Request pricing

Why value is key to growing a disruptive business

Why value is key to growing a disruptive business

Huthwaite’s Jo Derriman examines the crucial role of value and explains why it’s such a key ingredient for sales leaders growing disruptive businesses.

There’s a difference between disruption and innovation. Disruption is a relatively new business term but it’s hardly a new phenomenon. The first great disruption of the industrial age was made by Henry Ford when he mass-produced the Model T and brought affordable motoring to ordinary people. Prior to that, pioneers of the motor industry produced expensive products that were only available to the wealthy and had little effect on horse-based transportation. They were innovators but not disrupters.

In today’s B2B business environment many would have us believe disruption is the domain of the start-up, whilst mainstream suppliers service and grow their established customer bases through innovation. They argue that disruption starts in small, low-margin markets, the markets established companies don’t have the resources or agility to service.

I don’t think that’s true. Yes, there are a lot of disruptive start-ups who enjoy early success in the smaller markets, but few successfully scale into larger, more lucrative ones. In 2013-2016, 46% of UK start-ups failed. But, over the same three-year period, 2% reached annual turnover of more than £1million. Statistics from the EU and USA are remarkably similar, in most western economies around 40-50% of start-ups fail within three years, whilst only a small proportion really prosper. And many of those that are successful will go on to become major players in their markets. Across all market sectors and geographies there are market leaders who were disrupters 10 or 20 years ago.

 

Find out how to create a more confident sales team and ensure ongoing business growth in our free whitepaper:

Download

 

So what makes the 2% different from the rest? There are many reasons why a disruptive business can fail and most of these can be avoided with careful analysis, planning and clarity of vision.

One of the biggest is failing to delivery sufficient customer value. Regardless of your market, product or services, customers buy when they can see that the value of adopting your solution outweighs the cost of acquiring it. To successfully scale your business your sales team has to make that happen. And that’s why most disrupters fail. Through poor articulation of value or because there’s none to be had in the first place.

What is value?

Let’s start by looking at what it’s not. Firstly, it’s not your product or service capability. Nor is it your disruptive business model or your unique selling point. Truth is, value is not about you at all.

Value is the benefits and pay-offs the customer believes they will get from your solution. It’s entirely a buyer’s perception and it is different for different people. An engineer may value reliability, whilst the finance director values the increased productivity that reliability brings and the sales team value a higher quality end product that’s easier to sell.

Value is not necessarily what you, the seller, thinks it is and, if your solution is genuinely disruptive, the value may come from something or somewhere that no-one has considered before. By creating, uncovering and developing value in new, previously unconsidered areas you can create real product differentiation and sustainable competitive advantage.

How to create sustainable competitive advantage

Firstly you need a clear and accurate picture of what the value of your product or service is, and that’s unlikely to come from R&D or product management. They will no doubt provide you, the sales leader, with copious amounts of product literature, but the chances are that will purely be technical data – these people are technicians, data is what they’re good at. At best you’ll get details of the solution’s capabilities, what it does, and worst you’ll get a list of what it is, its features. The one thing you certainly won’t get is a list of reasons why a customer might buy it. Unless you have a top notch marketing team, it will be down to you and your team to find out.

You need to deconstruct the solution to find out where its potential value lies, a process here at Huthwaite we call Persuasive Case Analysis.

Firstly, you need to know what makes the solution different or better, your techies can probably help you with that, and then ask four questions:

  • What problems does that new or improved attribute solve?
  • What are the consequences for your customer if that problem remains unsolved?
  • What will the customer gain if that problem is solved?
  • How will your customer use that gain?

It’s only when you get to the answers to this last question can you truly understand where value lies. But remember, value is a buyer perception which varies from individual to individual, so your sales team has to answer these questions from the perspective of everyone who could potentially be involved in the buying decision and/or use or be affected by your solution.

And yes, I did say everyone. As we said earlier, disruptive solutions will create value in previously unconsidered places. Only by considering all the angles, (eg. individuals, departments, stakeholders) can we hope to uncover that truly compelling and unique value that will give you the growth you are looking for.

It’s potentially a huge task but it’s a great way of getting your sales team to get to know the new solution and, if you really want to get inside the heads of other functions why not ask you own colleagues? To know where the value lies for, say, a finance director or a procurement professional you don’t need to guess it. Just ask your own finance director or procurement person what, if they were buying your solution, would be of greatest value to them?

As you complete each Persuasive Case Analysis you store and share them, the ultimate aim is to have a completed Persuasive Case Analysis for every unique characteristic of your solution for every possible buyer or user type. And that’s just the start; as your sales team take the solution to real customers they can take the relevant Persuasive Case Analysis and refine it for that specific prospect, at both an organisational and personal level.

In effect you are building a unique value proposition for every individual customer and, given value is entirely a personal perception, that’s the only kind of value proposition that’s really worth having.

Identify your target audience

Once you’ve done that it’s time to identify your targets and that’s relatively straightforward – who is likely to have the problems your Persuasive Case Analysis has revealed your disruptive solution can solve? But, once again, remember a disruptive solution may have markets that are different to your traditional ones. Get your team to think creatively and brainstorm possible new markets or applications, then do some research to quantify the potential and decide if they’re worth pursuing.

Optimising the sales calls

Now you have your completed Persuasive Case Analysis and identified your target markets and your sales team are good to go. They head off to their first sales meeting and the conversation goes like this:

Seller: “We’ve got this great new solution. I’ve done an in-depth analysis and see you have problems here, here and here, which have consequences there, there and there. Our solution can solve these problems, which will give you gains of this, this and this which will allow you to do that, that and that. I’ve worked out you will save £100K, so, as our solutions only costs, £50K it’s a no-brainer isn’t it?”

Buyer: “Good-bye”

Clearly your sales team would never be that crass but armed with so much information is easy to fall into the trap of pushing your solution rather than pulling needs from the customer by asking questions. Our research shows that, even amongst experienced sales people, questions about customer needs fall by about 30% when introducing a new product or service.

So, think of the outcomes of your Persuasive Case Analysis as ammunition, what you need now is a mechanism to deliver your insights to the customer in the most persuasive way possible. And that means a rigorous sales methodology based on questions. Remember, value is in the customer’s head, your job is to get them to work it out for themselves.

The power of the question

Huthwaite’s SPIN® Selling methodology does exactly that, with Problem Questions uncovering the challenges your customers have and Implication Questions exploring the consequences. Bear in mind your disruptive solution may have an impact in previously unconsidered areas so, particularly when asking Implication Questions, you may need to give the customer a bit of direction. It may sound something like. “You say you have a problem with X, what kind of impact does that have on your supply chain?” If there are consequences in that area, and the customer has never thought about them before, you are revealing real insights and creating genuinely new value. You are being disruptive. Furthermore, because these are previously undiscovered areas of need your competitors are unaware of them and therefore aren’t addressing them. Not only are you creating new value for your customer, you’re creating competitive advantage for yourself.

Of course, value isn’t about how much pain your customer is going through, it’s about the relief they can get from adopting your solution. Once again, it’s about getting the customer to work out what they get if they buy from you and, most persuasively of all, what they can do with the improvements your solution can deliver. That’s where Need-Payoff Questions, (the N in SPIN®), come in. At their most simplistic they sound like “Is that a problem you’re looking to resolve”, but they can be used tactically to quantify the value, “What would you save if you resolved that?” and disruptively to move the customer in to whole new areas of benefit, “What would you do with that saving?”. That final question allows the buyer’s imagination, and perception of your value, to soar. In effect you are saying to the customer “Tell me all the other reasons why you should buy my solution”. 

Whatever the customer comes up with adds more value for the customer and, by moving into new areas, also builds your competitive advantage even more.

Presenting the solution

Only once you have built a strong perception of value do you present your solution, and here’s the final trap. Product management have given you a long list of impressive new features the solution has and the temptation to reel them off can be huge. Even if you avoid that, by thinking about what the features can do for the customer, there’s a risk that, once again, you are projecting onto the customer what you think they want; you’re not allowing them to think it through for themselves. Statements like “It’s got X which means you can…” are most likely to be met with “But I don’t want to…”.

The customer couldn’t care less about what the solution has or what you think it can do for them. You have spent time asking disruptive and challenging questions and built a clear picture of the value your solution can bring. The only thing the customer cares about now is how they can realise that value. Now is the time to show them how you can meet there needs with Benefit statements. They sound like this, “You told me that, if you were able to resolve X, you’d use the saving to…. Our solution enables you to do that by…”. That’s the most persuasive thing a salesperson can ever do – show the customer how you can get them what they have told you they want. It’s common sense, but as someone once said, common sense is very rarely common. That’s true here, our research shows Benefit Statements are the behaviour that most closely collate with a successful outcome to a sales meeting, but on average Benefits make up only 5% of a sales person’s behaviour. Successful sales people use consultative questioning to understand problems, identify what the customer wants to do and get the customer to quantify the value in doing so; and then show them how they can get it.

That’s selling value. That’s being really persuasive. And if your team are doing it in areas or ways the customer hadn’t thought of before, that’s being disruptive.

Is your organisation going for growth?

About the Author
Jo Derriman

Written by Jo Derriman