The new millennium has been an era of sweeping change for B2B sales. The internet has flattened the battlefield between legacy incumbents and scrappy upstarts. Automation, inside/remote sales models, big data analytics, new marketplaces, and (increasingly) AI are now critical ingredients for B2B organizations looking to outgrow their peers.
However, some old habits die hard. Competition and increased buyer empowerment mean that the pressure to discount has never been higher, despite the clearly destructive effects it can have on business value. Sales reps who are under pressure to meet aggressive targets are too often incentivized to beat the competition in competitive scenarios, where winning and losing are often perceived to hinge on price.
Salesperson making presentation
Competing on price is a two-pronged failure that leads to suboptimal initial sales outcomes that compound over time. First, sales teams risk losing deals to competing vendors who are able make a better business case to the purchasing committee. Despite what they may say about the importance of price, B2B buyers care most about how the solution they choose impacts their business’ bottom line. An Aberdeen survey for B2B buyers shows that the top factors in their decision-making include total cost of ownership (45%), how the vendor supports their business goals (42%), and efficiency gains (i.e.. ROI) (40%). If a sales team isn’t centering their presentation on B2B outcomes, they risk losing to one that does.
Second, in scenarios where they are able to win the deal, failing to convey the total financial impact their solution can deliver to the customer weakens their hand during late-stage negotiations and procurement. Sales reps and managers, lacking confidence in the differentiated outcomes they deliver, inevitably react by trying to differentiate on price instead of outcomes. This eats away at margins beginning at year one and has a compounding effect, impacting profitability for the entire customer lifespan. Pricing outcomes are a uniquely powerful lever in both directions – a 1% margin improvement equating to an average 8% of operating profit.
To break this cycle, B2B sales must change the terms of the game, and they need the support of the whole commercial team to do so. The key is an end-to-end focus on customer value, using well-designed value propositions as a primary foundation for their commercial strategy. A holistic focus on value can help organizations thrive by avoiding the following pitfalls in competitive selling scenarios:
- Not Identifying Winning (and Losing) Scenarios Early: Not every opportunity is equally likely to close, or even progress to a second meeting. There are a range of factors that influence the likelihood of winning a deal that can be apparent early on in the sales process.
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- Technical Fit: Most B2B solutions face competing alternatives in the marketplace. Outside of completely commoditized offerings, various competitors may be better natural fits for certain segments of the addressable market. A well-designed value proposition can be powerful enough to help commercial teams weigh the outcomes associated with a B2B solution versus the competitors across use cases, industries, and offer designs.This is important in competitive selling situations as it gives sales teams a window into whether or not the opportunity has a large differential in value – either in their favor or against them, helping them make better resource allocation decisions. This approach can also help them recommend a solution set that best fits the buyer’s needs, allowing them to lead with an offer designed to maximize value to the customer.
- Personal Relationships: Often, B2B salespeople will encounter scenarios where a strong preference for a competing solution exists outside the core value delivered by the solution. This can manifest itself in countless ways, such as an existing vendor relationship with the buyer in other parts of the business, a strong brand reputation within the base of end users, or even a close personal relationship between a competing salesperson and a high-ranking member of the buyer’s C-Suite. Most commonly, a competing vendor may have a leg up because one or more members of the buying committee had success using their solution in the past.While these competitive advantages can be difficult to overcome, a strong value proposition can help salespeople level the playing field by re-centering the conversation and the buyer’s decision on the superior economic outcomes associated with investing in their solution. If this value doesn’t resonate with the buyer in early customer meetings, B2B presales and sales teams can save hours of time chasing a lost cause.
- Column-Fodder Trap: Many B2B buyers are required by internal policy to evaluate more than one competing solution before making an investment. Often buyers begin their purchasing journey with one solution in mind. This is an acute risk in scenarios where an organization is replying to a request-for-proposal (RFP) put out by the buyer. However, even in situations where the buyer may not have issued a formal RFP, there is a strong chance that one or more internal stakeholders has a strong bias towards a particular solution.Customer value gives B2B sales teams a chance to: a) force themselves into the conversation by highlighting quantified financial value, or b) avoid losing precious time and resources when the deck is truly stacked against them.
- Sales Velocity Impact: Increased Number of Qualified Opportunities, Improved Win Rates
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- Poorly Articulated Differentiation: Once a salesperson has cleared the initial hurdle and gets an opportunity to present to members of the buying committee, it is likely that they are going head-to-head with competing vendors. This is their best chance to make a persuasive “why us?” argument to decision-makers. Sellers have a limited window where their buyers are paying attention. This opportunity to highlight their true differentiation is too often wasted on corporate overviews, technical minutiae, and feature specifics divorced from overall business outcomes.
Buyers who don’t understand the value you deliver are unlikely to pay for it, whether in the form of selecting another vendor or by purchasing at a margin-killing discount. According to Forrester, the first vendor that paints a “vision of value” wins the business 74% of the time. Making customer value central to sales conversations is the best way for B2B companies to communicate differentiation, and win more deals at higher prices.
Although this is often viewed as an exercise in sales execution, the entire commercial team shoulders the responsibility for quantifying and communicating differentiation. Product, product marketing, and marketing teams are typically better equipped than frontline sales reps to both translate product features into dollarized customer benefits and to understand the competitive landscape, quantifying how these dollarized benefits compare to the competition. Leading B2B teams use technology, like LeveragePoint Value Propositions, as a central hub to transform quantified differentiation into interactive sales presentations.
Additionally, with buying committees growing in size and preferring to do research online, the onus of communicating value at the earliest customer touchpoints increasingly falls on marketing. By ensuring that quantified and financial value delivered is embedded across all digital channels – website, ads, social media, live and virtual events, marketing collateral, and interactive content – marketing can support sales by informing the buyer of superior value delivered and enable a smooth transition into the first value-based sales conversation.
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- Sales Velocity Impact: Improved Win Rates, Higher Average Prices
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- Lack of Buyer Faith in Ability to Execute: B2B buyers are risk averse. Close to half of them claim to make defensive purchasing decisions 70% of the time. The fear of making the “wrong” decision (and the associated professional consequences), means B2B buyers often default to the alternative deemed the “safest.” Absent a well-articulated business case, this results in them choosing the most well-known or established option. This disadvantages B2B sales teams that lack high levels of brand equity, particularly those selling disruptive, innovative solutions.
Simultaneously, a competitive selling scenario will invariably involve other sales teams making bold claims about the impact of their solution – often to the point of overpromising. Even if competing sales reps aren’t overreaching with their promises in this deal, many B2B buyers have experienced this in the past. This fosters a lack of trust within B2B buying committees, making them skeptical of bold claims.
A strong Value Story can help sales teams address both of these issues head-on. By centering on the economic outcomes of the solution, salespeople emphasize their alignment with the customer and garner credibility with senior decision makers. By using Value Stories as flexible case studies, B2B sales can highlight their domain expertise and how they have helped similar customers. By collaborating on the mathematical and financial elements of the Value Story together with the buyer, sales teams invite pushback and foster a sense of shared ownership in the resulting business case. This process turns buyer stakeholders into advocates, helping advance the economic case to buy within their team.
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- Sales Velocity Impact: Improved Win Rates, Reduced Sales Cycle Time
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- Storytelling: Effective B2B sales is as much of an art to be mastered as it is a set of technical skills that can be taught. Research has shown that messages delivered as stories can be up to 7 times as memorable as a list of facts alone. The most effective value selling conversations paint a compelling “why us” narrative with quantified value delivered at the center. In competitive selling scenarios, buying committee members will be inundated with presentations, facts, and supporting sales collateral. A memorable, sticky story is critical to standing out and advancing the deal.
Great sales conversations are customer-focused. For most B2B reps, this means taking a step back and letting the customer share their perspective. A Gong survey showed that the least effective B2B sales reps talked 72% of the time, while the most effective ones only spoke 46% of the time. Active listening is a key skill associated with great salespeople that is too often underdeveloped in the average salesperson.
The leading sales reps in a B2B organization, whether through experience or aptitude, already deploy these techniques. Value Stories are the most effective way to facilitate two-way sales conversations across the broader sales team. Slide decks naturally lead to a one-way sales conversation, and are mostly not specific to the customer. Calculators that simply generate templated ROI reports at scale fail to initiate and facilitate a memorable two-way conversation. When ROI calculators are used, they are too often spreadsheet based and detached from a story of customer value delivered.
LeveragePoint Value Stories are the ideal solution for B2B organizations looking to boost the performance of the middle 80% of the sales force. By supporting the most effective way of conducting B2B value conversations, organizations can replicate the methods of their most effective salespeople on an organizational scale.
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- Sales Velocity Impact: Improved Win Rates, Increased Average Deal Size Reduced Sales Cycle Time
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B2B organizations cannot control outcomes in every scenario, but they can optimize for good outcomes through great processes. Losing on price will happen on occasion. Losing and winning on price with regularity is a warning sign that the fundamentals of the go-to-market model are shaky. Leading B2B companies align their entire commercial strategy, from product development and pricing to marketing and sales, with the economic outcomes of their customers. By helping the customer achieve commercial success in their own right, organizations can cultivate long-standing relationships based on value jointly created.
