Quite often, value selling and value management get mixed up. Or used interchangeably. The concepts are absolutely linked, but they definitely are not equal. In this week’s blog we will talk about the connections between them and five big differences too, that can sometimes be a bit of a tangle to work out.
First off, we need to explain value selling. What is it?
Well, it really is the best approach to target software, hardware and telco sales. And right now, value selling is a must-have. The idea of value selling is that you show customers how your product or service will benefit them. A traditional sales approach would generally try to reel customers in with exciting product and service features and low prices. But with value selling, it goes far beyond the product perks, and it also misses out on discussing the price to begin with, saving the need for any discounts.
Value selling helps you to show your customers how you will meet their current business needs and grow their business value. Your customers really need to see first-hand what they will get from going with your offerings, that they would not get if they went somewhere else. And, they will also need to know the quantified value you will be adding to their business. When you know how, it’s pretty simple to show your customers all the great wins you will bring them. With a value selling approach you put your customer needs first to close the sale. You show your customers why your offering is so useful, how you are going to fix their business problems and how much extra value you will bring them in monetary terms.
It’s pretty understandable that, if customers don’t have an issue that needs to be fixed spending money on new products will be lower down their to-do list. No matter how great your solution is. And this is where value selling is just the thing. You can find out what customers’ problems are, and then you can fix them. Every day at TVST we see that, when sales are based on potential customers’ needs and they can clearly see how much extra money they will get from a solution, our clients’ sales grow. The theory here is that when your customers can see how much value your offering will bring, they won’t even blink at higher prices.
How do you get your customers to say, “let’s do this”? With value selling. In 2021, if you’re not thinking about it already, you really should be.
Next, we need to get familiar with value management.
Value management is a customer relationship approach, not a sales approach. It spans the end-to-end. The whole customer value lifetime. From the opening contact with target customers to the contract signature and it continues until the end of the contract, or customer relationship. When you follow a value management approach you take your customers on their journey. You start out supporting your customers from value selling and you finish when the contract completes. You do not sell and then leave. Really, managing value is all about the upkeep – you look after your customers on-going needs, and you make sure that the value you estimated them becomes real value. A huge benefit here for you is you get your customers’ trust and loyalty. Value management makes sure that all of the hard work in value selling pays off. (We talked about building a value management culture in our last post if you missed it)
Although some of the key differences might be easy to guess now, some are a little less clear. Here are five ways to tell them apart, for you to bear in mind:
1. The life cycle of value selling is much shorter than it is for value management
As we mentioned above, value selling is a sales approach. The process begins at prospecting, and it stops at contract signature. So, it finishes as soon as a customer buys your product or service. The difference with value management, is that it has an extended lifetime. Because it’s relationship based. Equally, it starts at prospecting, but it then runs all the way through the contract to fully quantify the value you have delivered and support any resulting renewals. When you manage your customers’ value, you are of service for the sales cycle and then for all the time your customer stays a customer. This could be for one month. Or it could be for 25 years!
2. Value selling focusses on the value potential; value management carries on to value realisation
- Value discovery
This step always comes first. The aim at this point is to find a really good reason to begin a conversation with your customer. And you won’t find a good reason without doing some homework. The homework for your value sellers here is to delve into the prospective company to find out what your customer’s business needs are. The next task is to work out exactly how your offering can meet their needs. With all this information you will be well prepared to put together a strong business value hypothesis that clearly demonstrates the potential business value of your solution. And then you can open that door for more fruitful conversations.
- Value delivery
This second step is the part where your sales team work hand-in-hand with your customers. Your value seller and your customer need to select which solution benefits are most relevant. And this is where you can line up all the profitable benefits with your target customer’s business needs. When you really know their needs, you will get their full attention. Working with your customers makes sure that you can deliver a transparent business case. When you have a crystal-clear and reliable business case, final sale negotiations will be painless. And you can use the baselines again, for any future value management activities.
Your sales team have the power to turn your target customers into customers with value selling – because they can show and quantify the real value of your solutions.
Value management includes both of these value selling steps, but it also has one more:
- Value realisation
In a few words, manages the real value achieved. In this step your mission is to show your customers all the gains you made to their business since they purchased your solution. To do so, you can measure the values they actually reached against the original baselines from the business case.
This step is last, but not least. It is a big step. Your customers should spend a lot more time with you here. By supporting customers on their value journey and showing them the value they realised, you will give them a good reason to invest for the long-term. When you manage value, you can check your customers are getting all the benefits that your sales team had promised them. And your value specialists will be close at hand to fix things if the value delivered is not reaching the estimated value. One of the best things about value management is the happy customers.
Value selling should cover no more than 10-20% of your customer relationship lifetime. But value management will span 80-90% if your customers are satisfied and your offering is current.
3. Value selling works on an “outside-in” value hypothesis
In ‘value discovery’ when your value sellers begin conversations with customers, they need to focus 100% on the value. From the word go. For your sales teams to be successful, they will want an easily scalable method. It is all about having insights on your customers’ business needs and on any potential business outcomes. Remember, how much money you can save your target customer is the idea here. But you also need to have a way to measure the value of your solution. This measuring can be based on three key things – your hypothesis, publicly available data and previous customers’ benchmarks. A scalable method will ensure you will deliver reliable sales materials (for example your outside-in presentations and business cases), on time, every time. Even if you have lots to do at once! (We talked about scalability in more detail in our earlier posts)
In contrast, value management is quite different to value selling: because to work out your customers real value, they will have to give up some real data. This input is really important to set true baselines. When you measure the data outputs next to the baselines it is really easy for all parties to see the value delivered by your solution. And it is so effective! There is no need to hypothesise. And other companies’ data doesn’t come into the picture.
4. Value management positively effects upsell/cross-sell and customer satisfaction, long-term
At the beginning, value selling supports you to grow the deal size. It reveals all the benefits of your solution, and as a result, it offers ealier and bigger value realisations. When your sales are followed up, your solution could reach more departments and regions etc., a lot faster. Showing customers the value benefits will secure their investments.
Value management really helps lock-in renewals and also increases cross-sell and upsell openings. It is the best approach to reveal further business opportunities. Because value management backs your solution and customers’ investments with real delivered value, it will boost your customer relationships. With great connections it makes it a lot easier to find the gaps for upsell/cross-sell. And that is how you open the business decision maker’s door for a winning conversation! You will have proven that you are trustworthy, so decision makers will not have the doubts. When you have already grown a company’s value, you are in a far better position to convince them that you have more solutions to grow more value.
5. Value selling is much easier than value management
This is where the lines between the two often get a bit blurry. Value management covers the value selling steps but then also the value realisation. But the thing is, there is quite a lot more to successful value management because it deals with data that needs protecting. In contrast, data protection is not so significant in value selling. With value selling you can apply publicly available info along with third-party benchmarks, which need updating much less often.
When you are managing value, you will use sensitive data in a company’s own value calculation. This data needs to be kept really secure, at all times. Sensitive data has to be anonymised for it to be presented to any other customers. It is great to show your customers where they can find more value with some proof from your other customers’ cases – but taking really good care of this sensitive data is key.
For value management you need solid processes and databases. All customer-specific information should be easily accessible, consistently reliable, routinely updated and fully protected. Data protection is a duty and keeping it relevant is your power.
To wind up, value selling is, in reality, the early steps of value management. The point here is that value selling can stand alone. You can sell value without managing value, but you will not be able to manage value if you don’t sell value. Value management is a much bigger process. It runs through the complete customer value lifecycle. End-to-end. Both bring about shorter sales cycles, bigger deals and higher profitability. But they need different processes, they provide the backing for separate business goals and they result in different outcomes.
In this competitive world of digital transformation, are you feeling a little swamped with your value selling and/or value management? Can we help? … If you have any questions or comments around anything we discuss in our blogs, or if we can help you with anything, we are here. And we always love to hear from people. Please use the ‘get in touch’ link to talk with a specialist member of our team.
Thanks for reading. Stay tuned for next week. We have something pretty exciting on its way!
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