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.

The ROI of Winning an Oscar

OscarOne of the coolest things (in our opinion) about ROI is that you can calculate it on almost anything.

In the B2B world we obviously use ROI calculations to show our prospects and customers what they’ll gain by investing in our solution or offering. Recently – and just in time for the Oscars – we came across an interesting post from Forbes showcasing a list of actors that deliver the best return on investment for movie studios. Although it’s common to see lists made of actors that command the highest salaries, it’s slightly more unusual to see someone thinking from the perspective of ROI. Here’s the methodology they used:

Taking a star’s pay on a film, and the movie’s estimated budget, box-office receipts and DVD sales, we calculated a return on investment number, and then averaged the numbers for their last three films to get an overall return.

By this reckoning, Forbes placed Jennifer Lawrence third on the list, noting that she yields a return of $68.60 for every $1 she was paid. They also note that actors that accept smaller paychecks actually increase their ROI. (This is why Emma Stone ranked #1 on the list.)

You might assume that an Oscar winner would command a higher salary, but this separate Forbes post indicates that the equation isn’t so straightforward. In fact, winning an Oscar is not a good indication of higher salary earnings.

This is another good example of how there’s more to value than just price tags and budgets. Value is always in the eye of the beholder. To some, going home with a gold statue holds infinitely more value than a multimillion-dollar paycheck. As Forbes notes, actors who put a premium on winning an Oscar sometimes agree to lower paychecks for the chance to work on films that offer lower budgets but higher artistic credibility. To them, the trade-off in salary is more than worth it.

The same principles apply in the business world. Just because a solution is more expensive than anything else on the market does not guarantee that the customer will see a higher ROI. In fact, a higher price makes it more difficult to show a higher ROI. Conversely, the cheapest solution is not necessarily the best value. As we pointed out in a recent post about differentiating from your competition, value is relative not to what you paid for the solution but to what the next-best alternative is. Value encompasses price, plus the cost to deploy and maintain your offering, costs in other areas, and the impact on the customer’s revenue. All of those elements need to be taken into consideration when calculating ROI.

We’ve not yet been asked to assemble a value calculator for a Hollywood studio, but I’m sure it would be fun to try.

What do your customers value? What are some of the trade-offs they make in the name of value? Share your thoughts in the comments section. 

Getting to a Successful Close: The Four Phases of Value in Sales and Marketing

This is Part I of a five-part series about the life-cycle of value in B2B selling and marketing. Part I is an introduction and a summary four phases of the value life-cycle.

Whether you’re in sales or marketing, it is obviously in your best interest to understand what value you offer to customers. What most sellers and marketers don’t realize is that value has different meanings depending on where you are in the marketing/sales cycle. The “value life-cycle” has four distinct phases (listed below) – as you’ll see, different phases require input from different roles in the company.

Stratavant Value Lifecycle

Stratavant Value Lifecycle

Phase 1: Establish Offering Value (and price)

Initially, a marketing/development team defines value and sets price for a new offering. The common mistake here is that marketers set the price based on what the competition is charging or, worse yet, based on their own cost – not based on the value they create relative to the competition. During Phase 1 you will always be measuring value against the customer’s next best alternative (often a competitive offering).

Phase 2:Demand Generation

At this phase, marketing aims to project to the customer a picture of how your value can help them relative to what they’re doing today. At this point in the value life-cycle, you are trying to “shine a flashlight” on how much the problems that you can solve are really costing them. During Phase 2 you are measuring value against their current state.

Phase 3: Competitive Differentiation

At this point, sales (with support from marketing) needs to show the customer why their offering provides more value and is a better fit than competitive offerings. In Phase 3 you are showing that the total value your creates – throughout the life-cycle of the solution – is higher than the total value created by the next-best alternative (aka, a competitor). This is often referred to as TCO, or Total Cost of Ownership.

Phase 4: Business Case & Cost Justification

By Phase 4, the sales team is actively trying to close a deal. A cost-justified business case is key to convince a financially minded approver (often a CFO or someone from finance) that an investment in your solution is in their economic best interest.  During Phase 4 you are showing the Net Present Value (NPV) and Return on Investment (ROI) of investing in your solution (as we’ve written before, this is why it’s important to understand financial terms and communicate intelligently with CFOs). This type of analysis compares their current state of cash flow against what their cash flow will be after they invest in your solution.

How you think about value should change based on which phase you’re in. Phase 1 is strategic marketing, and the meaning of value is very different from Phase 4, during which sales is talking with the customer. The way you think about value at each phase will have an enormous influence on your ability to successfully position your product in the market and keep deals moving through the pipeline until they end in a successful sale.

While most people in sales and marketing do think (and talk) a lot about value, they don’t necessarily think about it within this framework. We’ll explore each of these phases more in four upcoming blog posts.

A final note: the word “value” is always about dollars and cents in the B2B world. If you can’t lower the cost of doing business for your customer and/or find a way to help them increase revenue, you’re not offering value and customers shouldn’t buy from you.

How do you think about value for your offerings? Do you have tools that help you to show value across the various stages of the value life-cycle?

Four Mistakes Sellers and Marketers Make

Making mistakes can be uncomfortable, but they’re a good opportunity to learn and improve (or at least move on). Here are four mistakes we’ve written about recently on our blog that we see in sales and marketing organizations. Feel free to share some of the major missteps you see among sellers and marketers in the comments section.

Mistake #1: Relying on spreadsheets for your presentations.

Have you ever made calculations in Excel to help convince a prospect to invest in your solution, only to find that a simple data-entry error foiled the end result? An analysis of multiple studies on spreadsheets from 2008 found that 88% of spreadsheets have errors. In addition, even the most carefully assembled spreadsheets contain errors in one percent or more of all formula cells. A complex sale typically involves complex calculations. The more faith you put in manual data-entry into spreadsheets, the more you risk making a simple error that could potentially result in a mistaken conclusion. An ROI calculator can easily prevent this. Not only will an ROI calculator prevent data-entry errors, many prospects are more inclined to put their faith in numbers generated by a calculator that’s been created by a third-party vendor.

Mistake #2: Not properly preparing reps to make sales calls.

According to Forrester research, only 13% of customers believe salespeople can demonstrate an understanding of their business challenges and how to solve them. What does this mean? Sales leaders are sending their reps into the field without giving them the tools to win. If this describes your sales team, I would say it’s time to dig into two areas of the organization. One is sales management. Explore sales coaching and training options you can provide for your reps. The second is product marketing. Strong assets from marketing can help reps explain in clear financial terms how they can help solve a prospect’s business challenges (which is a must-have skill in today’s business environment).

Mistake #3: Talking about ROI without understanding what it really means.

Do you every talk about “ROI”? Do you know what the term really means? 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. I frequently hear people use the term “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. Don’t let this happen to you — learn the proper definition of ROI and how to use the term to your advantage.

Mistake #4: Asking sales reps to become financial experts.

A salesperson’s biggest strengths are building rapport, understanding business problems, negotiating, etc. Although business acumen is important, some sales organizations are taking it a step too far by asking reps to essentially build what amounts to a financial analysis so that reps can say to prospects, “Here’s what the ROI would be when you invest in our solution.” This is putting too much on a sales rep’s plate. A better approach would be to embrace an ROI calculator that can be used over and over again with prospects in your target segment. With simple navigation and ease of use, an ROI calculator built upon a software platform can easily uncover the costs of buyers’ problems. These sales enablement tools seamlessly calculate the key financial metrics.

What are some mistakes you see in sales and marketing? 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. 

Maximizing the ROI on Your Road Warriors

Field sales teams are very expensive. When a salesperson has to travel outside the office to see a customer — possibly on extended trips to another city, state, or country — the price tag of a sales call can easily add up to hundreds if not thousands of dollars. Here are some ways sales organizations have responded to this reality.

1)     Create (or grow) an inside sales team. As this HBR blog post points out, companies like IBM, SAP, and Astra Zeneca have all invested heavily in growing their inside sales teams. When you consider cost per sale, this makes sense — inside reps make contact with prospects and customers via phone call or video conferencing and thus eliminating travel expenses altogether.

2)     Ramp up marketing assets and optimize online selling channels. Customers today research and buy products online  — this is true even for complex and highly expensive B2B solutions. That means customers are engaging with salespeople at a different point in the sales process; much of what field sales teams used to accomplish (knocking on doors and delivering presentations) have been replaced by online content that can be watched or read online. In other cases, companies are taking cues from customers and waiting to deploy field sales reps until customers indicate that they’re ready for a face-to-face meeting.

3)     Find ways to make field sales highly productive. One way, as we mentioned, is to create an inside sales team to augment the more expensive tactics practiced by field sales. Another way, however, is to adopt tools that directly benefit field sales. InfoGrow is a great example. Their CRM Call Planner tool allows reps to “cluster” their meetings by location, on a map within Dynamics CRM, to maximize the return of their time spent on the road (including turn-by-turn directions to prevent getting lost, and street and satellite views to find parking quickly — if you’ve ever had navigation or parking troubles on the way to a client meeting, you know these are two major productivity losses). If a meeting falls through or the rep has more time than planned, he or she can also use the tool to quickly find other opportunities to cold call nearby.

It’s important for all companies to quantify and measure their productivity levels. (In fact, we’ve helped a few clients create tools to do just that.) Sometimes we assume our sales and marketing teams are productive without any real evidence to back it up. Other times, we know a problem exists because we’re not getting the results we want — we just don’t know exactly where the problem lies. The great thing about tracking ROI is that you become empowered to take the right steps to put you on the path to success.

Do you have a field sales team? How are you measuring productivity? Share your thoughts in the comments section. 

Selling to the CFO: 7 Tips to Inspire Confidence in Your Solution

One of the greatest advantages in selling is the ability to understand how the CFO, (a typical approver) thinks. That’s particularly true if you’re selling a technology solution. Why? Tech sales generally represent large investments, and the job of any CFO is to make sure that any major expenditure will yield measurable results and a good ROI.

As the steward of money within the company, the CFO wants to make smart investments. Your job as a seller is to provide proof of value. Although you might be extremely personable, like-able, and engaging, it’s important to realize that the typical personality of a CFO is not built to make decisions based on whether or not he or she likes you. Treating them to nice dinners or a round of golf at an expensive resort might be pleasant and enjoyable, but ultimately those activities are not going to help close a deal if the CFO doesn’t see a sound business case for investing in your offering.

Financial officers will always be looking for hard facts and evidence that the company should free up funds to purchase your solution. That means your proof of value has to be unbiased, polished, and persuasive. Here’s how to increase your chances of persuading a CFO to give you the green light.

1) Quantify the benefits of your solution. CFOs want to see value in terms of currency (dollars and cents in the US). What ROI can you offer?

2) Show why your solution is a good use of funds. Make sure that you customize your presentation to the company — show why your solution is relevant for this particular company, at this particular moment in time. Don’t use a generic story to sell your solution.

3) Prove your solution’s value. Show the CFO where else you’ve delivered value. Include proof points, case study examples, and other references. This will increase their level of confidence in your solution.

4) Show professionalism in your work. Your presentation cannot appear as though it was put together the night before in a hotel room. No matter how genius the idea, a back-of-the-envelope proposal will get passed over every time. Spelling errors and typos can fatally undermine your credibility. And, needless to say, any mathematical error will make your entire analysis invalid. Double check your work and enlist the aid of other professionals (copyeditors, designers, technical experts, etc.) to put your best foot forward. Or, better yet, use a tool that has already been tested to be accurate.

5) Show your work. If the CFO is remotely interested in your solution, he or she will want to drill into the analysis to make sure they understand how the numbers were calculated. Your business case needs to be rooted in logic. Avoid fuzzy math.

6) Incorporate an unbiased perspective. Reference benchmark studies, analyst reports, statistics, or any other third-party data to help convince the CFO that your solution is a worthy investment.

7) Balance positives with negatives. Not every solution is a perfect fit for a company. Your aim is not to provide a perfect picture; your job is to provide an accurate and realistic perspective. Be up front about the potential downsides or drawbacks to investing in your solution. If the CFO thinks you’re hiding something, you will definitely lose credibility.

Follow these principles when selling to a CFO, and you’ll increase your chances of convincing them that your solution is worth saying yes to.

What are your biggest challenges when selling to CFOs? Share your thoughts in the comments section.