Tuesday, April 15, 2014

Interview: Guided Selling with Storytelling, Insights and Financial Justification

An interview with Dario Priolo, Chief Strategy Officer for Richardson, a leading training and sales effectiveness firm.

Research indicates that sales reps are being engaged later and later into the decision making process?

Yes, there are several studies that point out how sales reps are being invited later into the decision making process.

SiriusDecisions has what I feel is the best metric, pointing out that that 67% of buyers are already decided on their solution prior to rep engagement.

And research from Forrester indicates that the late engagement could have serious impacts on win rates?

Yes, Forrester recently published at their annual Sales Enablement Summit that 74% of deals go to the sales rep who can help decision makers set the buying agenda, while only 26% of the deals went to the vendor who wins the competitive bake-off.

This means that engaging earlier is more important than ever, to proactively establish the challenges to address, vision for solution, and specific buying criteria.

And if engaging later, which is more often the case, the sales rep needs to not just accept the bake-off criteria, but review the challenges to make sure the diagnosis is correct, and reframe the solution vision and decision making criteria.

As well, it seems that no matter when sales reps are engaged, more and more deals are not moving forward as quickly?

Indeed. Almost 60% of a typical pipeline is being indicated as stalled – no longer moving forward in the decision making process, this according to the Sales Benchmark Index.

As well, IDC is indicating that buyer decision cycles are longer than ever, taking 30% more time than just three years ago, now an average of 10 months.

In any pipeline review, the majority of the discussions are about prospects not calling reps back, not moving forward, and taking longer and longer in the process.

So, the multi-million dollar question, how can you enable your sales reps and channel partners to engage earlier and more effectively?

First you need to ignite the buying journey. In this “do more with less economy”, buyers have less resources and budget than ever to apply to new proposals. You have to be provocatively compelling in order to get the buyer to engage, and to do so it’s a focus on their challenges and not about your solutions.
  1. Insights to give ideas about issues worth addressing
  2. Diagnostic assessment to pinpoint issues
  3. Quantify the cost of doing nothing - help the buyer prioritize which issues should be addressed sooner vs. later – which are costing the most.

Early in the decision making process its about helping prospects better understand their issues, and the impact these issues are having on their business.

At this stage, you have to arm sales reps with Diagnostics and Insights, so that they can confirm that issues they are experiencing are typical, but that they don’t have to live with them, and illuminate issues of which the buyer might not have been aware.

Comparing the prospect’s issues and shortfalls to their peer’s practices at this stage can often add a prioritization and peer pressure that is essential to getting “do nothing” buyers moving.

Not only is it important to identify key issues, but to quantify what the issues are costing the prospect if not addressed. In particular quantifying the costs of current inefficiencies, potential losses due to risks, and lost business and growth opportunities. Early and first it is important to: Quantify the Pain.

Second you have to prove the value of your proposed solutions. Once the buyer is convinced they have a priority issue worth addressing, it is important to quantify the benefits of your proposed solution – the cost savings and avoidance, productivity and process improvements, risk reductions and growth- helping to: Justify the Gain.

Third you have to differentiate the value of your solutions versus other alternatives, proving the value vs. price, lower total cost of ownership (TCO). Once the buyer is convinced the solution is worthwhile, they always have alternatives. At this final stage, you could have made the case for change only to lose to the competition. It is essential that you Prove You’re not the Same, quantifying the total cost of ownership (TCO) advantages of your solution versus the competition, and proving that your solution can deliver higher value.

One more area of focus recently is in post deployment value messaging. Many solutions are an annuity, a renewable, and need to be justified not just initially, but throughout the life of the service to assure renewal. Sales reps need to be able to help customer recognize whether they have realized the gain or not, and if not, help to drive realization.

These progressive steps seem obvious as a course of action, and I am sure that many organizations feel they are doing this already, but unfortunately buyers don’t agree?

Indeed, Forrester surveyed buyers, and they quickly indicated that only 10% of sales reps sell with a value-focused approach - selling with insights, diagnostics, financial justification and value differentiation.

And this has DECLINED from the past few years, down from 12%.

This is likely a result of sales reps not evolving quickly enough in the face of a rapid raise in buyer expectations, frugality and risk aversion.

There is a clear Value Gap between the traditional sales rep approach of product feature, function and price, and today’s more empowered, risk averse and frugal.

What would your roadmap be on how to best bridge this Value Gap?

It comes down to three key elements:
  1. Content - Insights and Value Messaging
  2. Capability– Sales Training
  3. Competence - Guided Value Selling Tools.

First, there is a shortage of good value messaging, insights and financial justification to create a provocative and compelling value-focused conversation between buyer and seller.

We have seen too many companies approach the Value Gap with product centric value propositions that don’t resonate with real buyer challenges, or generic, one sized fits all value messaging that don’t personally connect and resonate with buyers. And most organizations lack the meat – insights and financial justification.

Second, most organizations lack the Sales training needed to advance sales from product / solution selling to value selling - building the capability sales reps need to be successful.

Your reps simply may not know what they don’t know. They hear “sell the solution” but they don’t know what that means and they don’t know how to do it. Even very senior-level people don’t know how to do it. We see this all the time in the classroom. On the surface, a training program looks very basic to these people, and they cop an attitude that the training is too basic. Then we put them through some drills – pretty tough drills – and we see them struggle and even fail in front of their peers. Then they realize that they in fact do have a lot to learn. Sales reps require a personal commitment to continuously improve – especially as the world changes so dramatically around us. 

Third, there is a lack of good tools at most organizations to guide Sales in deliver the right value messaging, insights and financial justification – moving beyond PPTs and whiteboard markers to have more provocative, insight driven conversations, and automate the diagnostic assessments and financial justification process.

One of the biggest challenges to a value-focused approach is developing the value messaging, insights and financial justification needed to ignite change. Where do you get the content?

It is typical for vendors to focus on their solution and what it can do.

But this is a “me” centric approach, one that will not resonate with buyers, and certainly won’t help you engage earlier when they are worried about issues and not your solution.

Better to focus on Buyer’s Challenges, organized into four key categories:
  1. Cost Reduction
  2. Productivity and Process Improvements
  3. Risk Mitigation
  4. Revenue Growth.

Any approach starts with the buyer’s challenges and the pain they are experiencing. Insights are created to highlight the magnitude of the challenge, experienced by companies similar to the prospect.

From here, a model should be provided to leverage the insights to calculate the buyer’s specific cost of “do nothing”.

Second, the Buyer’s Challenges need to be aligned with the solution. How can the solution help to address each challenge, highlighting the unique attributes of the solution and how it can better?

For both the challenges / cost of do nothing and the solution / benefits, it is important not just to create value messaging, but figure out ways to help the sales rep quantify the costs for not addressing the challenges or tally the specific tangible benefits that the solution can deliver.

How should the value messages, insights and justification vary based on verticals and the recent changes they might be experiencing?

In Information Technology, we have seen a significant migration in the decision making power from the CIO and IT executives to the business units taking the lead decision making role. There are more stakeholders involved in each purchase decision, with recent research indicating up to 10 involved in each major enterprise purchase decision, and each plays a major role and can’t be ignored.

In medical solutions, where a sales rep used to sell to the practicing physicians and nurses, the decision making now significantly includes sales calls to the COO and Finance / procurement.

There’s been a huge change in life sciences and health insurance, much of it driven by what the insurance companies will pay and for what, and the affordable care act. For example, no longer can pharmaceutical companies swarm a doctor’s office and influence them to write scripts for your meds. More and more, doctors need to affiliate with larger hospitals and heath care organizations, and must play by the rules set by corporate – maybe a chief medical or pharmaceutical officer – who must play by the rules set by the insurance companies and governments. The ACA is a huge change that is rocking the insurance world. Individuals will soon buy private health insurance through exchanges. That business is in a huge state of flux and we’re all trying to figure out how it will play out.

It’s not about the technical features and functions any more, but about the ability for the solution to drive business growth, streamline business processes and save money – the tangible top and bottom-line impacts.

COOs, business leaders, CIOs and Finance and procurement are more involved in each decision, bumping up the need not just for proving tangible business impacts, but delivering more formal business cases and financial justification.

As a result, you can’t talk in general about the value impact. You have to quantify the impact into personalized and specific cost savings, productivity and process improvements, risk mitigation and revenue growth impact.

And you must provide relevant proof points to make the claims credible – from research, third party validation and peer case studies / success stories in order to validate that the savings are real.

There are more stakeholders per deal now. How does this impact your approach to insights and value?

There are now 43% more stakeholders involved in each decision, with up to 10 involved in typical large (>$500K) B2B purchase decisions.

Each of these stakeholders have a different set of challenges, different pain points and KPIs they care about, and a different “point of view” on the value your proposed solutions can provide.

When developing the value messaging, insights and justification, you should list specific buyer personas, and for each role, make sure that you map each role to the challenges and benefits that they primarily care about.

Often during this design process, it is revealed that the value messaging and quantification was not thorough enough, and you will have to expand the messaging, insights and justification to make sure all stakeholders are properly covered.

Too often we see companies hire value messaging specialists or create their value messaging at too high a level and one sized fits all. One provider delivers a one-size-fits-all 3 business objectives and 9 challenges that don’t speak well enough to the different stakeholders and their unique “point of value”, much less different verticals.

With each buyer persona having a different set of challenges and different points of value, you need to be more specific, and assure that all roles are adequately covered.

How can Guided Value Selling Tools help?

It is all about enabling sales reps / channel partners to have better value conversations with prospects, and certainly in delivering provocative insights, benchmarks and financial justification helps to do this.

Alinean’s ValueStory is an example of a great tool – evolving beyond the current solutions: traditional “death by PowerPoint” presentations, old-fashioned whiteboards, and difficult to use business case spreadsheets,

ValueStory helps assemble the right value storytelling / messaging, insights and justification intelligently based on the vertical and roles of the prospects being engaged.

ValueStory delivers the value storytelling in a compelling visual format, needed to emotional connect and engage each prospect. And for insights and justification, ValueStory delivers the dynamic surveys, diagnostic assessments, benchmarks, cost of “do nothing “and benefit calculations needed to engage the most frugal buyer.

The best is that it’s in a really easy to use online and iPad App that sales reps and partners love to use.

How can Selling with Insights Training Help?

Training is essential to make sales professionals comfortable, capable and credible with the value messaging, insights and justification – all designed to help evolve the conversation.

In many cases, the training is the start of the change process for your reps, so it is very important that they leave with a great experience.

Your reps –and managers need to know why the change is happening and what they need do differently. And, the training really needs to be 100% relevant to developing the skills they require to do what you want them to do differently. Out of the box, one-size fits all training rarely works to effect change.

Your people need to work through the situations and challenges they encounter every day in their jobs, discuss solutions as a team and with the benefit of a skilled facilitator who can add to their expertise and guide the discussion.

It is best if they are training in context, so if you’re introducing a new tool that supports their interaction with customers, then you should incorporate that tool into the training – again, making the experience in the classroom as reflective of what is expected of them in the real world.

Finally, they need an opportunity to practice in a safe and supportive environment. The training should be hard work, but it should also be stimulating and dare I say fun. It can be both. A great facilitator will do that.

In summary, what are the steps you recommend to help bridge the Value Gap?

Thinking about what we discussed in a step-wise approach, we can summarize the progressive steps to bridge the Value Gap as follows:
  1. Insights & Value Messaging
  2. Guided Value Selling Tools
  3. Selling with Insights Training
  4. Coaching
  5. Review & Evolution

To review the presentation used to supplement the interview, click here.

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Tuesday, April 08, 2014

Why the Increased IT Spending Growth Forecasts from Gartner are Wrong Again!

According to Gartner, worldwide IT spending is on pace to reach $3.8 trillion in 2014, a 3.2% increase from 2013 spending levels (and a 0.1% uplift from the last forecast published in Q1).

Although the forecast predicts healthy growth for 2014, these same Gartner forecasts have been overly optimistic the past two years.

Examining their 2013 predictions, Gartner indicated IT spending would grow 4.2% for the year. When the dust settled on 2013, the IT spending growth was a mere 0.4%

In 2012, initial rosy predictions of 3.7% growth were never realized, coming in around 1% by year-end. This despite the economy improving slowly over the same time frame.

Looking back at the reasons for the forecast shortfalls, Gartner indicated economic headwinds, a shift from land-lines to mobile, even blaming exchange rate fluctuations.

We don’t buy these reasons for the forecast shortfalls, and believe that Gartner has missed a major "sea change" in IT spending and decision-making in their forecasts.

For IT solution providers who may be using these forecasts and expecting a turnaround in 2014 revenues, we urge extreme caution. Another slower than expected or flat spending year could have significant implications for your organizations, and moreover, your career.

Frugalnomics in Effect

So what are the real reasons behind the continued slow growth? I believe it all revolves around Frugalnomics:

1) Although progressing, real economic growth remains slow. As a result, organizations have learned how to permanently “Do More with Less”.

2) Although new technologies like mobility, big data, social collaboration and the cloud are hot topics, and they promise to fuel the next big IT investment wave, they are taking a little longer to catch fire than pundits claim, are replacing spending on other projects and not adding to overall spending, and are not significant enough to affect the annual growth figures - yet.

3) Purchase decision-making has significantly changed, now driven by buyers who are:
a.   Highly empowered – privately controlling the decision making process with ever more competition for each deal and more discounting,
b.   Risk averse – afraid of making a wrong decision, and instead choosing to remain with business as usual / status quo,
c.    Frugal – with over 95% of IT decisions now requiring a solid business case with significant ROI and fast payback according to IDC.

4) Most IT spending decisions are now driven and controlled by business groups vs. formal IT. At the same time, more and more spending is occurring in the shadows, by individual users and groups without the formal knowledge of IT. This “dark” spending is not showing up in the growth figures. When it comes to business and shadow purchase decisions, most IT solution providers are not adept at selling to the business groups and capturing dark spend.

All of these conditions still exist, indicating that Frugalnomics remains in full effect, and as a result we expect that Gartner’s even bumped up predictions for 2014 will prove overly optimistic.

Most importantly, you need to take Frugalnomics into account as you evolve your sales and marketing strategies and investments to meet the challenge.

Surviving Frugalnomics - The 3 Things You Must Do Now to Win in 2014

 To help meet the challenge and Survive Frugalnomics, we recommend three “must do” programs for the next year:

#1 - Engage Frugal Prospects with Provocative Marketing
Todays’ buyers are more risk averse and frugal than ever, with 58% choosing to “Do Nothing” versus considering your solution (SBI).

Prospects will choose to stick with the status quo unless you can proactively and provocatively quantify that they have a pain worth addressing. 

And those opportunities you thought were progressing through the waterfall / sales process to “wins” will stall unless you can help successively convince the prospect that the issue you can help solve is real, that it is a high priority worth addressing over all other issues on their plate, and that your solution represents a real low risk / superior value solution with unique competitive advantage.

In order to connect and engage with “Do Nothing” buyers, helping them through the decision making journey, you need to help them realize:

  • Why Consider a Change? - the Prospect has a pain worth addressing and a significant cost of “Do Nothing”,
  • Why Change Now? – the Prospect should not wait to address the issue because every day is costing them, they are leaving good money on the table (significant bottom-line impact, ROI and fast payback), and they are falling behind competitively (illustrated through peer comparison benchmarks),
  • Why Your Solution?– that your solutions can deliver unique and superior value at a lower total cost of ownership (TCO).
So how well does your current content marketing help answer these key decision making questions for your buyers in a compelling and quantified way?

Developing and deploying the right interactive Value Marketing Tools is the key, to provide Prospects the personalized, relevant and provocative value messaging, insights and financial justification to these key questions early in the decision making cycle. Click here to learn more.

#2 - Empower Sales with Value Storytelling and Quantification
According to SiriusDecisions, the #1 reason why sales reps fail to meet quota (for the 3rd year in a row) is their “inability to effectively communicate the value of proposed solutions”.

Sitting in on the majority of sales presentations and you can see that most are still delivering empty product pitches or pseudo-solution selling asking a few questions and then jumping into canned “death by PowerPoint” presentations. According to Forrester, prospects indicate that less than 12% of sales engagements are focused on customer value.

Despite significant changes in prospect expectations, sales leadership recognizing that value selling is needed in order to meet quota, and the millions spent on solution / value selling messaging and training, only about one in ten sales professionals engage with “value”.

So how well do your sales professionals and channel partners engage with value?

There is a way to overcome the value selling adoption challenge … to better institutionalize and effectively deploy your solution / value selling methodology to sales professionals and channel partners so it actually gets used in sales engagements. To empower sales professionals to engage with powerful value storytelling and “back of the napkin” value quantification. Click here to learn more.

#3 - Close the Deal with a CFO-ready Business Case 
CFOs are large and in charge of many IT purchase approvals. According to a Gartner and Financial Executives Research Foundation research survey, the CFO is becoming the top IT decision maker in many organizations, with:
  • Over 75% indicating significant decision making involvement,
  • 41% indicating being the main decision maker for IT investments.

 From the CFOs we talk to, they indicate that proposals:
  • Won't be considered a priority without a business case, and the larger the proposal, the more detailed and formal the case has to be,
  • Won’t be advanced unless they show that the proposed project is low risk and with low resource requirements, as “do more with less” applies regardless of the ROI,
  • Won't be approved unless you show that the issue being addressed is a priority with a high cost of “doing nothing”, quantified savings / benefits from the proposed solution, and a significant ROI and fast payback,
  • Won't be signed off unless you can prove your solution has a lower total cost of ownership (TCO) / better value than competitive offerings.

With Finance playing such a key role in IT decision approvals, it is imperative that proposals contain the business case content that CFOs need to provide approval, otherwise your deals will be stalled or delayed in the final stages, and you may be losing critical deals to competitors who make the better CFO case.

So how well do you deliver the business cases that CFOs demand?

There is an easy way to develop and deliver CFO business cases for your solutions. Click here to learn more.

The Bottom-Line

Gartner has once again predicted significant IT spending growth, but as in years past, we believe they are being overly optimistic by failing to factor Frugalnomics into the figures.

With Frugalnomics in full effect, IT solution providers need to implement a more value-focused approach.

If value marketing and selling are not effectively implemented, the majority of deals will continue to stall, sales cycles will get longer, and heavy discounting will prevail.

For the rest of 2014, IT sales and marketing professionals should consider three initiatives as a top priority to help Fight Frugalnomics:
  1. Engage Frugal Prospects with Provocative Marketing
  2. Empower Sales with Value Storytelling and Quantification
  3. Close the Deal with CFO-Ready Business Cases
To learn more, click here.

IDC 2013 Buyer Experience Study (Oct)
Forrester Sales Enablement Conference 2014

SiriusDecisions SiriusIndex, results from 2011 – 2013