Understanding How Value Adds Up for Buyers

Lots of leaders believe that their sales force (and marketers, product developers, etc.) know their buyers. I disagree. Well, they may know their names and titles and a bit more. But let’s get real. Do the majority of your salespeople really understand how their buyers actually perceive value in what your company provides?  

Look, I love the sales profession and am committed to keeping it relevant in the new economy.  So I am not bashing Sales.  But "Houston, we have a problem" with selling, because too many of our sellers don't understand how buyers really calculate value.

What’s to Understand?

As a sales manager, sales leader, and business coach prior to joining Forrester, I’ve had thousands of opportunities to observe professional B2B salespeople from many companies and industries in meetings with prospective customers and clients.  I’ve reviewed countless business proposals and presentations before they were put in front of IT and executive buyers. This experience has informed me that far too many (and I mean FAR too many!) salespeople lack understanding of the basis for which a prospective customer is really making a decision.  Let's not point fingers. Let's just help salespeople figure this out.

Think about your own buying experiences.  Out of all of the salespeople who you’ve ever interacted with, how many can you think of who asked the right questions to really truly understood what you were trying to accomplish and what you and your company were most concerned about (other than price)?  For me, just a small percentage of salespeople stand out in my mind.  And they do stand out, even after many years.  How about you?

Salespeople who understand what the real source of value for each buyer stand out and win.  They know that only buyers can ultimately determine if what we sell is valuable to them (regardless of what their Marketing department pitches). To understand buyers is to understand what drives their value decisions.  This is where Forrester’s Value Equation framework comes in.

 

 

The Value Equation framework enables salespeople to understand the benefit of gathering crucial information (i.e. questions) to understand the impact a buyer needs, and the risks that concern them.  Only by understanding buyer perspective of impact and risk is cost (price) ever a relevant discussion. Are your salespeople consistently understanding each individual buyer’s perspectives of impact and risk (except in simple transactional sales)?

Take a look at your proposals, follow up emails, and presentations your salespeople are providing to buyers.  Use the Value Equation to ask yourself (and the rep) what the salesperson really understands about that buyer’s impact and risk.  Is it addressed at all?  Is it quantified?  Are they even aware of these?  Or are they pitching products and “solutions”.  I guarantee that you’ll be surprised by what you see through this lens.

In fact, a significant problem for many companies (and their salespeople) is that their product managers, marketers, and sales trainers believe that their products or services have intrinsic value that just needs to be presented to make sales.  In reality, buyers are the only real judges of value, and they don’t care about your offering unless it has the specific *unique) impact they desire at an acceptable level of risk and investment to gain that impact. This is why top salespeople create their own messaging with clients.  I did when I was a salesperson, because Marketing messaging was too generic and product focused, and I wasn't going to stay on top by pitching products. 

Your product may fit a technical or functional need just perfectly.  But so what?  There is an oversupply of “solutions” that work, so pitching products is, at best, a luck of the draw proposition in the new economy.  The key to pursuing the right opportunities and winning is really understanding the buyer’s own value equation and using it to help them solve business problems. 

So how do you envision using the Value Equation framework to help your salespeople better understand each buyer? 

Would you like to discuss how to apply the Value Equation in your company?  Let's set up an inquiry to talk about your sales force.

Comments

Communicating Perceived Value

While developing case studies, we first speak to the vendor's CEO, sales manager, salesperson and project manager. We then meet with the customer's C-Suite. I've always been amazed at how much disconnect exists about the value / benefit perception of the software across these two camps. E.g. "our software replaced Excel" v. "By alerting us to new store openings in realtime, their software helped us to grow our market size". Before completing the implementation, we've found it difficult to put numbers to the three variables in your formula. We've found semi-quantitative visual elements to be more useful in communicating the notion of perceived value.

Great examples, Ketharaman.

Great examples, Ketharaman. How much more perceived value could be created if salespeople were focused on business dialogue (at the right altitudes within a buying organization) regarding the real business problems to be solved (i.e. growing revenue) vs. technical or tactical benefits?

An objection that we sometimes here to the Value Equation is in relation to plugging actual financial numbers into this framework. However that's not what this is intended to do. Feedback derived from questions such as "On a scale of 1 to 5, how critical do you believe solving this problem is for your business?" are effective at getting aligned with a buyer's value perception. This is a simple example, and there are obviously other more specific questions that could be asked, and other more detailed models that could be employed during development of a business case. However, the Value Equation is an excellent way of gauging perception throughout the buying cycle.

What "semi-quantitative visual elements" have you found to be more useful in communicating?