For our June Webinar, Todd Snelgrove, Founding Partner at Experts in Value, shared the keys to implementing a successful Value Management program, drawing from over 20 years of global value selling and commercial excellence experience. At the end of the session, he answered questions from the audience. In this blog, we share his live answers.
Which skills commonly require development in order to help salespeople become value experts?
Questioning the types of questions that they ask. How they ask the questions. Listing and probing. Because the customer might not say “TCO.” They might not say “value.” They might not use the word you’re using, but trying to come back there. And then it depends on the type of salespeople. I just found a lot of them could use the help and commercial understanding of the fixed costs, the variable costs, the breakeven, the cashflow, the net present value. We all need to go back to school in order to remember some of those.
What KPIs would you advise to use for monitoring value management as an ongoing process?
Great question. It depends on who you are within the organization. Embedding it in your system for all your product development processes and then having yourself or somebody on your team sit through that. Number of engagements at big accounts, for example.
I would measure how many of our key accounts that that we have a value conversation with that year. We used to measure tool usage, but the problem was that tool usage [was supposed to mean] that it was good quality stuff – the customer may have signed off on it. It was not. I did a free service and didn’t charge for it. So, originally it was usage and then we had to filter it down.
My favorite one is percentage of discounts versus sales. Pick a country, pick a sales force and say, “Everyone’s got a sales dollar target. Who’s getting that number while discounting less? They’re more efficient.” Systems have changed over the years, but there might be one $10 million seller and a different $9 million seller. The $9 million seller didn’t discount nearly as often because they used the tools, the techniques, and the knowledge, so they were a lot better than one that $10 million seller that discounted 10%. They should make more money.
So the final one was number of value agreements. These little ones where we would go in and say, “I’m not going to cut the price, but we’re going to guarantee delivery of value. If not, we will write a check.” We never wrote a check, but if you got one of those, that was a huge KPI. When we got one every few years, everybody was talking about it and jumping up and down.
What are some examples that you’ve seen over the years where technology was successfully used, and also unsuccessfully used?
I can’t say the company’s name, but they had chosen to build their own tool. This is a Fortune 500 company. They built their own tool, and of course, everybody that got it created their own variation, and it kept morphing and morphing.
Finally, I was brought in to help them, and two different people were going through it on two different days and I could see the differences and one of them gets to the results page. It just had the word ROI and it said “4.2 months.” And I said, “what?” And he goes, “well, the ROI.” And I said, “what do you mean?” He goes “the ROI.” I said, “you mean, return of investment, not return on investment. What do you mean?” There’s two ROI: return of and return on. I prefer to use the term breakeven because it [uses] different words. Return on investment – when does it pay for itself? 4.2 months, whatever. That’s great.
And then one of his colleagues had ROI and they had 40%. I said, “okay.” When I see the percent I kind of knew. And he goes, “you know, they won’t, uh, they won’t buy it.” I said, why? And he goes, because, they have a payback rule, and everything needs to be within a year. They needed to see a hundred percent.” It wasn’t a hundred percent, so when was the 40%, eight weeks! ROI needs to have the timeframe beside it. So I used to say to colleagues, what’s better? 100% ROI or 10%? 10% ROI in three weeks is better than a 100% ROI in three years by a magnitude.
So the follow-up thing here is that the people would say, “well, no customers ever challenged us on that.” But remember the LeveragePoint case study that Brian just showed, it’s going to get passed around the offices. It’s going to hopefully end up at a C-level person’s desk. And as they look at it and go, “they’re using the wrong terms, they got all these things wrong.” Your credibility goes.
And then the final point I’ll make here: the professionalism of the report makes a huge difference. I’m a numbers person, but I can tell you when it looks pretty, I’m amazed at the professionalism – people get it. A number is a number and that’s what matters, but those bar charts make all the difference where people can see that it just looks more professional. That’s a big takeaway that we have learned over the years.