Archive for the ‘Account Management’


Battling the 57%: From Sex to Romance – The Ultimate Flank

Don’t be put off by the title. This might not be what you expect.  And sometimes that’s the point.

There is a lot of nuance behind the 57% statistic – the CEB research that says buyers are 57% through their purchase cycle before they contact a supplier – and there are things you should do before, during, and after, the 57% point, if indeed this applies to your business.  (I promise I will get to the romance shortly.)

I think it is important to reflect on what the 57% really means and the limit of its impact. It is getting a little out of control. (I have organized a webinar on March 25 to dispute/clarify/de-bunk/resolve a few of the myths.)  What is obvious is that you want to be in a position where you can educate the customer before they get to the 57% point. But let’s say that your buyer has indeed progressed 57% through their buying process before they contact you.  What do you do?

If the buyer is 57% through the cycle, then they will most likely have a preference for someone. If it is you then you might have a short sales cycle. Perhaps their search has been truly unbiased and you are now part of a short-list. But if their preference is for a competitor, you will need to change the criteria they have used to get this far.  Redefining customers’ purchase criteria is one of the most powerful ways you can wrest leadership from a competitor.  In the TAS methodology we refer to this a Flanking Strategy – and that gets me to a story I read in the December 2013 issue of Harvard Business Review.

From Sex to Romance – The Ultimate Flank.

Pfizer launched Viagra (the erectile dysfunction drug) in April 1998, with a record 600,000 prescriptions in that month alone at a price of $10 per dose. Pfizer created an entirely new market on the basis of one key criterion of purchase: efficacy. The drug got the job done! By 2001 annual sales had reached $1.5 billion.

Not long after that Cialis entered the market. Whereas Viagra was effective for four to five hours, Cialis lasted up to 36 hours, making it potentially much more convenient for customers to use.

At the time, the key criteria that physicians considered when prescribing were efficacy and safety with a combined relative importance of 70%. Duration had a relative importance of 10%.

The marketing team behind Cialis decided to emphasize the benefits of duration—being able to choose a time for intimacy in a 36-hour window, and set the price higher than Viagra to underscore its superiority.  The new criterion of purchase – marketed as romance and intimacy rather than sex – caught on. A BusinessWeek article reporting on an early positioning study stated, “Viagra users who had been informed of the attributes of both drugs were given a stack of objects and asked to sort them into two groups, one for Viagra and the other for Cialis. Red lace teddies, stiletto-heeled shoes, and champagne glasses were assigned to Viagra, while fluffy bathrobes and down pillows belonged to Cialis. In 2012 Cialis passed Viagra’s $1.9 billion in annual sales, with duration supplanting efficacy as the key criterion of purchase.

Flanking – redefining customers’ purchase criteria – is one of the most powerful ways you can wrest leadership from a competitor; you will undoubtedly have a powerful competitor if you truly only enter the deal 57% of the way through the process. To flank successfully you need something to flank to (i.e. your competitive UBV that the customer cares about) and someone to flank with (i.e. a supporter with the buyer’s organization who will help you navigate the last 43%).

I will discuss this and ways to avoid the 57% trap altogether on the webinar. I would love if you can join the conversation.

 

 

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Realtime (Honest) Feedback on your Sales Proposals?

As you may know I published my most recent book – Account Planning in Salesforce - earlier this year. I am always nervous when I am launching a book.  I put a lot of myself into it and, even with a topic like Account Planning, I find that my writing always seems to become infused with my values, my opinions and my beliefs.  I really just don’t know any other way and I wanted the readers to get value from the book. I want them to feel that the time they spent reading it was worthwhile.

So, as you can imagine, when Account Planning in Salesforce went to #1 Bestseller in its segment on Amazon I was really pleased.  And the reviews were pretty good too – even the ones from people I don’t know!

But what I did not realize was that as people read the book on their Kindle devices, they were highlighting the passages of text that resonated with them. Meanwhile, the elves in the background at Amazon are continually collating and analyzing the highlighted areas and can provide a summary of what people care about. (See below the top 5 highlighted passages – I am really thrilled with the one that came in at #1.)

These insights are hugely valuable to me and I plan to use what I have learned from Amazon’s analysis in a webinar I am delivering on Account Planning in Salesforce for 2014 later this month.

But also this whole process got me thinking,  what if …

Wouldn’t it be great if you could do this for all sales proposals, PowerPoint presentations or marketing collateral?  It would be like having someone watch your customers as they read through your documents; highlighting, underlining, adding ? and X marks, circling paragraphs of interest or drawing lines through parts that they disagreed with.  Then you’d really know what they really think. (Scary? Maybe!)

At The TAS Group, we do a lot of micro-analysis on the effectiveness of our digital marketing, and of course that is really helpful in making sure that we are presenting the messages and content that add most value to our customers.  But we can’t micro-analyze on a personal emotional level … but thoughts are percolating here …

In the meantime, here are the Top 5 Most Highlighted passages from Account Planning in Salesforce.  (If you are interested, in an upcoming webinar, I will be discussing these comments and other issues that I think we should all be caring about as we plan for 2014).

Top 5 Most Highlighted

1

The impact on a customer of a poor buying decision is usually greater than the impact on a sales person of a lost deal. 

2

You need to be a specialist and expert in the business, strategy and market of those few customers with whom you are working. 

3

Research for Insight. Integrate for Velocity. Focus for Impact. 

4

Remember, customers don’t need you to learn about your product: they can get all of the information they need from the Internet. They don’t need you to recommend solutions: they can get that from their peers. Your opportunity is to help them shape their needs, identify or suggest initiatives, and then to figure out how you can apply your solutions to those initiatives. If you don’t know how to do that you should look for outside assistance. 

5

The cost of new customer acquisition is 500% that of customer retention. Increasing customer retention by 2% equates to decreasing costs by 10%. Reducing customer defections by 5% can increase profitability by up to 125% (depending on industry). (Source: Leading on the Edge of Chaos, Emmet C. Murphy and Mark A. Murphy)

If there were particular parts of the book that you enjoyed I’d love to hear from you.  If you have not read it you can get an extract here.

 

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The Role of Account Based Marketing in Account Planning

You may be aware that I recently published my latest book called Account Planning in Salesforce.  (You can get a free extract here.) I was driven to write the book by the need for sales professionals and account teams to maximize their revenue from their existing large accounts and also to build a framework for targeting new customers in a structured more customer-solution-centric way.  It turns out that about half of sellers do not know how to maximize revenue from their existing accounts. In Account Planning in Salesforce I spent a little time presenting how I think account planning relates to marketing.  I wrote …

As 2013 unfolds, my prediction is that Account Planning will eclipse general marketing as a source of opportunities for revenue growth among winning sales professionals. The ubiquity of the Internet, your customer’s ability to find out about your products and services as quickly as you can yourself, the impact on social networks as a driver of influence and preference, the pervasiveness of mobile devices providing always-on communication, and the growing barriers to customer acquisition all mean that you can no longer be a generalist in your market. You need to be a specialist and expert in the business, strategy and market of those few customers with whom you are working.

 I viewed a webinar recently hosted by the excellent Megan Heuer from the equally excellent SiriusDecisions research company.  Megan is a smart lady and she and I have bantered in the past about the relative value of Sales and Marketing, concluding of course that they should be two sides of the same coin, each adding a different perspective, both of which added value.

Megan and Sirius are leading a charge for Account Based Marketing, and I couldn’t be more delighted to see this account based approach gathering momentum where sales and marketing activity can be truly confluent and deliver synergistic special value.  I am passionate about the value account planning can bring and I feel that this is a domain that has been under-served. (Hence the multiple hours in writing the book and making my contribution to the design of Dealmaker Smart Account Manager.)  Account Planning is an organizational discipline and Account Based Marketing has a critical role to play. In fact ABM borders on business development, and is where the lines can get a little fuzzy.  It means that Marketing needs to stay very close to selling and the account strategy – and in fairness that is not as common as we’d like to see. Applying marketing strategy to sales plans, and influencing the development of the plans can be very effective – but understanding sales is critical.

There is a healthy overlap between the principles of Account Planning and Account Based Marketing.  Indeed in the webinar to which I refer it was said that ABM sits on a foundation of solid Account Planning and of course that is true. As I listened to the webinar I jotted down some notes that I thought would be worth sharing and I have used those to structure this blog post. I have supplemented those notes with other thoughts as they came to me, learnings from our customers and a perspective gained from the research I did while writing Account Planning in Salesforce. I say that so that you know that it is likely that any shortfalls are probably mine.  But I do want to give full credit to SiriusDecisions for their ABM leadership. Seems only fair.

 

Why ABM Might Fail

ABM, like Account Planning, can be a tremendously reward endeavor, but there can be things that get in the way that you should be aware of:

  • Lack of account insights – If you don’t know anything about the account, the people in the account, or their business needs, it is hard to develop an effective account strategy.
  • Lack of alignment to sales goals – Marketing needs to know what sales need to accomplish in order to construct the strategies and activities to deliver on those goals.
  • Overly broad deployment - When marketing tries to take on too broad a role in a specific account or too many ‘specific’ accounts at the same time, it typically does not work.  The very nature of ABM is that is has to be account specific and as I said in Account Planning in Salesforce, you need to Focus for Impact.
  • Unreasonable expectations – According to Sirius Decisions, for large accounts, marketing should not be expected to source more than 10% of the sales pipeline (in contrast with 30% of pipeline from general marketing).  As sales has a small number of accounts that they are responsible for, so they should be really on top of it in each case and should be developing their own opportunities. (I’m not sure I agree with the 10% number. I think it can be much higher – but this might depend on how you allocate opportunity credit.)
  • Lack of resources - ABM requires dedicated support (Should not be a part time job).  This is particularly true if Account Planning is critical to your company.  SiriusDecisions would suggest that ideally, if you have the resources, you should have account marketing managers as part of the account team.  In Account Planning in Salesforce I talk about one of the roles of marketing as developing Marketing OSAs (Objectives, Strategies, and Actions), a critical part of the account planning and execution process. Someone from Marketing needs to have the aptitude and bandwidth to do this properly if they are going to have a role.
  • Undifferentiated tactic execution – attempting to say the same things to targeted large accounts as you do to the general market will not work.  Using generic messages will not work. We know this is true.  In fact, if you are positioning yourself as a strategic partner for an account, and they perceive that they are getting the same messages as everyone else, it will in fact damage the quality of relationship.

 

What needs to change?

If you are really committed to an account based go-to-market model (at least for a segment of your market) then you need to change a few things in your approach.

  • The data and insights that you use to develop your marketing tactics must be transformed from the general to the specific.  They must be assessed only in relation to the account and industry, and in the context of each of the people in the account that you are trying to influence.
  • Your marketing planning must evolve from theoretical modeling with Sales and Marketing in separate silos into account-focused fact-based analysis account, with Sales and Marketing operating in tandem.
  • Effective account planning is about getting the right Demand Management balance, and you should weave ABM into that context, eschewing the singular focus on short-term opportunities for a more strategic approach that balances the longer-term view with the urgent need to fill your pipeline.  Sales needs to stop measuring Marketing purely on the number of leads, but instead hold marketing accountable to account-level SLAs for very specific marketing objectives that are linked to very defined opportunity goals.
  • Account Management, in most companies, has always been owned by Sales (or some off-shoot).  To maximize the impact that ABM can have on your account you need to consider sharing ownership of the account management activity with Marketing.  This should deliver to Sales complete visibility into what ‘marketing’ is being delivered to the account and continuous nurturing activity to help maximize the return from the account.

 

When does ABM work?

Marketing is usually involved in general corporate marketing, general event marketing, general field marketing. Note! All the words start with ‘general’.  ABM can build on all of these and can take advantage of existing marketing services that are horizontal, but ABM is about getting vertical and customized for the account.  It should feel different for the customer.  The longer-term goal is to create assets that feel customized to the customer but are in fact configured best practices.  If well designed, you should be able to re-purpose these assets in several accounts. This is obviously easier when these accounts are in the same industry.

As you define relationship development strategies, specific messaging strategies, account-specific awareness building, account specific references or case studies, applicable win strategies, you should find that you will be able to take a similar approach in multiple accounts but with each configured to the specifics of the individual account.  These activities should result in relationship acceleration, your company being seen as different kind of partner than your generic marketing would deliver. You are looking for greater access to the key individuals in the targeted accounts and momentum in opportunity creation and advancement.

But you haven’t a hope of leveraging ABM unless you can build credibility and trust between sales and marketing.  You should ask yourself three critical questions:

  1. Is sales open to new kinds of help?
  2. Is marketing invited to join planning and execution?
  3. How can marketing be aligned to best sources of growth

As ever, trust and collaboration are critical. Marketing needs to do the hard work to contribute to insights and planning for the account that add real value.  Constant communication is important as the fulcrum around which the iterative process between Sales and Marketing maintain alignment.

But remember that ABM is not necessarily for everyone. Sales teams vary greatly in their approach to their accounts.  The quality of the relationship in each account is different. Some sellers welcome Marketing’s involvement in their accounts and accounts teams may be hungry for help and willing to engage. In other situations, Marketing may feel less appreciated.  The relationship between Sales and Marketing is not always cozy or cordial.  ABM requires work from both and in some cases the sales folks may not be prepared to put in the effort. All these elements factor into which accounts might be good candidates for an ABM initiative.

Don’t forget that it is exceedingly rare for marketing to be able to add real value in terms of account research for existing large accounts in which you are truly active.  If you have account teams that are properly engaged in the accounts, they will typically know much more about that account than any desk-based research from Marketing can provide. So looking beyond basic research, you should consider perhaps, as an example, relationship development strategies to craft approaches that might help engage key individuals.  That may require executive sponsorship programs, understanding the profiles and backgrounds of the individuals and building programs that might interest them.  Most account teams know what is going on within the account, but can generally benefit from ‘external’ assistance to help with getting to particular individuals. Marketing should be able to constantly feed the account team with examples, references, competitive positioning etc.

 

How to apply ABM

SiriusDecisions sets out a list of what you need to know to build a plan, categorized into three categories:

Required

  • Account industry
  • Account Buying centers
  • Wallet share (by buying center)
  • Sales goals  (by buying center)
  • Current opportunity status
  • Contacts  (by buying center)

Recommended

  • Key initiatives  (by buying center)
  • Relationship status  (by buying center)
  • Relationship map  (by buying center)

Best practice

  • Growth trend
  • Competitive environment
  • Engagement history

I think this is a good list to get started with and in Account Planning in Salesforce I expand on each of these in greater detail. You might begin by using this list to ensure that  Marketing is aligned to the account objectives so that they can build visibility and credibility; and develop relationship strategies with key executives, decision makers and influencers. And it doesn’t stop just at the account.  At the end of the day the mission of account planning and management is to build long-term business relationships in a complex account that enable you to create, develop, pursue, and win business that delivers mutual value.  Marketing will also need to align to account objectives for opportunity development specific to align your solutions to the customer’s business needs, and to help with competitive positioning and strategy. They should be the engine that provides the relevant assets.  They can help with proof points through reference cases and other external validation of your company’s unique business value, all dome of course in the context of the needs of the customer. For example, there may be marketing initiatives to:

  1. Move a targeted account from disinterest or lack of awareness to engagement and awareness of your company’s solutions in the context of their industry to meet common business objectives
  2. Create campaigns leading to opportunities to position your company as preferred provider of choice
  3. After sale, continue to nurture to strengthen account position for broad and deep penetration, achieving strategic relevance.

 

Risks to Consider and Critical Success Factors

ABM is a critical component of account planning but it doesn’t always work. Here are some of the most common pitfalls:

  1. It is not built on a foundation of solid account planning
  2. Marketing is focused on or measure by number or value of leads
  3. Marketing tries to apply its existing tactics to ABM and look to see where those tactics might be used to ABM, rather than considering the objectives for the individual account and then determining the correct strategy.
  4. Sales is not open to collaborating with Marketing and inviting Marketing into their accounts.

So, what do you need to succeed?

  1. Sales (or part of the sales organization) must be focused on a defined set of accounts
  2. Sales is working on account plans
  3. Sales and Marketing can work well together to identify objectives and then develop the right strategies and actions together to make it work
  4. Sales and Marketing need to be aligned to the concept that it is not just about demand gen.  It is often more important in certain accounts to be focused on creating awareness and influence than looking just to find the short-term opportunities.

 

Finally …

This might all seem a little hard, and you might well ask yourself “Do I really need a different approach when selling to big companies just because they are big?” or “Does Marketing really need to change?” What’s the matter with just using the very same methods that have worked in smaller companies or in the market in general? Are there really considerations that are so dramatically different that they call into question the basic techniques that succeed elsewhere?

The answer is both “Yes” and “No.” Yes, you need a different approach, but no, you do not need to throw out techniques that succeed elsewhere. Instead you need to build upon them, extending the basic concepts, and augmenting the methodology to yield a model more suitable to the size of the task at hand. The factor that drives the need for this reinforced ‘industrial-strength’ process can be captured in one word: scale. The fact is that a large company is usually a collection of small, interrelated commercial activities, organized by function or geography, specialism or purpose, competitive forces or market dynamics. When approaching any such ecosystem, a deliberate design is demanded. Optimal outcomes are rarely achieved without such diligent efforts.

 

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Account Planning for everyone (who uses Salesforce)

Regular readers will know that I am passionate about combining sales methodology with technology to make life easier for sales people.  One of the areas where I have seen lots of wasted time has been in Account Planning and Management.  So, I decided to do something about it and I’m excited to  let you know that my new book Account Planning in Salesforce is now available at your favorite online store. You can get an extract here, and buy the book here.  It should be less than $10 (I’m trying to make it very affordable) and proceeds go to Peter Gabriel’s WITNESS charity.

As I hope you would have come to expect, this is not a theoretical book – but is practical and marries methodology with technology to make effective account planning accessible to all sales professionals who care about taking care of their customer while they go about selling to them.  But this post is not meant to be a promo for the book.  I was very fortunate to have a number of people who are a lot smarter than me review the book while it was a work in progress, and I want to share some of their comments here – as I think they point to the many challenges that sellers face when seeking to maximize revenue from their major customers.

This is Account Planning that works – because it is fully integrated with salesforce.com. There has never been a time where customer focus has been more important.  As broad marketing becomes irrelevant, sales professionals need to treat their current customers as their marketplace; consider what the marketplace needs and then deliver true value.

My friend Matt Dixon, co-author of The Challenger Sale, was kind enough to review the work in progress.  Apart from commenting that this is the only business book that he has ever seen that quoted lyrics from Metallica! (more about that later), Matt’s take was that “[the book] grounds its recommendations in the context of modern B2B sales, where customers armed with massive amount of information and advice can afford to engage sales people later and later in the purchase decision … there are no short-cuts to getting this right.”  Matt knows this better than most I think.

When Bob Thompson of Customerthink read the book, he hit the nail on the head.  He was kind enough to provide this quote for me.  “All too often Account Planning is a once-a-year effort that gathers dust on the shelf. Use Donal Daly’s ACCOUNT PLANNING in SALESFORCE to help transform this critical activity into a usable, customer-centric approach to growing loyal relationships all year long.” I thank you Bob.  There is a recognition from those who know how it really works, that there are many hours wasted on developing account plans that are never used. (By the way, if you’re not familiar with Customerthink, you should go and have a look.  Bob curates some wonderful insights on his site.

Matt Cox over at HP told me that from his perspective “Account Planning is a core sales skill that requires a disciplined approach and ongoing care and maintenance.”  and of course he is right. When I spoke to Peter Jofriet, who runs Sales Excellence at Honeywell, he said that “account planning must live and breathe as part of how you run your business. It needs to become part of your culture, and should be integrated into your overall business cadence.”  This is a really critical observation. Account planning can be the new marketing for your large accounts.  If you are hoping that your marketing department is going to help you penetrate that key customer, then you’re likely headed for disappointment. Ask Peter, he knows. And he had nice things to say about the book as well.  I thank you Peter!

More than half of the sales professionals that I have spoken to acknowledge that they are not maximizing revenue in their accounts. Sales reps are leaving money on the table and they are not serving their customers well.  I am trying to help them solve those problems. This book, based on interaction with hundreds of sellers and their customers, describes how high-performing rockstar sales reps are successful at maximizing value in their strategic accounts, both for themselves and for their customers.

You can read more insights from some of the others who supported me along the way here. I am deeply honored by the caliber of people who were interested enough to share their thoughts.

And about those Metallica lyrics …

Account Planning is not always the most riveting subject, so a book about account planning isn’t guaranteed to be a page turner! Well, I tried to make it as consumable and enjoyable a read as possible.  I feel pretty confident in saying that this is probably the first and only book on account planning that includes a playlist to help you hum along as you develop your plan.  You will find songs here that you know (from the Beatles, Metallica and U2), some you may have forgotten (anyone remember Rose Royce?) and probably some new songs that you will not have heard before. I borrowed from the lyrics of these musical muses to illucidate some of the points I was trying to make.  Metallica’s Nothing Else Matters refers to Trust – and in Account Planning, it is true; without trust, nothing else matters.  I hope the playlist adds to your enjoyment when (if) you read the book.  I know it lessened the load when I was writing it.

Account Planning is a tremendously important endeavor. It drives revenue, increases customer satisfaction, aligns your organization, and provides incredibly gratifying moments when you can see the impact of your work – both for the customer, and for your company. I hope this book accelerates your journey. More info here.

Thank you.

 

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When B2B Cross Selling Goes Bad

My new book, Account Planning in Salesforce, is due to be published at the end of March 2013.  I am excited about it.  As you would expect from anyone book on account planning it dives into the benefits of generating more sales from existing customers. Selling to an existing customer is easier than acquiring a new customer, and there is much research to support that.  But as I researched the cross-selling and up-selling activities of the ‘average’ B2B salesperson, I noticed some behavior that I think merits comment.

We are all familiar with the Amazon style “Customers who liked this also liked that“, or “Because you bought that, we thought you’d like this.” This works pretty well in high-volume low value transactions.  But even though we all receive these personalized, relevant, and sometimes interesting email offers from Amazon and others, it is very rare that we actually take any action. And in the high volume world that Amazon occupies, that is ok. Low hit rates and microscopic sales conversions are acceptable when you are dealing with millions of customers. ‘Big data analytics’ and predictive modelling can help to increase the return, but in the end it is a numbers game – albeit a numbers game that is getting smarter all of the time.

It is very different in B2B high value sales of sophisticated complex solutions – though what I have seen from some sellers, particularly those who sell for large brand name companies, is that just because the customer purchased Product A, they assume that the customer should automatically buy Product B from them. The arrogance is telling, and of course is ineffective. Buyers are a lot more discerning.

Let’s look at the purpose of cross-selling and up-selling in a large account.

If I sold Product A to a business Division A in a large account, then maybe I can sell that same product to business Division B of the same company.  For the purpose of this post this example will suffice as a definition of cross-selling. But because I have multiple products, I would like to up – sell Product B and Product C to Division A, and then if I was successful in cross-selling Product A to Division B, then I’d like to up-sell Products B and C as well. It all sounds pretty simple, but of course it doesn’t work like that, and the reason is that is fails what I call the Mutual Value test. For a transaction to be successful there has to be value for both parties – mutual value, with a focus on the word mutual.

The scenario I outlined above is a somewhat misguided attempt to identify ‘white space’ in an account, because it ignores the role of the customer.  Pursing ‘white space’ is very value but only when you use the twin axes of Value to You and Value to Customer. The ideal scenario you are aiming for is to have all of the divisions or business units in an account use all of your solutions, but just because one business unit purchased one solution from you, it is not a given that they should buy anything else, nor is it pre-ordained that any other department, division or business units in that company should buy anything else either.  Amazon has so many customers it is neither possible nor necessary to understand in depth the goals or aspirations each one of its customers. Amazon’s cost of  sales pursuit is very low and it can afford a low win-rate. That is not the case in the world of B2B sales.

Having an existing customer to sell to brings lots of advantages over selling to a brand new customer. But it does not bring any entitlements.

The advantages are:

  1. The customer knows who you are. That’s a good first step.
  2. You know some people in the account.
  3. You possibly have a Master Agreement in place as an Approved Vendor.
  4. You have an in-house reference (hopefully). This is very very powerful.
  5. You have developed relationships with some people who can help you navigate the organization.
  6. You have somewhat of an insider’s view of how the company works.
  7. You have some understanding of their technical and regulatory environment in which they operate.

But there are some other things to consider:

If you are trying to up-sell …

  1. Are you known just for Product A, or will they consider you for other solutions?
  2. What business problems do they have that requires Product B or C?
  3. What alternative solutions do they have that solve the same problems as you do with B and C?
  4. It is quite likely that the same decision makers aren’t involved in this decision as in the previous one
  5. The competitors are unlikely to be the same as before
  6. What impact will this additional sale have on your current ‘Product A‘ business?
  7. How will the customer view the increase in total spend with you?

It seems that in some cases when trying to sell more to the same customer, sellers tend to abandon some of the good selling behaviors that got them the original business.  Often they have developed a strong relationship with the customer and are reticent to hold out for a good price for the up-sell product.  On occasion they will blindly accept guidance from the people who they have made friends with, forgetting to ‘go wide’ in the account to validate and verify information. Then they lose the advantage they had and the cross- or up-sell activity is sometimes just marginally profitable.

That is a great waste. Selling to existing customers is easier than selling to new customers – but it is still selling.

By the way, if you are interested in being notified when the book (Account Planning in Salesforce) is available, please email me at ddaly (at) thetasgroup (dot) com.

 

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The Trust Default (Part III) – Building Trust

This is third post in a series on The Trust Default, serialized from my upcoming book on Account Planning.  You can click on the links to the previous two. (If you are interested in being notified when the book is available – sometime in March – please let me know ddaly (at) thetasgroup (dot) com.)

The Trust Default (Part I)

The Trust Default (Part II) – The Changing Shape of the Trust Circle

 

Part III – Building Trust

To develop a deep customer relationship you have to overcome the Trust Default. With the change in the shape of the Trust Circle you must accept that your customer’s perception of you will gain less ground from your company’s website or CEO pronouncements. You own this responsibility, and others will influence it.

If you are hoping to influence the customer’s attitude towards you then you better be sure that what they hear about you from peers, academics, company technical experts, and the regular employees is what you would like them to hear. The reality is that what you, as a business, might broadcast in your public statements is of diminishing value. The actions you take and the value you add to the community in which you and your customer exist is what will fundamentally determine your reputation, and how you are perceived.

Here is what you need to do:

  1. Invest your time to understand your customers’ industry and their business. If you’re to advise, you must be a subject matter expert.
  2. You need to give value first and expect nothing in return. You are building a relationship for the long term, and it is only OK to ask for something from the customer when you’ve earned the right.
  3. You need to be authentic, honest and fair – in everything, always.
  4. You must focus on areas of Mutual Value, where what’s good for the customer is also good for you – in that order. Explore the customer’s Business Strategy, understand or suggest Business Initiatives to deliver on that strategy, and when you find an area that will make a real difference to the customer, see if you have a solution to their problem. Start with the problem, not the solution. If you discover that it is only good for you but not for the customer, then you should explain that to her and explore alternative approaches.
  5. Choose your customers wisely, only applying the resources to customers for whom your products or services can truly deliver value. Don’t try to force-fit your solution. It will only end up in tears.
  6. Trust is a two-way street. If you are delivering on your promise, then it is only fair that the customer holds up her end of the bargain.
  7. Recognize that some customers don’t want this level of attention or relationship.
  8. It boils down to value, and value propositions needs to be business-based, not feature-based, addressing the Critical Success Factors for key Business Initiatives. This means that you must first truly understand the customer’s business.
  9. Recognize that the impact on a customer of a bad buying decision is usually greater than the impact on you of a lost deal – and then act accordingly
  10. Adopt the customer’s perspective. Sit in the customer’s chair and ask the question: “Would I buy from this company?” If you answer that question honestly, it will guide your actions.

Remember, customers don’t need you to learn about your product: they can get all of the information they need from the Internet. They don’t need you to recommend solutions: they can get that from their peers. Your opportunity is to help them shape their needs, identify or suggest initiatives, and then to figure out how you can apply your solutions to those initiatives. If you don’t know how to do that you should look for outside assistance.

Trust is Personal

Lasting business relationships between the seller and the buyer, like lasting personal relationships, are built on a foundation of trust that for each of us is fundamentally personal. While always important, trust as a determining factor of business transaction efficacy increases or decreases in amplitude at different phases of the business interaction, because risk transfers from seller to buyer before and after the sale. Be conscious of that shift, bearing in mind that while you and your buyer may be engaged in a commercial interaction for your respective companies, trust is fundamentally personal.

     Nothing Else Matters is a very personal song written by James Hetfield, singer and rhythm guitarist with the American heavy metal band Metallica. He wrote this song while he was on the phone with his then girlfriend. There are four lines in the song that go to the heart of establishing a trusted relationship:

Trust I seek and I find in you
Every day for us something new
Open mind for a different view
and nothing else matters.
Nothing Else Matters, Metallica, Metallica, 1992, reprinted with permission

If you want to be trusted by your customer, you will need to trust her first.

Now you can flip the Trust Default on its head. It should refer to the default position you take – a willingness to trust. If this is not currently your default approach, you will need an open mind for a different view. You may feel uncomfortable about this – but it is a major point that will deeply underpin your future success.

Trust is so important in developing long-term customer relationships that it is not too much of a stretch to say “… and nothing else matters.” Thank you, James Hetfield.

(By the way – I guarantee that my book will be the only book on Account Planning that comes with a playlist!)

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The Trust Default (Part II) – The Changing Shape of the Trust Circle

This is second post in a series on The Trust Default serialized from my upcoming book on Account Planning.  (If you are interested in being notified when the book is available – sometime in March – please let me know ddaly (at) thetasgroup (dot) com.)

You can click on the link for first post, The Trust Default (Part I), here.

There was a time when people would look to figures of authority for advice and guidance. Government leaders and senior company executives were at the center of the Trust Circle and were considered a talisman for trust. It has been a while since that has been the case, and in recent times their trust bank has completely defaulted.

But nature abhors a vacuum and human nature dictates that we all have a deep yearning to trust and to be trusted. We now look elsewhere for credible sources or trusted advisors and, with increasing frequency, we are placing our trust in people like ourselves. We seek advice from people with whom we can relate, whose circumstances are similar to ours and who face the same challenges.

Independent research shows that the shape of the Trust Circle is changing. In compiling its excellent Trust Barometer, Edelman asked participants how credible they would consider information provided about a company from a variety of sources.  (Click on graphic to enlarge.)

who do you trust

Between 2011 and 2012, CEOs and government officials plummeted on the credibility scale while peers and regular employees saw a dramatic rise. Customers trust your company’s leadership far less than before. The customer needs to see you as ‘A Person Like Me’, someone who understands their world.

In many cases, CEOs only have themselves to blame. While professing to be customer-focused, they often are not sufficiently familiar with what the customer really wants, and even if they wanted to (which is rare in itself), they may not have the knowledge to effect the necessary change to deliver on the promises they unwisely make.

The third (and final) post in this series will appear shortly, and is about Building Trust.

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The Trust Default (Part 1)

I have been away for a while, and have not posted here for two months.  The reason: I have have been writing a book on Account Planning.  The book is now finished and will be available in March. (Let me know if you are interested and I will email you when it is available.)  Some of the early reviewers had very positive things to say about the chapter in the book on Trust, and felt that Trust is an undervalued business asset, so I decided to serialize it here in a few posts.  Here’s the first.

- o – o – o – o -

If you want to build a long-term customer relationship you need to develop a deep level of trust with that customer. Customer acquisition is easier when you are starting from a foundation of trust. Once you have a Customer, converting that Customer to a Loyal Customer will happen only if the Customer feels that she can depend on you. Unless you achieve that level of trust your Customer will become a Former Customer.

Trust is the fulcrum upon which every customer relationship pivots. Trust is a valuable currency that must be earned, but never spent. Trust is built one step at a time, and unless protected, can be blown away in a moment. Account Planning is all about developing long-term relationships, and that is hard to do without trust.

Here’s an illuminating story.

When Angela called one spring day, the excitement coming over Skype was contagious. Angela was CEO of Kincometrics, a small software company serving the pharmaceutical market. Recognizing that selling to large pharma companies was going to be very difficult for a small company, as part of her go-to-market strategy, Kincometrics had partnered with a large well-known enterprise software company. For the purpose of this story – and to protect Angela’s business – I will refer to that company as BigSoft.

Angela’s face lit up as she told me that she had accompanied one of BigSoft’s sales executives to a meeting with BigPharma. (No, that’s not its name either!) The meeting had gone exceptionally well, and Kincometrics was on the verge of its largest deal ever.

In Angela’s words, the background went something like this:

“BigPharma had put out a RFI to a number of regulatory compliance system (RCS) vendors. It’s important to note that BigSoft does not have an RCS offering, so it would not have been able to complete the RFI without our company. They requested only three of the vendors to complete the RFP, and happily we were one of those. The RFP was followed up by web demos initially and then an on-site demo. The relationship between us, the BigSoft team and the BigPharma team started off really well.

BigPharma’s team felt more and more comfortable with the subject matter expertise of our team. The reason for this was that two thought leaders in our space represented Kincometrics. We had two PhDs (chemistry and microbiology) with extensive laboratory experience. As a result we could relate well to the day-to-day operations of the proposed end-users.

A number of web meetings followed the visit and then another on-site demo and discussion about implementation. We highlighted the extremely tight partnership between Kincometrics and BigSoft. This was clearly important to James, the CIO from BigPharma. Pretty soon it became apparent to everyone on the team that James was leading the decision-making process here. He felt the need to have a vendor who not only had the correct technology solution but also had a clear focus on the pharmaceutical industry. This would provide them with the support to expand the implementation as BigPharma deployment grew.”

Angela had called me to tell me that the meeting she had just attended was the final step in the budget approval process. She had won the business! Kincometrics was the preferred vendor and the price was acceptable. James, BigPharma’s CIO, confirmed that he was very comfortable with Angela’s team. He expressed his admiration for the unique design of Kincometrics’s RCS software, and said he was reassured by the partnership with BigSoft. What could go wrong?

Unfortunately, the story did not end there. The next call I got from Angela was not as positive:

“James requested a meeting with the new CEO of BigSoft, Kincometrics’ partner, and made it clear that this meeting was just to confirm his decision that he could rely on the technology support and domain expertise of the joint team. He made it clear that he preferred the Kincometrics solution. His only concerns were ongoing support and confidence that BigSoft was sufficiently focused on BigPharma’s future needs. Kincometrics was not represented at that meeting. That was a huge mistake.

After the meeting between the CEO of BigSoft and BigPharma CIO, the BigSoft sales guy who was at the meeting said, “This was the worst meeting I’ve ever been at in 30 years of selling. Even though I prepared everything that the CEO needed to bring this deal home, he totally screwed it up.” He was talking about his own CEO, the face of BigSoft!

The BigSoft CEO spoke only of the many changes that he planned to make now that he had taken over at BigSoft. He talked about the other industries that he had yet to conquer: Government, Finance, etc. He talked … and talked … and talked, and did not listen to James, the BigPharma CIO. Two weeks later we got the news that BigPharma would stay with its incumbent system, making further modifications to that rather than deploying the Kincometrics package. It’s a disaster!

The CIO from BigPharma emailed me to say he was sorry, but he felt that he could not trust BigSoft because, even though he said otherwise, James felt that the CEO of BigSoft was following only his own agenda. The CEO promised him that he would support their deployment, but did not listen to BigPharma’s concerns. The trust that Kincometrics had built up over the previous number of months was lost.

To add to the irony of the situation, during the main-stage presentation at the BigSoft Sales Kick-Off in July, roughly a week before being told we had lost, the BigSoft CEO mentioned the great meeting he had had with the BigPharma CIO. He emphasized the importance of getting a deeper knowledge of our customers and a greater understanding of their needs! This was exactly what he had not done. He did not really care about the customer.

You know, I’m not angry at BigPharma. I’ve met the new CEO at BigSoft, and I just can’t believe a word he says. I just can’t trust him.”

Angela’s story is completely true, even though obviously the names have been changed. It is a sad story. Angela had done everything right. Her product was a winner. She had tried to mitigate the risk of being a small company by partnering with BigSoft – but that was before they hired the new CEO. Angela had spent a long time building up trust with the CIO of BigPharma, but that was completely blown away in one foolhardy moment, by an arrogant ass.

Complete trust between people is infrequent, and between companies and individuals even more rare. Trust is not attainable by request or appeal and it is not transferable. It has to be earned. Trust sits on the three pillars of authenticity, integrity and honesty; promising only what you can give, and giving what you promise. Attitude and preference, as they relate to how a customer thinks about your company, are as likely to be informed by whether a customer feels they can trust you as by the capabilities your company can provide.

However, in many cases, companies have defaulted on their obligations to customers, who feel ignored, poorly treated, and often perceive that their concerns as customers or consumers are rarely heard. I refer to this as the Trust Default.

There is no question that trust in business has become more elusive. According to the 2012 Edelman Trust Barometer, just 45% of customers in the US trust businesses. In Europe, the situation is worse. Across the United Kingdom, France and Germany, less than one-third (31%) of customers feel they can trust business. The banking crisis and subsequent bailouts across the world have combined to infect industry in general, and financial services in particular, with a lingering malodorous tumor.

As a consequence of the Trust Default, developing trusted relationships with customers has never been more difficult. On the one hand the consequence of this is that the task of establishing true customer affinity might seem a little ambitious. But, on the other hand, if you are prepared to make the journey, you will find that not many others have joined you on the voyage. When you arrive at the destination you may well find that your only companion will be your customer.

From my perspective, what happened during the economic turmoil of the last decade was not so much a recession as a fundamental restructuring of the economic order. This is a good thing! It has forced us once more to focus on true difference versus positioned differentiation. To address the Trust Default, it has demanded a focus on values and ethics, underlining the value of trust as an asset.

We should recognize that, while honesty and integrity as propellants of commercial energy have not necessarily always been the most comfortable bedfellows with the pursuit of profit and revenue, what is scarce is valuable. If you are prepared to address the Trust Default, you have the opportunity to gain a considerable advantage over your competitors.

The next post in this series will deal with the Changing Shape of the Trust Circle

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The Four Phases of Customer Evolution

There are only four customer phases, and all customers will be in one of these at all times.  There are many erudite articles written about the interdependence between sales processes and buying processes, but – being primarily focused on new customer acquisition – many miss a critical consideration; The Four Phases of Customer Evolution.

Customers go through three Growing Phases and one Dying Phase.  You should understand the phases and particularly the reason why customers more from the Growth Phases to the Dying Phase.  The critical thing is not just to recognize which phase they are in – that is fairly obvious – but to understand that if they are to become a customer, then they will inevitably morph from phase to phase.  It is only a matter of time.

The four phases are:

  1. Prospect
  2. Customer
  3. Loyal Customer
  4. Former Customer

The fundamental substance of all the management theory, strategic advice and best practice writings about customer management, key account management or account planning any should be to accelerate phase transition through the Growing Phases; phase 1, 2 and 3, and then decelerate the inevitable transition to phase 4, the Dying Phase.

 

Here are some facts to chew over:

  • The cost of new customer acquisition is 500% that of customer retention
  • Increasing customer retention by 2% equates to decreasing costs by 10%
  • Reducing customer defections by 5% can increase profitability by up to 125% (depending on industry).
Source (Leading on the Edge of Chaos – Emmet C. Murphy and Mark A. Murphy)

 

The Road to Customer Defection

Before you read the rest of this section, I want you to consider two different scenarios. Each is real, and I hope you will easily identify with them both.

Scenario A: In the first scenario you (or your company) are selling a product or service to your customer. This scenario should be real and should relate specifically to your existing company.  Stop and think for a minute about why prior customers have stopped doing business with you.

  • Why have they left you or your company?
  • What do you think are the top three reasons?
  • Write them down – now, before you play out the next scenario.

Scenario B: In the second scenario; you are the customer.  We might all be forgiven for thinking that being a customer is easier than being a supplier – but that is not always the case.

In this scenario you need to think about the last time you (or your company) decided to stop doing business with a particular source.

If you take a personal perspective on this, that source might be a restaurant, a clothing store, a hairdresser, an online bookstore, an airline, or an online community.   From the perspective of your company, the source may be your stationery provider, IT services supplier, sales trainer, telecommunication equipment vendor, or any one of the many other options.

Combine the personal and company perspectives (if you have both) and write down the top three reasons why you defected.

If you are like most people, the answer to Scenario A will start with price or product features, and the answer to Scenario B is more likely to be more focused on ‘how I was treated’.

The problem is that in the real world these two scenarios converge and the disconnect between what suppliers think and the opinions of their customers send their relationship hurtling from a Growing Phase straight into the spiral of the Dying Phase.

Why do customers leave?  The reality might be different than you think.

According to Rightnow Technologies (now part of Oracle):

  • 73% of customers leave because they are dissatisfied with customer service, but companies think just 21% leave for this reason.
  • Company thinks that nearly half (48%) leave because of price, when in fact, according to the customer perspective, this happens only 25% of the time.

The U.S. Small Business Administration and the U.S. Chamber of Commerce support these findings. According to their research:

  • 68% leave because they are upset with the treatment they’ve received (Customer Service)
  • 14% are dissatisfied with the product or service

Serenade your customer

You’ve abandoned me. 
Love don’t live here anymore.
Just a vacancy
Love don’t live here anymore

The lyrics here are from the 1978 song Love don’t live here anymore by Rose Royce, an American soul and R&B group who had a number of hit singles in the 1970s.  While the reference to this song might be a little contrived – I’m a sucker for musical references – the sentiment is well expressed and relevant.

If your customers leave you, it is because they don’t love you, and that is usually because they feel unloved.  The reason they don’t love you is usually because they feel you have abandoned them. If there is a vacancy – your competitor will rush to fill it, and your customer will inevitably become a former customer.

It is hard to accept that the reason your customers don’t love you is because you have underserved them. It is much easier if you can point to price or product features as the determinants of defection.  That hurts less because you can convince yourself that there is little you could have done about it.

Ask yourself this.  If you knew that the customer was going to move from a Growing Phase to the Dying Phase, and there was nothing that you could do about price or product features, what actions would you take to serve them better so they would stay?

So what are you waiting for?  Write down your answers – and take action now.

 

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Customer Network Value

In June 2012, Angela Ahrendts, CEO of Burberry appeared on the cover of Fortune magazine.  As Fortune reports it:

 Last May, Burberry CEO Angela Ahrendts flew to California from her London headquarters to introduce herself to an executive she thought could be critical to the future of her business: Salesforce.com CEO Marc Benioff. When the two met at the Ritz-Carlton in Half Moon Bay, they stood in the hall batting around ideas for 15 minutes before even sitting down. Ahrendts explained her vision: to create a company where anyone who wanted to touch the brand could have access to it. She just needed a digital platform to make it happen.

Click for bigger image

Benioff sketched a diagram of how Burberry could become a “social enterprise,” overlaying technology like Salesforce, SAP, Twitter, and Facebook atop the entire company. (Benioff signed the drawing “Angela + Marc = LIKE,” and Ahrendts keeps the framed original, pictured below right, in her office.) “I told him, ‘I think I finally met someone who talks faster and has more energy than I do,’ ” she says. “We just connected.”

However, as anyone who attended any salesforce.com event between mid-2011 and 2012, physical or virtual, could tell you, you could see that Ahrendts’ new celebrity status is due in no part to the level of exposure given her by Benioff. It even got to the stage that Twitter contributors were wondering if she was going to wear ‘that white suit again’.  Benioff – certainly one of this era’s marketing geniuses – knows how to make his high-profile customers feel special – and knows, better than most, the value of the Customer Network Value.

In many cases customers are totally bypassing the early stages of the traditional buying cycle.  Rather than calling a company for information, they are instead joining forums on line, engaging in conversation on Twitter or Facebook, looking to people with ‘Klout’ or influence to guide them through the information gathering and evaluation phases of the buying cycle.

They look for recommendations from peers and others ‘like them’ to short-list potential suppliers, refine their requirements, and gain insight in the application of a vendor’s product that often surpasses that of the vendors sales person.

To care about your Customer’s Network Value, you must first care about your customer, and treat customer service, and every customer interaction as an extension of marketing.  Caring about your customers before they become customers is actually more difficult but increasingly important.

You can achieve this firstly by participating in the same networks in the Social Universe as the customer traverses the Contact phase of the buyer/seller transaction.  Then you need to monitor what is happening and respond to your customer during the Control phase, as that is where they can have most impact on your future customers.  In any case, if the customer wants to interact in the Social Universe, it is your job to facilitate that interaction.  It is increasingly becoming an implicit part of your promise to deliver – and you need to be prepared.

We need to recognize that our customers and prospects hang out somewhere, and that somewhere is increasing somewhere online in the Social Universe, where each is weaving their own tapestry with the threads of their network.

You really do want to be one of the threads!

Unless you want to become irrelevant, or unless you can consistently be the low-price provider servicing those who care only about price, then you need to be part of the ‘recommendation chain’. You must establish trust, and the customer must see you as someone more ‘like them’ than a representative of your company.  But, the threshold is high – because in the end, for new customers, you’re going to ask them to do business with you. Being ‘like them’ breaks down some barriers, but it’s not enough.  You must continually add more value in the Social Universe than you expect to get in return.  You’re looking to recoup the return on the influence you have developed online later.

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