these risks, the strategy is to move up the value chain. The next level of the value chain is the Effectiveness sales strategy.
Effectiveness is doing the right thing!
This Effectiveness value strategy is where your offering can help the Buyer do things they may not have been able to do before as opposed to just doing existing things faster, better and cheaper. And it has a higher perceived value over just being efficient.
It requires moving from only selling the features and functions of your offering and how they are better than the competition to selling best practice. “My offering will help you execute the industry best practice for companies of your profile”. Your deal strategy is to demonstrate how your offering can help execute industry best practice for companies that share the growth profile of the Buyer you are selling to.
Now there is some execution risk at this Effectiveness level:
Creativity – A more creative sales process is required. You may need to think out of the box.
Depth - You need to do a deeper discovery of the Buyer profile and understand their business objectives.
Breadth - You need to engage the Buyer on a business level so don’t get single threaded and engaged at a low level in the Buyer organization.
Complexity – Because you engage more deeply in the organization more people get involved in the buying process.
Cost – You may need to invest more resources resulting in a potential higher cost of sale.
Funding – This value type can change the deal fundamentals and require additional budget or changes in where the funding comes from.
Timing – Positioning Effectiveness will improve your chances of winning, but the added work and deal variables may extend your close.
I’m outlining these risks so you know to manage them in your Effectiveness sales strategy. But the rewards far outweigh the risk here.
In addition to positioning best practices, another way to execute an Effectiveness value strategy is to help the Buyer re-think or think differently about how they can leverage your offering to achieve their strategic business objectives.
Let’s review an example of using the Effectiveness sales strategy:
A leading, global Asset Management firm was seeking a software solution that would automate the scheduling of calls between their agents & their high-net worth clients. In their current manual state, it took an average of 6 exchanges between a single client and the operation’s people, who were responsible for setting up the meetings, to schedule a single call. Scheduling software had the potential to reduce the number of exchanges down to 1-2 per scheduled meeting from 6 providing dramatic efficiencies. There could also be significant cost savings realized by eliminating these operation positions. The funding for this project was based on this cost saving and efficiencies.
4 different vendors were being evaluated against a set of criteria established against the current scheduling process. My client, whom I was working with on sales strategy, was one of the vendors and engaged in the feature and function bakeoff. While that was going on, we asked the Buyer’s management if they would walk us through their entire engagement process so we could look for other value potential. What we determined is that the Buyer could automate the front-end scheduling with software but, instead of firing the operations people, there was value in re-engaging them later in the process where they could be more effective in following up on customer satisfaction issues and engage in low-risk, up-sell / x-sell activity. It was estimated this could increase unit sales by 25%.
By shifting the focus from efficiency only to including the effective re-deployment of assets providing a new service, my client was able to gain access to and engage with the Buyer’s senior executives. This had become a strategic initiative versus a tactical improvement. The project required new & additional funding but was considered crucial to their competitive position in their target market. While the deal took a bit longer to close, we out positioned the competition and doubled the initial deal size. There was no discounting required.
Executing an Effectiveness sales strategy requires hard work. You must dig deeper and execute a more thorough discovery process. The rewards, however, are significant for all parties. Except for your competitors that is!
So, position your efficiencies but let your competition continue to work exclusively at this level while you move around them and up the value chain to position the Effective value of your offering.
Remember, the objectives of this value chain sales strategy are to:
Reduce discounting pressure.
Increase deal size.
Out maneuver the competition. Instead of engaging in a competitive battle over features and functions, you engage the Buyer is a completely different evaluation process. In many cases, the competition doesn’t even see what you are doing and get left behind fighting the wrong battle.
Accelerate your sales cycle.
Improve your position as a strategic vendor & partner for future sales & referrals.
Reduce churn and improve retention.
Help your customer extract more value from your offering & increase their ROI.
To execute the Value Chain strategy properly you must never stop your discovery process until your agreement is signed. And remember, one of your fiercest competitors is the ‘no-decision’ so the value chain selling strategy is a way to effectively combat that. To execute, you constantly explore different ways your product can bring value to your customer.
Navigation:
In the next Compass newsletter, we will continue to move up the Value Chain and cover Risk Mitigation. This is the one of the most strategic & powerful of the enterprise sales value strategies.
This was written while listening to Free by the Zac Brown Band.
Art work by Amy Donaldson.