One of the core concepts of the Compass system is what I call Value Chain Selling. The value chain is comprised of 6 types of value organized in levels, or links in a chain, of increasing value from lowest to highest. Let’s start with the Efficiency value proposition.
Efficiency is the ability to achieve a desired outcome or perform a task with the least amount of wasted resources, such as time, energy, or materials. It is doing things right!
Most Enterprise sales professionals sell the efficiency value prop. “My offering will help you do your job faster, better & cheaper than your existing work process does to solve a business problem”. There is nothing wrong with selling efficiency. Everyone should show how their offering solves business problems more efficiently. If fact, if you are a clear leader in your category, that may be sufficient to win business.
But there are a few problems with this strategy:
80% of Enterprise sales professionals sell only the efficiency value prop. They keep hammering how much faster, better & cheaper their offering is over the competition or alternative solutions to solving business problems. So, all the competition of hovering around this value prop. It’s like watching a first-grade soccer match where all the kids hover around the ball as it travels around the pitch. Now, this is ok if you are the clear category leader. Your chances of winning are good. Just know, everyone is going to get bloodied fighting over this deal.
Efficiency is the weakest of all value props. It is a nice to have and lacks urgency. For the direct users and beneficiaries of your offering, it would be great to have a solution that would help them do their job faster, better & cheaper. They will be more productive and accomplish more with less. That way “I won’t have to work nights & weekends”. But, while senior Executives care about their workers being more productive, they don’t care that much. They have more pressing issues demanding their attention and their budget spend. “As long as the work gets done, I’m not that concerned that you are working harder than you have to”.
This is where most of the discounting pressure occurs. My friends at the Category Pirates https://www.categorypirates.com/ estimate that being the best in your category is only worth 24% of your estimated value! The pressure on discounting is significant if you are selling efficiency. It can also impact the timing of your deal. Because efficiency lacks urgency, Buyer’s wait until the end of the month, quarter or year to make their purchase looking to extract the maximum discount. They know the Seller is most vulnerable at that point. They know you will offer the biggest discounts to make your number at the end of one of those periods.
Most efficiency initiatives get budgeted and follow a managed buying process. The Buyer defines the problem to be solved, shows management the money the company will save by putting more efficient solutions in place and gets approval to budget the spend to solve the problem. The Buyer then kicks off a project to evaluate the alternative solutions available and take the Sellers through a bake-off before finally making a purchase. There are a few problems with this for the Seller. One is that it is a longer sales process with a high cost-of-sale. The second is that frequently one of the vendors helped the Buyer define the problem to be solved and skewed the requirements to favor their offering. If you weren’t that vendor, you are operating at a significant disadvantage from the start. We all hate responding to RFPs we get out of the blue, right?
A clear majority of all the deals I’ve done in my sales career were not budgeted. In fact, the large, fast moving deals seldom are. It is because we found a pressing business issue to be solved or a problem that posed a significant risk to the business. It had to be addressed quickly. So, where did the funds come from? My champions take it from budgeted, efficiency-based projects! Those could be delayed and funded later. Do you ever wonder why your deals are slipping? It’s because someone “is stealing your money”!
Operational efficiency is critical to the success of any business enterprise. Companies constantly allocate capital to drive efficiency so it’s good to sell your offering as being a highly efficient alternative. Just know that you will run into the challenges outlined here and be prepared for a bloody sales process.
We will review the Effectiveness value proposition next as we move up the Value Chain.
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Why focus on sales & deal strategy? Because strategy is timeless! Strategies that were developed hundreds and even thousands of years ago remain relevant today. Look at Sun Tzu, Machiavelli, Clausewitz and others. Sure, there have been new strategies and modifications to the old ones. But once you get good at strategy it will give you the durability to succeed in your sales and business career for a long time and in all types of situations. Focusing just on sales tactics or how you sell is important. But you are always chasing the next shiny object. Tactics change constantly. Develop your strategic skills. The payoff is significant.
This was written while listening to the top jam band Goose.
