Leanne Hoagland-Smith wrote an outstanding post, The Ultimate Sales Goal Is Connecting With Customer Value Drivers, Not Creating Value!
In the post, Leanne hits head on what too many sales people miss about value. We tend to think of value and value proposition in our terms. Instead, it’s the customer that defines value!
For us to be effective in engaging the customer it’s critical to understand their value drivers, positioning our value in the context of what’s important to them.
As a result, when we look at most complex B2B buying decisions, multiple people are involved. It’s incumbent on us to understand what each values and engaging them in discussions about those drivers and how we impact them.
It’s also important to recognize value is situational and time dependent. Stated differently, our customer value drivers change over time and with the situation. Assuming that certain personas, let’s imagine CFO’s, have the same value drivers is dangerous. While their functions are similar, the specific situation, their individual views, what they are trying to achieve is different. And the same person will change over time, based on needs and what they face. To make it more complicated, these value drivers may change within the same buying/selling opportunity. As customers learn more through their buying process, their value drivers will change.
Leanne’s article is critical to understand as the foundation for any discussion of value we have with customers.
Having said this, I disagree with the assertion that “it’s a fallacy to think sales people can create value.” (I really respect Leanne, so I hope I’m not simply playing word games, I don’t believe I am).
There are a number of cases where I think sales people have the responsibility and obligation to create value for their customers.
Leanne’s article focuses on customers that recognize the need to change and have embarked on a change initiative. For customers already on a mission to solve a problem or address an opportunity, it’s critical to understand and engage on the basis of their value drivers.
But there are far more customers who don’t realize they should/must change, there are opportunities they are missing, there are areas where they can improve. It’s our responsibility to help educate customers, help them identify ways to grow, improve, even bring sanity to their lives, or grow their businesses. This is value we create for the customer.
Helping our customers think differently about their businesses, to disrupt their status quo is critical to their success. Look at the evolution of computers/technology from card based mainframes, to minicomputers, to PC’s to tablets/smartphones, to wearable devices to whatever the future holds. If sales people weren’t disrupting the status quo, getting people to think about information/computing differently, our customers would miss opportunities. Helping our customer consider new business models—leveraging agile practices, imagining new possibilities in IoT and how they engage their own customers are ways that sales people create value.
In complex decisions, the majority of customer efforts fail. Data shows as many as 60% of buying initiatives end in no decision made. This means, the customer still has a problem or opportunity, but they have failed to solve it. Research shows this failure has little to do with the selection of a solution, but more on the ability of the customer buying team to align their priorities and objectives to make a decision. Sales people play a critical role in helping customers with this process–helping them to organize themselves, align the varying agendas and priorities, helping them make a decision, hopefully for the sales person. This is value creation.
In these days of customer research and self education, customers will inherently focus on the things they “value.” But what if they are missing important considerations? After all, they unless they are buying in this category every day, they may not know what they don’t know. Consequently, they may be doing something very wrong, or be missing opportunities. Sales people educating customers on these issues, challenging them to think differently, challenging their assumptions, having them consider different points of view or alternatives is value creation.
If sales people are doing what they should be doing, focusing on helping customers identify and address problems and opportunities, rather than pushing products, they should be expert helping customers recognize the need for change, mobilize change, develop and implement plans/programs to achieve their goals. Since we focus on our sweet spots, the problems we are the best in the world at solving and those who have those problems–we have deep expertise and greater knowledge than the customer. Teaching, educating, helping our customers recognize new opportunities, mobilize, and execute is value creation.
Value creation is not limited to bringing something into existence (though I believe that is a huge element of value creation—new business processes, new technologies, new methods). Value creation is also about bringing things into awareness for the customer.
We limit ourselves and how we serve our customers by not doing everything possible to help customer recognize and realize value.
Finally, recognizing when customers don’t value those contributions, leaving them alone, and going somewhere else is a form of value creation (or responding to their value drivers).
We have to be well grounded in the basic elements of understanding what customers value and engaging them on their own terms with what’s important to them. But we are not fulfilling our obligations to help customers succeed organizationally and individually if we aren’t constantly seeking to create value.
Afterword: Thank you Leanne for an outstanding article on the foundations of value. Thanks for challenging all of us to think about value differently, more deeply, and in a richer context.
Dave, I think value creation is doing everything to add value to the customer. See my book, Value Creation, the Definitive Guide for Business Leaders.
If you do not create value you are lost.
Part of creating value is understanding the value drivers for the customer. The customer Value Added CVA measure studies this from the point of view of customers and also the competition.
See:
http://customerthink.com/what-is-customer-value-and-how-can-you-create-it/
http://customerthink.com/components-of-customer-value-how-to-build-a-waterfall-of-needs-and-attribute-trees/
http://customerthink.com/measuring-value-customer-value-added/
Thanks for reinforcing the message in the post Gautam.
Hi Dave
Thanks for a very timely article, reminding us that value is in the eye of the customer.
In a previous life I was Head of CRM for a large automotive bank in Germany. During my first year in the job I was contacted by about a hundred salesmen from companies trying to sell me something or other. In the end I developed three tests to sort the wheat from the chaff:
The first test was does the salesman know my business so well that he knows what keeps me awake at night. I was always willing to brief salesmen on my challenges, but I expected them to have done their homework before contacting me. Of the 100 contacts only 10 had really done their homework and knew my challenges in detail. The rest just wanted to sell me whatever they had. They didn’t get past the first hurdle and didn’t get a face to face meeting.
The second test, having showed me they knew my challenges in detail, was does the salesman have an an innovative, new way to solve my challenges. Bringing new vendors on-board is time-consuming, costly and risky. If the salesmen didn’t have a better way to solve my challenges why should I bring them on-board? Of the 10 remaining contact only 5 had a ‘better mousetrap’. The rest just had common or garden solutions. They didn’t get past the second hurdle and didn’t get a planning meeting.
The final test, having showed me they had a better solution for my challenges, was can the salesman implement it as a pilot at low-cost, with little disruption to daily business, in the next couple of months. The last thing I could afford was a big, disruptive, risky project for something so new, even though it was a solution to my challenges. Of the 5 remaining contacts only 2 were prepared to pilot their solution and both got the chance to do so. Only one of the two was ultimately successful and is still a supplier to the automotive bank today.
I have talked with many Heads of since and all tell a similar story with a similar 90:8:2 rule.
The point of this story is to reinforce that the salesmen who succeeded were those who understood what value was for me, who had a better proposition to create value for me and who could work with me to co-create value in a pilot. Note my use of the words ‘co-create value’ rather than ‘add value’ (the words Gautam M used). As a pilot is in effect a controlled experiment, both for the salesman and for me, we both need to work together to make sure it iteratively creates value for each of us as the pilot progresses to its conclusion.
Value is almost always co-created as a proposition is used and rarely added at the point of sale. It is experienced phenomenologically rather than accounted for as part of some crude mental benefits minus costs calculation.
Graham Hill
@grahamhill
Graham, simply brilliant! Value can only be created with–not for the customer. As such, the concept of value co-creation underlies our abilities to really serve our customers.
Thanks for such a brilliant example and reminder–you’ve provoked a whole new series of posts 😉
Hi Dave, I do not think that a sales person per se can create value for a customer. Left to his/her own devices it is only possible to open gates. Then the customer needs to create the value out of the product/solution that the sales person sold.
Sales persons, however, can contribute to the customer’s value creation by participating in it, co-create it with the customer.
Value is created out of the good use of a solution, not by merely having purchased it.
In that sense it is possible for sales persons to create value. It is a journey that the sales person (and the company he/she represents) needs to accompany. This is a mind set. The ‘hit-and-run’ approach that we sincerely often see, is another mind set – one that does not help the customer to get much value out of the purchase.
Cheers,
Thomas
@twieberneit
Hi Thomas
I think that salesmen can create value for buyers – even if they don’t actually buy anything – through the process of value co-creation. Let me explain syllogically.
Buyers have jobs to be done. So do salesmen.
Buyers go through a process to get their jobs done. The process will almost certainly include searching for potential solutions, purchasing them, configuring them and using them to actually get their jobs done.
Salesmen interact with buyers to get their selling jobs done. Hopefully, the solutions they propose will match the solutions buyers are looking for to get their jobs done.
The buying process is full of uncertainty. By collaborating with the salesmen the buyer can reduce the uncertainty, e.g. by the salesman sharing their knowledge of the different solutions available.
The sharing of resources in this way for the benefit of another is the definition of service. By sharing it the salesmen co-create value together with the buyer, particularly if the buyer decides to buy their particular solution.
Ergo, salesmen can create value through a co-creation process, even if the buyer doesn’t buy the salesmens’ solutions.
Of course, the value co-creation doesn’t stop there. As Tuli et al show in a paper on ‘Rethinking Customer Solutions: From Product Bundles to Relational Processes’, buyers want help at different points in the solution lifecycle, particularly after they have bought it and want help using it.
The example I used from my own experience – in a previous comment – reinforces the value co-creation model. The discussions I had with the two successful salesmen, particularly around planning their solution pilots, helped me understand my challenge in ways that I hadn’t appreciated and thus, to identify better solutions to solve them. And this was only the start of a long relationship co-creating value together as the salesmen evolved from being representatives of their respective companies to becoming in effect, part-time advisors to me and the automotive bank.
It all seems so blindingly obvious… you can be much more successful as a salesman if you co-create value together with buyers. So why do so many salesmen – 98% in my experience – just not get it?
Graham Hill
@GrahamHill
Further Reading:
Tuli et al, ‘Rethinking Customer Solutions: From Product Bundles to Relational Processes’, Journal of Marketing
http://journals.ama.org/doi/abs/10.1509/jmkg.71.3.1
Thomas:
How do you define value. Sales people can most definitely add or destroy value. A few days ago I was about to buy a car from one showroom. The sales guy was great but his boss was obnoxious. I walked out (because value was destroyed) and went to a competition and bought the car Incidentally this salesamna made me happy and added value to me.
Value does not have to be co-created. This is only one option.
Thomas, the whole concept of Value Realization is critical, making sure the customer actually realizes the value they expected upon purchasing the solution. Too often, we don’t pay attention to that, consequently the customer fails–impacting our future business with them as well as creating negative references in the markets.
I will quibble a little with your comment. You focus primarily on the outcomes of the solution the customer selects. I do believe sales creates tremendous value with the customer prior to the sale.
Getting the customer to recognize they have a problem, they may be missing opportunities, that there could be better ways of doing things. Teaching the customer, providing insight and inciting them to be driven to change is a huge area where sales people create value.
Helping the customer through they buying process is another area. 60% of complex B2B decisions end in No Decision Made, primarily because the customer can’t organize themselves to buy. Sales can play a huge role in helping the customer in these areas.
To be successful we have to leverage all areas of value creation both before, during and after the sale.
Thanks for contributing to the discussion.
I’d suggest that, somewhat more than connecting with extant value drivers and somewhat less than creating value, what effective salespeople do is assemble and prioritize value elements for purchase influencers and decision-makers. This is where decommoditization, essentially the art of listening to and understanding the needs of prospects and customers and providing positively differentiated (perceived) value, comes alive.
A lot of great discussion, thanks to all for contributing. At the risk of repeating/clarfiying somethings in the post and my earlier comments:
1. We really can’t talk about “defining value.” The customer defines value. We have to present what we do/how we help in the context of what the customer values.
2. We do, however, have to focus on the problems we are the best in the world at solving, and the people/organizations having those problems. We cannot deliver value (or create value) outside this space. We waste the customer and our time the further we are from this ideal customer.
3. We have a huge opportunity to create/co-create value by helping the customer think differently about their business/opportunities and incite them to change. Focusing just on those that have already recognized the need to change and are some way through their buying process is not sufficient (at least in maximizing our impact, growth, contribution). There are far more customers/prospect who may be caught up in the day to day or may not simply realize there is a better way to do things or opportunities they are missing. It’s the sales person’s obligation to the customer to help them recognize these opportunities, educating them and inciting them to change. This is value creation/co-creation.
4. As mentioned, it’s not the customer’s job to be expert in the process of defining and solving these problems—they have their jobs to do. We create/co-create huge value in helping the customer understand the issues, understand the possibilities, learn more about what they should be looking for, considering.
5. Customers, unless they do this every day, don’t necessarily know how to buy. They struggle with aligning diverse agendas, priorities, etc. We can help tremendously in this process, creating/co-creating value.
6. We have to articulate and help the customer articulate value within their own organizations. If what they are trying to do isn’t aligned with their top strategies, the probability they will be successful in getting approval with to move forward is very low. This involves quantification and qualitative issues.
7. We have to recognize we are likely solving only a component of the problem the customer is solving. E.g., we provide software/technology, but the customer still has implementation, process change, etc. While we can’t do much with respect to those things outside our core, we can help the customer understand the issues and how the piece/parts fit together.
8. We have to make sure the customers realize the value sought in the first place.
9. The broader view of value creation/co-creation, value definition/articulation, value delivery/realization we have, the better we serve our customers (short an long term), and the more effectively we differentiate ourselves from the alternatives.
Hi all,
it really looks like we sparked a very interesting discussion here. Thanks to everybody, particularly to Dave and Graham!
@Graham, I think that I am pretty much with you, including your observation that many sales persons don’t get it.
There was a recent survey by G2Crowd that got presented during the last CRM Evolution that conveys a strong sentiment (62% strong agreement/agreement) to the statement that a sales professional gets engaged only AFTER the purchase decision has bee taken. This pretty much confirms your observation.
I say pretty much, because in a co-creation process the value is created in a team work approach, means even the ideal sales person cannot create the value on her own. This might only be a hair splitting difference, though.
@Gautam, in your example above the sales person destroyed value for the dealership, not for you. You value the type of car you are after and you have alternate means of getting exactly the model you want. Here I fully agree with Dave. Value is defined by the customer. In a B2B scenario this is normally the potential cost reduction or incremental top line reduced by the cost of buying and implementing the system. Then there is a bit of sentiment in there, too, which ideally shouldn’t be.
And yes, I am a bit of an operational guy, David 🙂 – to me it gets a bit philosophical if customer and sales person identify/co-create value, which then is not realised (by not purchasing or implementing the solution). What is the effective value in this case, as opposed to the hypothetical value?
Thomas, the sales guy destroyed value not only for his dealership but for me:
my time
the aggravation
and so I will not do business with him
Hi Gautam,
I would be aggravated as well, actually I had a similar experience at a car dealership here in Christchurch a bit more than a year ago.
The impression was that they wanted to rip me off on the purchase price and on the offer for the trade in. I was annoyed, told them that I do not like their way of doing business and left. Their offer for the trade in was about 1/3 of the going price in the market.
I found and bought a similar car somewhere else, after nearly shelving a purchase because I didn’t (yet) have an imminent need, so time on my hand.
What you (and I) had was a very poor customer experience. What you and I valued was the type of car that we wanted – which we got. We do what we need to do with the car and we enjoy riding it. My analogy to value is energy in physics. There is potential energy and there is released energy. When I talk about value I normally mean the latter. Value gets realised by using the solution.
You (and I) no more doing business with that particular dealership is their problem, and theirs alone. They got the additional problem that we are talking about our experience, which aggravates their problem.
Yes, the experience came at a cost for us as we needed to reorient and go somewhere else. Personally I account that as cost of business 😉
Cheers
Thomas
I guess we have a different view of what value is.
We can discuss this off line
Gaitam, Thomas
The question about what is value from the customer’s perspective, how that influences customer behaviour and how business should manage customers for value is far to important to left for an off-line discussion. It is fundamental to contemporary developments in how we manage customs for mutual value.
I think we would all be grateful if you would your approaches to axiology on-line. I know I would. That way we all get to benefit from your arguments, your insights and their underlying fact base.
Ding ding, round one!
Graham Hill
@GrahamHill
In my opinion, not only can sales executive create/co-create value along with the customers in the selling process, they can also create value for their own organisation and customers by taking customer feedback and showing some initiative to get your organisation to act on the feedback.
Good sales teams are hot beds of ideas about new features/products/services that their organisation can launch to help create value for their customers, if tapped well.
Great sales execs understand that they need to bring value to every discussion they have with their customers.. This could be in the form of an insight about an industry trend, bring forward a blind spot that the customer had in a specific area of their business, bring outside-in perspective about the customers strategy and if it works or not.. They can even co-create value by questioning the belief systems of their customers (if that is the right thing to do).
Sales
In my opinion, great sales execs always add/create/co-create value for/with their customers in more ways than we can think of and in every interaction that they have with their customers….
Gautam: Isn’t that both the beauty and challenge about value? Everyone has a different view of what value is. As we work with customers (and each other) we learn, collaborate, we have the opportunity to create something better than we might have done individually.
Dave, I agree when customers don’t fully understand their problem, salespeople will not be able to confirm value with generic questions, because there is no value to confirm. The answers to the generic questions are hidden just out of sight, because the customer can’t determine the cost of unrecognized or misunderstood problems.
To inspire change, star performer salespeople show customers that the risks of the status quo feel’s greater than the risks of change. With directed questions, they transport the customer to the risks of the status quo within their own company. This virtually experience is powerful, because customers are not only made aware of the risks intellectually, but more important, they feel the risks in their gut. Most salespeople, however, just tell customers the risks of the status quo. This approach is weak, because the abstract risks of the status quo don’t feel real compared to the risks of change.
I want to pick up on something Dave talked about early on in the article: “Assuming that certain personas, let’s imagine CFO’s, have the same value drivers is dangerous”.
There’s a huge opportunity for lazy thinking here, and it’s one that some of the buyer persona zealots have driven a coach and horses through.
I’m not against the idea of buyer personas per se: but they are simply the jumping off point for value creating conversations. We can, of course become familiar with the generic issues that are statistically likely to be on the radar of some representatives of the community the persona is intended to represent some of the time.
But these generic personas can only take us so far. It’s only when we blend what we have learned about the typical challenges of the industry or role with a specific appreciation of what is or could be important to the person (or buying group) at this particular moment in time that we stand a chance of creating genuinely distinctive value, measured by whatever parameters happen to be valuable to them at the time.
The simplest test, I think, is “was that conversation worth my time?”, followed by “and am I prepared to invest more of it with this company or individual in the search for further enlightenment?”
As a few observers have already pointed out, listening, reacting and adapting to what we learn in the here-and-now from our interaction with our prospects is where the greatest potential for value creation lies.
I’ll leave you with a final thought, before I go for a lie down in a dark room and listen to an audio recording of Zen and the Art of Motorcycle Maintenance: are we really any more adept about defining value from an academic perspective than we are at defining quality?
Hi Bob
An interesting and overdue comment.
I share your dislike of personas in general. All too often they are developed from sample sizes that are too small, using the wrong information and are about the wrong people. In fact, that personas focus on describing stereotypical people at all is a fundamental mistake.
Rather than waste time drawing up sales personas, salesmen would be better-off describing the jobs customers are trying to do, particularly those jobs where they need the most help. This will give them the insights they need to either create new and better solutions than those customers currently have, or alternatively, as Clay Christensen put it in an SMR paper, to ‘Find the Right Job for their Product’.
This essential learning from the last 10 years of Outcome Driven Innovation seems to have passed many in sales by. They need to speed up a little lest their customers leave them behind.
Graham Hill
@GrahamHill
Further Reading:
Christensen et al, ‘Finding the right Job for Your Product’, Sloan Management Review
http://sloanreview.mit.edu/article/finding-the-right-job-for-your-product/
Hi Bob
An additional comment about your comment.
Academics do have a pretty good understanding of how customers perceive value. That many of our colleagues in business do not keep up-to-date with the latest thinking in axiology does not mean that it doesn’t exist. I have lost count of the number of times that I have read about rather out-of-date approaches based on felcific concepts of benefits minus costs. As the old philosophical dictum goes, ‘the absence of evidence is not necessarily evidence of its absence.
If you want to read the latest thinking on the differences between value, worth and cost, I can heartily recommend Irene Ng’s definitive book on the subject: ‘Value and Worth: Creating New Markets in the Digital Economy’ (http://assets.cambridge.org/97811070/49352/frontmatter/9781107049352_frontmatter.pdf).
Graham Hill
@GrahamHill
The position and the jargon used to define Sales is dated and obscures the real value that people in positions in sales do.
Sure, all those functions could be reassigned, and perhaps they should be. but a sales profession is so much more than the “lone wolf pitching people” guy of the last century (I use “guy” here from that description. It was a white male, but today let’s call “guy” a “person”)
The superhero salesman of the mid 20th century got all the credit, commission and job instability… whether he deserved it or not.
We don’t need “lone wolf” today, but we do need that same guy, same personality, same drive, and some of the same “do or die” commission structures. The talent is still useful, coordinating the even more complex relationships between departments and channels.
I’ll leave it to you do decide how much of the “sales guy” you can tolerate in you organization. LOL