Tuesday, February 21, 2012

What is Discounting Costing You?

Discounting is unfortunately a way of life for many of our sales professionals today. 

There is a new breed of buyer who is more skeptical and frugal than ever before, indicating that price is the key factor in over 64% of decisions (U of Dayton). As well, these buyers are now firmly in control of the purchase cycle, inviting sales later than ever, when the process is already 65% complete (Forrester).

The engagement for many sales professionals doesn’t start at the crucial opportunity discovery or needs analysis phase. Instead, the engagement occurs when the “bake-off” is in full swing. As a result of the late invite and competitiveness of this stage, our sales professionals are often forced to discount as the only way to win the business.

Unfortunately, this has a high cost. Take a typical $500M software company. Discounting of a typical 10% per deal can add up, costing this organization $50M per year in lost sales.

What if you could reduce the number of deals where discounting was needed, and improve deal size overall?

For our $500M example, this would result in:

·         Reduce discounting by 10% = $4M

·         Reduce discounting by 30% = $12M

Accomplishing the reduction in discounting is a two pronged approach, enabling sales with:

·         Provocative content and tools, enabling them to engage earlier in the sales process by moving beyond the typical product / solution sales pitch, to provide compelling and challenging insight to prospects. This includes addressing key questions the buyer has early, especially:

o   Why Change? – quantifying for the prospect that there is a significant cost of doing nothing, and that the status quo is not an option

o   Why Now? – diagnosing and prioritizing the issues for the prospect, especially recommending the right solution and quantifying the value, significant ROI and fast payback.

·         Proactive tools to move the discussion beyond price, to focus on total cost of ownership (TCO) and quantifiable value advantages of the proposed solution. This enables the sales professional to address “Why Your Solution?” without the answer having to rely on discounting.

To learn more about the cost of discounting and recommended best practices, click here:

What is a Lengthening Sales Cycle Costing You?

For many B2B firms, sales cycles have extended by a month or more over the past few years, and show little signs of shortening. The economic malaise continues to drive buyers to be more skeptical, risk adverse and frugal, causing a rapid increase in stalled deals, and understandable delays in the decision making process.

These sales cycle delays have had a serious impact on B2B sales revenue and growth, resulting in the failure of many sales and marketing organizations to meet growth goals and quotas.

As a result of stalled sales and lengthening sales cycles, hundreds of millions in new sales has been lost, yet most organizations are unaware of the real cost of these sales cycle delays.

For a typical $500M software company, the average cost per each month of extended sales cycles is $41.66M ($500M /12).

What if you could accelerate the sales cycle on just a fraction of your deals…..and reduce these elongated cycles?

For our $500M company example, the value of reducing sales cycles:

·         By 1 month = $41.66M,

·         By 2 months = $83.33M.

Of course reducing the sales cycle is easier said than done … but there are some ways to assure that sales cycles don’t extend any longer, and best practices to begin chipping away at the issue. After all, the cost of doing nothing is just too high.

Facilitating the Buyer’s Journey
Throughout the buyer’s journey, prospects have to navigate a complex change management process, answer key questions about the opportunity, and justify their decisions to an increasing number of stakeholders involved in the decision making process. From discovery, to consideration, through to decision, the buyer’s journey is not a simple one.

Developing the right content and tools could help facilitate the buyer’s decision making process, helping to overcome the chasm’s in their decision making process – can help to streamline decisions and reduce the sales cycle.

The key  is to have the right, interactive provocative / value-focused content, to convince your buyer as to:

·         “Why Change?”, proving that there is a substantial cost-of-doing-nothing and that the status quo just won't do.

·         “Why Now?”, that your proposal represents significant incremental value, substantial ROI and fast payback, especially compared to all other proposed projects.

·        “Why Your Solution?”, proving that your solution represents superior value, lower cost of ownership than competitive alternatives.

Click here to learn more: http://www.alinean.com/content_optimization

Are we all Investing in the Wrong Content?

We all know the importance of content marketing, but some recent research would indicate that the spending is not aligned with effectiveness, and that "yes", we are investing too much in the wrong content:

  • Up to 60% of deals are not lost to the competition, but to the status quo - more risk adverse and frugal buyers choosing to do nothing, rather than change (SBI)
  • 65% of deals go to the solution provider that helps uncover the issue and establishes the business need as a priority, versus 35% that goes to those that win the bake-off (Forrester)
However, when we examine content marketing and sales enablement investments, more than 70% of the spending is currently aimed at the later, competitive shoot-out stages of the decision cycle,  versus addressing the more important earlier stages, where the buyer needs to be convinced as to "Why Change?" and "Why Now?".

Perhaps this is why Content Marketing Institute continues to report that >50% of content marketing programs are perceived as “less than effective”?

Some key questions you may want to ask yourself in light of this new research:
·         Do you see the same challenges, too many non-starters / deals lost to no-decision?

·         Similar issues in your spending alignment, investing too much in later phases and not enough to motivate the prospect as to “Why Change?” and “Why Now?”?

What is the Value of a Lead?

It seems like it’s harder than ever to get your prospects interested, and turn them into real opportunities.

The issue is that your prospects have clearly changed, today more:

1.       In Control – leveraging more information sources than ever, especially the Internet, social media and collaboration groups, your prospects dictate when and how they want to be engaged, and when they do, are armed with a wealth of knowledge about potential opportunities, your solution and the competition.

2.       Overloaded – forced to do more with less, your prospects have less time than ever to engage with solution providers, yet at the same time, are inundated with dozens of vendor phone calls and emails each day.

3.       Skeptical – your prospect has heard it all before, so the same old product / solution pitches won’t work.

4.       Frugal – more risk adverse and with less budget, your prospect is more apt to “Do Nothing, than to say “Yes”.  Unfortunately, it takes a lot today to convince your prospect to part with precious funds and take the risk on your new proposal. They especially won’t say yes unless they see a quantified “cost of doing nothing” and know the project will have significant tangible benefits, significant ROI and fast payback.

Frugalnomics is in full effect, and as a result, marketing is harder than ever before, requiring more significant investments in more content, more channels and more collaboration.

As well, your buyers have changed, so you’ll need new content that is more personalized, provocative, and value-focused, to fuel their need for control, break through the overload, connect one on one, and address the economic focus.

Is it Worth It? The Value of a Lead
The new content and tools are likely to require an investment on your part, to develop the new content and interactive tools to meet new buyer expectations. So how do you justify the incremental investment it’s going to take to drive these new programs?

Calculations can get complicated because marketing is often a non-linear process, with multiple touches and influences ultimately driving and opportunity and sale.

However, we aren’t looking for the absolute contribution, just a conservative method to determine if the value of each lead the marketing program generates, so we can be sure it will be worth investing in, and a so we can begin assigning some value to the program once its up and running.

Although a simple approach, we’ll use Incremental Sales Revenue as the basic metric to estimate the value of the program:

Number of Leads Generated By a Campaign * Lead to Sales Conversion Rate * Average Deal Size = Incremental Sales Revenue

Two key figures drive the justification:

·         Lead to Sales Conversion Rate

·         Average Deal Size

These two metrics vary dramatically between companies, but using some industry average figures, let’s run through an example of a campaign that is estimated to generate 200 new leads per month:

·         Number of Incremental Leads Per Month Estimated From the Program= 200

·         Avg. Conversion Rate of Leads to Sales = 1.0%

·         Avg. Deal Size = $50,000 (will vary by prospect)

Applied in the formula, this results in:

·         Incremental Sales Revenue per Month = 200 * 1.0% * $50,000 = $100,000 / month

·         Incremental Sales Revenue per Year = $100,000 * 12 months = $1.4M

·         Avg. revenue per lead = $583 / lead

To calculate the net value of the campaign and lead to the business, it is important to not count the gross value, the sales revenue, but to adjust the sales revenue for the cost of this revenue. To do this, we use incremental margin, factoring in the cost of goods sold / cost of services for the deal sold, and any incremental sales, general and administrative overhead expenses for the margin. Using a 25% margin figure:

·         Avg margin per lead (at 25% margin) = $145 / lead

So what do your numbers tell you about the value per lead? Worth more or less than this example?
If you said the same or more, this would not be a bad program for you to invest in, especially if the campaign is more effective at connecting and engaging with today’s more challenging prospect, and moreover, if it can guarantee the number of leads. This would mean close to 200% ROI.

We have such a program for you, fueled by Alinean’s Interactive White Papers, which can be personalized for each of your prospects, to better attract, connect and engage - and with a guaranteed ROI.

Monday, February 20, 2012

What is the Do Nothing Buyer Costing You?

Up to 60% of deals in sales pipelines are currently not being lost to the competition, but are being lost to the status quo – the do nothing buyer (Sales Benchmark Index). This malaise is costing millions in lost sales, and represents the single greatest opportunity for driving your 2012 sales and marketing success.

As we have been reporting for some time, the Great Recession has led to a fundamental and permanent change in B2B buyers, who are more overloaded, skeptical and frugal than ever before – Frugalnomics is in full effect. As a result, many buyers are forced to do-more-with-less, and are more risk adverse. These buyers are more apt to stick with their current state than change, even though they know their legacy solutions are not ideal.

If they are like the majority, your buyers are unduly assigning extreme cost and risk to any proposed changes, so your prospect needs to be convinced as to the overwhelming, quantifiable reasons to consider new solutions, or they will simply do nothing. As a result, up to 60% of your sales pipeline is currently frozen in place, content on sticking with the status quo rather than change.

What is the Do Nothing buyer currently costing your organization? The numbers may surprise you.

Consider a typical $500M revenue software company. The estimated pipeline for this firm is typically 1.3x annual sales, or $650M. With 60% of the pipeline stalled at status quo, some $390M of sales are stalled in status quo. Breaking the status quo represents the potential to boost sales 78%, the single greatest opportunity to drive incremental sales.

What if you could convince your buyer as to:

·         “Why Change?”, proving that there is a substantial cost-of-doing-nothing,

·         “Why Now?”, that your proposal represents significant incremental value, especially compared to all other proposed projects.

Implementing provocative sales and marketing tools, to answer “Why Change?” and “Why Now?”, has been proven to break the status quo. With these tools to help you advance just a small percentage of stalled deals from Do Nothing to Yes, you could reap you millions in additional sales revenue.

Currently, most sales and marketing efforts have focused more of the messaging, tools and training to win the competitive bake-off phase of the buying decision. Shifting just a small percentage of the investments to the earlier part of the buyer’s journey, answering the “Why Change?” and “Why Now?” questions for the buyer via provocative sales and marketing tools, represents your greatest opportunity for success.

For a $500M software company, making such provocative sales and marketing tool investments can help address a substantial part of the stalled deals. Drive just five percent of the deals from Do Nothing to Yes can yield almost $20M in incremental sales revenue, while advancing 1 in 10, could yield $40M in incremental sales.

Some key numbers you can examine today, to size what addressing the status quo could mean for you:

1.       What percentage of your current deals are currently lost to the status quo?

2.       What is the sales revenue impact of the status quo?

3.       What could provocative sales and marketing tools mean to break the status quo and drive incremental sales?

Click here to learn more about the status quo busting opportunity, and provocative sales and marketing tools:

Monday, February 13, 2012

Can we host the Alinean developed sales / marketing tool?

Just like several very successful sales and marketing applications, especially salesforce.com, cloud services is our business delivery model.

Like salesforce.com or other cloud service providers, they don't let you host because, having the provider host often delivers faster time to market, allows you to focus on your core competencies / applications, often delivers superior service,  and in almost all instances, provides lower total cost of ownership (TCO) compared to premise-based solutions. 

For Alinean, the cloud service delivery model provides:

1) a rich on-line / database driven enterprise application, Alinean XcelLive, that would be difficult to manage host on your own - Some of the features include fast tool development, lower cost maintenance, rich customer intelligence, superior access and data security, integrated administration and reporting, and integration with CRM and marketing automation systems. Additional features can be found here: http://www.alinean.com/XcelLive

2) No integration or IT resources needed to initially get the service / tool setup and delivered

3) No need for ongoing IT or webteam costs to manage and maintain - we do it all for you, providing high SLA commitments, application hosting, bandwidth, monitoring, maintenance and technical support - lower total cost of ownership (TCO).

4) Continuous improvement of the application, providing additional features and services over time

5) Ability to not just deliver one tool, but leveraging the cloud platform to deliver an entire suite of marketing and sales tools to help break the status-quo and drive more opportunities and deals.