More and more, companies are implementing sales value management practices to focus their sales strategies on the exclusive benefits that their products and solutions offer to customers, rather than on their functions and features. This holistic approach demonstrates the real value (product – advantage – benefit!) to customers and the additional economic profit and savings that can be attained, by aligning the customer’s strategic and operational goals and the vendor’s solution capabilities.
Gaining in popularity for more than 20 years, value management is now a must-have, but to build an effective value management practice, the following 5 pitfalls need to be avoided:
1. A talented team without the backing
Today it is relatively simple to identify and recruit individuals with relevant experience in the value management field and companies are enthusiastic to recruit straightaway; however, it is important to be able to fully integrate your new value management team with company structures and processes. Without the right competencies, sponsorship, training and tools to measure success, efforts to implement value management practices mostly wither and fail.
Even with a “dream team” and all the right tools, without the appropriate competencies and backing, sales teams may find approaches that focus on business value cumbersome, complex and time consuming, and decide not to use them. The result: extra costs, no solutions, futile internal discussions – and lots of frustration.
2. Not using the best tools
When building a value management practice from scratch, it is tempting to build tools in-house.
In most companies, sales executives have already developed their own tools, so it might feel appealing to continue using them but, with different team members developing varied approaches to analyses and presentation formatting, this tactic can deliver large differences in results.
When looking at your current in-house tools, are you sure you are focusing on the KPIs that will convince your customer? Are you sure all your formulas are accurate? Are you sure you can explain them? Do you have a menu of business case success measures, such as NPV, IRR and ROI? Is the tool user friendly and can you easily demonstrate various scenarios and confidently discuss the value you aim to deliver to your customers?
The benefit of arriving late to this party are the key learnings gained from other companies’ experiences, that can help save time and effort. Investing in the right tools is a necessary expense to enable your value management and sales teams to collaborate effectively and seamlessly.
3. Inadequately equipped sales executives
In our experience, some value management reports are poorly structured and complex to explain. Sales teams have varying levels of mathematical literacy, interest and availability to become familiar with such complex reports.
This means they either need the support of business value managers that can deliver the reports on their behalf, or in-depth training to ensure they understand the value of the document and feel comfortable to deliver it. Support and training in this field is indispensable and it needs to be refreshed. Your value management team needs to work hand-in-hand with sales and must be available to answer questions, at any time.
4. Failing to build a unique collateral
The value management reports used for each stage of the sales process require different levels of detail. One document will not suit all customer needs and will not be sufficient for the end-to-end sales process. Each document needs to be customised for each business case, based on the level of available information on the market, the industry and the customer; it should include benchmarks of your prospect, relative to the industry, competitors and best practice.
It is fundamental to build a unique collateral and develop different types of reports that are flexible enough to accommodate all needs, easily.
5. Limited scalability
At the beginning, a small practice with very customised reports may serve you well but, when your teams are familiar with this approach and you start reaping rewards that start to grow your sales volumes, such as better success ratios, lower discounts and more sales pitches, there comes the need to scale simply and cost-effectively.
This requires the right balance between customisation, and time spent on manual research and work. You need to build your practice with your scalability in mind: how would you create and deliver 10, 100, or 1,000 of these value management reports per month? If each report requires a month or longer to build, then you will quickly reach your operational limits.
The Value Search Team builds, operates and scales your value management practices, anytime, anywhere. How to increase your average deal size will be the topic of our next post!
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