Let's say we were to go back in time, before the terms Internet and bricks-and-mortar crept into daily conversation, before acronyms such as AOL, ASP, or CIO existed. A time before sellers and buyers had information pouring over their desktops, and before the alien race of dot.com entrepreneurs and venture capitalists invaded the world. Were salespeople different then? Not long ago, large, mainstream companies faced with the “technology” age focused on manufacturing and distributing products. They focused on shaping big businesses with large teams of people to do the work. Technology was used to increase productivity or to lower costs. Today, technology is the business. Bricks-and-mortar business today is completely dependent upon technology, from cash registers to forecast reports, from automobiles to airplanes. Companies are changing at every level to meet the efficiencies that technology creates. IT is the business of businesses.
Surprisingly, while the Internet has changed the way that we all do business—more specifically, the way that businesses are organized—it hasn't done much to change salespeople's selling behaviors. Today's technology sellers prospect, ask questions, handle objections, and close much as they did years ago. And today, as they did then, sellers fill out call reports, forecast revenues for management, and are expected at Monday morning meetings. So what is different for salespeople today? It is the way that value is created and the things that buyers value as important that has changed. Creating value for the buyer has always been a sales enigma. It is a puzzle that is solved by the buyer with the guidance of the seller. Value is critical for establishing long-term sales success, yet it is difficult to clearly understand and define. Establishing (and justifying) value early on in the sales process is a crucial factor in causing a buyer to want to buy. By establishing value sellers define the price they get for the solution, strengthen their ability to compete effectively, and ultimately guarantee their compensation.
Smart sellers spend time preparing ROI (return on investment) calculations for buyers, which shows them how the proposed solution can have economic value. But that's not enough. I've met some salespeople who are amazed at the cost saving their solution will bring, and are even more astounded when the buyer does not move ahead with the purchase. Logically the buyer should commit, but the seller first has to fix the value in the mind of the buyer. And value must come from emotional impact, not just cold logic and cost-based reasoning. In other words, buyers must feel they should buy the seller's solution.
Communicating the concept of value can be extremely difficult for the
seller. The abstract nature of value makes it difficult to pinpoint. Nonetheless, sellers are compensated for their ability to establish value for the client, and it is essential that they piece together this puzzle.
What Establishes Value in a Solution?
Let's look at some examples of how value is established in the IT market. When the IBM PC came out it was, in terms of technology, a step behind many other desktop systems that were then available. But large corporations rushed to buy it, apparently because of the IBM initials on the box. Without even trying, those three letters established a sense of security. And in a market ruled by the FUD factor (fear, uncertainty, and doubt), the saying in corporate America was that, “No one ever got fired for buying IBM.” So the IBM PC sold extremely well to the corporate market. Within a short time IBM opened retail “centers” to distribute the new personal computer to home users, and launched an aggressive sales effort aimed at small to medium-sized business. It was a huge mistake. The same three initials on the box meant nothing to small business buyers, who were not going to fire themselves for buying something that cost less from another vendor. The only perception that was established was that IBM was the high-price solution. Soon Compaq, Dell, and others overtook the IBM PC, and the rest is history. In hindsight, IBM should have brought the product to the market at a low price-point and captured market share.
If IBM got into trouble for selling reputation instead of price, others have succeeded by appearing to intentionally establish a shortsighted value. For example, when local area network (LAN) technology was first introduced, Novell sold its operating system software, called NetWare, on the basis that it would save the user from having to buy larger hard drives and more printers. Sharing these devices brought about an easy-to-understand economic gain for the buyer. Novell played down the “soft” productivity gains—the savings in time, manpower, and workflow—that might occur, believing that it was too difficult for the client to conceptualize. Today, in a mature LAN market, it is accepted that such “soft” gains are the main reasons for acquiring a network.
There are many examples of the value enigma in the software market. Here is one:
John is pitching software to a mainstream company. The price of software that can support twelve people might be, say, $2,000, but a version of it that can support 100,000 people may cost $2 million. The core technology is the same for both versions, and the user interface is the same, but the value of yet another option—the $250,000 enterprise version—is its ability to expand and scale to accommodate so many users.
Obviously, John hopes that the buyer will see value in the scaleable version of the software. As he walks into the buyer's office, his mind fills with facts and figures about his solution, and he weighs the persuasiveness of each technical feature and its potential benefit. But remember: the buyer is looking for the value in a solution. The sale does not rest on those facts and figures.
The question is: how will John establish the value of his software solution?
How Does the Seller Establish Value?
Unfortunately, each buyer measures value in a different way. In fact, the same types of buyers—ones that share similar responsibilities—will measure the value of a solution differently at any given time. Given two similar buyers in the same marketplace, one may place significant value on one solution while the other may view it as worthless or, worse, a detriment.
Through my research in technology-related sales, I have identified six areas of value that a technology solution can affect (see Figure 5.1). The buyer may attach value to one or all of these “buckets” of wants. Some are measurable and some are not, but they can all be significant reasons for the buyer to move ahead in the sale.
The “SECRET” to creating value is:
Security
Expandability
Cost
Reliability
Ease of Use
Throughput |
