“How to get credit for the customer value you create” – interview by John Smibert.
In our last interview (Sales Poker) Dean Kelly gave us an excellent definition of customer value – “it’s what the customer puts on the table – not what we put on the table“. He went on to say how we achieve this – how we create value.
So this time I asked him what we need to do when the customer does put the value on the table.
I loved his response. He talked about how we need to capture our share of that value and ultimately how we need to get credit for the value
See the full interview below to learn more.
Dean Kelly is the Sales Deal Mechanic.
John: Welcome back! I’ve got Dean Kelly, the deal mechanic, with me again – welcome back, Dean!
Dean: Thank you, John! Thank you for having me!
John: Hey, Dean we talked last time about your perception of what ‘value’ means, and I liked the way you expressed it. It’s what the customer’s willing to put on the table, it’s not what we put on the table, and that really helped me understand it’s customer’s value, not our value.
John: Okay. So, assuming the customers puts the value on the table, what happens next?
Dean: The simple way of thinking about value to me is what I call the customer value life cycle. Stage one is ‘Creating Value’, which is coming back to creating value in the mind of the customer by asking those questions. Once you have sufficient value, clearly more value than the cost of your solution, we move to the next stage, which is ‘Capture Value’. So, how do I, the sales organisation or the salesperson, capture a share of the value I created? If we go back to an example where I’ve got a six-million-dollar solution, and I’ve created 10-million dollars worth of value, then by you spending six with me you gain four.
John: Four million dollars, yes.
Dean: So, I’m looking to create their value, but I’m looking to capture the six million, because that’s a reasonable capture rate, or a reasonable share of the value.
John: A good exchange.
Dean: You’re better than your 10 million.
John: Yes, good exchange.
Dean: And I’m better than my say four million, which might be the low-cost. So, ‘Create Value’ then drives into ‘Capture Value’, which also supports the concept of value-based negotiation. Rather than discounting, which undermines the client’s belief in your value as a seller, you’re looking at having a business relationship develop in the ‘Capture Value’ and in the negotiation. That then drives into a step we call ‘Credit for Value’, which might happen weeks or months after the deal has been implemented, to go back to the client and close the loop, and say “When we spoke during the sales process you said you needed these things here.” Or “Here’s what we delivered. And hey, we’d like to get credit for that value delivered.”
At the same time, you’re giving your sponsor in the account the get credit within their own organisation for having made a good decision, having seen value to be derived by the organisation, and therefore they’re more likely to then drive you back into the ‘create value’ on the next project or the next opportunity.
John: So the life cycle continues.
John: When you talk about credit, you’re talking about a pat on the back?
Dean: Yes, it’s a little bit like that. [laughs] A pat on the back, yes, but you’d like a little bit more than that. One of the biggest issues that I see in a lot of sales teams is that the first deal they have business people involved in often. What happens by the next year – maybe a renewal, particularly in the cloud-based space as a service – they’re not stuck down in the low levels of IT, because it’s a renewal; they’ve lost their relevance back to the business.
Dean: So, what I’m talking about is coming in with a message around how we improve the business, help the business, and saying “While we were working with you, we found these other areas that we think would be important and strategic to you.” So that ‘credit for value’ is a little bit pat on the back, it’s also a little bit “I’m more than what you judged me on the first time, there’s more opportunity for incremental value here. And to help us remain relevant to the business—because obviously we want to move our relationship up and up and up in an organisation, rather than be “sentenced to purgatory” in IT.
John: And you haven’t used the word “trust” at all. I’m assuming that the pat on the back, that credit is “We trust you more now. We are ready to go through the next cycle.”
Dean: Well, how many salespeople out there go in and introduce themselves “Hi, John! I’m Dean, your trusted advisor!” And to me it’s like you can’t claim you can’t sell for point. So, to me by going through this you are more likely to be seen as someone who brings value, and as a person who reinforces what they say with what they do. But only the client can bestow you with the trusted advisor status. I think it is an output of following this type of cycle.
John: And a part of the credit.
Dean: Yes, absolutely.
John: Okay. Alright, so they’re the three steps. Quickly, again?
Dean: Yes. ‘Create value’, ‘Capture value’, and then go on and get ‘Credit for value’ for yourself, but also credit for the people that sponsored you, so credit in the view of their own organisation.
John: And that drives the ongoing customer life cycle value.
Dean: Bigger deals faster!
John: Great – thanks very much, Dean!
Dean: My pleasure!
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