How to Credibly Show Revenue Gains in your Business Case

Believe

One thing that B2B sellers and marketers always have to contend with is buyer skepticism around proof points — and especially promised revenue gains.

I have previously written on how to handle indirect benefits in a business case (and tips on how to address one specific category, labor savings, is discussed here). But what about sales growth?

Specificity is the key to overcoming a customer’s natural skepticism in this area. If you say you’ll increase sales by one percent, that doesn’t really mean anything to the customer. They might be thinking to themselves, “Yeah, I’ve heard that one before.” By contrast, if you say you can take two weeks off their sales cycle that starts to bring your value proposition into focus and ward off objections. Customers will be more receptive to hearing about removing barriers to closing deals or increasing the number or quality of leads than just about generic promises of revenue increases.

How We Talk about Revenue with Clients

When we talk with customers, we focus on four specific aspects of how ROI-selling can impact revenue instead of talking about generic top line revenue gains.

One, ROI selling increases the number of leads and the quality of leads. Here’s how it works. First, we work with our clients to create a value calculator. Then, the client makes the value calculator available on their website. When prospects visit our client’s website, they can use the value calculator to evaluate whether our client’s offering delivers enough value to be interesting. However, to download the report, prospects must first fill out a registration form, which then goes to our client as a lead. That results in not only more leads for our client but leads that are typically assigned higher lead scores because they have spent the time to evaluate the value of the offering.

Two, ROI selling improves close ratios. Obviously when leads are better qualified, close ratios will also improve. Also, because the tool itself provides a cost justification for purchase, using our tool helps increase the probability that the project will be approved during an internal evaluation. This will also impact close ratios positively.

Three, ROI selling shortens the sales cycle. An ROI tool helps take the legwork out of building business cases via spreadsheets. Less time on preparing a business case means a shorter sales cycle. And the business case compels prospects to make a faster buying decision, especially when you include such metrics as “cost to delay per month” (which we will talk more about in an upcoming post).

Four, ROI selling increases the average selling price of an offering. Value calculators, ROI tools, and the like quantify for buyers the value they can receive from a solution. In turn, this reduces pricing pressure because buyers already believe they are getting a good deal. It can also enable you to quantify the value of add-ons and options, thereby increasing the selling price even further.

Only when the specific impact on the buying process is established can you credibly show how your offering will increase sales revenue. The conversation then turns to, “What impact on sales would more and better qualified leads have? What if your close ratio was higher and your sales cycle shorter?”

One final point on revenue growth. Be prepared for the prospect to still push back and discount the impact of revenue gains. Lots of things need to happen to achieve revenue growth and typically the company is already engaged in many activities designed to increase revenue. It is OK to show the total potential revenue increase, but you need to allow the prospect to discount the net result to ensure that both they and the project approvers will believe it. Since revenue gains will usually have the largest impact of any type of benefit, even discounting it by 50% or more will still likely result in significant value.

It is fine to show top line growth using case studies from your other customers as part of the discussion, but I believe you’ll get better traction if you tie those proof points to the process changes that drove that revenue growth (shortened sales cycles, better leads, etc.). That is the best way to justify the cost of your solution and show the customer the level of value your offering can deliver.

Does your offering enable revenue gains for your customers? If so, how have you been able to convince prospects of the revenue gains? 

[Image: Flickr / Spike55151]

How Much Does Brand Awareness Matter?

Recently I read a MarketingProfs blog post reporting that business decision-makers are 10% more likely to consider B2B brands that consumers know and feel connected to.

The report, which was based on data from a survey of 9,500 global consumers and 450 business decision-makers, included some interesting charts and categorized companies in four ways.

  • Known, but not relevant
  • Highly relevant
  • Limited relevance
  • Not relevant

According to the blog post “relevant” meant that consumers knew the companies and felt an attachment to them. “Known but not relevant” meant customers recognize the name but aren’t sure what the company does and do not feel a strong connection to the brand.

I found it interesting to compare some of the companies on the “known but not relevant list” to ones on the “highly relevant” list.

Known but not relevant

Boeing
COSCO
Airbus
Huawei
Citigroup
BASF
BP

Highly relevant

Google
Microsoft
Intel
Bosch
Dell
FedEx
3M

Namely, I thought it was interesting that BASF landed in the “known but not relevant” quadrant. Does anyone else remember the old BASF commercials? The tagline was, “We don’t make a lot of the products you buy. We make a lot of the products you buy, better.”

I’m sure BASF has spent tens of millions of dollars on advertising campaigns; if their goal was to raise brand awareness, it worked. If their goal was to raise awareness and create a sense of connection with consumers, then they fell short (at least according to this one study).

In a B2B setting, I do think awareness and relevance can help you. But it will generally only help you get a seat at the table. In B2C, that brand awareness is absolutely crucial, because people will buy based on brand. But, as we’ve said before, B2B buyers care more about value than branding. My belief is that B2B branding — whether in the form of positioning, messaging, colors, slogan, logo, advertising, brand strategy, or any other form of promotion — will only be effective in the long run if it supports a company’s true value proposition.

Are companies that have good brand awareness more successful? According to the study:

Besides increasing the likelihood of purchase, high consumer awareness was also linked to better financial performance: When the 10 most-known B2B brands examined were compared with the 10 least-known, those with high consumer awareness had 27% more growth in stock value between 2010 and 2013, and 31% greater growth in revenue.

I’m not sure the data in this study is enough to prove that brand awareness causes high revenues and stock value. I think there might be a correlation (where variables move together), but not causation (where one variable causes another to move). In this case, correlation doesn’t imply causation. The companies with strong value propositions end up being more successful resulting in a stronger brand, not the other way around. Success is not caused by brand, brand is the result of success. In a B2B world, brand is the result of the sum total of the market’s experience, and therefore not the cause of success.

For example, consider Google and Microsoft, both of which landed in the “highly relevant” category. Google doesn’t do much advertising. But they don’t need to, because they’re Google. Same with Microsoft, which spends relatively little on advertising, given the size of the company. (Microsoft spends less than 1% of sales on advertising whereas P&G spends greater than 11% of sales.) Yet almost every PC (except those from Apple) shows a Microsoft logo when you fire it up.

I’m not saying that building a brand name doesn’t help sales. But saying that spending lots of money on branding is going to increase your sales is a bit off the mark. Even if that’s true, it’s going to cost a lot of money — and who’s to say there aren’t other, more valuable areas of the business you could choose to invest?

It comes back to this: Branding is not the same thing as advertising. Your brand is the sum total of everything you do. And, if that’s the case, of course the companies with the best brand — the best overall experience — will have the highest sales. What’s the real takeaway from that? I would argue that it isn’t to invest a lot of money in brand awareness. It’s to be the best company — the best sum total experience.

Think of it this way. You can’t take a bad company with bad products and go out and try to improve your brand by advertising and promoting it because that will just accelerate the awareness that your products aren’t valuable. In a B2B environment, success comes from delivering value and creating something that people want to buy. If you have those two things first, branding will likely help you get a seat at the table. But it won’t necessarily help you close more business.

Which do you think matters more, brand awareness or value? Share your thoughts in the comments section.

Why Value Based Selling Is So Successful

by Jim Heffernan

light bulbs

Value-based sales is a popular term that gets thrown around an awful lot these days. Many major companies claim to provide this service to their customers while citing different reasons for why their particular organization has the best value. From tech support to delivery speed, from warranty policies to company reputability, there are many factors that a company will claim makes them a “value-based seller.” 

What is Value Selling? 

If you go online and search for the keywords “value based sales” or “value selling,” you will be practically bombarded with articles about how the process works or what value selling really means. For example, Sequeira Consulting’s website defines value based selling as an approach “built on quantifying the impact the service makes on the customer’s financial performance,” a definition mostly suited for business to business (B2B) transactions because it points out the mutual benefits to both the service provider and the client in financial terms. In an article for SalesResources.com, Dave Kahle defined the “value” in value selling as something “defined by the customer, not the supplier,” a definition more in line with the traditional “the customer is always right” mode of thought prevalent in the customer service industry.

In truth, value selling is all of the above and more. In both of the above examples, the emphasis is on what would best serve the needs or wants of the customer, not the price of the service given. Even though a B2B transaction is usually negotiated with both sides looking squarely at the return on investment (ROI), that ROI consideration is only a part of the value being sold to the customer. When a salesperson uses value selling techniques to identify the needs of the customer and highlight how those needs are met by the product being sold, the customer becomes more invested in acquiring that product. When a customer is invested in acquiring a product, that customer is much less likely to allow the transaction negotiation to become stuck or fall through. This applies equally to both B2B and private consumer transactions.

How to Make Value-Based Sales Work for You 

By refocusing the discussion between buyer and seller from price to value, the seller can mitigate the risk of lengthy, time-consuming debates and haggling sessions over the cost of the product and keep the buyer from attempting to discount the product to a price which makes it virtually unprofitable.

Using a simple example, a new start-up business is moving into an office and needs to buy light bulbs in bulk because the office was supplied with defective bulbs that burned out within a month. The sales representative of the bulk light bulb company offers the customer high-quality bulbs that are both long-lasting and energy efficient, but it would cost $500 for enough bulbs to fill the office and the buyer only budgeted for $350. If the seller were to drop the price, the light bulb company would barely make enough profit to justify the sale. Cheaper bulbs would burn out too quickly, and the buyer is now wary of “bargain” brand pricing because of the defective product from earlier.

Here is where value-based sales techniques can really shine. The sales rep, knowing that the customer wants the better-quality bulb, can establish the long-term value to the buyer. Even though the initial price of the bulbs is just a little above the customer’s assumed budget the seller can stress the long-term benefits of the high-efficiency bulbs. In this instance, the sales rep would inform the customer about the value of not having to replace the bulbs for up to four times as long as the standard product, thus curtailing the need to continuously budget $350 per year just for new lights, or even mention that the high-efficiency bulbs use half the kilowatt hours of their lower-price counterparts, reducing monthly energy costs. By helping the customer understand the measurable value the product will deliver to his business, the customer will feel less compelled to haggle.

The reason value-based selling works is because it takes into account the needs and wants of the customer to create an approach that best influences the customer’s purchase decision. If a sales rep can create in the customer the impression that the product being sold is indispensable to his or her needs and that the value of the transaction more than justifies the price, that is value-based selling.

Value-based selling engages customers and creates a buying situation where the customer is less focused on price and more anxious to start realizing the benefits This allows sellers to successfully close transactions more often with better profit margins and saves time that can then be dedicated to more customers.

Identifying and addressing a customer’s needs with a product and guiding the customer into recognizing the value of that product is the way in which such involvement builds a healthy, stable relationship between buyer and seller. Buyers who simply receive a product that is cheap without being made aware of the value that they are receiving from the seller will quickly switch to another supplier if they find a cheaper source of the product. Why? Because, without the sense of investment in a product that is supplied by a value-based sales approach, the customer is only focused on the cost of obtaining the product and not the value of what they are getting.

However, when a customer has been invested in the seller’s product through a discussion of the value that is being given, they will consider more than just the price of a competitor product before making a decision to abandon their current supplier. If the seller can keep the customer convinced that their product is a better value overall, they are able to keep the customer’s business without having to sacrifice profits by dropping the cost of the product.

In Conclusion 

Ultimately, value-based selling is successful because it provides customers with the understanding that they are making worthwhile investments of their money. Good value-based sales techniques are tailored to the needs of the customer, making them understand why they are buying a quality product for the asking price. Value selling resolves potential customer issues with pricing and prevents the stalling of important deals and the wasting of precious employee man-hours. The rewards for masterfully exploiting value-based sales techniques are well worth the investment for any company with a product to value.

Jim Heffernan

Jim Heffernan is Sales Performance Consultant at Miller Heiman and President of Insights53. This post appeared originally on the Insights53 blog and is published here with permission. 

 

[Image via Flickr / kennymatic]

How Can You Create the Most Value for Your Customers?

If you’re in B2B sales or marketing, it’s your job to understand the prospect’s business well enough to know exactly how you can deliver value. In other words, you need to know where the big drivers of value exist within your customers’ businesses. Let’s take a simple example.

Suppose that you sell an offering into a manufacturing environment and your typical customer’s income statement looks something like this:

Income Statement Impact

 

 

 

 

 

 

 

Now imagine that your offering, depending on which features you use and how you choose to deploy it, could have several impacts. For example, it could:

  • Increase customer’s sales volume
  • Increase customer’s average selling price
  • Decrease customer’s raw material cost
  • Decrease customer’s manufacturing labor
  • Decrease customer’s other manufacturing cost
  • Decrease customer’s SG&A

So, which of the above benefits should you focus on? One way to think about it is to estimate the magnitude of the value created for each of the potential impacts. For instance, if each of the benefits listed above would yield a 1% improvement, the net impact would break down as follows:

Magnitude of valueFrom this perspective, you can see that you can achieve the highest possible value for this type of customer by focusing on increasing their average selling price. The lowest value you offer is in the area of “other manufacturing costs.” If you want to showcase the highest value possible to your customer, then you should prioritize your offering’s benefits in the following order:

  1. Average selling price
  2. Raw material cost
  3. Sales volume
  4. Manufacturing labor
  5. SG&A
  6. Other manufacturing cost

This sounds pretty straightforward, but I guarantee that many sellers and marketers are engaging in various self-defeating behaviors by choosing to focus on features that create little or no net value. For example, sometimes engineering will focus on developing products that reduce raw material costs, despite the fact that you could develop or enhance an existing offering that will have a greater impact on the customer’s average selling price. Or, sales will pitch the benefits of a 1% improvement in sales volume, when in fact your highest value proposition is in the area of “manufacturing labor.”

Remember that each customer will have a different financial framework, so it makes sense to constantly reevaluate the order in which you prioritize the benefits of your offering. Whether you’re working on closing a deal with a prospect or looking to develop new features or products, you must first understand where you have the most potential to provide the highest value possible for your customer.

In an upcoming post we’ll explore a related issue: creating a sense of urgency by highlighting the biggest sources of value. 

Our Experience with B2B Marketing Videos

Like just about everyone, we’re well aware that video can be a powerful vehicle to communicate with prospects and customers.

According an Inc.com blog post, (“B2B Marketing Secret: Video, Video, Video”) 92 percent of B2B customers watch online video and 43 percent of B2B customers watch online video when researching products and services for their business (with 54 percent of these watching on YouTube). Numbers like these make video a difficult medium to ignore.

We recently created one of our first company videos because of an unexpected honor — we were selected as a finalist for the Northeast Ohio Software Association (NEOSA) Awards (in the “Best of Tech Software Product” category). Over the past eight years, the NEOSA Best of Tech Awards have recognized outstanding companies like Hyland Software, TOA Technologies, OnShift, AtNetPlus, Sparkbase, and Sherwin-Williams, so we were humbled to be included as a finalist.

NEOSA asked all finalist companies to submit a short (30 second) video, to be shown at the awards dinner. Because our previous efforts with video were primitive (using a camcorder to record somebody talking), we decided to invest in something with a higher production value.

We were glad we did — one thing we noticed was that the quality of the videos among nominees improved dramatically relative to previous years’ submissions. Some of them were outright funny, such as OnShift’s video for the Tech Team of the Year category (and included our good friend Chris Weisel), or even used puppies to pull at heartstrings, such as OnShift’s video for Tech Company of the Year. (You can check out the videos of the NEOSA award winners here.)

We surmise the videos got better because:

• People understand how impactful video can be for B2B brands.
• The cost of producing a good-quality video has become much more reasonable.
• Social-media channels can be used to get more mileage out of an investment in video production.

Here’s the end result of our efforts.

The process was easy, fairly inexpensive, and actually quite fun. Good lighting, background music, clear screenshots and visuals, and a polished script helped us create a final product we were very happy with.

Do you have any experience creating or leveraging video for B2B marketing purposes? Please share your thoughts in the comments section.

The process was easy, fairly inexpensive, and actually quite fun. Good lighting, background music, clear screenshots and visuals, and a polished script helped us create a final product we were very happy with.

Do you have any experience creating or leveraging video for B2B marketing purposes? Please share your thoughts in the comments section.

Three Keys to Influencing B2B Customers

On a very basic level, the job of sellers and marketers is to help the customer through a decision-making process. Recently Ilya Bogorad addressed the topic of decision making in a terrific blog post, “Making a Case: How to Become a Thought Leader and Influence Decisions,” and I highly recommend that anyone in sales or marketing read it. His insights on how to create a convincing business case are worth your time.

In my view, there are three important things to keep in mind as you travel along the decision-making journey with a customer or prospect.

One: Understand what they’re trying to accomplish. What is the main objective of your client? If you’re not playing from the same sheet of music, your deal won’t go far.

Two: Understand what they’re being measured against. How will the client define success? Is that a three percent increase top line revenue? A twenty percent reduction in labor costs? To craft a solution jointly, you must first understand what success looks like from their perspective.

Three: Understand what their alternatives are. Find out what they’re considering as alternatives to investing in your solution. That could be a competitor’s solution, but it could also be making an investment in an unrelated area. This last point is key, because sometimes sellers don’t understand that even if you’re talking to a customer and saying, “Hey, this problem is worth solving and we are the best ones to help you solve it,” that customer still might have to go back and compare against other alternatives as a matter of protocol.

When it comes to making a business case to invest in your solution, this is where a TCO comparison and ROI tools could help you. A TCO tool illustrates what the prospect’s best choice is relative to other alternatives, usually a competitor. An ROI tool shows how much the prospect stands to gain (in revenue, cost savings, or both) by investing in your solution relative to the status quo.

At the end of the day, any B2B company is concerned about one thing: dollars and cents. But it is also subject to the personalities and decision-making styles of the decision-makers. As you help your prospect through the buying journey, keep your focus on their unique situation as well as their potential financial risks and benefits. This is the best way to gain trust and influence, no matter what style of decision-maker you’re dealing with.

What are your tips to gain influence with decision makers? Share your thoughts in the comments section.

Are You Wasting Your Investment in Lead Generation?

Danilo Rizzuti arrowsEach year InsideSales.com conducts an audit of lead-response patterns among 14,000 companies to see how quickly and effectively they respond to Web-based inquiries. (They define response time as “the period between the submission of a Web lead and the first contact attempt by a company representative.”) Here are three major takeaways from their Annual 2014 Lead Response Report:

Takeaway #1: U.S. companies are spending more on lead generation, but they are not improving in lead response times.

While companies increased lead-generation expenditures by 82% between 2005 and 2009), just 37% of these companies responded to Web leads within an hour. Meanwhile, 24% took more than 24 hours to respond. [Harvard Business Review]

Takeaway #2: Many companies are wasting their investment on lead generation.

Of the 9,538 companies that received a “test lead” as part of the Lead Response Report, 47% did not respond at all. Forbes has estimated that B2B companies spend between $30 and $200 per lead generated by marketing. As the Lead Response Report points out, any delay in response times to those leads is a waste. “It is highly likely that company executives do not realize the potential return on investment (ROI) gains that can occur with improved lead-response management.” [Forbes]

Takeaway #3: Many companies are giving up on leads too quickly.

InsideSales.com research indicates that sales professionals, on average, call leads 1.3 times before giving up. Results from the Lead Response Report indicate that the median number of contact attempts (for those companies that responded at all) was 1; the average was 2.2. Ken Krogue, president and co-founder of InsideSales.com says salespeople should be making between 8-12 follow up calls in order to be successful. [KenKrogues.com]

We probably all agree that it’s better to follow up sooner rather than later to inbound marketing leads. Years ago I learned this lesson firsthand, before marketing automation was even a thing. After we sent an email blast, I called a lead who was still viewing our Website by using a real-time email tracking program. His first question was, “How did you do that?” At the end of our chat he asked me to send a proposal; we closed a deal the following week.

We routinely tell Stratavant customers who purchase our Value Calculators that they need to follow up within five minutes to a Web lead. That’s how much response time matters. When you consider how much inbound marketing has grown, response time might even matter more. It is unlikely today that I would even be asked how I knew whether or not someone had visited our Website, because most companies are using tracking tools and many customers have come to expect that kind of custom and immediate response.

Customers take it for granted that we’re watching their online behavior and responding accordingly. Not only that, but I would venture to say that their attention spans are shorter. I can remember calling on someone within hours after he visited our Website and he had no recollection of it.

Lead response times are just as important as lead generation. If your account teams complain about junk leads, ask them how quickly and persistently they’re following up. It could be that with some simple adjustments in process and behavior you could realize the full potential of your investment in lead generation.

How quickly do you respond to leads? Have you ever closed a deal because you responded within minutes to a Web visitor? Share your thoughts in the comments section.

[Image via freedigitalphotos.net / Danilo Rizzuti]