Spring is in the air for many of us here in the United States, and with the long Winter many have had, the change in seasons can't come soon enough.
But the season is not the only change in the air. If you are in sales and marketing, there is another forecast that is just as promising, especially if you recognize the pending fertile business opportunity and prepare accordingly.
It is not often we see so many thought leaders and pundits confluence around such significant observations:
• At Forrester, sales enablement analyst Scott Santucci indicates that "We are in the middle of a major transformation in the B2B sales model, driven by customer's enterprise-wide strategic procurement initiatives to buy only what they need at the lowest possible price".
• Marketing luminary Seth Godin indicates that "No business buys a solution for a problem they don't have." And yet, so many B2B marketers launch into presenting the cool features and functions of their product, without taking the time to understand if the person on the other end of the conversation/call/letter believes they even have a problem that the product hopes to solve.
• At IDC, research indicates that B2B purchase decisions more than ever being driven by financial requirements, such as enabling business growth (30%), improving profitability (25%), and reducing costs(22%) versus other goals, leaving the economic-focused buyer clearly in control.
• Marketing guru Geoffrey Moore, who's Crossing the Chasm remains the guidebook for many technology marketers, indicates that buyers are forced to do-more-with-less, leaving less than 15% in discretionary funds to fund new projects, and with less money to go around, subjecting proposals to higher levels of review in buying organizations.
• At SiriusDecisions, analyst Jim Ninnivagi indicates that it's easier for B2B buyers to "do-nothing" than "challenge the status quo", leading to hundreds of missed selling opportunities and stuck sales processes.
At Alinean, we have coined this new B2B challenge Frugalnomics, indicated by buyers who are more:
1. Empowered: Fueled by the Internet, with access to a wealth of resources, research, discussions, product and pricing information, buyers are self-empowered to drive the buying cycle, inviting sales later and later into the decision making process, if at all. Commodity sales professionals are being disinter-mediated.
2. Skeptical: Inundated with more carpet-bombing marketing campaigns than ever before, buyers are suffering from information overload, making it difficult, if not impossible, to use legacy strategies to break through the noise to connect and engage with decision makers, and moreover, gain their trust. B2B buyers are now relying on industry analysts, peers and trusted 3rd party publications, but not on vendors, to help them facilitate important purchase decisions.
3. Frugal: With two economic downturns over the past decade, buyers have been forced to do-more-with-less, and CFOs have gained more formal control over business groups and key purchase decisions, leading to an unprecedented level of financial due diligence on proposed spending. Quantified savings, tangible bottom-line impact, low risk, significant return on investment (ROI), and fast payback are the new language of the economic-focused buyer.
Clearly the pundits are onto something: B2B buyers have fundamentally and permanently changed, and the B2B sales and marketing professionals that realize Frugalnomics is in full effect, and change strategies and tactics to fight back, will be the winners over this next decade.
Frugalnomics Changes Everything
As many of us have already realized, two economic firestorms in the past decade have fundamentally changed B2B buyers - making them more empowered, skeptical and frugal than ever before. And this is not just a temporary change. As we saw in technology bubble-burst, even when the economy recovered, technology sales and marketing was never the same, and this promises to hold true for B2B in general in the wake of the Great Recession.
There is a cold hard fact: the old selling approaches don't work well in today's environment:
• Product Selling: Approach today's buyer with a product selling approach, presenting features, functionality, and benefits, and the buyer's eyes will glaze over. Product Selling relies on the buyer to connect the dots - understand the application and outcome of the solution that they can receive. Buyers just don't have the time, patience and resources for this "you figure it out approach". However, we find that over 30% of vendors and sales professionals still rely on this antique sales approach.
• Solution Selling: The most common sales approach today with over 60% of sellers, Solution Selling is where vendor's sales team "seeks out current concerns in a question-and-answer dialogue with customer managers". According to Geoffrey Moore, solution selling is not dead, as it is "still the right approach when the customer understands the challenge to be faced and has the budget in place but believes that point products or services are insufficient to solve the problem." However, this approach does not work well higher up in organizations, as executives want insight and advice, not question and answer sessions. Moreover, most buyers are so overloaded that they often are not even aware of "pain" you are trying to solve. These overloaded customers want consultative advice and a focus on value / outcomes, not just a salesperson listening for keywords and presenting canned advice.
How to Fight Frugalnomics?
So how do you prepare for the changes these forecasts predict? According to Forrester's Scott Santucci, "Buyers are stratifying their suppliers into a caste system, increasingly delineating strategic vendors from commodity providers." To prevent being relegated to a commodity provider, fighting it out on undifferentiated offerings and discounts, a new set of sales and marketing best practices are emerging.
Although the pundits each have different names for the recommended strategies, each highlights the need for a consultative and proactive value-based approach to Fight Frugalnomics:
Provocation-Based Selling -- coined by Geoffrey Moore, this methodology helps to loosen the "status-quo", by making the buyer aware that there is a cost-of-doing-nothing, helping to proactively and holistically:
1. Illuminate issues, of which they might not have been aware,
2. Confirm the symptoms they were aware of, but could not easily put a name on,
3. Prioritize which issues require the most ardent pursuit, and quantify the competitive or other value which may be achieved by resolving the issue (creating urgency),
4. Recommend, based on priorities, a solution roadmap to stepwise remedy the issues.
Outcome Selling - coined by Forrester, a go-to-market approach where you design your value communications system to optimize the value your customers realize, the value referring to the specific "know how" your clients need to achieve an outcome. This methodology includes replacing the traditional Product, Place, Promotion and Price with a new 4-Ps mantra of:
1. Problem - What are the customer's problems - those they know about, and those of which they may not be aware / have not yet been diagnosed?
2. Pattern - How will your solution solve their problem? Who will use your product?
3. Path - How will it be purchased and how can you help facilitate the decision cycle? What does the customer need to be successful?
4. Proof - What is the quantified value the solution will deliver with regards to reducing costs, driving incremental revenue / margin or other tangible business benefit, and what additional business benefits will the solution deliver such as reducing risks, or driving agility?
Value Selling - coined by several industry leaders including Alinean, helping to facilitate the customers buying cycle by proving the tangible value a solution can deliver at various decision points:
1. Engage - connect to set the stage for value discussions via personalized communications, illuminating for prospects how others with similar businesses, size , geographic location, and indicated pain points have resolved pressing issues and realized tangible value using the providers solutions.
2. Diagnose - survey current buyer strategies, spending and best practices to determine what issues the buyer might have, helping them prioritize issues via competitive benchmarking versus peers and leaders, highlighting the value of remedying the gaps, and providing a roadmap of solutions to help solve the most pressing ailments.
3. Justify - Prove that the proposed project should be a priority over all others by creating a business case for the proposed solution roadmap, first by quantifying for the buyer what maintaining the status-quo is costing - the current "cost of doing nothing", then tallying the required investment, benefits, ROI and payback of proposed solutions.
4. Differentiate - Assure the buyer that they have made the right vendor and solution choice, quantifying that the selected solution from the provider is the best choice to deliver superior value at a lower total cost of ownership (versus lower price).
5. Prove - post-project completion and deployment, prove that the promised value has actually been delivered; quantifying the investments and benefits to assure that the target ROI has been achieved.