There are three value conversation “moments of truth” in every buying cycle that you must be great at: first, creating value to break through status quo bias and build a buying vision (differentiation); second, elevating value to impress executive decision makers who must see the financial and business impact of your solution (justification); and third, capturing value to manage the tension of price and negotiation conversations in order to protect your margins (maximization).
1. Create Value – The Differentiation Conversation
In recent research we conducted, 89 percent of salespeople said that pricing pressures have increased or significantly increased in the past three years. The number one reason they gave for losing the pricing wars is “a lack of differentiation” (68 percent).
Several traditional approaches you may be using are actually commoditizing your conversations, creating indecision for your buyers, and even causing skepticism about your claims.
Years of decision-making research shows us how the human brain determines value and frames choices. Yet many B2B marketing and salespeople continue to insist on imitating so-called “best practices” of others in their field versus learning and applying the science of why buyers buy.
Also, differentiation conversations take two different forms, which you will examine and learn how to master. The first is differentiation from what behavioral experts call “status quo bias.”
You know what the buyer wants to do? Nothing. Nothing is safe and comfy. Change is scary and risky. You have to tell a story that shows buyers why they must change—why staying the same is no longer safe.
That’s the first critical step, which is often overlooked in favor of the second form of differentiation: separating you from your traditional competitive rivals. Most salespeople ask their marketing departments for competitive matrices that show you against your arch enemies, and compare your features versus theirs. In the end, the competitive matrix shows your company with more “full moons” in your columns and your competitors with more “half moons,” which means you are better. Until your competitor shows their matrix with just the opposite view.
2. Elevate Value – The Justification Conversation
You’ll next have to go toe-to-toe with financially savvy executive decision makers who will be looking to justify the business impact of investing in your solution.
Even your most inspired and enthusiastic buyers will shy away from putting their careers on the line to invest in a solution they’re not confident will get them closer to achieving their business objectives. So you need the confidence and competence to back up claims with a credible, compelling business case.
According to IDC research, by 2016, senior-level executives will be directly involved in 80 percent of business purchasing decisions at various points in the buying cycle.
One company we worked with undertook an experiment to determine the level of executive penetration their sales reps were involved in. After reviewing their CRM system, to their surprise, they discovered only 10 percent of the qualified pipeline identified an executive-level title and contact person in their opportunity database. Not that only 10 percent had made contact, but that only 10 percent had even figured out who they needed to make contact with! A full 90 percent did not even know yet who had the executive power in the purchasing decision.
In separate research we conducted with 700 salespeople for this book, “justifying value to executives” produced the second-most fear and anxiety in salespeople. Just behind price negotiations (which we talk about next). Part of the problem is that most salespeople don’t get enough opportunities to participate in executive-level conversations, so there’s a lack of confidence. Next, they don’t completely understand the financial measurements that are meaningful to this buyer, so you struggle to connect the dots between your solution and the metrics that matter.
These executive decision-makers want to have conversations that demonstrate your business competence: familiarity with industry trends, linking those to strategic initiatives, and connecting that to your solution with legitimate ROI projections based on understanding client company financials.
No surprise, most salespeople don’t rank well in these categories, according to executives. In fact, they say that salespeople are woefully uninformed about the things executives actually want to talk about. The Elevate Value section of the book will help you get it together.
3. Capture Value – The Maximization Conversation
There is no escaping the pricing discussion. Salespeople often try to hold it off as long as possible, which is good. But you unwittingly give away most of your value long before traditional end-stage negotiations take place. You actually train your customer to expect more, to expect freebies, and to make you expend a lot of valuable effort before the sale.
This article is excerpted from “The Three Value Conversations,” a recently published book written by a team of authors at Corporate Visions: Tim Riesterer, Erik Peterson, Conrad Smith and Cheryl Geoffrion.
