The Key to Selling in the C Suite

Transcription

1 By Michael J. Nick

2 1 Executive Summary Imagine being moved to a Country where you don t speak the language. You are expected to open the market and sell your products and services. What do you do? In this paper we explore the language of the C Suite. You must learn the language to be successful.

3 2 Contents Executive Summary... 1 Contents... 2 Introduction... 3 Assumptions... 4 Communicating in the C Suite... 5 C Suite Metrics... 5 Value Calculations... 7 Recap... 9 Conclusion About the Author... 11

4 3 Introduction Selling today is very different than selling a year ago, five years ago and most certainly twenty years ago. Training our sales force in the past was about building a relationship, learning a process and controlling the sale. I know major corporations that taught how to read and purchase wine off of a menu. There were several training sessions on etiquette. Training companies like Solution Selling or Sandler taught process. Steps you take in the sale and thee results you should expect. With the rise in SFA (Sales force Automation) process became evenn more important. You were expected to document the results as you completed steps in the process. In the past sales professionals touted the value of their products and services using traditional measures: Return on Investment (ROI), Internal Rate of Return (IRR), or perhaps Net Present Value (NPV). Today the playing field has changed again. Sales professionalss need to communicate at the C level if they want to be successful and close more deals. This paper breaks down this concept of selling to the C suite and gives you insight intoo not only what is important to C level executives, but how to articulate and communicate your value proposition at a different level to whichh they relate. If you are a B2B sales professional andd have a complex sale, then please read on.

5 4 Assumptions First, I want to make several assumptions. Assumption #1: My first assumption is that sales professionals are able to qualify a prospect. The questions you use to determine if your prospect is willing and capable of buying your products and services are critical to any sale and may be used in the C Suite metric calculations later. I find it is not enough for a prospect to meet your marketing criteria. You also need to determine that your product meets their strategic objectives as well. This becomes critical the longer you pursue the opportunity. For example it is important to know if your prospect is interested in expanding their operations, or reducing their operating costs or perhaps contracting a division. Is the prospect interested in reducing debt, or investing in new assets? Will the implementation of your products affect a prospects inventory, DSO s or overhead? Regardless of what you are selling in the B2B world, certainly the strategic initiatives will inevitably affect any strategic buying decision. If a sales professional fails to gather this information up front during the qualification and discovery stages they could be in for a long sales cycle and end up losing because of their lack of knowledge in a corporation s strategic goals. Assumption #2: My next assumption is that a sales professional is able to conduct a discovery exercise with a prospect to identify their issues, pains and goals. This doesn t have to be complex. Without sounding to mercenary, I of course would suggest you read ROI Selling (Kaplan 2004) and adopt the techniques I have outlined. However, any form of gathering the information will work just fine. The key is taking the agreed upon issue, pain or goal to the next level: That next level is to calculate the current cost of status quo. In ROI Selling I make the point that it is critical for a prospect to not only agree they are experiencing a certain pain, but then

6 5 need to understand and agree on the cost of that pain. Why? Because history has shown us that people rarely make buying decisions unless they feel pain. In addition to understanding current cost of status quo, I strongly suggest you implement a plan to extrapolate that pain over three to five years. How? This is easily done by asking the prospect one additional question: What is their expectation for growth or contraction over the next three to five years? Next multiply that times the rate of inflation, and you have a pretty good idea as to the cost. Communicating in the C Suite Imagine you are transferred to a country where you don t speak their language. Your mission is to build the sales program. For the first year you will be required to sell directly to the end user. What do you do? You don t speak the language, you cannot demonstrate your products or communicate your value, what do you do? It seems far fetched that you would be put into this position. However, you have been. Strategic buying decisions have moved from the shop floor to the Board Room. In the Board Room they speak a different language. This language is based on economic impact and C Suite metrics. Traditional approaches like relationship selling, or show up and throw up selling are not going to be effective in the C Suite. If you are unable to perform discovery, articulate your value and demonstrate your solutions, it would be nearly impossible to be successful selling in the C suite. C Suite Metrics Let s begin with the prospect s Chief Financial Officer (CFO). A CFO is the originator of much of the information that is used to make most buying decisions in every organization. The CFO keeps all of this information in separate buckets to be used for analysis of among other things,

7 6 what to buy and when to buy. Here is a revelation for you ROI is no longer the key metric the CFO really cares about in the buying process. The basic problem with ROI is that it is typically calculated (estimated) before implementation and rarely calculated (proven) after delivery. Here are some of their metrics the CFO does care about. They include: Return on Asset (ROA) Return on Equity (ROE) Earnings Operating costs Net Profit, Gross Profit Payroll as a percentage of sales Sales per employee Debt to Equity EBITA margin Profit per employee Advertising as % of sales Days Sales Outstanding (DSO). The calculations for these metrics are fairly simple. I explain each in my book, The Key to the C Suite (AMACOM 2011). The key to using these metrics is that a sales professional can correlate the value provided by his product by identifying and understanding the prospect s current situation. Sound familiar? It should! I just mentioned it above when I discussed capturing current cost of status quo. This trend will continue here as I add on to my original statement. People rarely make a change unless they feel pain and believe the change will help them. The key is to demonstrate the prospect s C level executives how the value provided by the proposed product or service impacts one or more of their closely monitored C Suite metrics.

8 7 Value Calculations A significant part of successful selling in today s environment is the need for a sales professional to understand his or her product s value proposition. After you have identified your prospects issue, pain or goal, and helped them capture current and on going costs; a successful sales professional will prove they can resolve the prospect s problem by implementing their solution. This resolution must reduce the cost of the problem, avoid the cost of the problem, or help increase a prospect s revenue. These measurable results are critical to calculating the economic impact on a prospect s C Suite metrics. The question remains, how does a sales professional prove the value? The easiest way of course is to demonstrate the resolution. If you sell software, demonstrate the product as it relates directly to the issues identified, if you sell cars, let your prospect take a test drive. The point is if it is possible to demonstrate the product, and you are capable of a demonstration, it is generally the best way to prove value. Often times it is not possible to demonstrate your value effectively, then, a sales professional must use secondary methods to prove value. I would suggest customer reference calls and visits, case studies, expert analysis from a reputable research firm like Gartner or Aberdeen. Once a sales professional can prove their value the next step is to estimate and measure what that value is worth to the prospect, especially, the C level executives. For example: There are many ways to generate revenue. One of my favorite is to reduce the number of customers that attrite. If your customer base is paying an annual maintenance fee and they stop, you are losing revenue. If you can prevent the loss, then

9 8 you increase your bottom line revenue by recapturing otherwise lost payments (i.e. revenue). One of my customers provides a service that helps reduce customer attrition. They can prove this claim through customer case studies and testimonials, references and of course math. Their value proposition is all about recapturing the revenue their prospects lose through customer attrition. Here is how it works. Add up the total revenue your maintenance customers generate and divide it by the total number of customers who pay the fees. This will give you an average value per maintenance customer. Multiple the average value times the average number of customers lost annually and this will tell you your annual loss of revenue. Next our client claims they can reduce this number of lost customers by 20% annually. The reduction in lost revenue is the actual value they are delivering. Here is the math. Annual revenue: $20,000,000 Number of total customers generating this revenue: 800 Avg. value per customer: $20M / 800 = $ Average loss per year: 5% Number lost customers per year: 800 * 5% = 40 Annual cost of customer attrition: 40 * $25,000 = $1,000,000 Estimated reduction in attrition: 20% Value of reduction (Revenue Increase) $1,000,000 * 20% = $200,000 In this example, our client has increased the revenue of their customer by $200,000. When discussing this value equation with the C level executive it is important to note there is more going on than just a simple increase in revenue and reduction in customer attrition.

10 9 The discussion you should be having is about cash flow, profitt improvements, and return on asset and equity. Be sure you have taken the time to read the prospect financials and get a better understanding of what is important to the C Suite. Are they trying to raise cash flow? Are they concerned about profit or revenue per employee? Whatever the issues the prospect is facing will be revealed in the paperwork they file with thee SEC. If they are private, ask the question, what keeps you up at night? Increase Revenue Revenue Growth Cash flow Earnings increased Operating cost reductions Lowers payroll as % of total revenue Increase revenue per employee Increases shareholder value Recap Let s recap what we have covered so far. First, I assume you are able to qualify, identify issues, calculate current cost and extrapolate it over three to five years. Next, I have defined the C Suite metrics and given you the homework of finding their calculations. Finally, I have reviewed with you the importance of being able to definee and calculate your value to your prospects and your existing customers. This is like building a house we have laid the foundation, built the structure, put on the roof, built out the interior, and next we have to pull all the pieces together and sell it. To do this you absolutely need the pieces I have identified above.

11 10 Conclusion Most sales training programs promote and teach top down selling. By definition this means they teach you to start a sale in the C Suite. What these training programs lack are the tools to make you successful communicating at this level. They assume you will get passed down the chain of command. Here is the basic problem. Sales professionals spend too much time with people (prospects) that can only say No. The C Suite can say yes, and that is what you are looking for. Selling in the C Suite is more about the economic impact your product or service has on their corporate strategy for growth and their financials, and less about the ROI you bring to the table. To take advantage of these techniques it is crucial to first understand the value of your deliverables as they relate to your prospects strategic objectives and second, be able to articulate that value. C level executives are tasked with setting the tone and direction of an organization. They do this through vision, planning, and goal execution. Regardless of your product or service, in these most difficult economic times every purchase made must align with their vision, plan and goal, and the effect of the expenditure against the C Suite metrics. Your ability to identify pain, capture cost, articulate your value and measure the effect on the C Suite metrics will ensure you are at the top of the purchase list when the time comes to execute their strategic plan.

12 11 About the Author Michael Nick is one of the leading experts in sales tool development, training and enablement. Founder of the ROI Selling program, Michael has worked with companies like, Rockwell Automation, Fiserv, Autodesk, Hewlett Packard, Emerson, Compuware, Ingersoll Rand, Bomgar, and Microsoft Great Plains. With three bestselling books in ROI Selling, Why Johnny Can t Sell and his latest Amazon top 10 Business book, The Key to the C Suite, Michael provides guidance and insight into: Developing quality discovery documents Establishing status quo Estimating value Creating a Business Case Providing TCO analysis Tools to help your prospects improve revenue, reduce cost and avoid many costly mistakes in the sales process With implementations throughout the world in multiple languages and currencies, Michael s experience can help you gain greater insight into why your customer s buy, buy now and buy from you. His proven process that includes a Value Inventory Workshop, Custom tool design and delivery, and a comprehensive implementation process ensure ROI Selling success! Michael is available for keynote speeches, ½ day or full day workshops, Seminars and consulting engagements. PH Website: Personal Twitter: Corporate Social Media Contact Facebook: