In this blog, I would like to complete the discussion of how technology can play a much greater role in actually facilitating the right conversations between buyers and sellers. Previously, we explored collaboration and transparency. In this blog we’ll explore the third essential attribute to any software and technology solution and that is ensuring a relevant conversation about value between the buyer and the seller.
Value: From the English / Oxford Dictionary
- relative worth, utility, or importance..
Using this as a starting point, let’s explore the meaning of “value” as it pertains to B2B sales. While I have found this concept to be perhaps the most misunderstood (and abused) term in business (and I have written much about it), the initial question we must ask is “relative to what?” This leads to several critical insights:
- Value is anywhere and everywhere specific to the customer’s situation
- Value only exists in the customer’s mind as that perceived utility or worth which is incremental to the customer’s next best alternative to you
As a consequence, none of the products or services you sell have any intrinsic value whatsoever until the customer considers them in the context of their own current situation and perceives how they compare to the next best alternative – and it is only the incremental part that represents the value! I believe there are three key opportunities for technology to facilitate the right conversation during the business lifecycle: creating the potential for value, capturing that value in the right deal, and finally delivering the value after the sale.
This is the most important step in selling as it involves determining the expected outcomes the buyer wants to achieve. Everything else in the ongoing relationship logically flows from a common understanding of these expected outcomes. How the outcomes are measured is simply how value is measured (metrics). For example, are we trying to increase something, decrease something, do something faster or do it at a lower cost? Most importantly, this can’t be determined in a vacuum by one side or the other. The buyer must clearly understand (and agree to) the expected outcomes, because they will live with the results of the sale. And the seller must be aligned and agree to the outcomes they are comfortable delivering – because they are now on the hook for producing those results! More business relationships have been damaged or ended by a mismatch of expectations (surrounding value) than anything else I can think of.
It is truly amazing how often this critical step is missed and, as previously stated, the current state of technology in sales does not help the situation – but it should. What if technology could facilitate collaboration and transparency between both parties on the desired outcomes? What if it could also help each gain internal alignment regarding priorities, timelines and success metrics? What might this do to shorten sales cycles and begin to build trust between the parties during the sale?
Capturing Value in the “Right Deal”:
As I’ve previously stated, the goal of any B2B negotiation should be to identify the “right deal” that should be closed. By “right”, I mean a deal that is acceptable to the buyer as well as the seller but also a deal that has the right mix of products and services (as well as volumes, pricing, close date, lead times, terms and conditions, etc.) to deliver the outcomes. Again, this can’t be done in a vacuum by one side or the other – this is a role for technology to help guide the right conversation.
Why might we use technology to help facilitate the conversation? After all, business negotiations are a daily occurrence and supposedly a common skillset of both selling and buying organizations. Put bluntly, in most B2B negotiations, I see one party or both forgetting the real goal is not to simply “win” the negotiation and close a deal, but rather to ultimately deliver the promised and expected outcomes.
The key to focusing the conversation on value is through collaboration and transparency to clearly “connect the dots” between the products and/or services the seller intends to offer and how they relate to delivering the final outcomes. This helps the buyer see that the seller is not simply adding unwarranted items to pad the deal size, but rather is clearly focused on the outcomes. Now both sides will be having the “right negotiation” which goes a long way to closing the “right deal”.
Delivering the Value After the Sale:
It doesn’t take much imagination to see that if both sides have not collaborated on and been transparent about the desired outcomes as well as the right elements in a deal to achieve those outcomes, the odds of actually delivering the value are close to zero. And yet I find this to be the norm for too many B2B relationships. Here again, is a ripe opportunity for technology to facilitate a collaborative and transparent conversation after the sale.
Technology could provide on a 24/7 basis:
- Mutually defined outcomes with agreed upon success metrics
- Clearly defined steps for getting from here to the outcomes by a certain timeframe with mutually assigned responsibilities
- A transparent scorecard for reporting and measuring progress
- Customer Business Reviews (CBRs) to discuss progress and the Past Value Delivered (PVD)
None of these key items can be accomplished alone by the seller nor can the buyer be expected to manage the delivery of value. If the results or progress are not transparent to both parties (24/7), then there is always room for doubt about the actual state of affairs. Designed correctly, the current state of delivering the outcomes (value) is populated by the buyer and the seller (collaboration) and fully accessible to both parties at any time (transparent). This will build trust between both parties and facilitate the long term business relationship.
Does the right technology exist today? Not to my knowledge. But certain elements do and my goal is to integrate them into a value based buying and selling system that is collaborative and transparent. It’s not going to be easy, but then anything worthwhile never is!