Many companies are failing to provide their salespeople with one vital component of their training mix – business knowledge. Dave Stein explains why the ability to articulate business value must be more of a priority.
It is vital for any company trying to sell something that is likely to have measurable value to potential buyers that they can quantify and prove the business value of their product or service. While this is by no means a new concept, it is particularly relevant in the current climate.
The sales trainer and consultant Mack Hanan suggested this idea in some books over the past 40 years, including Consultative Selling (1969). When I read those books initially, they completely changed the way I approached selling my own products. I was no longer selling my sales-training programme by being able to handle a certain number of students, the volume, and look at the presentation materials, or the ratings.
The real value of the programme, or indeed any other product or service, and therefore the focus of what needs to be communicated, is the fact that potential customers can expect, say, an 18pc increase in top-line sales over the 12 months following purchase. That benefit needs to communicated by explaining where this growth comes from and providing the names of clients who are in a similar industry to the potential buyer who has experienced, for example, somewhere between a 15 and a 25pc increase in top-line sales.
When you start to talk in those terms, you immediately differentiate yourself from your competitors because very few salespeople are interested in, or capable of, articulating the specific, quantifiable business value that their products and services can offer the customer.
Secondly, talking in those terms can ensure that the conversation is escalated from the director of selling, who you may have been dealing with, to the finance director or VP of operations or, in a smaller company, maybe even the CEO. If we’re talking about a 18pc increase in top-line sales next year, this is a much higher and much more visible discussion than how many pages and pictures a training book contains.
We now know that salespeople who have this financial savvy, i.e., generally a sound knowledge of business, and know how to use it in the course of their sales efforts will get and keep the attention of executives, will win business and will be less prone to commoditization and pressure to cut prices. It’s difficult for a prospective buyer to put pressure on you to reduce your price when you can prove that they’re going to get an extra 18pc on their top-line and they’re a US$100m company. You’re showing them a very, very substantial business impact.Assuming you’ve done a good job with the numbers and built up your business case with all the necessary proof statements, you’re in a pretty good position to win a sale and to get it at your price point.
So, why are so few salespeople doing this? Typically, salespeople are not numbers people. It’s just not something they are comfortable with and likely to do without being cajoled or incentivised or, in some cases, forced.
But they can be brought forward, through coaching, training, support and ongoing learning. That development may take a number of months, with them starting off by learning what cash-flow analysis, balance sheet, and P&L statements are. Maybe a month or two later, they can actually explain these terms, and maybe a month or two after that they can compare one customer’s financial statements to another’s and explain the different financial positions of those two companies.
And then a month or so later, they can explain how their product or service will enable their customer to improve his financial position so he can out-position his toughest competitor.
And this is really the kind of selling that needs to be done these days. It’s the kind of selling that outlines specifically how your product or service is going to enable your customer to achieve their business plan from business, financial and operational perspectives.
This is true business-to-business selling and there is very little of it going on in many sectors, not only in Ireland but all over the world. As a result, there’s a tremendous opportunity for business owners, sales leaders and general managers who decide that they’re going to invest a bit of time and money in getting salespeople up to speed on this financial knowledge and business perspective. It’s not easy, but it’s also not that hard and savvy sales leaders and business owners will see this as a way of leveraging additional competitive advantage for their selling efforts next year.
Of course, it’s hard to quantify your business value if you’re a brand new company and you’re selling something completely innovative. But most companies aren’t in that situation. Most have products installed and they have customers. Part of your company’s objective is to go to those customers and ask questions about how your product or service has changed their level of performance from a financial perspective.
You may not get exact answers or exact numbers from them. But you can get a sense, and across a number of customers you can start to formulate what a model would look like for that next customer. You may not be able to say that you can guarantee 18.273pc improvement, but you may be able to say that you expect the improvement to be between 15 and 20pc and you’re willing to guarantee that it will not be below 12pc. And anything above 25pc, you’d like to share in the profits!
You can’t make the numbers up, but they’re there to be had if your company is willing to take this seriously, willing to assign a financially savvy person for a few days to talk to existing customers, and to start expressing what those benefits are in whatever functional area that product or service applies.
The role of marketing
For most companies, marketing owns this. It is the specific job of marketing to do this work and to serve up on a silver platter to the salespeople the Excel spreadsheet models, the value statements and the questions that need to be asked of specific customers. Marketing has to put the value equation behind the products and services so they’re the ones who have to do a lot of this work.
Marketing also has some responsibility for the training that has to take place. They train (or organise the training for) the salespeople on the product, how it works and what it looks like. They should also train the salespeople on the financial impact of that product on customers’ companies, and then reinforce the training and make sure that the salespeople are capable and ready go out and make that kind of business case. You can’t put sales-people in a class for a day or give them a computer-based learning programme and tell them to go and learn it.
Many salespeople are very well qualified when it comes to pure sales skills, product skills, company knowledge and industry knowledge. Most know those four areas. The fifth is business knowledge, which includes knowledge of financial statements, understanding where the value comes from, how your products and services can advance the customer’s business plan, the ROI, and assumptions a customer’s finance people should be using to determine the impact of your product.
For salespeople to maximise their chances of making sales, they need to have the spreadsheets and lists of assumptions given to them by marketing that they can present to customers to work out their numbers. So, this now becomes a business discussion rather than a bells-and-whistles, speeds-and-feeds type pitch. And that’s really where we want to be going in today’s difficult economic environment. We want to be able to talk to our customers about the specific business impact of our products.
There are certain salespeople who will never be able to articulate business value in this way. They may be great at golf, at dinner, drinks, building relationships, gut instinct, they may be very smart and intuitive, but there might be no way to ever get them to do a financial or business-oriented sell. You may want to continue to have them aboard and to assign a business analyst or a resource to them who can do the business discussion. I’ve worked with lots of successful salespeople who couldn’t do this, but had the ability to bring a sales support resource with them on certain sales calls who could be the expert in this kind of area. Of course, that’s an additional resource and these days, we don’t necessarily want that kind of overhead.
In general, salespeople who are told that they are going to be selling this way in future react with horror, fear and supreme defensiveness. If they’ve been selling for a number of years and they never leaned towards this kind of selling, it’s not because they’ve never heard about it or even lost deals to salespeople who were doing this, it’s because it’s something that they’re just not generally comfortable with.
Therefore, when it’s introduced to them, it has to be done gently. It has to be sold to them and they need to be reassured that they’re going to get all the support and nurturing necessary and that it’s going to be phased in over several months. It has to be very carefully planned and positioned in a way that will leave salespeople the least defensive and open to learning ways that will make them (and your company) more successful.
This is not just something that Mack Hanan wrote a book about 40 years ago, leading to a few people trying it and doing very well. The biggest companies – General Electric, IBM, Deloitte, Accenture, as well as big building and infrastructure companies – are winning business and very large deals because they have all of this financial data behind the sale. They’re able to make very accurate projections on what the business impact is going to be. There’s a strata of companies and industries and salespeople where this is central to the way they run their operations.
For the mere mortals amongst us who are not at that level, who are not selling billion-dollar projects, where this does not come as a natural thing to do, we can take from the biggest and the best who do this all the time and bring it down to the level of selling a €30,000 or an €80,000 product or service. The bad news is there’s some work to get there. The good news is you will win more business.
These days, anybody who writes a cheque to a vendor has to ask themselves if this investment will pay itself off and offer them long-lasting financial benefit going forward. Most do, and if the vendor isn’t up to speed in being able to provide the answers, they may not get a sale.
There is an investment involved in developing this business knowledge and developing the salespeople to use it. But if you know that it’ll help to sell more next year and beyond, then you probably have a good business case. The companies I’ve worked with that have made the decision to sell this way and have followed the process all the way through with the tools, the training, the reinforcement and support will never look back. This is because they realise the benefits of selling this way are just enormous and it leaves them in a place they never imagined they would be.
This article first appeared in Marketing Age magazine
by Dave Stein