How to work with customers so they are “able” AND “willing” to pay for your value

By Todd Snelgrove, founding partner, Experts in Value

For every individual SAM and SAM team, one of the most important goals is to be able to deliver value to the customer AND make sure you get paid for it. Once upon a time, “all” you had to do was convince the end user of your offering’s superiority to other options — and then let them do the internal selling for you. Today, you’re dealing with a highly educated Procurement function with a great deal of sway over what gets bought from whom.

Don’t despair: All hope is not lost. To thrive in today’s world, you just need to learn to think like – and sell to – both the economic buyer (i.e., Procurement) AND the technical/business/end user. In this post, I focus on eight areas your value program needs to master to get all your customer stakeholders the information they need to pull the trigger on your offering. These will be covered in much greater detail in a one-day workshop I will be delivering at SAMA Academy in San Diego on Tuesday, Oct. 16.

First things first, let’s look at a couple terms from the title of this blog, so we make sure we’re speaking in a common language.

Ability to pay (ATP). Simply put, this term refers to whether or not your customer has the money to pay for your offering. We’ve all had customers tell us our product is too expensive, that another, cheaper option is “just as good,” or that the supplier isn’t budgeted to spend what we’re asking. In my book, this is just evidence that our offering just isn’t resonating with the buyer — that it doesn’t sufficiently address our customer’s needs and strategic drivers. But I also think about what my former CEO used to tell me: “Todd, budgets can be changed. If you put a newer and better option in front of me that creates real economic value, it will get funded.”

Willingness to Pay (WTP). This refers more specifically to whether your customer is actually willing to pay for your option over its next best alternative, whether that means buying from a competitor or sticking to the status quo. It is critical to understand that WTP fluctuates as a company’s needs change. And so it’s critical for you to understand that Procurement’s needs differ from the end user’s needs, so they are going to value certain qualities — and hence their willingness to pay for them — less. While your end user may be willing to pay a premium for decreased downtime or better systems integration, Procurement won’t be unless you can quantify and document the value in business terms.

So how do you build your organization’s ability to succeed at selling value? Based on the work of myself and others, many companies have begun creating ROI/value quantification tools, but often these value initiatives aren’t leading to bottom-line results. Research shows that, all too often, suppliers focus only on helping marketing and sales sell value but not creating a simultaneous culture change that actually incentivizes and encourages them to *WANT* to sell value. Recent research from SAMA shows that, while pretty much every company in the world knows it needs to quantify customer value, only 30 percent actually have a disciplined process for doing so. And in my experience, of those 30 percent most could stand to do it much better.

Below, you can see a handy chart I created with James Anderson, the distinguished professor at Northwestern’s Kellogg School of Management (or, as I like to call him, The Value Guru), which shows the factors that influence a salesforce’s ability AND desire to sell value.

Causes of Value Selling Success 1.png

Let’s tackle these concepts one by one…

Value conceptualization. During your new product/service development process, are you thinking ahead about how much this new offering would be worth to your strategic customers? Are you building the formulas and test case examples in advance, so when you’re ready to launch you already have sample ROI calculations to share with customers?

Value-selling process. Do you have a process that pushes Sales and Marketing to interact earlier in the buying cycle so you can frame your customer conversations around value from the start, rather than reacting to an existing demand via RFP and trying to push value when it may already be too late?

Customized ROI tools. Have you created a tool for Sales to create customized ROI analyses for all your solutions, and is it easy to use, intuitive for the customer? Does it save and track cases as you build them, and can it track actual realized value for customers who have begun to adopt your solution?

SAM/sales team training on value selling. Have you given your teams the training they need to be able and comfortable selling on value? A one-off seminar isn’t enough. Training needs to be robust, ongoing and challenging, with exercises, role-playing and tests. Selling is a skill, and like any skill it requires training and ongoing fine-tuning.

Rewarding the right behavior. To give just one example, many companies still measure their SAMs/sales staff on sales versus target. But if I’m a SAM who is only being measured on the top line, what incentive do I have to push my customer to pay a price premium, even if I know the value is there to justify it? I’m much more likely to cave and offer a five percent discount and move on. But that five percent comes off the bottom line, and for most companies that’s 50 percent of net profit. One tell-tale sign you’re not rewarding the right behavior is that your SAMs and field sales are either continually pushing for discounts or complaining that you’re not priced competitively. This is a sure sign they don’t have the tools, knowledge and, most importantly, incentives to have the right kinds of conversations with your customers.

Value-based contracts. Have you created contracts that allow the customer to pay based on the actual, mutually agreed-upon and delivered value? If not, it’s a lot to ask of a Procurement expert to just “take your word for it.” Words and PowerPoint slides will not get you the traction you need to sell on value. While many companies have built processes around offering discounts, very few have ones that guarantee delivery of value.

Business Culture. What does your company stand for? Does your CEO talk about customer value? Is it part of your company’s annual report? Does it get discussed at your investor day? For true business culture change around value, you need a person working full time to drive the concept of value and its adoption at every level of the organization.

Customer Culture. Are you engaging customers earlier and, most importantly, differently? Are you discussing early in the sales process that, when they buy your offerings, that they need to consider value and not simply buy at the lowest that meets the minimum requirement? It takes a different sales and marketing approach to be seen as a thought leader in your industry and to drive a change in how your customers value value.

Tools to help quantify and demonstrate value are critical, but underlying those tools your company has to have a holistic value mindset that runs across and through the entire organization. For much more detail, see my book (co-authored and -edited by Andreas Hinterhuber), “Value First Then Price: Quantifying Value in Business-to-Business Markets” (Routledge, 2016). And of course, remember to register for my SAMA Academy workshop in San Diego on Oct. 16, 2018.

Todd C. Snelgrove is the former Global Vice President of Value at SKF, where he drove the creation, tools, processes and results of a 20-year value journey at the company.

 

Making Brainstorming a Highly Effective Creative Tool

 

By Mick Carroll, PhD

Brainstorming is easily the most common activity that an organization turns to when it needs to be creative.  First, let’s take a look at what brainstorming is and why it is so ineffective as most commonly practiced.

The origins of brainstorming can be traced to back to the 1940s and ’50s to an American advertising executive, Alex Osborne.  This process was based on the creative characteristics of:

Fluency, i.e., the ability to generate a multitude of ideas

Flexibility, i.e., the ability to change perspectives and thought patterns

Originality, i.e., the ability to express new concepts, relationships or ideas

Awareness, i.e., the ability to see beyond the given rules and principles

Drive, i.e., the motivation, energy and confidence to take chances and fail

The biggest problem with these creative characteristics is that they are not normal ways that the human brain functions. The brain is programmed to immediately search for solutions.  The brain has evolved to be a survival instrument always looking for the quickest ways to size up a situation or challenge it — and then quickly provide the best path to resolution.

Brainstorming requires the following rules, which make intuitive sense:

  • No criticism. The atmosphere for brainstorming is supposed to be open; the purpose is to encourage ideas, not judge them prematurely.
  • Freewheeling discussion and free expression are desired — more than carefully thought-out ideas.
  • Quantity over quality of ideas is desired.
  • Combining, improving and adding on to ideas are highly encouraged.

So why doesn’t brainstorming typically result in many creative and useful ideas?  It has to do with how the brain is wired and what people know.  The thought process is driven by neural connections that people make based on something called “knowledge clusters.”  This is a fancy way of saying that people have created ways of knowing and processing information, and this becomes deeply engrained, habitual and many times automatic.  Simply putting people in a room and telling them to be creative has no impact on their highly patterned ways of thinking.  Often, this is described as “stuck thinking.”  Unless tools and mental processes that make a person make new associations, relationships and thought patterns are introduced, very few new or creative associations and relationships will occur.

The main purpose of this post is to answer the question “How can you make brainstorming a highly creative and generative process?”  The main ingredient of creative thinking is to achieve new combinations, relationships and associations among the knowledge points or clusters that one has stored in his or her head.

Keep in mind that, for brainstorming to succeed, you have to change  the patterned ways in which your brain wants to think. Here are some steps that can be immediately taken to improve your next brainstorming session:

Two weeks before the planned session, send out a notice that there will be a brainstorming session. Include on the notice a clear statement of the issue/problem/opportunity the session will be addressing, e.g., “The purpose of the brainstorming session scheduled for two weeks from Friday will be to generate ideas around how we find more effective ways to process internal workflow to speed up our delivery to customers.”

Have participants rewrite this statement at least two different ways and send them  to you within two days. Depending on how many people will be attending, give individual or team pre-assignments.  Depending on the purpose of the brainstorming session, the following assignments should be given:

  • Have participants research three companies in your industry and report back on how they handle your issue.
  • Have several people go on small “field trips” to different places (e.g., museums, restaurants, sporting events) to see how these environments might have possible solutions/ideas about your issue.
  • Similar to above, have several people search for analogous activities (e.g., an election, air traffic control, Library of Congress cataloging) that might be similar to how you handle your issue.
  • Have participants draw a picture or pictures of the problem/issue that you will be addressing at the brainstorming session.

Here are a few guidelines for the actual session:

  • Have each person or team report on their assignment.  Allow time for ideas to flow during each report.
  • Periodically during the session, ask three questions and document the answers on a flip chart: (1) What is the purpose here? (2) What is happening here? (3) What is the value here?
  • It is critical that someone in the meeting organizes, illustrates and displays the ideas for the group.  Pictures are key stimulators of ideas.  It is also extremely helpful that someone draws out the current process that you are trying to improve upon.  Seeing what you currently do can help the mind look for alternatives.
  • When harvesting ideas, don’t throw any away — rather, drop them into different buckets, such as: ready-to-use, “seedlings” (i.e., the beginnings of a good idea) and “useful directions” (i.e., useful broad concepts), ones that aren’t ready at the moment but may have future value.

Alternate approach to classic brainstorming:

“Six Thinking Hats” Ideation Each hat color (see below) represents a persona, attitude or approach.  Have each participant pick a hat color/role that represents qualities that are out of their comfort zone. The idea is to change the way you normally think about things.  (Have fun with this; humor relaxes the mind and causes new connections.)

Another variation calls for everyone wearing the same color at the same time.  At a designated time,  everyone will change to the next color and assume the associated thinking approach or attitude.

White Hat:  Data and information. “What data is available?” “What data is needed?” “Let’s run some projections.” “How do we get the data?”

Red Hat:  Feelings, intuition, emotions, no data or evidence. “My gut tells me…” “I don’t like the feeling of this.” “This just feels right.”

Black Hat: Caution, risk averse, critical judgment. “This won’t work.” “We’ve tried this before.” “We don’t have the resources.”

Yellow Hat: Optimistic, positive, benefits, figure a way to make it work — opposite of Black Hat. “Let’s pretend money is no object.” “What do we need to do to make this work?” “Who needs to be involved?”

Green Hat:  Creative thinker, new ideas, variations, challenges conventional thinking, movement.  “What are the main concepts we are looking at?” “Let’s look at five great companies inside and outside of our industry.” “Let’s have weekly ideation sessions around this.”

Blue Hat:  Process, control, manages process, keeps process moving. “Let’s summarize.” “What are next steps?” “Let’s go back and review Red Hat’s points about _____.”

Could these tactics help prime the pump at your next brainstorming session? Or are they too zany to fly at your organization? Let me know what you think by connecting through LinkedIn. I’d love to hear from you!

Mick Carroll holds a PhD in educational philosophy and is the founder of BetterThink, a business consultancy specializing in using creative thinking to solve problems.

 

Digital transformation: Buried treasure or just more hype?

By Nicolas Zimmerman

Editor-in-chief

SAMA

It’s widely accepted that the introduction of new technologies like blockchain, Internet of Things, augmented reality and others  is changing business faster and like never before, creating uncertainty for customers and suppliers alike. But if you’re unnerved by this state of uncertainty, good news from the front lines: Your customers are looking for help navigating the complexity of digital transformation, and if your company can provide answers, you’re going to be sitting pretty.

At a recent SAMA Executive Symposium, Anton Chilton, the global head of field operations for manufacturing software company (and symposium co-host) QAD, offered a comprehensive take on his company’s approach to dealing with the changes wrought by new digital technologies. (QAD makes ERP software for manufacturers.)

He outlined three of the biggest high-level challenges facing his customers:

  • Industry disruption. For evidence of how quickly industries can transform, look no further than the automotive world, once thought to be immune to disruptors due to its astronomical barriers to entry. Not only has Tesla advanced to become a major player in just a few short years, but Dyson (yes, that Dyson) is working on an electric vehicle.
  • Smart manufacturing. Technology isn’t just changing the businesses themselves but also how customers conduct business — from how they interact with their supply chain to how they optimize their shop floor.
  • Geopolitical turmoil. From trade war to Brexit, the world is seething with change and uncertainty. If you’re a global manufacturer, how do you decide where to invest?

What does this mean for you, as a strategic supplier? Chilton suggests that adaptability will become (if it hasn’t already) the new competitive business advantage. He suggests four key traits to maintain your organization’s agility.

  • Ability to read and act on signals. The time to react to changes is growing shorter and shorter, so you have to be highly focused on the external world. Look at what’s happening in the world around you — with your customers, with their customers, with their supply base and with your competitors — and be prepared to act on those signals.
  • Ability to experiment. Much of the potential business value from digital transformation is, as yet, in the realm of the imaginary. The use cases may not exist yet. But you don’t want to make a big bet on something that *might* work. The ability to experiment, and the willingness to “fail fast,” is critical.
  • Ability to manage complex systems. Because of the interconnectedness of everything, you will increasingly have to excel at knitting together multiple systems, from multiple parties. Only the most nimble suppliers will be able to pull this off successfully.
  • Ability to mobilize. With the pace of change accelerating, none of the first three traits will “play” if you don’t have the ability to translate strategic thinking into action and deliverables.

For QAD, this has created a host of new business model imperatives. As Chilton says, these things have always been true, but they’re “even more true now.”

  • Results-oriented. It’s easy to get excited by new technologies, but you can’t forget that they have to lead to good business outcomes. Don’t be seduced by tech for tech’s sake.
  • Rapid response to change. If new technologies are transforming your customers’ businesses (and they most certainly are), you can’t take five years to roll out a new project. 
  • Risk & change management. So many big capital projects run over budget, run late or fail to deliver the promised business benefits — sometimes all three. More and more, customers will be looking to their strategic suppliers to help them both manage risk and manage change.

Research reveals that the only way to grow business with existing customers is to bring them new ideas and fresh perspectives. That is the SAM’s raison d’etre. Good SAMs are experts at taking their company’s existing capabilities and leveraging them to solve their customers’ problems. But increasingly, customers are looking for new ideas and fresh perspectives on digital technologies whose business impact may be an open question. Suddenly, a SAM can find himself in uncharted territory.

So how does QAD attempt to navigate this untrodden territory? Chilton’s team puts emerging technologies in one of four buckets, based on how close they are to having real-world impact: (1) research/monitor, (2) educate/evaluate, (3) innovate or (4) productize. Chilton likens the framework to a “virtual time machine,” which helps QAD keep tabs on emerging technologies while staying focused on the ones most likely to yield dividends.

Of course, it’s still up to the SAMs to have probing questions with their strategic customers to tease out which emerging digital technologies could be leveraged to solve a customer’s business problems.

“It’s a difficult conversation to have,” Chilton admits. “You don’t want to give the impression you’re out there just fishing. You don’t want to seem clueless.”

This new paradigm makes it more critical than ever to find and develop SAMs with the right blend of traits to have productive, probing conversations with customers around future challenges.

What follows are the traits Chilton prioritizes when adding new talent to his strategic accounts team. For the most part, these attributes have always been important to SAM, but they’re doubly so now as interactions shift from the known to the unknown.

  1. Curiosity. If SAMs are not naturally interested in how their customers are using new technologies, they aren’t going to be able to harvest insights on QAD’s behalf. More than ever, they also need to be curious about the technologies themselves. What is it, how does it work, what are some examples of how it could be used? These insights can help QAD build a roadmap.
  2. Key observation skills. Who at the customer is using these new technologies? Whose job could potentially be changed or improved with the use of new digital technologies? What kind of things are they being used for?
  3. Networking. There are an increasing number of key decision makers at our customers. In the past, QAD always worked with the IT group, but that’s changing and expanding. Especially with big digital transformation projects, many more people need to be involved than in the past, so SAMs have to seek out and cultivate relationships with the customer stakeholders who may be impacted by new digital technologies.
  4. Collaboration. This means both internally and at customers. No one is going to own any “digital transformation space,” so there will inevitably be third-party providers bringing solutions you will have to introduce and integrate at the customer. Collaboration will be become even more important than it already is.
  5. Courage. It’s hard to sit in front of a senior customer and navigate a successful conversation in areas in which you’re not an expert. And with so many emerging technologies out there, this will be an inevitable condition of many customer conversations. Self-confidence will be absolutely critical.
  6. Coaching. You grow existing accounts with fresh ideas and by convincing the customer you’re the only company that can solve a given problem. Coaching the customer (as well as internal stakeholders) will only grow in importance.

Chilton ended on a note of fierce optimism. While digital transformation may be disrupting industries, including yours, the fact is that no one has the answers. Your customers know this, and they’re looking for help from their suppliers. If you can empower your SAMs to help customers navigate this uncertain time and start developing answers, your company will be primed to take advantage of the uncertainty created by digital transformation.

Wish you could have seen Chilton speak in person? SAMA’s executive symposium series is open to all SAMA Corporate Member companies. Want to become a member? Contact Chris Jensen, SAMA’s Director of Membership & Strategic Accounts, at jensen@strategicaccounts.org or +1 312-251-3131, ext. 10.

Emotional Intelligence: What it is, and why it’s so critical for SAMs

By Jessica Worny Janicki and Bo Golovan

Analysis vs. empathy

A SAM is a business manager and a true LEADER in managing strategic relationships, and this requires much higher and more complete interpersonal relationship skills and EI than the average sales rep: from technical expertise, analytical and strategic thinking to communication, management, leadership and negotiation skills. Successful SAMs understand how to integrate this complex mix of hard and soft skills.

The SAMA competency model articulates how technical and cognitive skills combine with social and emotional competencies to create high performance. For why this combination is so rare and difficult to achieve, we turn to the field of neuroscience. The brain contains what’s called the “Task Positive Network (TPN),” which is analytical and task-oriented, and the “Default Mode Network (DMN),” which is empathetic and social.

“In the business world right now, the emphasis is more on the task orientation of leaders rather than cultivating empathy,” says Anthony Jack, assistant professor of cognitive science at Case Western Reserve University. “That is partly because it’s easier to assess task-oriented leadership.”

But the long-term consequences of this cultural bias are damaging, Jack says. He and a group of researchers at Case Western suggest that business leaders should strive to cultivate both skill sets (analytical/task-oriented and empathetic/social) so they can learn to cycle fluidly between the two networks and better perceive when each mode of thinking is appropriate.
With its focus on social and emotional functioning, EI provides a perfect framework to develop the Default Mode Network. It offers a guide to how and when to deploy it to leverage performance.

What is EI?

EI is a set of social and emotional skills that influence the way we perceive and express ourselves, develop and maintain social relationships, cope with challenges and use emotional information in an effective and meaningful way.
Most SAMs have spent a lot of time learning and developing hard skills but much less time on soft skills, potentially resulting in an unbalanced skill set and a lack of agility between the TPN and DMN brain networks.  EI can be used as a tool to establish a more effective balance.

EI for professional development

To co-create value with customers, SAMs need to possess strong communication and influence skills, know how to listen beyond what is said, effectively articulate a value proposition, persuasively promote their ideas, get buy-in among key decision-makers and be comfortable addressing difficult situations or conflicts. To lead orchestrate an ecosystem of resources and stakeholders, they must demonstrate strong interpersonal skills to develop and maintain trustworthy relationships, develop a team vision, lead teams in implementation and execution, and demonstrate sensitivity, understanding and empathy for cultural differences in order to adapt and be effective in a global environment.

The EQi 2.0 model of emotional intelligence comprises fifteen competencies across five categories that form the building blocks of abilities such as communication, decision making, time management and resilience. The framework provides an effective structure to support and develop these competencies.

Interpersonal skills are at the heart of the competencies SAMs need to build and develop strong relationships, manage cross-functional teams, align stakeholders, influence and negotiate. But it is essential to understand that these skills also build on others, such as self-perception and self-expression.  Although the model’s competencies are separated into five distinct groups, they are all interrelated and mutually impact each other.

Self-perception is an essential building block, as it is about our internal world, which determines how we perceive ourselves, our mindset and our attitudes. Being self-confident, for example, helps SAMs overcome obstacles, while being motivated ensures they are driven by a desire to perform and excel.

Self-expression is the flip side: focused on the outside world, it describes how we choose to express ourselves and how we communicate. Sharing and expressing feelings in an open and transparent way helps SAMs establish rapport with stakeholders and build trustful relationships with cross-functional teams. Emotional expression, of course, happens in a context and is a matter of degree, which SAMs assess by being tuned in to others and having empathy. An effective SAM reads and understands these social cues and adjusts his or her behavior accordingly and in the moment. For example, a SAM is more open with a long-time customer than with a new one.

Decision making is highly relevant for SAMs, as they constantly face multiple and often complex decisions. To optimize their decision making, SAMs must integrate emotional information in an effective and meaningful way, along with analytical and strategic elements, data and facts. Understanding and managing emotional undercurrents to get buy-in or during negotiations, for example, can be the difference between success and failure.

Stress management is particularly important in the SAM environment, which is fast paced, competitive and high stress. Stress, especially if chronic, can be detrimental to performance, both cognitively and emotionally. Being aware of stress, assessing its impact and developing appropriate coping strategies reflects valuable stress-management practice and is key to effective functioning. Developing flexibility, resilience and remaining optimistic in the face of adversity allows SAMs to process stress more effectively and mitigate its damaging effects.

Each individual has a unique profile, with distinctive strengths and areas in need of further development. Results of an EQi assessment provide SAMs and sales leaders an individualized road map that can become a daily guide that empowers them to accelerate their professional development.

Here are two tools you can use to start developing your EI skills immediately.

Gauge your mood. Developed by the Yale Center for Emotional Intelligence, the Mood Meeter app is both fun to use and rich in content to expand users’ emotional self-awareness and emotional expression capabilities. The app enables users to quickly and easily track emotions througho. ut the day, expands emotional vocabulary, provides tips for moving one’s emotional state, and provides stats for further reflection and analysis.•

Reflective listening. Adapted from “The EQ Edge” by Steven J. Stein & Howard E, the following listening exercise strengthens users’ reality testing, empathy, interpersonal relationship and problem-solving skills.  Step 1: Ask someone you know well how he or she feels about a given topic.  Let the conversation roll for five minutes without sharing your own point of view.  After five minutes, describe to the person your version of what he or she thinks and feels.  Compare your version with the other person’s version and note any differences. Step 2: Review this video to learn about reflective statements. Repeat Step 1 with another person, this time using reflective statements with the speaker.  Compare the amount of information you collected in both conversations.

Jessica Worny Janicki is the owner of JWJ Consulting. Bo Golovan is the owner of Strategic Solutions Associates. 

They will deliver their highly rated “Emotional Intelligence for SAMs” workshop on Wednesday, July 25, at SAMA Academy Chicago. Click here to learn more and to register.

Key insights from SAMA’s Annual Conference

Nicolas Zimmerman

Editor-in-chief

SAMA

As the largest conference in the world focused on the challenges and opportunities of strategic account management, SAMA’s Annual Conference is a goldmine for anyone who wants to know what’s on the minds of SAMs and the architects of SAM initiatives. Here are a few things I and my SAMA colleagues picked up in Orlando May 20-23.

Don’t fear the machines.

While as much as 85% of sales tasks could be automated by 2020, the key is to know which situations call for human interaction and which can be handled by computers. 3M Vice Chair and Executive Vice President H.C. Shin summed up the dynamic perfectly in his opening keynote:

“As society becomes more technology-driven, human judgment becomes MORE important — not less. In this era of AI and everything else, what we do on a day-to-day basis is more critical than ever.”

McKinsey & Co. Expert Partner Jennifer Stanley recommends embracing “the bots” for what they can do better and faster than us, things like data collection, data processing, setting appointments and predictable physical work. This frees up critical time for activities only a human can muster: thinking creatively, developing new offers leading and coaching your teams, boosting your social and emotional intelligence skills and more.

“We should embrace them for taking parts of our jobs that are less exciting…because it frees us up to do the one thing that is most interesting anyway: being more human with our customers.”

Speaking of which….

Customer-centricity starts at the top.

Everyone talks about putting the customer first, but how many can say just how much time they spend with their customers? For H.C. Shin, the customer-first mentality starts at the top. He calls his management style “trench leadership.” When he gets his calendar in June, the first thing he does is block off 50 percent of his time for customer meetings.

“People don’t listen to what you say as a leader,” Shin says. “They listen to what you DO as a leader.”

Disruption is scary, but isn’t doomsday…yet.

Says Shin: “There is no state of equilibrium. We either take advantage of this opportunity, or we will fall behind and risk disappearing.”

Disruption will continue to come from unexpected sources. Who would have thought 12 years ago that Wal-Mart’s biggest competitor would be an online bookseller? By 2030, more than half of global data will be the product of machines talking to machines. The most conservative estimates put the number of professions that will disappear at more than 50.

But more that 80% of the world’s data sits behind firewalls. Incumbents will lead the next wave of disruption, predicts IBM’s Shari Diaz, who oversees innovation, strategy and operations for Watson Supply Chain.

“They have the expertise. They have the lessons learned. And they have the data. If they can take that data, get the right technology platform to leverage it, they will win the next wave.”

Finding ways to make your “intangible” value tangible.

With everyone moving away from products, the race is on to differentiate beyond product/technological excellence. This brings to the forefront the value of quantifying your intangible value of your offerings.

According to Andreas Hinterhuber (of Hinterhuber & Partners) and Stephan Liozu (of French security company Thales Group), two of the world’s foremost experts on B2B pricing, suppliers do three general things for their customers: save them money, make them money, and provide risk reduction/peace of mind/emotional satisfaction.

It’s this last area that is the “Final Frontier” of value quantification — and also the hardest to get right. “Our theory,” says Liozu, “is everything can be quantified.” But how?

You have to translate “soft” factors like brand perception, trustworthiness, country of origin, risk of failure and security into tangible customer benefits. For example: Brand is intangible. But brand equity is tangible. You have to figure out what it’s worth to your customers and then be prepared to defend your price premium.

Or take risk: In cybersecurity, the cost of a breech is astronomical. If you can build probabilistic models showing the risk of failure, you put fear into the mind of your buyer that helps justify a price premium.

Your company’s intangible benefits can’t be treated as “tiebreakers” —  a soft benefit that may put you over the edge in a competitive deal. Says Hinterhuber: “By treating intangibles as ‘tiebreakers,’ you defeat the purpose. They have and should have a value in and of themselves.

And here are a few more quick bites from the rest of the SAMA team.

  • “Innovate or die.” Of the 30 companies listed on the Dow Jones Index when 3M joined on Aug. 9, 1976, only five (including 3M) remain there today.
  • When everyone else zigs, you should zag. In the wake of the financial crisis of 2007-2008, the companies that invested in research came out way ahead of those who hunkered down and cut costs.
  • Opportunities exist at the intersection of huge technology changes and significant demographic shifts. How do you translate this equation into your industry?
  • Customers are looking for strategic suppliers who will share risk with them.

Feel like you missed out? Don’t worry: We have several training opportunities scheduled for 2018, and if you register now for our 2019 conferences you will benefit from our super-early bird pricing.

Denise Freier joins SAMA from IBM

Bernard Quancard, CEO and President of SAMA, announced the addition of Denise Freier as the new Chief Operating Officer of SAMA during SAMA’s Annual Conference.  Denise joins SAMA after more than 40 years of executive and sales leadership at IBM, serving as one of the executive leaders for one of the largest global transformation initiatives in the history of IBM – an undertaking that reimagined how IBM engages with its customers.  Building on her career in sales, sales operations and strategic account management, she most recently led IBM’s CRM implementation, where she was accountable for the design, deployment and adoption by more than 40,000 global sales and sales managers. Bernard highlighted Denise’s experience, noting that Denise “has been on the front lines for the twin revolutions of customer-centricity and now digital transformation.”

SAMA is delighted that Denise will bring her experience as a SAM practitioner and her familiarity with the SAMA community as a thought-leading presenter and long-standing SAMA member.  Denise will begin to take over the day-to-day direction of SAMA and, after a short transition period as COO, will become the next SAMA CEO. Her addition allows Bernard to focus more on his passions of developing leading-edge thought leadership and expanding SAMA in Europe as SAMA’s president emeritus.

“We evaluated more than 200 tremendous candidates for this SAMA position,” said Jim Ford, Chairman of SAMA’s Board of Directors. “After a long search, the Board’s Executive Committee unanimously agreed that Denise’s unique experience was the best choice. We believe that she can take SAMA to the next level.  Denise joining SAMA is addition without subtraction — an ideal transition that frees Bernard to focus on what he wants to do most.”

Five Tactics and Challenges SAMs Face … And What to Do About Them

By Jeff Cochran

Partner, Master Facilitator

Shapiro Negotiations Institute

We’ve all been involved in at least one high-pressure sales scenario, whether we’re the buyer or seller. Take the ubiquitous example of purchasing a used car:

“If you are ready to buy it today, I can offer it for as low as $24,999.”

You need a new car, but you also recognize your need to be the one in the driver’s seat, as it were. Maybe you think the price is a little steep, and you want to bring it down. What do you do?

You stall.

“This was a little more than I was expecting to spend.  I need to talk it over with my wife first.”

We rely on a tactic because we don’t like to be pressured and we want a better deal. It’s a common negotiating tool — one that we all encounter regularly, but one not all of us knows how to handle.

As a strategic account manager, you run into these sorts of stall campaigns all the time. Does any of this sound familiar?

Instead of a wife, it’s a boss. Instead of a dealership, it’s a rival company. Clients have an arsenal of tactics they use to try to get the most out of their account manager relationships. Let’s explore some of the most common:

The “Higher Authority” tactic

This is the classic shrug-your-shoulders, “it’s out of my hands” ploy. This tactic says, “I want to do business with you, but what can I do? My hands are tied.” It effectively transfers responsibility to an anonymous third party. It’s also one of the most common tactics strategic account managers encounter in daily business. Often, it’s a ploy to drive the price lower.

The “Should Cost” ploy

This is a common tactic and one of the most frustrating to navigate. Say you go to the store for office supplies and buy a stapler. The stapler rings up for $19. “That’s ridiculous,” you say. “This should only cost $12.”

It’s not something we think to do, is it? But it’s a ploy that strategic account managers run into regularly. This length of tubing “should” cost $12,500. These engine parts “should” cost $125,000. These filters “should” cost 79 cents.

If you have dealt with Procurement, then you have likely also dealt with “Should Cost.” These  days, other departments will use this tactic as well. The question is, “What can we, as SAMs, do about it?”

The “Taking Business to the Competition” threat

Ah, yes. The “I would love to continue working with you but your competitor is offering a much lower price” hurdle can be frustrating to navigate. Sometimes this is real and there really are competitors trying to win the business offering a competitive product or solution. But just as often, they actually do want to stay — but this threat is low-risk, high-reward for them.

Critical turnover

In this business, you’re only as good as the relationships you forge. Say you have a great working relationship with a decision maker – someone so good at her job that she earned a promotion or took an offer elsewhere. Now, all of a sudden you have a new client contact. This newbie doesn’t know how to justify costs to management and begins to question your product/solution at every turn.

Bringing in “The Big Guns”

Most SAMs’ response to dealing with Procurement is the same as the rest of us waking up on Monday morning: “Ugggghh. ” However, it is important to not see it this way. Working with Procurement has its pros and cons. While it may be harder to develop a relationship, it still can happen. It just needs to be approached differently.

Now you’re probably saying, “Yes! I can relate to all of these, but what do I do?!!?!” What follows is what we recommend, based on all of our years of training strategic account managers.

Generally, we recommend you consider the following three-step approach against any tactic:

1: Recognize the tactic. The first step in remedying a situation is realizing that it’s occurring in the first place. Learn how to recognize stall tactics when you see them. Are they appealing to a “higher authority?” Are they strategically creating more turnover? Whether it is on purpose or not, the first step is to be aware of it.

2: Respond effectively. These tactics only work if you let them. Take steps to defuse the situation. A response should take the form of engagement with the customer. You could try any of these responses:

“What is this ‘should cost’ based on?”

“Could we set up a meeting with you and your director so we can go through it together?”

“Before you transition into your new role, can we grab lunch with your successor?”

3. Redirect the conversation. Finally, take control of the negotiation and redirect your conversation to a safe place. If you get defensive or try to justify the price of your product or solution, you’re putting the client in the driver’s seat. Maintain control and steer the conversation back to your product/solution’s benefits. Alternatively, you could say, e.g., “The cost of the stapler is $19; tell me why it shouldn’t be.” Don’t give the client an opportunity to steer the negotiation for you.

In this case, this works for both “higher authority” and “should cost.”

Here is what we recommend when dealing with critical turnover at your customer:

Maintain consistency. Don’t think about the switch as starting over, but pick up right where you left off. Better yet, prevent this from happening in the first place by forging relationships company-wide, including with supervisors — even the C-Suite. As a SAM, your job is to forge relationships high, wide, and deep. Don’t bank on just one internal champion. It’s far too risky.

Here is what we recommend when dealing with the threat of taking business to the competition:

The “I can find a lower price elsewhere” hurdle can be frustrating to navigate. The solution: plant a seed with a well-placed question. The answer is less important than the other side having to think about it. Try these, for example:

“If you leave, what will happen to the proprietary technology we’ve built together?”

“Are you equipped to handle the burden of startup costs?”

“What would happen if the other company doesn’t deliver on its commitments? The lowest price doesn’t always mean the lowest cost.

Don’t get defensive, but do let the client know about the dangers of leaving. They spent months, even years, cultivating a relationship with you. They know you can deliver a high-quality product on time. Your support has been put to the test and passed with flying colors. Are they willing to throw it all away to save a few pennies per unit?

Here is what we recommend when faced with “the big guns” (i.e., Procurement):

Don’t view your relationship with a procurement specialist as a hurdle. View him as a potential ally. You should dedicate time and energy to befriending these procurement specialists and communicating your company’s values and account plans. You can use procurement specialists to build a rapport with customers, even if they don’t end up bidding on your project or product.

To sum up:

SAMs regularly face hurdles from strategic customers, whether it’s hard-nosed negotiating tactics or general bureaucratic messiness. Knowing how to approach these challenges will improve your customer relationships, establish rapport and ultimately lead to more business. It takes some practice, but if you enter your engagements with a plan in mind, you’re sure to see significant improvements in your outcomes.

Jeff Cochran is a partner and award-winning Master Facilitator at Shapiro Negotiations Institute. Over the last 15 years Jeff has trained and coached organizations in over 25 countries in the areas of sales, negotiation and influencing. Before SNI, Jeff was an account manager for Tessco Technologies and a Peace Corps volunteer in Nepal. If you enjoyed this post, come see Jeff speak in person at the SAMA Annual Conference May 21-23 in Orlando, Fla.

 

 

Accelerating customer decision making through rigorous business assessments

By Nicolas Zimmerman

Editor-in-chief

SAMA

At SAMA we hear it all the time: Customers expect more than ever from their strategic suppliers. They expect insights, they expect a distinct point of view, and they expect best practices gleaned from other customers. Most of all, they expect their strategic suppliers to help them solve actual business problems.

National Instruments, a global provider of testing and measurement software and hardware platforms, traditionally has functioned as a products company, which meant responding to customer challenges by helping them to achieve technical success through its testing packages. Responding to its customers’ evolving expectations, NI is learning to help its customers achieve business success by developing in-house tools and capabilities for conducting rigorous business assessments for its customers. They use these engagements to create alignment at the customer and accelerate decision making.

NI’s mission is to take the customer on a journey — first to agree on a “future state” vision and then to gain organizational consensus on a course of action and free up resources to execute on that vision.

When NI’s customers get stuck on their status quo, Deb says, it usually can be attributed to one of two factors: Either they didn’t build a strong enough business case for change, or the company failed to build internal consensus to focus on a particular problem at the expense of all the other problems it could seek to solve.

Before the engagement

Says Deb: “If you do not validate that the customer is ready to change and ready to execute, you can do a lot of good work and end up with a report that just gathers dust.”

That is why NI makes sure it has explicit customer buy-in from the beginning in the form of a formal memorandum of understanding, sponsorship on the customer side from someone at VP-level of above and a nominal upfront payment for National Instruments’ services.

What the customer brings to the engagement:

  • Highly confidential data that normally would not be available to suppliers
  • Access to the right people in the customer organization

What National Instruments brings to the engagement:

  • Industry best practices — common problem statements from best-in-class organizations and the high-level testing strategies they’ve used to overcome them
  • Sophisticated financial modeling capabilities, which they use to build a compelling business case

Building Internal Consensus through Business and Technology of Assessments

Research from Harvard Business Review shows that, in the past two years, the average number of entities involved in making complicated solutions purchases has jumped from a little more than five to nearly seven. This helps why so many “slam dunk” projects fail to gain the requisite internal consensus to move forward.

“Our starting challenge is the customer status quo,” Deb says. “If we can’t challenge the customer enough to change from that, this whole flow doesn’t work. They may go through this process and decide, for all sorts of reasons, that they’re not going to move forward. So our whole idea with these business impact engagements is to help the customer through this journey.”

They do this by conducting comprehensive business and technical assessments of the customer organization, which consist of six steps:

  • Assess testing organization. Because NI’s customers run the gamut from consumer electronics and heavy manufacturing to medical technology, the company is in possession of copious data on what best-in-class testing looks like. Using this stockpile of data, NI assesses its customer’s testing capabilities across five competencies ranging from the highly technical to the highly business-oriented.
  • Identify areas for improvement. NI grades its customer in each of the five competencies as “average,” “above average” or “below average.” The goal isn’t necessarily to be above average across the board but to identify how important each area is to the company and to use that to guide decisions on where to invest in improvement. The goal is allocate resources most efficiently for maximum impact.
  • Co-develop a test TCO model. NI creates a baseline model to show the customer its current distribution of costs. The idea is to open the customer’s eyes to the “hidden cost of the status quo,” Deb says. While customers usually have a very strong sense of their hard costs (e.g., material costs), they are often shocked to see how much “invisible” costs (like hardware and software development) impact their bottom line.
  • Quantified high-impact recommendations. Using the baseline model, the company’s current testing capabilities and the metrics that are most important to them, NI forward projects ROI and payback period for addressing certain areas.
  • Proposed multi-year plan. NI makes a set of recommendations for improvements, highlights the metrics they believe will be affected, and tries to quantify the risk of doing nothing.
  • Help build internal consensus. Even more than highlighting the benefits of moving forward, NI sees its role as lowering the customer’s perceived risk of a given project. Says Deb: “You may have the world’s greatest ROI project, but if the customer perceives there is tremendous risk associated, they will back off.”

NI has learned from its past mistakes and feels like it has fine-tuned a process for conducting its customer business assessments. A rough outline of NI’s process follows:

STEP 1: Business alignment at the VP level or above. Discussions are held with the leadership sponsor regarding alignment with the company’s business needs and signing a Memorandum of Understanding (MOU).This ensures NI will get access to the right people at the customer and the necessary data during the information-gathering phase. This also encourages commitment to execution on the back end

STEP 2: Kickoff engagement and onsite interviews. NI uses these interviews to understand the customer’s processes, how it uses its assets and how it makes investment decisions. It’s during this stage that NI makes sure its financial models are tailored to the client’s specific needs and goals.

Interviews last no more than an hour and are done with the fewest number of people possible. NI focuses on three levels of customer stakeholders: engineers and other “boots on the ground,” middle management and senior management responsible for mapping long-term strategy. NI pays special attention to the people up- and downstream from these key stakeholders, as it’s usually at these “handoff” points that Deb and his team see the most value gained or lost. “Most of the value creation we find is at these interfaces,” he says. “Within these blocks, most companies do a decent job. It’s in these ‘handoffs’ and interfaces where value is lost.”

STEP 3: Process maps and test TCO models creation. National Instruments develops process maps, showing the decision flow based on the interview and follow-up conversations, and builds factory and service center TCO models that identify needed data for input.

STEP 4: Acquire the right customer data needed to build out NI’s projection models. This is the most difficult step, but Deb says it may also be the most important. You can show a customer case studies all day, but unless you’re using the customer’s own data you are going to struggle to create the urgency needed to make the case for change.

Deb emphasizes that this stage of the engagement must be beneficial for both sides. In exchange for furnishing NI with the data it needs to populate its models, NI provides its customers with data insights. While some of the information the customer provides NI will be readily available, much of it is data the customer has never captured and, in many cases, doesn’t even know how to capture. Here, NI works with its customers to think through its knowledge gaps and how to build proxies to capture missing data.

STEP 5: Report preparation and executive debrief presentation. A formal report is prepared and the highlights presented to executives in a debriefing presentation, followed by discussion on follow-up execution. The deliverables include a report on the highlights of the interviews, a TCO financial model including ROI, a formal business report documenting insight and an executive-level summary.

But the business and technical assessments are just the beginning. While they free up budget and resources to start investing, customers still need help executing all the way through the end. If you over-promise and under-deliver, it may be the last co-creative engagement you have with this customer. But if you’re there until the end ensuring a successful execution, you will likely find yourself with a long-term strategic partner.
For a more in-depth treatment of NI’s award-winning process for conducting customer business assessments, see the forthcoming issue Velocity magazine.

Key insights from the floor at SAMA’s Pan-European Conference

By Bernard Quancard

President & CEO

SAMA

Plus ça change, plus c’est la même chose.

This French proverb (“The more things change, the more they stay the same”) has been perhaps overused, but it is interesting to note how much it applies to the best practices of strategic customer management. One thing I love about SAMA’s conferences, training events and leadership symposia is the dual focus on emerging trends impacting strategic account management and “evergreen” subjects that never lose their currency with strategic customer-centric organizations.

With that in mind, I offer you a few critical observations gleaned by my senior team and me during two days with the SAMA community at the SAMA Pan-European Conference 12-14 March in Berlin. These are in no particular order, and, like SAMA’s conferences, they contain a mix of old and new wisdom — and, hopefully, a little something for everyone.

  • Customers want their strategic suppliers to be more proactive in proposing solutions that address their big strategic challenges. In his opening keynote, Arcadis CEO Peter Oosterveer talked about personally visiting each of his company’s major strategic accounts when he came aboard — both to telegraph his personal commitment to his customers and to listen to what they had to say about doing business with Arcadis. In his keynote, he said he came away from those meetings with two main realizations: (1) Customers do not care one bit about their suppliers’ internal issues and organizational challenges; they just want them to follow through on their commitments and help them solve their own business challenges. And even more critically, (2) customers are eager for their strategic suppliers to more aggressively and proactively bring them solutions that create actual business value. If you, as a SAM, are waiting around for your customer to approach you with a problem, you risk missing out on opportunities to co-create value.
  • Despite having generally strong solutions, most companies report a sad inability to tell their story well enough to capture the imagination and spend of their customers or to accelerate the rate of the sales cycle.  The real issue is that companies’ messages are not structured in a way that the human brain wants and needs to consume information.  The ultimate standard for all communication is that it can be repeated. This makes sense when you consider that complex customer purchasing decisions are made by an average of 6.8 people from a range of functional areas, roles and geographies. This means a salesperson’s key customer contact must then retell the sales story to a network of other stakeholders in a concise and convincing way.  The majority of the time they can’t, resulting in long delays in getting a decision — or, worse, a deal that is dead on arrival due to the story’s lack of compelling clarity and clear benefit.
  • SAMs must learn how Procurement works and how they’re measured. Presenter David Atkinson of Four Pillars estimates that only 10 percent of sellers truly understand how to effectively work with Procurement. What makes this such a head-scratcher, according to Atkinson, is that Procurement’s toolbox hasn’t changed much over the years. Atkinson proposes that strategic suppliers should incorporate Procurement metrics into their account plans. If SAMs can communicate their value in a way that aligns with how those in Procurement are measured, then they will be better positioned to make their Procurement counterparts look good, which will help steer the conversation away from price and toward value.
  • When selling to the C-Suite, your messaging must be calibrated to each relevant stakeholder. Jacques Sciammas, who served in the C-suite at Charles Schwab, Berkshire and BankBoston, reminds us that every executive is measured differently and sees business decisions through his or her own prism. You can’t come in with a one-size-fits all message and expect to get the traction you need to be relevant to and resonate with each individual’s vision and measurements.
  • Most B2B companies are not truly customer-centric. According to Gallup, companies’ lack of customer-centricity is leading to a double whammy of anemic growth and customers’ migration to disruptors. And while SAMs are the primary keys to success of a SAM initiative, they can only be successful if they’re backed up by a strategic customer-centric organization. Based on extensive polling and interviews, Gallup found that fewer than 30 percent of companies are fully engaged in a true customer-centric approach. And where does the customer-centric approach need to originate? I would point you to my first takeaway: Just think about the signal it sends to customers when a strategic supplier’s chief executive sits down with the sole purpose of listening to his customer. If suppliers aren’t set up to enable the SAM, companies risk failing to attract and retain top talent and ultimately struggle to grow organically and to reap the benefits of well-intentioned leadership initiatives.
  • Suppliers are all at risk of having strategic customers leave you.  These are the top three reasons customers make a switch: (1) supplier is too difficult to work with, (2) supplier takes the relationship for granted, and (3) supplier doesn’t do an effective job monetizing its value. While many suppliers think they are engaged in strategic account management, many of them are stuck on the treadmill of managing deals. As a strategic supplier, you can’t give your customers any excuse to start weighing their options.
  • The importance of creating a coaching culture at your company can not be overstated. As I wrote above, the SAM is the fulcrum of the entire strategic account management effort, so attracting and retaining the best talent is a business imperative. Psychometric tests widely available today can help answer the questions every SAM leader should be asking: Does a potential SAM candidate have the requisite inherent makeup to become a great SAM? As a SAM coach, how do I know what areas to focus on developing for each individual on my team of SAMs to improve their long-term efficacy beyond just “deal coaching”? Other questions SAM leaders need to ask themselves: Should I coach my SAMs myself or hire outside coaches? (Either way works.) Should my coaches be certified? (Absolutely, yes.) And should I track and measure an individual’s growth and the ROI of the coaching effort? (Most definitely.)

The last thing I want to leave you with is from a conversation I had in Berlin with a very experienced SAM. When I asked him why he had taken the time out of his incredibly busy schedule to attend the Pan-European Conference, this is what he said: “I just got assigned to a new customer after having successfully developed my current customers for more than five years. I decided it was time to remind myself of the best and new SAM practices, versus relying on what I remember working in the past.”

Do you need to brush up on what the best are doing with their most strategic customers? Join SAMA for our 2018 Annual Conference May 21-23 in Orlando, Fla. Click her for more details.