1 What is changing
1.1.1 Future sales needs and how personal emotions fuel B2B purchases
1.1.2 E-commerce within multi-channel strategies
1.1.3 The linear funnel model – outdated?
1.1.4 The future of B2B sales
1.1.5 Value through Digitization
2 Creating and defining customer value
2.1 Concept of Customer Value
2.2 Value of Goods and Relationships
2.3 Decision-Making During Sales
2.3.1 The Phenomenon of Unreasonable Decisions
2.3.2 ‘Complimentary’ – an Emotional Hole-in-One
2.3.3 Luxury – The consumer’s increasing Desire for the Noble
2.3.4 Added Value Project Coordination, Documents and Books Included
2.4 Buyer Decision Processes – The Fear of Consequences
2.5 How Customers Buy Today – A New Decision Model
2.6 Consequences for Sales Situations
3.1 Decisions and Restrictions
3.2 Five Aspects that Determine our Actions
3.3 Perceiving and Recognizing
3.4 Trust, Rationality and Irrationality
3.5 The Role of Trust in the Contract Phase
4 The New Sale – a Relationship-oriented Approach
4.1 Emotional Selling: A Story of Success
5 The Limbic System: Neuroselling
6 Customer-specific Decision Structures
6.1 Structures in the Buying-Center
6.2 The Environmental Dimension
6.3 Supplier Selection and Trends in Sales
6.4 Customer Benefit and Added Value-Factors
6.5 General Decision-making Criteria in the Customer’s Buying Process
6.6 Decision-makers and Characters
6.7 Winning over decision-makers
7 The benefit makes all the difference
7.1 Who is clueless otherwise, talks about the price
7.2 Who does not provide benefits, ultimately sells discounts
8.1 Added Value
8.2 The Determination of Benefit
8.3 Product Features – Advantages – Benefit (FAB) and Motives
8.4 Benefit Categories
8.5 Turning Soft Success Factors into Financial Benefits
8.6 Determination of Benefit – a reference Model
8.7 The Proof of Benefit
9 What counts in B2B is rational and emotional ROI..
10 Creating value through product and service quality
10.1 Creating value through product quality
10.2 Creating value through service quality
10.3 Service as a competitive advantage
10.4 Expected benefits and sacrifice
10.5 The Value Quotient
11 Why Value – selling
11.1 Customer Value Management and Value Calculation
11.2 Drivers not feature count
12 How to implement Value Selling and ensure success
12.1 Relationship and Consultative Selling
12.2 Enterprise selling – The 5 steps of execution
12.4 Value-based Selling Training Concept
12.5 Implementing a value-selling strategy
12.6 Value-based pricing
Figure 1: Linear Funnel model
Figure 2: The customer journey today
Figure 3: Translating Customer Value Learning into Action
Figure 4: Customer Value in Exchange
Figure 5: Addressing emotional and rational needs of a customer
Figure 6: Customer value
Figure 7: How emotions influence B2B buying
Figure 8: Communication of a seller´s offering towards the customer’s needs
Figure 9: Elements of the Value Pyramid
Figure 10: Components of Customer Value
Figure 11: Suggested Process Framework for a Value Based Sales Process
Figure 12: From Product Selling to Co-makership
Digitization is just one of the major influences and trends that requires companies to significantly change and adapt to improve their offerings and customer relationships. While the idea of digitization and globalization is not new, there is a new wave of transformative technologies with the potential to substantially affect the world around us. Artificial Intelligence, Big Data, Internet-of-things, Robotics, and Blockchain, to name a few, allow new areas for opportunities and differentiation for vendors and suppliers. Many of these technologies will impact the marketing function and in particular sales organizations, customer interaction and demand. Looking at the future of sales, we proclaim six assumptions:
1. Robots will take over commodity and, ultimately, business-to-business sales (B2B). By 2020, digital sales will be well established in B2B and chat bots will take over part of the sales function. In consequence, understanding customers creates the highest emotional value for prospects. If customers know what they want, they don’t need a sales person anymore
2. E-commerce includes complex solutions - the end of solution sales?
3. Emotional value-add differentiates a sales organization
4. Proactively identifying customer pain points is applied by many collaborative start-ups, which have found ways to simplify complex and frustrating customer experiences. Uber, Airbnb and Lyft have disrupted whole business sectors and created new markets
5. Artificial Intelligence and analytics impact not only the B2C environment with chatbots etc., but B2B markets are adapting these technologies and sales organizations need to respond. Well-designed analytics programs deliver significant top-line and margin growth by guiding sales teams to better decisions
6. Agility, customer obsession, trust-building and longterm thinking are the new principles for sales success
We are living in the era of subscription and have entered the shared economy. Back in the 1970s, product sales served customer needs. When customers became more demanding, they asked for services like product support, warranties, maintenance, installation or consulting. The early 1990s were driven by the introduction of electronic commerce and online sales, and companies like Amazon changed the way we buy books, which disrupted a whole economy of traditional book stores. Being customer-centric was en-vogue in the 2010s.
In many markets, service margins are up to four times higher than product margins and therefore influence revenue streams and profit results much more. It is not enough to just have high performing products and services, if the sales appearance and brand recognition from the beginning of the sales process to the end are not sufficient. Selecting the right set of supplementary services is equally as important as their quality, which is finally measured by customer satisfaction and loyalty of the customer-life-cycle. Back in the 1990s, companies like HP started selling their printers at a very low cost in order to compensate the loss of product margin with frequent future sales of printer cartridges, while optimizing utilization and quality during the production process. Customer value is not generated by products anymore, but by services, and companies need to realize that this requires a shift towards a cross-functional process to deliver that value through customer-specific solutions. Buying decisions are already made without the sales person.
Still, companies are trying to find a way to focus away from their internal processes and structures towards understanding the journey of the customer along their touchpoints in order to respond to customer needs rather than to develop new products and try to sell them through traditional marketing channels like sales organizations or push marketing. Today, we live and work in an era where the relationship is the center of buying and selling. Vendors increasingly face the alternative of either gaining a key supplier status with their customers or being pushed into the role of a backup supplier. As product and price become less important factors, suppliers of routinely purchased products search for new ways to differentiate themselves in a buyer–seller relationship. This suggests finding new avenues for differentiation through value creation in business-to-business relationships. Results from research have found that relationship benefits display a stronger potential for differentiation in key supplier relationships than cost considerations.
Speed has become a key differentiator to distinguish yourself. Consumers can expect to receive their parcel the next day or with Amazon Prime Now within 1 hour after ordering online. B2B companies can launch 1000 servers and build a whole data center within minutes and go global by using cloud technology (a network of distributed and highly-automated servers on the internet). Traditional overnight batch processes cannot satisfy the requirements of a modern company. Agility and real-time processes are needed to establish the next generation of value chains.
In the last 15 years, 52% of the fortune 500 companies (S&P 500 index) have disappeared. In 1955, the average life expectancy was 75 years. In 2015, the average life expectancy of companies was 15 years. In most organizations, decision cycles lagged behind technology cycles, which is the reason why they struggle to respond to digital disruptions.
According to Capgemini (2015), one key reason for organizations becoming complacent is management inertia - the failure to sense the need for change. For example, Kodak had most of the patents for the digital photography technology, but did not commercialize them aggressively as it feared the cannibalization of its film business. Successful responses to digital disruptions launched services that mimicked those of a disruptive competitor. They started hiring digital talents, acquired multiple startups in innovative fields, and incorporated the teams into their operations later.
Because the world increasingly becomes software-driven, competitors will emerge from adjacent industries rather than just the home industry of the incumbent. Organizations need to move to a resource allocation that is centrically organized around opportunities and new business models, not existing structures.
1.1.1 Future sales needs and how personal emotions fuel B2B purchases
According to Forrester Research, 25% of sales people have business acumen and 88% know their products and services. This shows a clear gap in understanding business measure, strategic decision making, process understanding and ways of expanding an organization, including its transformation and cultural change management. Besides a financial knowledge management on key performance indicators like budgets, margins, growth rates, CAPEX vs. OPEX targets, cost optimization or return rates, e.g. IVV, NPV or ROI. Many of the CxO’s objectives involve gaining competitive advantage through time-to-market, costs and agility improvements. Sales is shifting the argumentation from product pricing to adding value to the customer’s value chain. This requires the skill of the salesperson to utilize economic models such as Net Present Value (NPV) or Return-on-investment (ROI) as well as cash flow analysis. They need extensive information and different contacts within the customer´s company. As the pressure to grow earnings has increased, the focus in most sales organizations is moving towards profitability rather than simply generating revenue streams. This results into streamlining the cost of sales around support costs, service models and selling higher prices to increase profit margins. It will be essential to move away from a prospect-oriented feature discussion to how clients can improve their total cost of ownership (TCO), time to market, agility, innovation rate, profit, cost savings and revenue growth by building a solution with tangible financial benefits to ultimately increase efficiencies across the value chain with the seller’s offerings.
Thus, account managers need to think and act as entrepreneurs and evaluate risks in delivering their solutions to the client and the impact of a price reduction. In general, the customer needs to be analyzed regarding his value contribution to the seller’s financial targets. Long-term thinking is an important prerequisite to not lose profit in every deal. There will be more times to make a hard decision to sacrifice short-term gain for a longer-term goal. The value assessment of and with customers comes in several steps. First, the identification of the value potential, then the evaluation of the performance after the initial baseline assessment. After a long-term value realization including data management and analytics these assessments should be conducted on a regular cadence by analyzing customer satisfaction after the delivery of the solution. Thus, account managers need to recognize opportunities in a systematic process with pre-defined key performance indicators (KPIs) to detect misallocation of resources, understand risks and potentials of the customer and develop a solution, which generates value for their client. This has been approached by solution selling and needs to be extended by value-selling to determine the value.
On top of this, we recognize the trend that buying centers are getting larger and more complex with up to six different stakeholders instead of the old-fashioned purchaser who only negotiates the price, delivery times, payment and termination term. The value proposition has to be explained to different people or groups of people from business, procurement, legal and other corporate functions.
Sales will be organized along customer segments and less around product groups. In fact, the matrix organization is moving away from a product / regional split to business lines and customer segments within the sales organization. If companies want to be truly customer-focused, they have to be obsessed about the customer and his structure and needs, instead of their existing silos that add no value to the buyer per se. This requires a detailed understanding of the customer´s business strategy, financial goals, major projects and their processes, e.g. procurement, supply chain, decision making and stakeholder network, which is not represented in an organizational chart. In the Business-to-business (B2B) domain, these sales-driven companies need to change their communication channels in the age of social media, touch points or multi-channel management and ensure that the customer can easily access information on a seller´s portfolio. The account manager´s role has already extended into an information broker and catalyst between the seller´s and buyer´s organizations.
● From product to solution offering
● From purchase price to economic value
● From transaction to value-generating
● From product-only to product + service and customized solutions
● From product/region matrix to customer segments
● From personal sales to multi-channel
● From information sharing to customer involvement with social media
● From sales representative to catalyst
● From customer-orientation to customer-obsession
In 2015, Forrester forecasted that 1 million US B2B salespeople will lose their jobs to self-service e-commerce by the year 2020. B2B buyers favor do-it-yourself online options for researching and buying products and services, and they are demanding that B2B sellers fully establish those digital paths to purchasing. Digitalization will change the buying behavior much more towards e-commerce and self-service consultation with support of sales robots. The salesperson will be an information catalyst and relationship manager until technology will be able to overtake the role by using machine-learning and understanding emotional vibes from speech to text recognition as Amazon´s Alexa or Apple´s Siri show nowadays with new skills every day from various companies and organizations.
● Expanding the role of self-service e-commerce. The evidence has shown that nearly 75% of B2B buyers said in the survey that buying from a website is more convenient than buying from a sales representative. Furthermore, 93% said that they prefer buying online rather than from a salesperson when they have decided on what to buy.
● Delivering a digitally enabled B2B selling model because digital channels are here to stay. B2B e-business and channel strategy professionals and their ecosystem partners must create websites that network B2B buyers researching online with call centers, inside sales agents, field sales professionals, and their own internal websites.
In 2017, the “Death of a (B2B) salesman report” has been updated by the author Andy Hoar as business leaders are continuing to automate sales processes and promote digitally enabled commerce:
● 53% of the B2B buyers Forrester surveyed in 2015 preferred to gather information on their own, as opposed to interacting with a sales rep. Today, that figure has grown to 68%. B2B buyers want to do their own product research
● The survey found that upskilled inside sales will play an even greater role in all phases of SMB and enterprise sales than initially predicted in 2015.
● Shifting from offline to online sales is both cost- and customer-effective. Companies such as Coca-Cola and Levi Strauss reported that shifting its B2B customers to a self-serve portal increased their revenue by 10%.
As an example, German based software start-up foxbase.de has started to develop a solution for digital B2B sales. Likewise, in a professional sales conversation, customer and sales staff of a selling company can easily find the best product from a wide range of product portfolio online. Henkel Adhesives B2B has engaged with foxbase and launched multilingual digital product selectors (DPS) for different industrial adhesives categories. Customers provide their individual needs and, based on this information, the DPS searches for the best suitable product through filters, and recommends up to three products. Prices could be made visible based on stipulated volume agreements between the supplier and the customer. The DPS is directly linked with the supplier’s lead management system and search behavior, combined with different information coming from the user, can be used for conversion and optimized product recommendation through machine learning. Data from DPS is stored, analyzed and visualized in sophisticated dashboards and reports to validate customer requirements and identify trends.
First, understand the customer, then increase the value
The seller needs to get closer to the B2B and B2C customer and create engagement instead of demanding generation. This can be achieved by understanding the Customer Journey through Analysis (CJA). The funnel concept fails to capture all the touch points and key buying factors resulting from the explosion of product choices and digital channels, coupled with the emergence of an increasingly discerning, well-informed consumer. A more sophisticated approach is required to help marketers navigate this environment, which is less linear and more complicated than the funnel suggests. We call this approach the consumer decision journey.
1.1.2 E-commerce within multi-channel strategies
With the shift towards online business (e-commerce), the number of channels being used by consumers has expanded. CJA offers a company the possibility of visualizing and quantifying the CJ across multiple channels with the added value of understanding and optimizing the journey by analyzing large volumes of data. It should then provide more relevant and differentiated insights into consumer behavior, which is more complex today, since customers go through a sequence of non-linear interactions. While in 2016 50% of worldwide data has been collected, only few insights have been generated to introduce data-driven decision-making.
Predictive data analytics providers offer applications for finding complex patterns, profiles and common interaction paths to increase marketing effectiveness and customer satisfaction. Scientific research and studies have proven that the idea of online-to-offline flow (and vice versa) is common sense and online media can lead to offline sales. Sufficient technology (e.g. session-based tracking, multitouch cookies and algorithmic attribution services), data coordination and knowledge management between business departments are the first steps in developing a new value model of marketing (Skinner, 2010), which includes the value of both online and offline media to sales. The Makebuzz example - how marketing automation impacts media spending- resulted in a decrease of 10% from the marketing budget due to a shift of approximately 25% of online media budgets (paid touch points), which reflected the growing importance of internet media and incorporated marketing and sales data from both channels to form a comprehensive CJ picture. By understanding the impact of all media to e-commerce, store and call center, Makebuzz.com found a way to ‘right size’ the complete customer journey with their advanced CRM technology. They transformed a media services firm from a single point offering to a significant technology and organization. Revenue grew from $80 to over $450 million. Table1 provides an overview of the CJA phases in more depth.
Source: Thomas Menthe, 2018
1.1.3 The linear funnel model – outdated?
The marketing funnel is a visualization for understanding the process of turning leads into customers, as understood from a marketing perspective. As consumers are using different researching techniques today (e.g. social media advertising) and get various inputs throughout the process, the linear sales funnel (see figure 1) in B2B or B2C is somewhat of an obsolete model. One alternative to the marketing funnel is McKinsey’s consumer decision journey, which employs a circular model (see figure 2) to show how the buying process fuels itself and to highlight pivots or touch points. In the traditional funnel metaphor, consumers start with a set of potential brands and methodically reduce that number to make a purchase.
Figure 2: The customer journey today
Source: McKinsey, 2009
AT Kearney described in their publication “Beyond Limits: The future of B2B Sales” (ATKearney, 2015) that technology is equipping companies to set new records in the B2B sales race, but they must
act sooner rather than later to profit from these new opportunities. While the B2B sales innovation is on, people will implement the new ways and processes and it will be more important than ever to hire inspired, motivated and engaged sales staff into B2B sales organizations to drive the change.
Companies say they are already struggling to deal with challenges such as:
● More complex products and services to meet clients’ demands
● New entrants with alternative offerings, unconventional business models, and lower prices
● Accelerated commoditization and substitution Greater market transparency and growing customer procurement capabilities
● Shifting control of the buying process toward customers
Cloud providers such as Amazon Web Services, Google or Microsoft Azure are taking the market share in pay-as-yougo infrastructure (IaaS) and disrupt the model of buying infrastructure from hardware vendors such as IBM, HP or Dell. With Software as a Service (SaaS), companies do not even need to buy large license-agreements but just select the Oracle or SAP Solution and the Anti-Virus protection from the Amazon marketplace and pay on an hourly, monthly or yearly base to streamline costs, use the scalability and avoid expensive hardware or software upgrades of the IT landscape. On top of this, offers provide up to 60% lower prices to their customers, which is a thread to existing compute and storage suppliers.
The innovation has begun and technology-fueled sales practices with advanced analytics in real-time involve replacing salespeople with technology solutions. More importantly, productivity and revenue are higher than average and customers receive information much faster compared to calling their account manager and waiting hours for a reply.
The following emerging practices are being implemented and a fast growing number of tools and technologies like tech-enabled consultative selling improve the selection and use of products and services in client organizations:
● Bundles, pricing and value capture are combined in a new way with self-parametrization offers
● Co-creation with customers meets collaborative selling with other business units or ecosystem partners to maximize the value for the customer
● Education of customers about value-creation opportunities
● Scientific models like big data-enabled customer analytics redefine customer value as sales management is using predictive models or experiments to understand the true potential
● Virtual experience like augmented or virtual reality in a gamified, multimedia and multisensory environment triggers the human need for experiential adventures during the buying process
● Marketing generates must-have situations and influences the buyer to create customer pull rather than pushing products through sales
● B2B offerings and services concepts are providing 24/7 accessibility through all channels- primarily the digital ones
● Sales reps use tablets with an online store app and guide the buyer through the online purchasing process to educate them about future purchasing options
● Personal B2B buying portals allow seller companies to analyze data from customers using the digital connected experience and have the ability to anticipate and adapt customer needs with data-driven activities
For example, Amazon has introduced customer interactions where they are presented with preconfigured value propositions geared toward their specific needs based on their historic search behavior. MyIBM provides personalized support and services to B2B customers based on interest and purchase history. Other suppliers increased their sales efficiency substantially by implementing a configurator that lets customers quickly put together a customized product solution and quote.
Thus, B2B sales organizations are learning to point out desires of their clients they did not even know they had. Oftentimes that means not just educating the customer, but also orchestrating the different parties and functions within the customer organization to discover and recognize the need. New players in the all-different sectors from banking to logistics use algorithms (machine learning) to intelligently track the data points their clients leave in various digital platforms such as Amazon, eBay, or Facebook.
Another example for how B2B sales can add value to companies is, once more, online retailer Amazon, who provides a mindset of “selling everything inside the company.” Amazon has taken an almost religious 360-degree B2B sales perspective on its operations, looking at every part of the company as potentially salable products and services. No matter if B2B or B2C, Amazon examines its entire value chain with a B2B sales eye. With these new large revenue and profit streams, Amazon’s B2B sales force is a powerful contributor to the bottom line and as a B2B-centered customer-focused company the B2B sales force can become the “superwomen and supermen of the future”.
Machine-learning enables recommendation engines to boost cross-selling revenues and generate new sales based on the user’s buying and search patterns. Churn prediction is another concept used to predict the risk of customers moving away and help maintain them before they switch providers, e.g. to avoid the unnoticed switch of electricity providers after a move.
1.1.5 Value through Digitization
New chances emerge in digitization for companies in the B2B and B2C areas in order to approach customers and decision-makers and present them with new offers. Nowadays, customers use apps on their mobile phones to read the news, make purchases, monitor their fitness activities or control their homes. In the business area, apps are being used to grant access to information anywhere, edit approval processes from anywhere and at any time, as well as observe the business development in real-time, to be able to react to altering trends.
Many services of companies do not offer a sufficient way of distinguishing between competitors in the area of 'low involvement' products and are thus being categorized by price. Digitization provides opportunities through new technology that improves the customer's experience, makes the offer come alive (e.g. through virtual reality) and presents need-based solutions (e.g. individual online consulting). Modern cloud-services - the online provision of IT-resources and applications on-demand for usage-based prices - allow for the acceleration of the time-to-market and the development of new applications and thus enroll new digital offers worldwide within minutes. Due to the usage-based availability of IT-resources such as the infrastructure (server, memory), as well as platform offers, services can be developed and innovations advanced in cost-efficient ways. Usually these are the strengths of start-ups that are available to large companies via cloud-services. This agility, which is typically known from software development, is not only a method, but also a disposition and a culture in which adjustable, interdisciplinary teams complement the hierarchically coined structures and focus their development on the customer (see also: customer-centered focus of a company). Real-time processes and agility are crucial when it comes to modern supply chains that are influenced by the paradigm shift in the trade between companies ...