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    The New Solution Selling: The Revolutionary Sales Process That is Changing the Way People Sell
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    The Solution Selling Fieldbook: Practical Tools, Application Exercises, Templates and Scripts for Effective Sales Execution
Friday
12Mar2010

The Case for Buyer-Aligned Value Models…Part 2 of 4

The Case for Buyer-Aligned Value Models…Part 1 of 4

The Strategic Importance of Value Models

Whether you sell a commodity product or a complex business solution, a value model is the foundation for your positioning and messaging strategy because it determines how you communicate the purpose, value, and differentiation of your products and services. Like the product-feature-function model shown in Figure 1, value models provide the taxonomy for collecting, organizing, and sharing the marketing and selling knowledge that drives the three critical marketing deliverables that I mentioned in the introduction. 

Figure 1: Value Models Drive Three Key DeliverablesFrom an operational standpoint, value models are a lot like a sales process in that they provide management with an opportunity to reinforce fundamentals and best practices. They also share five other important similarities with sales processes.
 

  1. They can be formalized and managed or they can be spontaneous and ad hoc. 
  2. They can be seller-aligned or buyer-aligned depending on their perspective and context.
  3. Seller-aligned value models reflect the seller’s perspective where value, and differentiation are defined from the inside-out, in the context of the product or service
  4. Buyer-aligned value models reflect the customer’s perspective where value, and differentiation are defined from the outside-in, in the context of solving the customer’s problem
  5. And most importantly, they don’t require 100% compliance to have an impact on culture as well as results


Unfortunately, while most sales executives clearly understand the importance of managing their sales process, few marketing executives pay much attention to their value model. In fact, most are unaware that there are actually three different value models (See Figure 2) that their organizations can employ, depending on the perspective and context that they want to emphasize.


Figure 2: Three Different Value Models to Choose From 
In the Seller-Aligned Value Model on the left, a product’s purpose, value, and differentiation is defined and communicated through product-feature-function logic. This is a simple, straightforward, and universally understood model that reflects our natural tendency to think inside-out (i.e. it’s all about me). This is why product messages are  easy to create, communicate, and understand, and it’s also why product messaging doesn’t require much management focus or a systematic process… it just happens organically.
 
When companies want to move from selling products to selling solutions however they need to change the way they think about purpose, value, and differentiation. This transition from a seller-aligned to more of a buyer-aligned model does require management focus and attention.
 
The Hybrid Value Model (middle of Figure 2) is what most B-to-B marketing organizations end up adopting when they decide to support a solution based strategy.  The hybrid model combines both buyer and seller perspectives and it supports high level problem-solution messages along with more tactical and explicit feature-function messages.
 
The Buyer-Aligned Value Model on the right is the only model that truly supports a solution focused strategy because it enables high-level problem-solution messages as well as explicit cause-capability messages. Explicitly aligning causes with capabilities is the most effective way to communicate your understanding of the problem as well as your value and differentiation from the customer’s perspective. This is why the buyer-aligned value model has been universally embraced by what are arguably the most solution oriented organizations in the world… pharmaceutical companies.
 
Companies that sell cholesterol reducing drugs for example, focus on educating the market that plaque in the arteries is the key underlying cause of high cholesterol. By explaining the underlying cause before they talk about the solution they build additional credibility. This makes them more believable when they describe how their drug breaks up plaque better than the competition.

In the next posting learn more about the differences between hybrid and buyer-aligned value models, and the simple steps that B-to-B marketing executives can take to catch up to their brethren in the pharmaceutical industry and more effectively support a solution strategy.

To be continued… The Case for Buyer-Aligned Value Models Part 3 of 4 will post Tuesday, March 16.

Want to learn more about Solution Marketing and Buyer-Aligned Value Models for Sellers? Join SPI and Bob Schmonsees for an upcoming webinar: Equipping the Sales Mind of the Future, March 23. To register, click here.

Wednesday
10Mar2010

The Case for Buyer-Aligned Value Models…Part 1 of 4

The pressure on B-to-B product marketing organizations to increase their strategic relevance and their impact on sales has never been greater. They have to quickly find a way to:

  • Create more customer relevant positing and content
  • Do a better job of generating, cultivating, and nurturing leads
  • Improve their alignment with sales anddeliver tools that enable salespeople to have more meaningful business and value conversations with their customers

These are tall orders, and for a lot of marketing organizations they’ll require a fundamental transformation in their thinking as well as their day to day behavior.

So, what can marketing executives do to start this transformation?

First…Get Serious About Solution Messaging

For the past few decades, thought leaders like Pragmatic Marketing have been telling product marketing organizations that one of the best ways to increase their strategic impact was to make the transition from product focused messaging that reflects the inside-out perspective of the seller to more problem focused messaging that reflects the outside-in perspective of the buyer.

The good news is that some companies have finally got the memo.  As a recent best practices study by CSO Insights showed, companies with marketing organizations that explicitly focus on communicating their understanding of the customer’s problems along with how their solutions help the customer solve those problems experience:

  • 25% higher quota attainment
  • 20% higher win rates
  • 3 times the competitive win rate
  • 5 times less discounting

So, why haven’t more marketing organizations figured out how to create customer relevant messaging that truly supports a solution based strategy? Unfortunately, while some companies have successfully transformed the way their sales people sell through rigorous sales training programs and buyer -aligned sales processes, most of those companies haven’t applied the same kind of strategic focus or transformational emphasis on product marketing.  

As a result, few marketing executives or their organizations understand some of the key fundamentals, nuances, and implications of solution messaging. Most give little thought to the underlying value model their organizations use to communicate the purpose, value, and differentiation of their company’s products and services, and few have implemented any systematic processes to reinforce solution messaging fundamentals and best practices.  

To be continued… The Case for Buyer-Aligned Value Models Part 2 of 4 will post Friday, March 12.

Want to learn more about Solution Marketing and Buyer-Aligned Value Models for Sellers? Join SPI and Author Bob Schmonsees for an upcoming webinar: Equipping the Sales Mind of the Future, March 23. To register, click here.

Tuesday
23Feb2010

2010 Sales Trends Are In – Change the Way You Sell or Get Left Behind

In annual research by CSO Insights and co-sponsored by Sales Performance International, the key trends analysis for 2010 contains some unsettling data. The 2010 Sales Performance Optimization study incorporated participation by 2,800 global firms ranging from small businesses to the largest global companies. Overall, the results reflected the difficult economic situation encountered in 2009. Key findings in the study include:

Quota Attainment Fell Significantly

The percentage of sales reps attaining quota in 2009 dropped to 51.8% (58.8% the prior year). According to the study, “While we have seen this percentage lower one time (49.1% in 2003), the 7% drop from 2008 to 2009 is the largest in the sixteen year history of our study.”
 
Revenue Plan Attainment Declined Significantly

How well did companies manage to attain their overall sales plans?  Again, the results were quite disappointing. According to the study, “Here we see an even larger drop of 8% from 2008 to 2009 (also the largest decline in performance in the history of the study).”  While general economic trends clearly contributed to these difficulties, the study noted multiple factors related to investment in sales, including:

  • Reduction in lead generation spend
  • Reduction is sales training budgets
  • Deferred investment in sales knowledge management (SKM)


As a result, not only were sales conditions extraordinarily challenging, companies invested less in areas that consistently correlate to higher levels of sales performance.

Trusted Partners Continue to Outperform Vendors

One of the most intriguing aspects of the annual report is comparison of companies that have elevated their relationship with customers to that of a “trusted partner” versus companies that are perceived as a “vendor.” Even in a down year, the companies that have attained a trusted partner status with their customers significantly outperformed their vendor peers in all key performance areas. The trusted partners enjoyed the following performance advantages over vendors:

  • 15% higher quota attainment
  • 9% higher attainment of company plan
  • 11% higher forecasted wins
  • 5% less turnover


A key conclusion of the report was “you can raise individual rep quotas in a bad economy and achieve them if you change how you sell.  Optimize process and relationships, and reps will be able to compete more effectively.” The question is how can your company successfully transform its approach to selling and realize the performance gains that trusted partners consistently achieve?  For access to the 2010 key trends report, and a white paper that illustrates how your organization can move from vendor to trusted partner, follow the link below.


Learn more about the CSO Insights report, Sales Performance Optimization, 2010 Key Trends Analysis and Sales Performance International’s From Vendor to Trusted Partner white paper.

Wednesday
20Jan2010

Recurring Revenue within Existing Accounts vs. Acquiring New Customers

What Happens When Sales Organizations Focus Exclusively On Recurring Revenue within Existing Accounts vs. Acquiring New Customers?

We have all heard of – and many of us follow - the supposition that selling to existing customers is easier and a more cost effective way to generate revenue and thus a great way to grow business. Based on a recent observation I would like to offer a contradictory theory to this widely held perspective.

At SPI we have recently started working with a client that is a venture capitalist. The principals of this firm worked as executives in some of the top software companies in the world so they focus on their comfort zone; acquiring and turning around failing software companies. Among all of these failing companies that get acquired I have observed a consistent theme:

Apart from having no repeatable sales process, misalignment of their marketing efforts, and ineffective pipeline management they had little to no focus on selling to new customers and spent all their time servicing the existing by pushing renewals and upgrades. In fact, the only new logo business would come via unsolicited RFP’s (Tenders). And we all know the low win rates associated with sellers who live their lives as “Column Fodder”. Of course, based on the “compensation drives behavior” theory the sellers were compensated on this approach. To drive renewals sellers would do things like discount high profit items, namely services, to get the additional licensing revenues. In my humble opinion their poor performance was preordained by their approach.

I cannot and will not advocate a complete reversal of their approach but I will make the obvious recommendation that balance is the key to their salvation. Not backing the truck up to their loading dock and dumping your products and then running like hell for the next logo, but a “healthy pipeline” of net new and existing customer opportunities supported by effective and attentive customer service is the best practice.

Thursday
14Jan2010

Overcoming Buyer Risk in Major Purchases

The risk associated with making a major purchase is not a new emotion to buying and selling, however, it appears to have taken on more significance given the current economic conditions.

The first step in overcoming buyer risk is to recognize that risk is a natural emotion within a buying process. When making a purchase, most buyers go through a need  analysis and budgeting phase, then a solution-evaluation phase and finally they weight the consequences and benefits of a purchase-decision. In this final phase, they experience and work through risk.

During the risk phase, buyers ask themselves questions such as: “What are the consequences of taking action?”… “What if we don’t see the results we expect?”… “What if the offering or service doesn’t work the way we expected it to?”… “What if a better alternative comes along?”

Risk is the concern that causes buyers to slow the decision down and maybe not make a decision at all. It’s in this phase that salespeople lose deals without knowing why. The salesperson may have been winning the opportunity up to that point, but because they didn’t understand the risk phase and because they weren’t looking at a potential purchase from the buyer’s perspective, they say and do the wrong things and lose the sale.
   
For example, the salesperson tries to mitigate the risk by saying “Don’t worry about those things, everything will work out, trust me.”… “The economy is going to rebound.”… “We need to get this signed by the end of the week or our special pricing is off the table.”  Or they do things that they think will get the buyer over the risk but actually throw them into more risk – such as “drastically dropping the price” which in some cases can throw the buyer in further risk because it causes them to question the original price offered (i.e. “Why did they drop the price all of a sudden, is there something I should be worried about?”). In all these cases, the seller can seem insincere and focused on what is good for him or herself, not the customer.

The key is to recognize that risk is a positive buying signal (yes, a positive signal). It means the buyer has naturally gone through their buying process and is serious about making a purchase. They just are at the end of their process where risk naturally shows itself. The seller should smile and recognize they are close to a win. They just need to consultatively and empathetically help the buyer through the risk by doing a few simple things… recall the business issues driving the purchase, how they helped the buyer understand the scope of the issue and how they demonstrated how their solution can help address the buyer’s business issues. Then reassure the buyer that they understand the decision is a big one but that it is a good one.