Maximizing Organizational Value
Value is gained not only by addressing a single individual's problem or opportunity, but by also helping any related problem or opportunity managed by other people in that person's organization. Without a collaborative value estimation tool, many sellers make the mistake of focusing on the scope of an individual buyer, and not on the full impact that a solution could have on the buyer's entire organization.
Organizations are interdependent. Therefore, the organizational value of a solution is cumulative—the more people impacted, the larger the value to be received. It is imperative that the Value Driver look across the buyer organization to find all potential value. By examining the impact of a solution on all interdependent people in a buyer organization, a seller can develop a more complete estimate of value for the buyer, and establish a compelling reason to act.
Other Uses of Value Estimation
Value estimation provides sellers with several other important advantages that help them to sell more effectively.
Leverage
Sellers can offer a quid pro quo of quantitative estimates of value to buyers in exchange for access to other people in their organization, including those with authority and influence over the eventual purchase decision.
Differentiation
Value allows sellers to differentiate themselves. Very few sellers focus on value with their buyers. By doing so, sellers demonstrate situational fluency.
Progress
A mutually agreed-upon estimation of value is an indicator of progress with Buyer 2.0—it is a verifiable outcome that shows alignment. It provides evidence for both buyer and seller that there is a compelling reason to act.
Using a Collaboration Plan—A Buyer Alignment and Risk Mitigation Strategy
Agreement on the quantitative value of a proposed solution, by itself, may not be enough to convince Buyer 2.0 to make a buying decision. Buyers' high aversion to risk also compels them to demand proof of the viability of proposed solutions.
Buyers would not need sellers at all, if they could prove to themselves that a solution would solve a problem or capitalize on an opportunity. If they could feel assured that a capability would deliver the value expected, they would simply make the buying decision. In fact, for products they view as a commodity, Buyer 2.0 often completes transactions without sellers. For example, buyers can now make online purchases for airline tickets, hotel reservations, automobiles, clothes, books, and other commodities without the help of a seller. This trend will only grow over time as the Millennials become the largest sector of the workforce and technology advancements make the user experience for buying online easier.
For purchases of more strategic solutions, however, buyers conduct their own research to understand the “what”—the capabilities they need. The details of the “how”—the way a solution would deliver value—typically require more investigation. For this, they need a Value Driver to show proof of capabilities, as well as the time frame associated with achieving the desired results within their organization. The Value Driver persona utilizes a tool, the Collaboration Plan, to achieve this. (See Figure 6.2.)
Figure 6.2 Example of a Collaboration Plan
Alignment with Buyer 2.0 should occur both procedurally and behaviorally. The Collaboration Plan serves to align buyers and sellers by identifying the procedural steps in a buying process. It is designed to clarify all the procedural aspects that a buyer needs to complete to make a buying decision. From a behavioral perspective, the Collaboration Plan also serves to align with the buyer's concerns and their shifts over time—for example, from determining needs to evaluating solutions to mitigating risk—and what is important to the buyer at various stages of the buying process.
For more transactional sales of smaller or limited solutions, the Collaboration Plan may simply be a short list of recommended actions by the buyer and seller organizations, with responsibilities and suggested dates for each action. For more strategic or enterprise-wide solutions, the Collaboration Plan will require a more comprehensive list of buyer and seller actions, resources, and anticipated dates for completion.
Structure of the Collaboration Plan
A Collaboration Plan can be organized in a variety of ways. We suggest it be submitted as a summary project plan. Elements could include:
Events—lists activities in a sequence of interdependent activities.
Week—gives suggested dates for each event. If dates are missed, the seller should negotiate new time lines and send out an amended plan.
Responsibility—designates who is responsible for a given activity.
Resources—lists specific people in either the buyer's organization, the seller's, or both who have an active interest in or contribution to the success of a particular activity in the plan. This ensures that they are included in the collaboration process and are given access to the collaborative portal.
Go/no go—is a powerful qualifier because it requires that a decision be made about whether to proceed further in the plan. The purpose of the plan is to manage shared progress of a buyer and seller toward a mutually agreed-upon decision, whether that decision is to buy or to part ways.
Billable—is optional and may not be applicable in all cases. However, this can imply to the buyer that your activities or services are valuable. Any billable item may be negotiable, but it's hard to negotiate it if it isn't first in the plan.
Activities in a Collaboration Plan
Regardless of the length or brevity of any Collaboration Plan, it should include recommended actions for addressing:
Operational risk issues—proving the viability and applicability of a proposed solution to address the identified problem or opportunity.
Transitional risk issues—identifying and planning for installation, implementation, and conversion requirements.
Financial risk issues—arriving at a mutually agreed-upon statement of value and return on investment, and identifying and tracking the desired business results for the buyer.
Buying process issues—including legal, administrative, technical, and purchasing department reviews, and required approvals by managerial or executive decision makers.
A Collaboration Plan also addresses the seller's risks, in addition to the buyer's. The seller can include actions to secure approvals from financial, legal, administrative, and procurement resources, if required. Approvals from ranking decision makers with influence and authority should also be incorporated, if needed.
However, the Collaboration Plan is not a just plan to sell, ending with a signature on an agreement. It is a jointly agreed-upon series of events for charting a course through evaluation all the way to successful business results for the buyer. The Collaboration Plan should be built to serve the mutual interests of both the buyer and the seller, by making the entire interaction open and transparent.
The Myth of Control
Unlike some popular sales theories, the philosophy of The Collaborative Sale is not to control the buyer. This kind of thinking is a throwback to selling practices based on Buyer 1.0 behavior. In our previous book, The New Solution Selling, we document this kind of control-focused approach with buyers. However, Buyer 2.0 is an empowered buyer, reluctant to give up control of the buying process. Our understanding of buyer behavior has led us to mutual collaboration as the only reasonable approach. The intent of The Collaborative Sale is to help sellers work in conjunction and alignment with buyers, not to control them. The Collaboration Plan is one way to demonstrate this to Buyer 2.0.
When offering a Collaboration Plan to a buyer, the preferred outcome is to have the buyer make changes and additions to it. If the buyer changes the plan, then that buyer owns the plan. A buyer who ignores a Collaboration Plan proffered by a seller, or who responds only with perfunctory acquiescence, is not really committing to joint exploration of a potential solution. A buyer who amends and improves a draft Collaboration Plan in conjunction with a seller is showing willingness to work actively toge
ther.
For this reason, mutual agreement on a Collaboration Plan is another important indicator of alignment with Buyer 2.0, and is a verifiable outcome that indicates positive progress. It is proof to both the buyer and the seller that the buyer's concerns about operational, transitional, and financial risk will be addressed—and if they are not, then the parties will disengage by mutual agreement.
Create an Online Collaboration Site
In order to encourage active collaboration with the buyer, we suggest that selling organizations create an online collaboration site—a virtual location where all information exchanged between the buyer and the seller is jointly accessible for review and edits (see Figure 6.3). This concept facilitates the essence of the Collaborative Sale, where the goal is to achieve total transparency between buyers and sellers.
Figure 6.3 Collaboration with Multiple Stakeholders
A collaboration site enables sellers to connect with the entire buying committee, and to gain at least indirect access to everyone involved, with complete visibility as to who is accessing resources and how they are participating in the collaborative effort.
For example, to promote the mutual development of and agreement on elements of a Collaboration Plan, the seller can offer it on a secure online resource—a file-sharing facility such as Dropbox, a Microsoft SharePoint site, a secure wiki site, or a dedicated customer portal. Buyers can use this facility to add their own content, reference and forward useful resources to other people in their organization, and amend or update the Collaboration Plan as required.
One of the challenges that sellers have faced for many years is how to engage multiple people involved within a company or on a buying committee. Sellers are often blocked from having access to everyone involved in a buying decision. The Collaboration Plan, along with a collaborative portal or exchange site, provides a vehicle for everyone involved within a company to participate in the interaction taking place. Using this facility, sellers have complete visibility as to who is participating and to what degree, providing indirect access, at least, to buyer stakeholders.
Collaborating to Close
A positive result of selling collaboratively, for both buyer and seller, is that an aggressive close is usually unnecessary to secure the business. By working together through the Collaboration Plan, both buyer and seller have visibility on every aspect of the process. The selling effort is completely transparent to the buyer. Both parties know the next step toward realization of the value of the solution. Further, if the Collaboration Plan is well constructed, it will address the buyer's concerns about operational, transitional, and financial risk. Both the buyer and seller will know when it is time to make a buying decision, and the buyer will be prepared to do so.
If a buyer uses a formalized procurement process or purchasing department, that function should be included in the Collaboration Plan. Regardless of the party with whom the seller will conduct final negotiations, the seller should be well prepared after working through the actions of the plan. The seller will have a mutually agreed-upon estimate of value, clearly defined business results, and proof of alignment on the operational, transitional, and financial aspects of the solution. Armed with this knowledge, a seller is in a good position to take confident and clearly articulated positions in a final negotiation, and to make concessionary exchanges of commensurate value, if required.
Another fortuitous by-product of a Collaboration Plan is that it improves the predictability of revenues from sales opportunities. Since it is a series of steps agreed upon by both a seller and a buyer, with clear verifiable outcomes that demonstrate alignment throughout, the Collaboration Plan identifies close dates with a high degree of accuracy. This greatly improves visibility on progress in the opportunity, and provides the seller with more confidence in anticipated buying decision dates. Managers can use this to forecast future revenues with much more certainty.
Enabling the Value Driver Persona
The Value Driver persona enables a seller to:
Understand and position value throughout the buying process. That is, the seller leads with, sells with, and closes 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.
The keys to making the Value Driver persona successful are twofold. First, the seller must develop the core competency of situational fluency. Second, the organization must provide support, including the development of online collaborative tools such as a collaboration portal and interactive value estimation tools for both the web and individual sellers.
The Maersk Line story is a very good example of how to embrace the Value Driver persona at both the organizational and seller levels. Maersk Line began with a corporate initiative to sell the value of its capabilities in new ways. The company then enabled its sellers to execute the Value Driver persona, with appropriate situational fluency training and interactive online tools. The result: $111 million in new revenue, and a 350 percent return on the investment within the first year.
Value Driver Competencies
In order to successfully execute the actions needed to fulfill the Value Driver persona, a seller must possess the following essential characteristics, knowledge, skills, and abilities:
Situational knowledge—understands the buyer's industry, job roles, areas of responsibility, and common business issues.
Capability knowledge—understands product and service solutions, and how they address customer business issues or capitalize on potential opportunities.
Value identification and articulation—determines scope and impact of buyer problems or potential opportunities; identifies, quantifies, and communicates the tangible results of proposed solutions; can identify or create compelling reasons to act based on value.
Financial acumen—understands buyers' financial statements, key performance measures, and how their decisions will affect value creation.
Risk management skills—can relate to and understand buyers' risks at both the individual level and the organizational level; can take appropriate actions to mitigate buyer risks.
Technical skills—is able to use appropriate technology to operate business impact and value analysis estimation tools, such as online collaborative value calculators and specialized Excel worksheets.
Customer focus—keeps the customer foremost in mind; advocates for the customer's best interests; can anticipate potential solution transition and implementation issues for specific customers and recommend appropriate actions and resources to address those issues.
Communication skills—has ability to express points of view clearly, both orally and in written form.
The Story (Continued)
Jon had been collaborating with the insurance broker on a VisualizeROI online value estimation. They were making progress, thanks to an analyst report Jon had discovered that stated that the broker's firm reported profits down 10 percent over the past two years while firms with similar portfolios were up 7 percent in the same time frame. No amount of further research resolved the mystery behind the 17 percent difference, but the broker willingly admitted to Jon that the brokerage's actuaries had priced a risk pool inaccurately and it had cost the firm dearly. A $20 million value model had become $35 million and a five-year return on investment (ROI) was close to 23 percent.
Jon dialed both the CEO and Nancy after meeting with the broker to review the results of the demo meeting he'd just finished using data from the broker. “It was terrific before it became problematic,” he said from his rental car.
“This new guy they'd just hired to do some organizational development work started flexing his muscles. It was the first time I'd met him. He carried on about teaching people the new system and how it would affect work flows. He was a jerk.”
Nancy asked, “What about your sponsor? How'd he react?”
<
br /> “He texted me in the meeting to say that he knew a politician when he saw one; not to worry. We're going to collaborate with the guy on a new implementation schedule to overcome those transitional issues.”
“When they develop or change your proposed plan, they own it,” said Nancy. “This sounds promising, Jon, but be sure to find a way to let the new guy shine as a result of hiring us. Let's show him how this could be an early career win with his company, and you'll have a friend for life.”
Later, Jon logged in to the online customer portal site and opened the Collaboration Plan. He amended the Event, Responsible, and Resources columns in the plan he had drafted with the broker before that meeting. Over the next two days, the two iterated the plan, and then scheduled a conference call with the new manager who had raised objections in the demo. Jon knew if he could get him to collaborate on their plan, he could win this business.
1 A copy of this document, The New Normal: A Manifesto for Changing the Way We Think about Shipping, can be downloaded from: http://preview.thenewsmarket.com/Previews/MAER/DocumentAssets/207207_v2.pdf.
2 Alexandra Levit, “How to Sell Value Instead of Commodities,” Forbes Online, August 8, 2013. Accessed December 1, 2013, at www.forbes.com/sites/theyec/2013/08/08/how-to-sell-value-instead-of-commodities/.
3 Sales Performance Optimization Report, CSO Insights, 2012. Also at www.csoinsights.com.
4 Ibid.
Part III
Making the Collaborative Sale a Reality
The Collaborative Sale Page 11