Chapter 3
Insight Selling and Value
Defining Value
“Overall Value Was Superior”
I can easily judge whether a salesperson is worth listening to. Can you articulate the value proposition you bring to the table in a way that it gets to the crux of how you enhance value for us as a company? Do you exhibit gravitas? Recognition of the field in which we operate? Understanding of the competitive environment? It’s analysis, but it’s the ability to articulate the analysis in a succinct way that’s connected to our value proposition that will persuade me I should listen to you.
—David Lissy, chief executive officer, Bright Horizons
Ask 100 sellers at 100 companies why their customers buy from them, and you’re likely to hear 100 answers with the same underlying theme. That theme is simply: the value we provide.
Sellers describe their value to us in a number of ways: We get results, our relationships are very close, they get from us what they’ve always wanted (but never gotten) from other companies, we bring innovative solutions to the table, and so on.
You might think, “Well, this is pretty obvious, isn’t it? Maximize value—of course.” To some, it might well be, but in practice, there’s no denying that sales winners are much better at getting buyers to perceive maximum value than second-place finishers.
In fact, in our research, only one factor—“overall value was superior”—was of top importance to buyers in all six categories we studied. On the other hand, product or service superiority was important only sometimes. For insight sellers, then, it’s critical to understand what the terms value and value proposition, so often bandied about in sales, mean.
In our experience, there’s a lot of confusion around value. Perhaps this is because the definitions we see most often aren’t very helpful. Take the term value proposition. Mostly we see it defined as something akin to an elevator pitch.
For example, from Investopedia1:
What Does Value Proposition Mean?
A business or marketing statement that summarizes why a consumer should buy a product or use a service. This statement should convince a potential consumer that one particular product or service will add more value or better solve a problem than other similar offerings.
Investopedia Explains Value Proposition
Companies use this statement to target customers who will benefit most from using the company’s products, and this helps maintain an economic moat. The ideal value proposition is concise and appeals to the customer’s strongest decision-making drivers. Companies pay a high price when customers lose sight of the company’s value proposition.
Sure, it’s good to be able to introduce your company with a compelling statement, but sellers who stop their discovery about their own value after they’re done perfecting their elevator pitch are missing out. Not many sales are won in elevators, and people don’t buy because of two key points in a brief statement. They buy for their own collection of reasons, which frequently differ from one buyer to the next.
Let’s start with our definitions of these key terms.
- Value is the monetary worth of something, that is, whether and how much someone will pay for something.
- Example of what a buyer might say when he or she perceives value early in the buying process:
- “I didn’t know about this until the seller brought it up, but I can see now there might be a worthwhile return. Let’s pursue it.”
- Example of what a buyer might say at the end of the buying process:
- “This will net us $10 million in savings in the next two years. That’s why I was willing to pay what I paid for it.”
- Value proposition is the collection of reasons why a buyer buys, in essence, the factors that affect their decision to purchase and from whom.
- Example of what a buyer would say about why he or she bought:
- “I bought this product because of the following seven reasons. Now, if you’ll look at this comparison grid of potential vendors, I bought from this company because of the five collective advantages they had over the other firms.”
When sellers think of a value proposition not as a statement, but as a concept about why people buy something, they have a lot more to work with. Thinking of a value proposition as the collection of reasons why a buyer buys puts their selling efforts to work much more effectively.
Value Proposition Essentials
Three Legs of the Value Proposition Stool
The collection of reasons why people buy typically falls into three major buckets that, in sum, form the value proposition (see Figure 3.3):
Figure 3.3 Three Legs of the Value Proposition Stool
- Buyers have to want and need what you’re selling. You as the seller have to resonate.
- Buyers have to see why a seller stands out from the other available options. You have to differentiate.
- Buyers have to believe that a seller can deliver on their promises. You have to substantiate.
When a Component of Value Is Missing
As you can see from Figure 3.3, take any one of these away, and it becomes much more difficult to sell:
- Remove resonance and people just won’t buy what you’re selling or won’t buy it from you, because what you bring to the table isn’t important enough.
- Remove differentiation and they’ll pressure your price or attempt to get what you sell somewhere else.
- Remove your ability to substantiate your claims and—although buyers may want what you sell (you resonate) and may perceive you to be the only ones who do what you do (you differentiate)—they won’t risk working with you.
Perhaps one of the most important findings in our research is this: According to buyers, insight sellers add value over and above the products and services they sell. They aren’t simply selling the value proposition of the offering; they are a significant part of the value proposition.
In a sea of perceived product and service sameness, the sellers themselves are the difference across all three value proposition categories. Buyers awash in information know they have choices for what to do. They have to sort everything out, make decisions and investments, and choose with whom to hitch their wagons.
It’s the insight buyers gain from sellers that’s increasingly making the difference in their decision making. Sellers make buyers aware of new strategies to take advantage of (opportunity insight) and help buyers make better decisions through their interactions (interaction insight). In both cases, the buyers value what the sellers bring to the table.
How Insight Sellers Resonate, Differentiate, and Substantiate
Resonate
Resonate can be defined as “producing a sound that relates harmoniously,” “to have importance,” or “to make an emotional connection.”
The dictionary writers probably weren’t thinking of sales, but the definitions work perfectly here. Sellers make sounds (they have conversations) that relate harmoniously (make connections with buyers) in ways that are important to them either rationally, such as in return on investment (ROI) and other tangible outcome terms, or emotionally.
Insight sellers resonate because they bring ideas and opportunities to the table that are important, and they interact in ways that deepen relationships with buyers, making it important to buyers to keep the seller around on an ongoing basis.
There are two types of resonance—rational and emotional—sellers should keep in mind when selling.
Rational Resonance
Rational resonance is a buyer’s perception of the need to solve a particular problem or achieve a particular goal because of the calculable impact in financial or other measurable terms. For example, a decision maker might say, “Last year, 100 employees whom we didn’t want to leave left our bank, costing us $100,000 in replacement expense and lost productivity per person. In other words, $10 million walked out the door last year that certainly didn’t have to.”
If that decision maker comes across a seller who can demonstrate, “We have helped our clients in financial services reduce unwanted turnover by an average of 20 percent within one year, and we can do it for you,” it would probably resonate rationally. Doing quick math, the buyer could see that would equal a drop in unwanted turnover by 20 people, saving the company $2 million.
Emotional Resonance
Emotional resonance is a buyer’s collection of feelings toward a particular problem, a particular solution, or a particular company.
More years ago than I prefer to count, I (Mike) was working at a company that had recently made the decision to go public. Curious, I asked the chief financial officer of the company why he chose a particular big-five firm (at the time there were five) to handle the preparations for our public offering.
He said to me, “Come down to my office, and I’ll show you.” When we got there, he walked me through a decision grid the firm had created for the president and board of directors. After he was done, he said, “Clearly, this firm was the most qualified, best firm for us to take us public.” After hearing his argument, I couldn’t agree with him more. This firm was head and shoulders better for us. Then he said, “Close the door.” I did. “Do you want to know the real reason I picked them?”
“It wasn’t what you showed me?” I asked.
“Nope. I picked them because . . . I liked them better.” He went on, “Three of the five had the experience, the people, and the resources to do a great job taking us public. But I’m the one who will have to work with these people for 18 hours a day for a year straight, and I simply had the best connection with the folks at the firm I chose.”
It’s been said that buyers buy with their hearts (emotional) and justify it with their heads (rational). This kind of statement is often associated with consumer buying, not business buying. Although the contexts might be different, it’s just as true with business buyers that emotions and feelings influence their decision making and budget allocations.
Differentiate
Differentiate can be defined as “recognize or ascertain what makes someone or something distinct.”
In the past, differentiation was more about the something. Today, however, it’s as much—often more—about the someone.
Given what we do, we’ve been a party to many buying processes from the buyer’s side. Buyers often say when they make decisions, “Of the five companies we looked at, I actually think that three of them have the right products and are well suited to do the work, but we still have to pick a winner.”
In our experience and in our research, it’s the seller—not the price or the product—that makes the difference most often.
One of the 42 factors we studied was “offers products and services that are superior to other options.” If you just look at the straight frequencies—how often buyers agreed or strongly agreed with this statement in terms of the provider they selected, this factor shows up twenty-fourth on the list of 42 factors—not exactly bubbling up as a headline.
It’s a factor that affects the sale but only sometimes in terms of distinguishing the winning seller from the second-place finisher. In practice, we see product and service superiority most often as important when it’s flipped on its head. When buyers perceive products and services to be inferior, these sellers lost. No surprise here. In many sales, of the several options a company is considering, the buyers believe at least one of them doesn’t match up. But for the few sellers on top, it’s usually close. Once there’s at least a perception of product or service parity—or if it’s debatable that one is better than the other—other factors take over the purchase decision.
If your company does offer truly superior products and services, then your sales job is easier, for sure. Lucky you! For those offerings where you truly have something breakthrough or markedly different from others, you’ll have a much easier time differentiating.b For the majority of companies and many of their offerings, however, they’re in a brawl with their competitors for even the slightest of edges in product or service superiority, if they can even be achieved.
What can be achieved, however, is seller superiority.
And seller superiority is one of the most powerful differentiators that affects the purchase decision.
Also note that, like resonance, differentiation has two major components: overall distinction and perception of scarcity.
- Ask buyers why they chose one provider over another after they make a purchase, and there’s usually more than one reason (sorry, Investopedia). There is a collection of distinctions that ultimately makes the winner stand out in their mind.
- When buyers perceive that something is scarce, it stands out to them, and they tend to desire it more when it’s difficult to find.
Scarce, by the way, does not necessarily mean unique. Unique is appropriate sometimes. But uncommon can be just as strong, and it’s usually more believable. If you have something superior, by all means, bring it forth. Don’t discount, however, that buyers need to have expectations met in commonly discussed areas and don’t feel they get it. Many sellers promise quality, results, responsiveness, service, continuous improvement, and so on, but few deliver. Those who prove they can deliver well in these areas stand out.
Speaking of prove, we come to the next value category: substantiate.
Substantiate
We worked with a company once whose sellers had to drive their own demand. In one case, one of the sellers engaged a buyer in discussion about the opportunity, and the buyer was interested! The seller had a few more meetings with the buyer after the first meeting. Then the sale fizzled out. When he asked why, the buyer told him that they simply weren’t going to pursue it further.
The seller said to us later, “The business impact story here was tremendous; more than a 10 times return on investment was easy to see. That this sale didn’t move forward . . . I can’t believe they just didn’t see it.”
Then we talked to the buyer as a part of our analysis of the lost sale. When we mentioned the ROI case to the buyer and asked him about it, he said, “Oh, I saw the ROI case. I got it. I would have loved to achieve it. I just didn’t believe it would come true.” The problem here wasn’t in resonate, and it wasn’t in differentiate. It was in substantiate. The seller failed to get the buyer to believe.
The perception of risk becomes that much more pronounced when sellers practice insight selling. With insight selling, sellers are essentially telling buyers to do new things and to do things differently.
When employing opportunity insight, the sellers’ job is to insert something into the agenda of the buyers that they are likely not even considering, but that demands their attention, and then influence them to take action on it. What demands a senior buyer’s attention? Things that can make a big difference—that can have big return.
With the potential for big reward, however, comes the perception of big risk.
In a vacuum, risk and reward move together, as Figure 3.4 shows.
Figure 3.4 Risk and Reward
The seller, however, has the power to either lessen or enhance the perception of risk (Figure 3.5).
Figure 3.5 The Seller Has Significant Impact on Whether Buyers Lean toward Seeing an Investment as Good or Bad
Let’s go back to our example. The buyer saw the ROI; he just didn’t believe it would come true. There was too much risk.
Buyers tend to perceive risk in four areas:
- Seller—getting the buyer to believe, and believe in, the seller (and team) as a person
- Offering (product or service)—getting the buyer to believe the offering will perform as described
- Company—getting the buyer to believe the seller’s company is the right partner
- Outcome—getting the buyer to believe he or she will achieve the promised results in an acceptable time frame
It’s up to the seller to discover which categories are most important to the buyer and to minimize risk in each category.
Figure 3.6 examines each, outlines the effect each has on the sale, and outlines its implications for insight selling.
Figure 3.6 Risk and Insight Selling
It all comes down to value and value proposition. At the end of a sale, sellers win when they get the buyer to think, “I need this” (seller resonates), “This seller is the best choice” (seller differentiates), and “I believe the seller can succeed and achieve the outcomes we need” (seller substantiates). In our research and our work with clients, we see that the sellers who apply both opportunity and interaction insight do the best job to achieve these outcomes.
In the chapters that follow, we’ll get more specific about how to apply insight selling to create the strongest value propositions and win sales in our modern and ever-evolving buying environment.
Chapter Summary
Overview
- The value used to be in the products and services. With products and services commoditized, the seller becomes the value. This is a massive shift.
- Although the first point is, indeed, true, there is a significant opportunity for sellers to sell products and services buyers should be buying but aren’t even considering. Not all products and services are commodities or even known to exist by buyers.
Key Takeaways
- The collection of reasons why people buy typically fall into three major buckets that, in sum, forms the value proposition: resonate, differentiate, and substantiate.
- Buyers have to want and need what you’re selling. You must resonate. If you don’t, people won’t buy what you’re selling or won’t buy it from you, because what you bring to the table isn’t important enough.
- Buyers have to see why you stand out from the other available options. You must differentiate. If you don’t, buyers will pressure your price or attempt to get what you sell somewhere else.
- Buyers have to believe you can deliver on your promises. You must substantiate. If you don’t substantiate your claims, although buyers may want what you sell (you resonate) and may perceive you to be the only ones who do what you do (you differentiate), they won’t risk working with you.
- There are two types of resonance—rational and emotional. Sellers should keep both in mind when selling.
- Insight sellers affect the resonance bucket of the value proposition because they bring ideas and opportunities to the table that are important, and they interact in ways that deepen relationships with buyers, making it important to buyers to keep the seller around on an ongoing basis.
- Sellers who apply both opportunity and interaction insight do the best job to resonate, differentiate, and substantiate.