Thomas Menthe - A new era of Value Selling

Because the world increasingly becomes software-driven, competitors will emerge from adjacent industries rather than just the home industry of the incumbent. Organizations need to move to a resource allocation that is centrically organized around opportunities and new business models, not existing structures.

According to Forrester Research, 25% of sales people have business acumen and 88% know their products and services. This shows a clear gap in understanding business measure, strategic decision making, process understanding and ways of expanding an organization, including its transformation and cultural change management. Besides a financial knowledge management on key performance indicators like budgets, margins, growth rates, CAPEX vs. OPEX targets, cost optimization or return rates, e.g. IVV, NPV or ROI. Many of the CxO’s objectives involve gaining competitive advantage through time-to-market, costs and agility improvements. Sales is shifting the argumentation from product pricing to adding value to the customer’s value chain. This requires the skill of the salesperson to utilize economic models such as Net Present Value (NPV) or Return-on-investment (ROI) as well as cash flow analysis. They need extensive information and different contacts within the customer´s company. As the pressure to grow earnings has increased, the focus in most sales organizations is moving towards profitability rather than simply generating revenue streams. This results into streamlining the cost of sales around support costs, service models and selling higher prices to increase profit margins. It will be essential to move away from a prospect-oriented feature discussion to how clients can improve their total cost of ownership (TCO), time to market, agility, innovation rate, profit, cost savings and revenue growth by building a solution with tangible financial benefits to ultimately increase efficiencies across the value chain with the seller’s offerings.

Thus, account managers need to think and act as entrepreneurs and evaluate risks in delivering their solutions to the client and the impact of a price reduction. In general, the customer needs to be analyzed regarding his value contribution to the seller’s financial targets. Long-term thinking is an important prerequisite to not lose profit in every deal. There will be more times to make a hard decision to sacrifice short-term gain for a longer-term goal. The value assessment of and with customers comes in several steps. First, the identification of the value potential, then the evaluation of the performance after the initial baseline assessment. After a long-term value realization including data management and analytics these assessments should be conducted on a regular cadence by analyzing customer satisfaction after the delivery of the solution. Thus, account managers need to recognize opportunities in a systematic process with pre-defined key performance indicators (KPIs) to detect misallocation of resources, understand risks and potentials of the customer and develop a solution, which generates value for their client. This has been approached by solution selling and needs to be extended by value-selling to determine the value.

On top of this, we recognize the trend that buying centers are getting larger and more complex with up to six different stakeholders instead of the old-fashioned purchaser who only negotiates the price, delivery times, payment and termination term. The value proposition has to be explained to different people or groups of people from business, procurement, legal and other corporate functions.

Sales will be organized along customer segments and less around product groups. In fact, the matrix organization is moving away from a product / regional split to business lines and customer segments within the sales organization. If companies want to be truly customer-focused, they have to be obsessed about the customer and his structure and needs, instead of their existing silos that add no value to the buyer per se. This requires a detailed understanding of the customer´s business strategy, financial goals, major projects and their processes, e.g. procurement, supply chain, decision making and stakeholder network, which is not represented in an organizational chart. In the Business-to-business (B2B) domain, these sales-driven companies need to change their communication channels in the age of social media, touch points or multi-channel management and ensure that the customer can easily access information on a seller´s portfolio. The account manager´s role has already extended into an information broker and catalyst between the seller´s and buyer´s organizations.

From product to solution offering

From purchase price to economic value

From transaction to value-generating

From product-only to product + service and customized solutions

From product/region matrix to customer segments

From personal sales to multi-channel

From information sharing to customer involvement with social media

From sales representative to catalyst

From customer-orientation to customer-obsession

In 2015, Forrester forecasted that 1 million US B2B salespeople will lose their jobs to self-service e-commerce by the year 2020. B2B buyers favor do-it-yourself online options for researching and buying products and services, and they are demanding that B2B sellers fully establish those digital paths to purchasing. Digitalization will change the buying behavior much more towards e-commerce and self-service consultation with support of sales robots. The salesperson will be an information catalyst and relationship manager until technology will be able to overtake the role by using machine-learning and understanding emotional vibes from speech to text recognition as Amazon´s Alexa or Apple´s Siri show nowadays with new skills every day from various companies and organizations.

Expanding the role of self-service e-commerce. The evidence has shown that nearly 75% of B2B buyers said in the survey that buying from a website is more convenient than buying from a sales representative. Furthermore, 93% said that they prefer buying online rather than from a salesperson when they have decided on what to buy.

Delivering a digitally enabled B2B selling model because digital channels are here to stay. B2B e-business and channel strategy professionals and their ecosystem partners must create websites that network B2B buyers researching online with call centers, inside sales agents, field sales professionals, and their own internal websites.

53% of the B2B buyers Forrester surveyed in 2015 preferred to gather information on their own, as opposed to interacting with a sales rep. Today, that figure has grown to 68%. B2B buyers want to do their own product research

The survey found that upskilled inside sales will play an even greater role in all phases of SMB and enterprise sales than initially predicted in 2015.

Shifting from offline to online sales is both cost- and customer-effective. Companies such as Coca-Cola and Levi Strauss reported that shifting its B2B customers to a self-serve portal increased their revenue by 10%.