Thursday, April 15, 2010

Selling Software to the C-Suite REQUIRES Quantified Value

In a recent article on Sandhill.com, Selling Software to the C-Suite, Stephen J. Bistritz outlines how presenting the value proposition is important in a down economy, and that throughout the buying cycle there are multiple opportunities to communicate value.

1) Value Proposition - early in the lifecycle you can guess at customer needs and propose how the solution mught derive value

2) Value Hypothesis - during engagement with the customer you can investigate pain points and how the solution can help customer save, streamline or overcome the issues.

3) Formal Value Reviews - post sale, reviewing the value received vs. the value proposed to determine gaps and assure value derivation.

Although overall we believe value selling is vital, and that the advice offered in this article is good, it is not specific / scientific enough to drive results and action on the part of a frugal buyer. The methodology addresses the art of value selling, but does not address the most important element - Show me the Money - the science of value selling.

Ever since the bursting of the tech bubble in 2001 buyers have fundementally changed. Previous technical buying on innovation, time to market, and features has now been replaced with economic buying, which requires QUANTIFIED proof of bottom-line impact, savings and superior competitive value. We call this change in buying attitude Frugalnomics, and sales and marketing needs to change to address these new market conditions.

Lets look at how value selling science can be used through the buying lifecycle.

Early in the buying process, during the discovery phase, customers need help understanding what issues they have. Many have day to day pain points which need to be discovered, but beyond that, many are so busy that they don't even know what problems they have.

Diagnostic tools need to be used to perform a health check and uncover issues and opportunities proactively. The opportunities need to be quantified so the customer understands the magnitude of the pain. The best health checks include:
> structured set of surveys and scoring to help facilitate discovery and help customers map where they are on a set of recommended best practices / capability & maturity improvements.
> peer comparisons - helping the customer understand where they stand compared to average and leaders in their industry, region and of similar size. The diagnosis and quantification drives urgency, essential in today's environment of fixed budgets and priorities.
> a prescribed mapping of the pain points diagnosed with recommended solutions - a roadmap for success.
> ability to use the science of the engagement, but not lose fact that each customer is unique and the presentation needs to be customized

In the middle of the buying process, the consideration phase, we prescribe that each of the recommended solution sets be modeled, simulating what the solution can do to help reduce costs, streamline processes and drive business advantage. Comparing the "do nothing" As Is scenario with the proposed To Be scenario after the solution is implemented quantified potential savings, and investment requirements. Key financial metrics of the project such as ROI, NPV, IRR and payback period can be derived from comparing investment vs. benefits - providing tangible proof that the solutions can deliver value, and providing urgency so customers can rank priorities based on returns.

During the selection phase of the buying cycle it is important for the seller that the customer does not tactically select a lower priced solution after all the strategic hard work has been done. We prescribe that the sales team use tools to help quantify total cost of ownership advantages, focusing not just on price up-front, but the total cost savings the solution might deliver over time, and competitive feature advantages - all quantified in hard dollar terms.

And finally, during the post-implementation / sale phase, that the quantified ROI analysis be used to determine exactly whether value was delivered. Several of our customers have formalized this into post deployment value audits and ROI SLA guarentees, standing behind the pre-sale ROI predictions and assuring that true value is acheived.

As we progress in the era of Frugalnomics, we believe that combining the concepts of Stephen J. Bistritz as the art, with Value Selling science, is an absolute requirement for selling success.


The original article by Dr. Bistritz on selling to the C-Suite can be found at:
http://www.sandhill.com/opinion/editorial.php?id=299&page=1

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