Test Your Credibility as a Sales or Marketing Professional

Last week we published some thoughts from RainToday editor Michelle Davidson, who offered three great points about what buyers want from sellers and marketers. The very first point she made was that buyers want to deal with knowledgeable sales and marketing teams. As she stated, today’s buyer has no need or patience for a sales pitch. They want answers, analysis, and advice.

Image via freedigitalphotos.net / samuiblue

Image via freedigitalphotos.net / samuiblue

This is a message we are passionate about and feel it cannot be stated often enough: trust in B2B selling and marketing is built on credibility.

In the past, knowledge mostly meant knowing everything about your product or solution (as well as that of your competitor). And credibility was about how you acted — prospects preferred to buy from vendors who were helpful, honest, and delivered on their promises.

Those things still matter, of course. But credibility today now encompasses knowledge of a more sophisticated nature. As I wrote in a blog post last year, I believe buyers now take for it granted that you’ll include a business case as part of your sales pitch or proposal. I believe credible sellers and marketers are those who can answer “yes” to the following questions:

  1. Do you understand your prospect’s business challenges and do you have tools to help you express those business challenges in financial terms?
  2. Do you understand how to highlight business/financial challenges the prospect has but might not be aware of?
  3. Can you demonstrate an awareness of how the prospect’s options (buying from a competitor, doing nothing, or buying from you) compare to one another?
  4. Can you talk about ROI knowledgably with the Chief Financial Officer and/or CEO?

Beyond looking for integrity in all the traditional realms, buyers today trust vendors who can demonstrate this level of business acumen. Today, you must help prospects see their problems, envision solutions, overcome internal objections to investing in your solution, and achieve measurable results. That is how we need to start thinking about credibility as sellers and marketers.

How well do you score on the credibility scale? Share your thoughts in the comments section.

Read This before You Talk about ROI

How frequently do you use the term “ROI” in front of customers and potential buyers?

I frequently hear sales and marketing professionals talk about “ROI” inaccurately. In a casual conversation, people might still give you the benefit of the doubt and have faith that you know your stuff. However, if you’re making a formal presentation or having a serious conversation with a prospect who’s well versed in financial terminology, any misuse of the term could obviously leave a disastrous impression about you and your company.

For example, I hear both sellers and marketers say things like this all the time:

“Your ROI is $100,000.”

Why this is incorrect: If you’ve ever expressed ROI in terms of dollars, you’ve likely confused ROI with net present value (NPV). NPV answers the question, “What is the cash benefit minus the expenses required to achieve the benefit worth in today’s dollars?” ROI is not a dollar amount — it’s a percentage. Specifically, it’s a percentage that represents what your net gain will be on any investment.

ROI = Gain of Investment – Cost of Investment / Cost of Investment

In other words, if your benefit is $100 but you spend $50 to achieve that benefit, your ROI is 100%.

NPV is still an important consideration because the term takes into account the value of a dollar over time. Obviously a dollar today is worth less than a dollar five years from now. Let’s say you invest $100,000, with an expected return of $120,000 within the next two months. That investment would be worth more to you than an investment of the same amount of money, with an expected return of $120,000 five years from now. The reason is that $120,000 is worth more two months from now than it will be five years from now.

Speaking of periods of time, I’ve also heard sellers and marketers say things like this:

“You’ll get a six-month ROI with our solution.”

Why this is incorrect: If you’ve ever expressed ROI in terms of a period of time, you’ve likely confused ROI with payback period. Again, ROI is always a percentage — never a period of time.  If I invest $100,000 in a project, the payback is the length of time it takes for the cumulative benefits to become greater than the cumulative investment.  Payback period is always measured in time (typically months).

During my first job out of college as an engineer, I became an economic evaluator. That meant part of my job was to evaluate capital investments and decide whether they represented a good investment for the company (including evaluating the payback period, NPV, and ROI). So that was where I learned a lot about financial analysis and how to talk about numbers with CFOs.

The magic of these financial metrics is that together they give you a great picture of the impact of an investment. Essentially, you can measure ROI on anything. The formula is simply to subtract the cost of your investment from the gain of your investment, and divide it by the cost of your investment. That’s how we’re able to build ROI calculators for so many different scenarios for our clients.

People confuse financial terms all the time, so if you’ve gotten this one wrong in the past, don’t feel bad. Just don’t let it jeopardize your ability to close a deal.

What’s your understanding of the term “ROI,” and how frequently does it crop up in your discussions with prospects and clients? Share your thoughts in the comments section. 

Three Ways to Rev Up Your B2B Demand Gen Results with Online Calculators

Most marketers would agree—effective business-to-business demand generation revolves around three tenets:

  • Customize the message,
  • Encourage involvement,
  • Demonstrate financial benefits.

Fortunately, online value calculators meet all three of these masters. In fact, every day, sales reps use these calculators to successfully shorten the sales cycle and close deals. And many (if not most) B2B marketers have a calculator or two parked on their corporate websites.

But imagine the power of online value calculators when they are put directly in front of a larger group of prospects. Easy-to-use calculators that ask a few simple questions are a great way to help your prospects take the first step in understanding the value your solution can bring to their business. They can help you:

1. Spark an immediate reaction that generates more leads. As offers go, online calculators are uniquely engaging; prospects often find themselves interacting with the tool before they know it. Whether you ask your respondent to profile before using the calculator to maximize lead collection, or require them to profile to download a summary report to optimize lead quality, calculators are a proven way to generate stronger click-through and response rates than other, more traditional offers.

2. Engage prospects in ways that improve lead quality and conversion. A prospect who has used your online value calculator now understands your solution and its potential value to his or her business. Although other forms of online content (such as white papers, videos and infographics, for example) can be effective offers, they don’t have the power to provide a custom assessment of your solution’s financial benefits.

Engaging email featuring an online calculator.

Engaging email featuring an online calculator.


3. Cultivate existing leads and thus shorten the sales cycle.
In addition to lead generation, online value calculators are ideal for use as part of lead nurturing. Exposure to one of these tools can take top-of-funnel leads and move them along the lead qualification spectrum by demonstrating to them the specific financial upside of your solution.


Ultimately, the best way to make the most of your online value calculator is to build a demand generation campaign around the tool. First, create a microsite to host the calculator and tell your marketing story. Drive prospects to the microsite by promoting it on your corporate website, promotional microsites, or in third-party media buys. Showcase the online calculator in email to cross-sell and up-sell current customers and prospects, or feature it in lead nurture streams. Plus, include links to your online calculator in your online user communities and social media properties.

No matter how you target your customers and prospects, a demand generation program built around an online calculator is an ideal way to ensure a wider audience has every opportunity to understand the true value of your solution.

Is it your experience that online calculators are more successful than other offers? Have demand generation campaigns focused around the tool provided a boost to your results. Share your thoughts in the comments section.

This article was written by Linda Lucido, Partner and Planning Director of Integrated Marketing Partners (www.imarketingpartners.com).

Helping Prospects Visualize the Need for Change: The Halogen Story

Sometimes the earliest stage in the buying process isn’t when a prospect realizes he or she has a problem. It’s a nagging feeling they have about the status quo. Even though things are going well, they still feel they could somehow be better.

This is an opportunity for sellers and marketers. Your job is to paint a vision of what “better” looks like (including, hopefully, the idea that your product or solution can help them get there).

One of my clients, Halogen Software, decided to help its target market of HR managers identify ways they could improve their succession-planning strategies. The challenge for Halogen’s typical prospect is: how can we identify, develop, and retain a talented workforce? Halogen’s succession planning software solves this problem by easily allowing users to:

  1. Understand their workforce’s potential
  2. Develop internal talent pools,
  3. Recruit successors from within.

We worked with Halogen to create a succession planning assessment tool that would give prospects an idea of their status quo, and show them areas for possible improvement.

The tool essentially asks prospects “How does your succession planning strategy stack up?” by taking users through a 20 question self-assessment. Each question elicits rankings, ranging from “Not at All” to “Very Well.” The tool then provides a score to show users how well their organization is doing in succession planning (scores appear in four areas: identification, assessment, development, and management). Users can download a report that features their scores, plus tailored recommendations for improvement based on best practices extrapolated from Rothwell & Associates research.

Use an assessment tool to help prospects visualize the need for change

When prospects understand their shortcomings, they respond more urgently to invitations to try new solutions and find new ways to improve. Because Halogen offers this assessment tool on its web site, the company paves the way to have more effective conversations with prospects that now have an idea about how they can go from good to better.

What’s your biggest challenge in getting prospects to engage with you? Do you use assessment tools to paint a vision of success? Share your thoughts in the comments section.

ROI Selling: Four Opportunities to Advance Your Sale

When customers make a purchase, they typically go through a few different stages. As a seller or marketer, your job is to help shepherd the customer through these stages quickly and efficiently.

Based on our experience, here are the four most common stages of buyer purchasing behavior, plus the tools you can use to advance the sale to the next stage.

1. Customer assesses the problem.

In this stage, the customer is trying to assess the problem and figure out how their performance compares against benchmarks. At this stage, a simple assessment tool can help customers get a feel for how they’re performing in the market.

(To capture more leads from your website, provide visitors with an assessment tool.)

2. Customer quantifies the value of the problem.

At this stage, the customer is saying, “This solution looks interesting … but is it worth it to me to implement it?”

This is when sellers and marketers must quantify the value of the problem for prospective buyers. In other words, if the prospect were to solve this problem, how much money will they either be able to potentially make or save by doing so?

It’s important to note that when customers quantify value, they’re simply trying to figure out how big the problem is. Is this a two million dollar problem, or a 10 million dollar problem? (Note that you’re not yet discussing how much investment it will take to fix the problem — that happens at the “justify the cost of making a purchase” stage, explained further below in this list).

(To capture more leads from your website, provide visitors with a value calculator. )

3. Customer compares alternative solutions.

Frequently (but not always) customers reach a stage where they want to compare offerings. Essentially, at this stage you’re trying to show the customer why this company should buy from you and no one else. Your Company has one offering; XYZ Company has a similar one: which one is best?

At this point, we advise using a TCO (total cost of ownership) tool, which will provide calculations showing the value of one solution over another, over the same time period.

(To close more competitive deals, provide your sales team with a TCO tool. )

4. Customer justifies the investment.

One of the final questions a customer will ask is, “Is there a cost justification for me to make this investment?” In other words, the customer wants to know what the return on the investment will be if he or she buys your solution.

Unlike the stage above in which the customer assesses value of the problem, this stage identifies the cost involved in investing in a solution to that problem. In other words, the problem could cost $5 million, but if the solution requires $10 million to solve, the company should probably address another area or spend resources elsewhere. On the other hand, a problem that costs $2 million and only would cost $150,000 to solve would be worth doing something about. (A good rule of thumb is to ask yourself whether or not you’ve made a case that will cause any Chief Financial Officer to sign off on a major expenditure.)

(To close more deals rather than losing to “no decision” provide your sales team with an ROI calculator.)

Many sellers and marketers won’t have to use all of these tools — very commonly our clients end up using just two or three tools in combination. For instance, a TCO tool is not really of interest unless you’re losing lots of bids to competitors. Similarly, if you’re losing business to “no decision,” or only have a 10% close rate on a large funnel of opportunities, then you need an ROI tool to help you justify the cost of investing in your solution.

Also, not all customers go through each of these stages. Some customers, for example, go straight from “quantify value” to “justify investment.” (In fact, a value calculator plus an ROI calculator is what we most commonly deliver for our clients.)

What’s your biggest selling/marketing challenge, and what tools are you using to overcome it? Share your thoughts in the comments section. 

Discussion with a Sales Leader: The Transformation of the SunGard Sales Force

Last week I spoke with Ken Powell, who’s been leading a sales transformation at SunGard in his role as VP of Global Sales Enablement. (He was also a speaker this week at the Sales 2.0 Conference in Boston.)

He joined SunGard just 15 months ago, but his prior experience leading a sales transformation in his previous role at ADP helped him hit the ground running. Already he’s taken many steps to improve sales effectiveness. These have included:

  • equipping the sales team with mobile devices (specifically, Windows 8 tablets, which have “exceeded” his expectations and are “more business friendly” than the iPad);
  • adopting various Sales 2.0 applications (including Xactly, OneSource, LinkedIn, and SAVO, to name just a few);
  • simplifying messaging.

As a company, SunGard is in an interesting spot right now. Formed originally through acquisitions starting in the 1980′s, its primary revenue driver is currently software licensing, although they also have a large consulting organization. Ken said one of their aims is to make the consulting aspect a competitive differentiator.

To that end, Ken has already done quite a bit of work with his team to refine the message his teams send to the market. Whether his salespeople are face-to-face with customers or interacting online, Ken has made it clear that they must connect the capabilities of SunGard solutions and capabilities to business outcomes. Given this initiative, it didn’t surprise me to learn that one of the next steps for Ken and his team is to incorporate value-based selling tools (and TCO tools in particular) into the selling process. In his words, proof of value is “a natural course of a conversation that professional salespeople need to have today when they’re interacting with customers, because it’s an expectation.”

Since I’m in the business of creating ROI tools, Ken asked what I tell clients about overcoming the fairly typical objection from customers about “fictitious numbers.” As we all know, numbers can be arranged in ways that will support almost any kind of story (as Mark Twain said “There are three types of lies:  lies, damned lies, and statistics.”) As a result, many customers look at numbers supplied by salespeople with a very skeptical eye.

I said that, in my mind, a major benefit of using a value calculator (or other tools) as part of the sales process is transparency. Whenever we train salespeople on how to leverage ROI tools, we advocate what we call a “peel-the-onion” approach. Salespeople should rely on the default calculations of an ROI tool to generate an initial report. But the next step shouldn’t be to simply throw the report over the fence and let the customer evaluate it alone. A much more effective route is to say, “We have this tool to evaluate your business case and decide whether or not this solution makes sense for you. Let’s sit down to discuss the numbers together.” After that, you answer questions and adjust numbers accordingly as you go.

With a peel-the-onion strategy, the customer sees the numbers evolve and thus becomes invested in the final calculation. For example, you might change the default analysis from three years to five years on the spot. Or, if the customer pushes back on a point, you have options. If the customer says, “Ok, I’ve seen your case study and how you’ve done this with other customers, but I personally don’t think you’ll ever get a two percent reduction in labor for us.” At that point you can ask the customer what he or she feels is realistic. If it’s one percent, you plug in the numbers for a one percent reduction in labor and show them what that scenario looks like.

The point is to start the conversation with numbers. Numbers will get the customer engaged. Only then can you talk about features and functions and how you’ll be able to support those numbers with your capabilities.

Great sales leaders must make hundreds of choices that will influence whether or not their sales teams succeed. This is particularly true for sales leaders that undertake a sales transformation, which by definition involves countless changes that all tie back to a unifying business strategy. It’s an interesting journey for any sales leader and I look forward to seeing what evolves at SunGard.

Do you have a sales process that supports a business case? What do you say when customers show skepticism about numbers? Share your thoughts in the comments.

How to Communicate Value to Customers: The IQS Story

One thing that will make or break your sales is your ability to help buyers understand the value you can provide to them. In some cases, as with a client of mine, IQS, that means communicating the ways in which the prospect or customer is losing money.

Situation

IQS has a 25-year history of providing manufacturers with quality and compliance management solutions, which are components of a Manufacturing Execution System (MES). The company has a strong foundation in various target markets, including automotive. We’ve been working with them for the last 10 years and have helped them to identify some of the key ways that their solution delivers value to their customers.

Cost of the Problem

Given that IQS’ solution focuses on solving  quality issues, we had to first understand the cost of the problem.   In its study, “Closed Loop Quality Management,” Aberdeen found that 7% of production did not meet specifications for a typical manufacturer.  We then dug into how off-spec product would impact a company’s financials:

  1. Lost sales revenue
  2. Increased cost of goods sold
  3. Increased cost of selling

So, if a typical manufacturing company was seeing these profitability impacts on 7% of their production, we were confident that a quality management solution could make a significant bottom line contribution.   We then determined that the cost of poor quality impacts manufacturers in these specific ways:

  • the need to carry extra inventory,
  • higher equipment downtime,
  • greater scrap and disposal costs,
  • extra shipping and expediting costs,
  • higher warranty costs,
  • and an increase in product returns and the labor cost required to rework off-spec material.

The following diagram shows these impacts.

IQS margin impact2

Value Delivered by the Solution

We then focused on how IQS could reduce that cost of poor quality.  By reducing errors during the manufacturing process, IQS is able to reduce almost all of these factors.  Also, IQS provides traceability into what happened during the manufacture of a particular product so if a problem is identified in the future, it can be traced back to the root cause and corrected very quickly.

Stratavant worked with IQS to build a value calculator that can be used to estimate the value that their solution can deliver to a prospective customer. The calculator quantifies the value that the IQS solution delivers in the following categories:

  • Reduced Direct Material Cost
  • Reduced Scrap Material Cost
  • Reduced Production Labor Cost
  • Reduced Inspection Labor Cost
  • Reduced Non-Production Labor Cost
  • Reduced Maintenance Cost
  • Reduced Warranty, Recalls, and Returns
  • Increased Sales Revenue

This tool has helped both IQS and prospective customers estimate and understand how much financial impact the IQS Quality and Compliance Management solutions can have on their organization. This helps IQS to build the business case for their offerings.

With any customer, you always want to first identify what the cost of the problem is. It’s important to quantify the problem in terms of numbers. How much is this costing the company? That’s the basis for developing a winning value proposition.

Stratavant tools can be used to quantify the value of your solution.  How do you quantify the business case for your solution? Leave your thoughts in the comments section or email me at dfleming@stratavant.com