In the previous post, TECHNOLOGY SALES – HOW DO WE GET ACCESS TO THE BUSINESS? we discussed how legacy IT sales organizations can gain access to those much higher up in IT as well as the business (where increasingly the decisions and money are), by initially focusing on the data and applications that are important to the business. Outcome-Based Selling should be a significant strategy for addressing this shift of technology sales to the lines of business. However, I’m concerned with how Outcome-Based “Selling” is being widely interpreted and implemented.
A recent publication by LinkedIn “The Enlightened Tech Buyer: Powering Customer Decisions from Acquisition to Renewal”, found that today’s tech buyers are seeking to make “informed, rational decisions” and that they are under increasing pressure to deliver greater business outcomes (a hat tip to Dutch Schwartz for sharing this study with me). Additionally, the study found that 71% of IT projects are considered failures and 19% are considered utter failures.
We can certainly argue the interpretation of “failure” and “utter failure.” Other studies I’ve cited put the number of IT initiatives that fail to deliver the promised results at closer to 70%. Whether 90% or 70%, we can safely say the overwhelming majority of IT purchases do not deliver on the desired customer outcomes. Many of these failures could have been avoided if the selling organization had worked with both IT and the business to define the right desired outcomes before the close and then delivered those outcomes after implementation.
Chris Luxford recently wrote a very insightful post on the pitfalls to “Outcome-Based Selling” that I highly recommend. I’ll try not to repeat what he says, but it’s important to envision Outcome-Based Selling as a corporate belief system and therefore a different business model—not simply a sales process. Therefore, it belongs to the entire selling organization and not just Sales. More precisely, it really belongs to both your company and the customer. I’ll steer clear of the internal aspects and focus on my area of expertise which is the customer facing interactions.
Ideally, it begins with jointly helping the customer identify the potential outcomes available to them. But don’t expect them to know what they don’t know. We should be bringing something to the table here, too. After all, if the customer knew exactly where they really wanted to go, they most likely wouldn’t need you and would already be heading there. However, there is a huge difference between identifying and selling to desired outcomes and ultimately delivering and getting credit for those same outcomes (value realization). And that’s where Outcome-Based “Selling” (as many interpret it) has the potential to cause more long-term issues than it solves…
If we have effectively sold to customer outcomes, shouldn’t we also be proposing to those same outcomes? This is where I see Outcome-Based “Selling” start to head off the tracks. Most B2B proposals range from a two-page quote (listing SKUs, volumes and prices) to a “young novel” about our company, our various offerings, corporate history, etc. (all publicly available on the internet and thus of little value to the customer).
But how do they relate to the customer outcomes and how are we making it easier for the customer to make an informed buying decision? In short, if we sell to outcomes, but don’t clearly link them to specific products and services, then our proposals send a very mixed and confusing message. The customer will begin to ask are we really focused on their outcomes or what we want them to buy?
Negotiating Outcomes (Great Deals)
Imagine we have sold to customer outcomes and proposed to those same outcomes. So far, so good. Then it’s logical and imperative we also negotiate to customer outcomes (which happens to be a much easier way to negotiate). By that I mean we should be targeting and negotiating what I call a Great Deal.
A Great Deal is both good for us and good for the customer. But most importantly, a Great Deal should have the right bundle of Deal Levers (products, services, volumes, prices, terms, etc.) that give us and the customer the highest probability of delivering the desired outcomes. In short, if during the negotiation we close the wrong deal, what are the odds we can actually deliver the expected outcomes?
Delivering Outcomes (and Getting Credit)
Assuming we’ve overcome the above pitfalls and booked the business, the most important part begins—at least from the customer’s perspective. This is where the outcomes are achieved, and the value is delivered (everything up until now has simply been a necessary evil). But this is where most organizations that attempt Outcome-Based “Selling” fail – sometimes spectacularly.
This is the critical point of handoff from Sales to Implementation, Services, Customer Success, Support, Renewals, etc. How often do these teams even know why the customer bought our products and services much less the outcomes the customer wants to achieve? What are our internal teams aiming at and how will they define success?
Furthermore, how often do we jointly develop a Success Plan with the customer to ensure the outcomes are achieved? How about a scorecard to serve as a single point of truth in tracking progress against the desired outcomes? Or a communications plan to ensure we are we are getting credit from the key decision makers for Past Value Delivered?
We haven’t even ventured into the marketing and lead development which should also be Outcome-Based to be proficient in attracting the right types of leads and customers. Effective Outcome-Based “Selling” is so much more than a sales process and involves the entire company as well as the entire customer journey. It is a corporate culture and a business model and therefore it is challenging to implement (like most worthwhile things). The payoff is it can be a sustainable point of differentiation in the marketplace.