Mind the Value Gap - Alinean presentation at Qvidian Connect Conference 2014 on Value Storytelling, Insights, Financial Justification, ROI & TCO
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Today's buyer has changed - more empowered, skeptical and frugal - a condition called Frugalnomics. Unfortunately sales has not evolved to address frugalnomics - as the #1 issue for not meeting revenue targets is the inability for sales reps / partners to effectively communicate the value of proposed solutions. This is the Value Gap. This presentation discusses how visual value storytelling and financial justification / ROI can help bridge the value gap - leading to more more revenue opportunities and improved selling effectiveness
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Mind the Value Gap - Alinean presentation at Qvidian Connect Conference 2014 on Value Storytelling, Insights, Financial Justification, ROI & TCO
- 2. Let me tell you a story …. What’s keeping you up at night?
- 3. What’s the Value to us? Feature! Function! Price! #1quota issue = Poor Value Communications (SiriusDecisions) Sales reps focused on Value (Forrester) Buyers Disengaging due to lack of Value
- 4. Show Me the Money 95% of buyers require financial justification / ROI prior to purchase 65% say lack research, knowledge, tools to do analysis themselves Your Buyers Differentiating Features Challenges Key Improvements / Proof Points Benefits Pain Points / KPIs “Cost of Do Nothing” Your Solutions IDC 80% indicate 3rd party proof required to trust vendor provided ROI
- 5. Value in the Eye of the Beholde 43% more stakeholders per decision IT Management Support Sales Marketing HR Executive Products
- 6. Value & The Buyer’s Journey 67% of buyers have clear picture of solution before sales reps are engaged (SiriusDecisions) 74% set the agenda 26% win the Bakeoff (Forrester) 40% acceleration via better
- 7. Is it All About the Benjamins? Visual Storytelling Financial Justification 58% of typical pipeline is stalled (SBI)
- 8. Roadmap to Close the Value Ga Value Matrix Content Audit & Mapping Sales Playbook Value Conversation Thought Leadership Insights Diagnostic Assessment Cost of Do Nothing Solution Guide Financial Justification Proof Points Competitive Gu TCO Compariso
- 9. Increased Competitive Wins Enhanced Renewal Rates Why Change Now? Faster Rep Ramp-Up Improved Quota Performance Less Stalled Deals More Selling TimeAccelerated Sales Cycles Greater Deal Size Storytelling + Justification Guided Selling Customer Intelligence Visibility Insights $8.10for every $1invested
- 10. Let me tell you a story ….
- 11. (click here to learn more) Consulting services to develop, harmonize & certify your value messaging & quantification Interactive tool to guide your value conversations, delivering storytelling, insights, justification & intelligence
Editor's Notes
- Let me tell you a story …. About a salesperson named Bob. On this particular day, Bob’s getting prepared to meet with a large Fortune 500 company he’s been wanting to crack for years. He’s finally got a meeting with the right decision makers and he’s more than excited.He’s polished and ready to go!Cut to the meeting. After a little small talk, Bob’s asked the client a few questions about their issues and “what’s keeping them up at night.”Then Bob launches into his PowerPoint deck…….and starts telling the audience all about his Company, how big they are, how many customers they have, and of course all about the latest greatest product and all its features / functions….Off went the lights, and out goes the audience.Although the prospect initially seemed interested, the deal stalls in Bob’s pipeline and eventually fades away ……
- Unfortunately this is an all too common story …. Perhaps a familiar one for your own Sales reps and Channel partners?On one side, we have prospects that have fundamentally and permanently changed – now more empowered, skeptical and frugal than ever before – we call this new environment“Frugalnomics”, and we’ll see in a moment just how serious the implications of Frugalnomics can be.Now this new environment is challenging enough, if it weren’t for the other side ….. Where we have Bob, using a traditional selling approach that hasn't evolved beyond one-size fits all PowerPoint product pitches.As a result, a significant Value Gap exists today between between a new breed of buyer - more empowered, skeptical and frugal, and traditional sales reps who have not evolved from product, features and price to effectively communicate your value story, insights and quantification. It all comes down to your rep’s ability to have the right value-focused customer conversation. ….This is common senseright? Soundseasy enough?Well unfortunately, the research shows that the Value Gap is significant and growing:Forrester surveyed B2B buyers who say only 1 in 10 sales reps are focused on value….. This is down from 12% just a year ago …. Buyer expectation for value are increasing, while sales reps are going the other way.Our friends here at Qvidian recently conducted an important study, which indicated that over 60% of buyers are disengaging with sales teams because the sales reps didn't present value or really understand the buyers' business challenges.So does this have a tangible impact? You betcha! The leading sales & marketing advisory SiriusDecisions reports that the number one reason why sales reps are not making quota is not for lack of qualified leads, sales training or products, but an inability to effectively communicate value to prospects. The bottom-line. You can’t meet your revenue growth goals, or expect any of these key performance indicators improve unless you evolve your sales and marketing and Mind the Value Gap.
- So how do you Mind the Value Gap?Well first, you have to recognize that your prospects require not just value communication, but value quantification. They need to clearly understand the tangible bottom-line impact your solutions will have, and plenty of proof points on how they too can expect these same benefits.How important is quantified value to your prospects?According to IDC, 95% of B2Bpurchases require a financial justification / ROI . The larger the deal, the more formal and extensive the financial analysis and due diligence.Although required, 2/3rds of buyers indicate they don't have the knowledge, research metrics or tools needed to do ROI / business value calculations. So buyers, left on their own, will struggle to derive the financial justification needed for approval. If you leave the analysis up to your prospect, you are bound to have months of delay.However, providing the value quantification is no guarantee, as 80% of buyers indicate that any vendor provided justification needs to have 3rd party validation / proof for credibility.With financial justification a requirement, how do you best classify the value you deliver? Most start with their products and features and what those features can do to help a prospect save money or drive benefits. This is a “Me First” perspective, not too different than Bob’s approach with the client. It is best to start with the Buyers perspective first, the challenges they have, what pain points they would like to resolve and KPIs that need to be improved, and the current “Cost of Do Nothing” – the high spending or lost business opportunities of current business as usual.And what challenges should you look across? We suggest the following:Cost Savings, and how your solutions help the prospect reduce current spending, or avoid future planned purchasesProductivity and Process Improvements, and how your solutions help reduce the time it takes to perform work, removes process steps, reduces errors and/or reduces required skill levels.Risk Mitigation, and how your solution can reduce the risks of certain issues, and the scope of the impact should an issue occur.Revenue Growth, and how your solutions can help the prospect intelligently grow revenue or recapture lost / squandered business opportunities.
- When it comes to a buyer perspective, it is important to recognize a significant change – that there are many more stakeholders involved in each decision.IDC reports that there are now 43% more stakeholders per purchase decision compared to just 3 years ago. On average 8 per deal. As your deal sizes grow to over $500,000, over 10 decision makers are involved.With more buyers involved, deals are more complex. – especially because each stakeholder plays a different role in the decision making process, and each stakeholder has their own business and personal view of the challenges they are looking to overcome and the value they can derive.Let’s look at a typical purchase of a new web conferencing / collaboration solution and all the different stakeholders that might be involved.For IT, they care about how current collaboration / communication costs can be reduced, and legacy solutions can be replaced with a new lower cost of ownership solution. For Support, they just want a solution that doesn’t create so many support issues and is easier to support, especially on multiple devices.For HR, its about enabling better communication and collaboration in a work anywhere, worldwide environment.For Sales, they want a solution that’s easier for customers to access, and allows them to better collaborate with customers, helping to increase sales and reduce costs per customer.For Marketing, they want a solution that will let them more cost effectively conduct webcasts and on-line events – lowering cost per lead.For Business groups like product development its about improving work anywhere collaboration and reducing time to market.For Executives, its about being able to better communicate to employees worldwide, to keep everyone focused on the same goals and objectives.Value is truly in the eye of the beholder, with each stakeholder having a different value perspective. When you develop your value communications and quantification its key to be sure each decision maker is covered, and that the right value is used appropriately with the value each stakeholder most cares about.
- Each buyer has a certain decision making path. Although we know that reality is a little less orderly, a typical decision-maker first needs ideas on which issues to address as a priority. Once an issue is identified, the buyer begins exploring potential solutions. Finding a few solutions, evaluation due-diligence is conducted, leading to a selection and a purchase.Recent research reveals that during the buyer’s journey, sales is being engaged later and later in the process. Empowered by the Internet, social media and discussion groups, SiriusDecisions reports that up to 67% of decision-makers already have a “clear picture” of the solution they want before Sales Reps are engaged.As a result, getting engaged earlier has become more important than ever. A whopping 74% of the deals go to sales reps who help the buyer establish the buying agenda, while only 26% of deals go to the vendor that wins the bakeoff. And the early mover advantage has dramatically increased over the past three years.Early in the process its not about products, or benefits- … its about diagnosis – helping the buyer identify and illuminate issues, and quantifying the cost of do nothing – Quantify the Pain. During the exploration and evaluation phase, its all about quantifying the value and ROI your proposed will have – Justify the Gain.In the later phase, during the bake-off, it’s all about proving your value is different – delivering the solution with a lower risk, lower total cost of ownership and unique features that deliver incremental and quantifiable business benefits.The good news is that buyers really want solution providers to help facilitate their journey according to IDC, indicating that decision cycles could be accelerated by 40% if done right (according to IDC). Unfortunately, most sales reps don’t do a great job of providing the conversations, content and tools.So the big question, do your sales reps have the conversations and tools to engage earlier – to Quantify the Pain? What about the conversations and tools for facilitating the later phases – to Justify the Gain and Prove you are not the Same?
- Sit in on any sales forecasting call and you’ll hear sales reps lament that account after account don’t call them back or are endlessly delaying moving to the next step– these deals are stalled.According to Sales Benchmark Index, up to 60% of buyers in a typical pipeline are not being lost to the competition, but are choosing to “do nothing” and stick with business as usual versus committing to change and your proposal.The reason for all these stalled deals – status quo bias. Has anyone ever heard of this before?This is your buyer’s brain. And the buyer’s brain has an odd twist to it – a predisposition to stick with business as usual. The brain hates change.Status quo bias describes the results of a collection of neuroscience studies where a buyer will artificially discount the benefits, and at the same time artificially inflate the risks and costs of a proposal.As a result, unless provided with an overwhelming reason to change, at least 3x more benefits vs. risks/ costs, the buyer will simply stay with business as usual, and why especially in these times of heightened caution, more and more of your pipeline is likely frozen.So how do you get over the status quo bias?Financial Justification is of course important, rationalizing to the buyer that the benefits outweight the costs / risks by a large margin is required.However, status quo bias is deep, and you need to present the value in more than just $ terms in order to win the business.Financial justification appeals to the logical portion of the brain – the neo cortex, but there is a whole science on decision making, indicating that the more primitive Emotional part of the brain plays a huge role in our decision making, and especially as the source for status quo bias. The beauty is, if you can tap into the emotional part of the brain, your conversations can really make your presentation be more likeable, more memorable, and most importantly get he buyer to overcome their status quo bias and take action.So how can this be accomplishedFirst, the primitive emotional brain responds to simple visuals, think cave drawings, versus spoken or written word - studies indicate that 83% of learning is visual (OSHA), and that when presented with information that is solely aural, we recall approximately 10% of that information 3 days later. By simply adding a visual image, we can increase that retention rate to 65% (HP).Second, storytelling, the way things were communicated around the fire - Neuroscience indicates that effective storytelling actually causes a change in the audience’s brain, involving an automatic secretion of two chemicals: Cortisol, which is the usual response to distress, but signals and maintains engagement and focus, helping the audience pay more attention; and Oxytocin, which deepens the level of engagement and creates a feeling of empathy.The conversation needs to be organized in a very specific way in order to get an emotional connection, and make the case for change – Did you know? The Challenges with the current state, The cost of do nothing, The Vision for the solution, the benefits, the proof points… The bottom line: You need to combine Visual Storytelling with Financial Justification to get stalled deals moving again!Source:http://blog.alinean.com/2014/02/once-upon-time-storytelling-stimulates.html
- So what’s the implementation roadmap to get the Value Gap closed?First, you need to create your value matrix, examining each of your buyer roles, their challenges and developing the key messaging, insights on current costs/ opportunities and justification as to how you can help them reduce costs, improve productivity / process, mitigate risks and drive revenue growth. With all the key messaging, insights and financial justification developed, you now need to leverage this in content and tools.It is then important to do a content audit and map of the content to the buyer’s journey. What do you have in place already to help facilitate the buyer’s decision making. is it aligned with the Value Matrix? Do you have elements buyer’s need for each phase of the journey and what content and tools are you missing that really should be developed?Next, its important to leverage the content to help fuel the conversation between sales and the prospects. You can leverage Sales Playbook tools like Qvidian’s to recommend the right steps and content for each step of the buyer’s decision making process.And finally, and most importantly, it all happens with a conversation – between the sales rep and a prospect. Where the rubber meets the road. Here, you should use a tool like ValueStory to help guide the sales rep, facilitating value-focused visual storytelling, insights and financial justification.
- For every $1 invested in closing the Value Gap has been shown to generate $8.10 in incremental benefits beyond the investment, this according to IDC.The benefits can be gained from improving value storytelling + justification, providing intelligent and interactive conversation guidance in each engagement, and collecting invaluable customer intelligence from each and every engagement.
- Let me tell you a story …. About a salesperson named Bob. On this particular day, Bob’s getting prepared to meet with a large Fortune 500 company he’s been wanting to crack for years. He’s finally got a meeting with the right decision makers and he’s more than excited.Bob reviews the Sales Process and knows exactly what stage the prospect is at, and has some great advice on what to do step by step for this first meeting, and links to all the key content he needs.Bob is guided to research on the company as well as profiles on each key stakeholder. He then compiles this research into his Storytelling / Justification Tool, entering in information about the company profile, and highlighting the key objectives the prospect’s company has for the next year and their top priorities.With the customer instead of jumping into a PowerPoint deck, Bob leverages a guided selling tool to communicate key research about challenges that other companies just like the prospect are facing. These insights are intelligently presented with clear visuals to resonate with each specific stakeholder in the room. Bob discusses each with the client to understands which issues the buyer is facing.To dig further and add more value, Bob does a quick diagnostic assessment, to help the prospect measure where they are today, help compare how well they are doing verses peer benchmarks, and uncover some new issues they hadn’t thought about before.Bob collaborates with the prospect to quantify how much these issues are costing the prospect each day. With the prospect’s top challenges as a frame, Bob then paints a picture about the possibilities for the future, guided to just the right solution recommendations.. Bob collaborates with the prospects to quantify the potential cost savings, productivity improvements, risk mitigation and revenue gains that are possible, and is guided to case studies to communicate to the prospect the proof points needed to back up each of the claims and differentiate the proposed solution.The conversation When the conversation winds down, he emails the team with a leave behind customized report documenting the value conversation, because Bob knows for every person in the room, there are 1 to 2 others who will be involved in the decision, and they too need to understand his value story and financial justification.The conversation with Bob was a valuable one for the prospect, covering all key aspects to motivate change– why the prospect should consider a change, why they should do so now, and why Bob’s solution represents the lowest risk and best potential solution. Armed with the value story and financial justification, the prospect is able to fast track the project …. And Bob …. He’s on his way to winners’ circle.
- I hope you can stopby and see me and my Alinean team here at the event so we can discuss your unique sales challenges and how we may be able to help you address this key opportunity and Mind the Value Gap.