Sansriti Saxena, Manager of Value & Solution Engineering at Ecosystems
“Value is more than ROI.” This is a phrase I hear often as a Value Engineer, and it is something I retain in my own arsenal when I’m supporting clients who are still in the early stages of developing a value selling program. At a high level, this makes sense – more and more, research has shown that today’s customers are less focused on features and functions and more on how technology will help them achieve specific business outcomes. Collaborative value selling leads to a 28% increase in win rates, 34% increase in cross- and upsells, and 7.1% increase in customer retention. Following the disruption of Covid-19 to the sales landscape, 92% of business-to-business (B2B) buyers prefer virtual sales interactions, up 17% from pre-Covid numbers (Bain & Company). In this environment, sellers need to be able to lead with value without direct conversation.
So what does that look like in practice? Approaching selling from a value lens, business cases need to be built to customer-specific outcomes. The building blocks of a business case, called “value drivers,” are engineered to the desired outcomes. Construct a business case from only the most pertinent value drivers, and the seller has a unique digital value story wrapped and ready to share with the prospect.
Underneath the veil of value engineering is a basic understanding of the customer journey in terms of outcomes, which are expressed clearly and concisely through a chain of calculations. Every world-class value driver contains three key elements: transparent logic (Logos), alignment to motivating factors and corporate initiatives (Pathos), and credible evidence and support (Ethos). Logos identifies the what, Pathos captures the why, and Ethos navigates the how.
All world-class value drivers utilize key performance indicators (KPIs), quantifiable measures used to evaluate the success or the achievement of desired outcomes. A good KPI is distinctly measurable, readily available, and highly relevant. A great example of a KPI is win rate %, a metric that we at Ecosystems track with our customers. Because win rate is a crucial metric by which B2B organizations track and record their internal performance, it is easy to determine both baseline and target values (measurable), tracked quarterly (available), and is in direct alignment with our customers’ business goals (highly relevant).
World-class value drivers structure the logic as a chain of easy-to-follow calculations that lay out a cohesive and compelling story. This starts with an introduction of what is known (or can be assumed) to set a baseline on where the customer stands. Once there is alignment with the customer on baselines, we explore with the customer the improvements that the solutions will bring and how that will result in measurable KPIs driving towards the desired outcomes.
Here is where Logos answers the question, “What will be the business impact to my organization from adopting this solution, and in what specific areas?” In addition, a world-class value driver uses language (think labels, prefixes/suffixes) to its advantage – “30% Improvement” is more impactful than a plain “30%” and “$40.25 per hour” is more telling than “$40.25.” The story is finished with the outcome of the business transition. The epilogue is a happy ending drawing the customer to the natural conclusion: that this offering not only aligns with their business needs but will play an active role in helping them meet their business goals.
Pathos is the emotional tie between an offering and a prospective customer and can take many forms: Corporate Value, Job Value, or Personal Value (also known as the Value Trinity™). The most common is Corporate Value. In this form, Pathos pins the outcomes of the offering to an organization’s business. This could be in alignment with company initiatives or goals, such as revenue generation or sustainability.
Job and Personal Values relate directly to the users of the solution as well as corporate leadership. One example would be increased efficiency – elimination of the need for mundane, monotonous tasks – and thereby an improvement in employee satisfaction. Personal value impacts the individual and is often tied directly to the economic buyer. For example, an individual could use the solution to drive positive outcomes and get a promotion as a result of their work. Overall, Pathos answers the question, “Why is it in our best interests to purchase this solution?”
World-class value drivers reference Pathos through the use of qualitative and non-monetized value.
Including qualitative and non-monetized value is another way to layer value into a business case and focus the conversation on value, rather than features and functions.
Ethos is how a business case garners credibility. A world-class value driver defends its logic with reputable evidence and support, or benchmarks, integrated within the baseline assumptions and the improvement to the KPI. In many circumstances, certain KPIs may resonate with a customer but are not being tracked. Whether they don’t have the right tools or the right executive sponsorship, the ability to track the KPI is likely one of the reasons the customer is interested in purchasing a solution.
However, this creates a dilemma – how is it possible to set the baseline value without hard numbers? This is where Ethos and credible benchmarks come in. Where it may not be possible to use actual customer data, a world-class value driver contains credible, intelligent default values from which a customer can gain an overall understanding of how their organization is likely performing. These intelligent defaults use third-party research, internal company benchmarks, subject-matter expertise, and general industry data/trends to define the baseline assumptions. The sources behind these intelligent defaults are intentionally transparent and detailed to help the prospect gain confidence in the assumptions.
Once the prospect is in agreement with the baseline, they will be eager to jump on the selling point of the offering – how is the KPI going to be improved? In the same way, credible evidence and support are used to establish baseline assumptions, they can also be employed to convince the prospect of the impact. Here is where case studies, benchmarks, and third-party research can really energize a customer around the possibilities of a solution. Using Ethos in this manner also offers a unique opportunity to showcase differentiators. In this way, Ethos helps answer the question, “How is the impact of this solution different from any other offering?”
Let’s take a look at a real-world example from within the Ecosystems platform.
The value driver begins with a simple and concise description of the benefit, followed by a clear example of Ethos: a link to a credible white paper on the benefits of the offering. The quantification of the benefit is structured in a way that is easy to understand, with a clear definition between the “Baseline” and “With Ecosystems.” The value driver also includes quantification of the Increase in Customers (non-monetized value) alongside the annual dollar benefit. Additionally, this value driver makes use of publicly available third-party data (linked within the driver) to add credibility to the baseline assumptions.
With each value driver engineered with Ethos, Pathos, and Logos, a complete business case contains the compelling value narrative that will lead to a lasting partnership. The return on investment isn’t just a monetary one – it is the achievement of necessary business outcomes that will lift the customer to the next level.
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