The Collaborative Sale

by Keith M Eades

  Relationship-building skills—is able to build productive social bonds with customers and buyers; builds, maintains, and leverages mutually beneficial business relationships.

  Customer focus—keeps the customer foremost in mind; advocates for the customer's best interests.

  The Story (Continued)

  Jon always opened his e-mail first thing in the morning, even before getting out of bed. Nothing important had come through in the past six hours except Nancy's meeting request for the following week, when she would be in town for a board meeting. Thinking back to their first meeting at the airport, he could see how her advice to delay asking for demos had worked for him. She had pulled a file out of her black monogrammed messenger bag, and placed a thick presentation between them, thumbing to the fifth page.

  “Here's what another of our portfolio companies is doing with collaboration. Yesterday, Bowsi's lead business development guy had a first meeting with A-Bank. Of course, Bowsi is selling something different from ExyRisk, but let's set that aside. It's the approach of the Bowsi seller that I admire.”

  Nancy had tapped a column of calculations with her forefinger. “He relied on the world's universal language, numbers. He did his homework and extrapolated from another engagement while estimating the size of the bank's mortgage portfolio based on a Hoover's report,” she had explained.

  “Then he calculated the ROI on Bowsi's Tier One product using one-, three-, and four-year horizons,” she had said, tapping the respective columns.

  Nancy had met Jon's eyes. “Remember, he did all that just to get the first appointment. When he got into the meeting, the bankers quizzed him on his methodology and poked at his case study. When they were satisfied, they told them that although the numbers he extrapolated weren't precise, the formulas and his approach were intriguing, so they asked for a demo.”

  Jon had studied the page and nodded. “I see that. Well done.”

  “Now I want to show you a tool that Bowsi is using to collaborate with prospects; it's called VisualizeROI.” She had opened her laptop and let it warm up. “Instead of building a spreadsheet model on your computer, I want you to build it in this tool. It has all the muscle you need but it will help you collaborate with your prospects in some intriguing ways.”

  She had fired up the application and they had watched the demo together. The wheels had turned in Jon's head as he watched.

  At the end, he had said, “I'll go back and say I've calculated that a partnership with us has a bigger impact than he thinks. Let's say I've come up with a $20 million improvement over four years, if my assumptions are valid. I can build a model to that number, for sure.”

  “Great start, but hold on just a second,” Nancy had said, reaching for her phone and tapping the screen. “I just figured there are 1,460 days in four years. You could say, ‘Based on what I'm seeing, every day we don't take action is $20 million divided by 1,460, which is nearly $14,000 of lost revenue each day.’”

  “Yeah, I can take this and run with it,” Jon had said. He had paused as a doubt arose: “What if it's not $20 million, but less? Haven't I shot myself in the foot with a big number?”

  “As long as you collaborate on your assumptions, like the Bowsi rep did, you're fine. He will probably say, ‘That's a bit aggressive—let's scale it back to some other number,’ but now he owns that other number. The next step would be to prove you can deliver on that, and then you go to a demo.”

  Jon had shifted in his chair and looked at the ceiling, “Of course another approach would be to say, ‘I'd like to talk to you about validating my assumptions. It might be more compelling than it looks.’”

  “Now you're talking,” Nancy had said, smiling. “There's this concept I've heard sales consultants use called situational fluency, a blend of people skills, selling skills, capability knowledge, situational knowledge, and a willingness to collaborate. Do some homework and see if this firm would respond better to an opening volley of ‘I can help you make $20 million over the next four years’ compared to ‘I'd like to validate some assumptions I've made that might mean that a partnership with us is worth $20 million to you over the next four years.’”

  1 “Fifteen Million Salespeople to Be Displaced by 2020, Predicts Sales 2.0 Conference Host,” Reuters U.S. News, Thomson Reuters News Service, March 15, 2011. Accessed December 1, 2013, at www.reuters.com/article/2011/03/15/idUS233420 15-Mar-2011. Selling Power magazine publisher Gerhard Gschwandtner predicts that the number of sellers in the United States will decline from 18 million to fewer than 3 million by 2020.

  2 James Ledbetter, Death of a Salesman. Of Lots of Them, Actually Slate Magazine, “Moneybox,” September 21, 2010. Accessed December 1, 2013, at www.slate.com/articles/business/moneybox/2010/09/death_of_a_salesman_of_lots_of_them_actually.html.

  Chapter 6

  The Value Driver Persona

  By perfecting the innovative idea of containerization in global transport, Maersk Line became the leading container shipping company in the world. By 2011, the company had grown to more than $25 billion in revenues, with 325 offices in 125 countries, and 22,000 employees serving over 100,000 customers worldwide, using a fleet of ships carrying over 1.6 million container units.

  But Maersk Line was at a crossroads, facing some unsettling realities. New competitors were emerging. Customers increasingly perceived container shipping space as a commodity, and rate wars were eroding profits. The shipping giant knew its proud legacy was no guarantee of future success and continued industry leadership. Something had to change.

  So, in 2011 Maersk leadership produced a stunning proposal entitled The New Normal: A Manifesto for Changing the Way We Think about Shipping.1 It was bold and innovative, but more important, it confronted the brutal facts. The manifesto conceded that the industry's 50-year-old protocol was letting customers down. Shipping had settled into a pattern of “good enough” results where containers arrived late as often as they were on time. Simply selling container space at ever lower rates was a race to bottom—a one-way ticket to profitless commoditization.

  Maersk leadership boldly stated that “shipping had to be turned on its head.” Why couldn't Maersk provide increased value by making reliability and excellent customer service the new normal in the shipping industry? The company introduced Daily Maersk, an offering developed in direct response to increasing concerns about freight reliability. “Customers had to take out huge buffer stocks to compensate for all of the times a ship didn't arrive on time, so they were losing money by the hour,” explains Jesper Thomsen, Global Head of Commercial, Maersk Line.

  Daily Maersk introduced the practice of having ships that leave the same port at the same time every day so that at least 95 percent of shipments arrive as scheduled. Considering that the industry standard is 50 percent on-time delivery, Daily Maersk represents a radical shift in mind-set and offers massive cost-saving potential for customers.

  But offering compelling new forms of value would matter only if the company's 2,000 salespeople could articulate the value of why twenty-first-century customers should choose Maersk. They asked Sales Performance International (SPI) to help enable their sales team to identify customer business challenges and then quantify and articulate the value of overcoming these issues.

  “Now we help customers to consider issues they hadn't thought about before—new ways to improve their business,” asserts Eric Williams, Global Head of Sales, Maersk Line. “We move the conversation beyond the standard ‘What is your price from Hong Kong to Rotterdam?’” Maersk Line also developed interactive value calculation tools for the sales team, enabling them to provide quantitative estimates of business impact for each customer.

  Thomsen estimates that the changes in sales behavior have earned many millions in incremental profits from the new value-driven container sales, but that isn't the only positive result. “What's most important is that we have fundamentally changed the conversation with the customer and helped to decommoditize transportation.”

&
nbsp; Focusing on Value

  Maersk Line is an excellent example of how changing sales behavior from emphasizing product and price to emphasizing solution and value can make a significant difference to results—for both the seller and the buyer. In less than a year, Maersk Line realized more than $111 million in increased revenue, representing a 350 percent return on investment in the value-driven sales behavior initiative.2

  Since Buyer 2.0 is highly risk averse, the new buyers will choose to do nothing or stay with the status quo if they don't see specific and compelling value in a seller's proposed solution to their problems or opportunities. What Maersk Line accomplished was to help the sales team mitigate Buyer 2.0's perception of risk by equipping sellers with the methods and tools required to assume the third persona in the collaborative sale—the Value Driver.

  What Is the Value Driver Persona?

  The Value Driver persona enables a seller to:

  Understand and position value throughout the buying process. That is, they lead with, sell with, and close with value.

  Collaborate with buyers so that the discovery and confirmation of value are jointly determined.

  Use value to build a compelling business reason to act.

  Use a Collaboration Plan to influence the buying cycle and mitigate risk.

  Sellers who take up the Value Driver persona and communicate specific, quantitative value early and throughout engagement with a buyer are more likely to win business. The Value Driver collaborates with individual buyers and buying committees to eliminate fears from a purchase decision.

  As buyers progress into an active state of evaluation, they become more concerned with potential risks associated with their possible choices of action. Risk comes in several forms:

  Operational risk. Quite simply, will it work? Will the solution provide the capabilities required to reach or exceed business goals?

  Transitional risk. How do the buyers get from where they are today to where they are using the solution successfully? What factors need to be considered in implementing the solution? What could go wrong during the transition?

  Financial risk. What is the quantitative value of the solution to the organization? How does this compare to alternative uses of funds and resources? Is it a good investment?

  The Value Driver recognizes that Buyer 2.0 is concerned with all types of risk, and they take proactive steps to mitigate the risks, making it easier for buyers to progress to a purchase decision. Even if a compelling financial case can be made for an envisioned solution, the qualitative aspects of a purchase cannot be ignored. Operational concerns and transitional issues can block the decision to buy as effectively as the lack of a compelling quantitative case for value.

  For example, one of our clients is a provider of typographic technology—electronic typefaces and fonts for use in software applications and consumer electronics display screens. One of its sellers was working with a consumer electronics manufacturer to provide typefaces for an electronic control panel on a new line of household appliances.

  The appliance maker agreed that the solution provider's technology would make the line easier to use, and therefore improve sales. The customer's product management team agreed with the seller's estimates of financial value. Since the new technology had been proven in similar applications, there were no operational concerns. In fact, the customer's marketing team believed that the new display technology would make the line highly appealing to consumers, and therefore make it a big seller.

  So, the customer agreed the investment was worthwhile, and that the product would fulfill all of its requirements. And yet, the customer was unable to make a decision. The paralyzing issue was that the technology required some new skills in product design. It used a different approach from an older system, one that the customer's engineering team already knew and liked. The engineers were resisting the change, saying that the time needed to learn the new technology would delay the line's market launch.

  Only when our client's seller discovered this transition issue was he able to address it. He proposed providing a training expert and some technical consulting to assist with the product design work for the new line. Once concerns about the transitional risk were addressed, the customer signed the contract eagerly.

  Finding Compelling Reasons to Act

  Buyers do not act without compelling reasons to do so. The Value Driver's mission is to find those reasons. If a reason is bound to a hard deadline—a specific time that a new capability will be required—then the buyer will be compelled to act before that deadline in order to avoid adverse results. For example, another of our clients provides customized information systems for financial investment management and stock brokerage firms. If one of its customers wants to grow revenues by opening a new office, then missing the planned opening date could mean a loss of revenue, budget overruns, and idle workers. For that customer, having the office open on the planned date becomes a compelling reason to act.

  Even if there is no obvious time-bound reason to act, the Value Driver can create a compelling case for avoiding delay in a buying decision. If the quantitative value of a potential solution is known, then every day that goes by without those capabilities in place means a loss of those benefits to the buyer. A simple example: if the value gained is estimated to be $1 million annually, then every day of delay costs $5,000, based on 200 workdays per year. The Value Driver persona can help buyers overcome any hesitancy to act by showing them the cost of not taking action and of settling for the status quo.

  Eliminating Losses to No Decision

  If a seller fails to convey value or mitigate risk, then buyers will hesitate to make a purchase decision, resulting in a loss due to inaction. CSO Insights found in a 2012 survey3 of sales organizations that nearly one-quarter (24 percent) of all forecasted opportunities ended up as losses due to inaction; in other words, the buyer chose to do nothing at all. For most organizations today, losses to no decision number higher than losses to any direct competitor. The Value Driver persona, if executed well, helps to eliminate losses due to no decision.

  Collaborating on Solution Value

  It is entirely possible for a seller to win a solution evaluation by Buyer 2.0, but not win business. Even if sellers show how their capabilities can solve buyers' business problems, and also show how buyers can successfully implement their solutions, Buyer 2.0 is still unlikely to buy without an understanding of the quantitative value and potential return on investment for that solution. The collaborative seller recognizes this need, and works with buyers to develop mutually agreed-upon estimates of value.

  To develop a credible estimate of value that buyers can believe in, sellers must first define the scope and impact of a problem or potential missed opportunity. They must determine the adverse effects of their current problem or potential missed opportunity.

  What revenues are being missed, lost, or reduced?

  What costs are being increased or added?

  What risks are being assumed that could otherwise be reduced or avoided?

  A Value Driver diagnoses the scope of buyer problems or opportunities by utilizing the conversation model described in the previous chapter. By determining how much, how often, and how many times a buyer experiences the negative implications of a problem or potential missed opportunity, a Value Driver can then develop an estimate of value—a quantitative assessment of the impact of a potential solution.

  In working with sellers around the world, we've learned that many of them do not subscribe to or engage in the Value Driver persona. We believe it's because they lack the situational and capability knowledge needed to engage in this activity. Additionally, many of them are not given the tools to do the job. And, if they don't engage in the value analysis process, they certainly can't give buyers a compelling reason to act based on value. CSO Insights' 2012 survey showed that only 16 percent of sales executives believe their teams convey the value of their solutions well.4

  Fortunately, both the sophistication and
the ease of use of value estimation tools have improved greatly. Even more important, these emergent value calculation tools are designed to be used collaboratively with buyers, to encourage and enable mutual agreement on estimates of value.

  For example, Maersk Line, cited at the beginning of this chapter, enabled its sellers to collaborate with buyers with a customized online value estimation tool. Using this application, sellers enter information about their buyers' shipping routes and frequencies, and quickly develop quantified estimates of value for improving inventory costs and time to market through more predictable shipping schedules and other factors. In collaboration with Maersk Line sellers, customers can try different scenarios and assumptions to arrive jointly at value estimates that are both believable and compelling.

  As illustrated in Figure 6.1, online value calculation tools like VisualizeROI, SharkFinesse, and ROI4Sales are designed to develop persuasive cases in collaboration with buyers. Not only can these online tools encourage buyer-seller collaboration in pursuit of mutually agreed-upon estimates of value, but they are easy to use and graphically compelling. Further, the results can be shared by the buyer with other people in the organization, with full visibility to the seller. Value Drivers encourage buyers or committees to use these tools to engage in what-if analysis, so that the value estimation model becomes their own.

  Figure 6.1 Example of Collaborative Value Estimation Tool

  SPI uses VisualizeROI technology to collaborate with buyers and develop clear illustrations of the potential value of solutions.

  At SPI, we have created value models in conjunction with VisualizeROI, and share them on our website. We use these models in collaboration with our customers to determine mutually the value of improved hiring and sales productivity initiatives, as shown in Figure 6.1. (Readers are encouraged to go online and experiment with these models at www.spisales.com.)