• The Big O – Outcome Selling

    Today’s buyer is more empowered, skeptical and frugal than ever before, providing a great challenge to sales and marketing professionals, and shaking the very foundations of traditional selling models.  This new IT challenge, called Frugalnomics, is indicated by:

    1. Empowered Buyers: 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 Buyers: 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. IT 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 Buyers: 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.

    IT buyers have fundamentally and permanently changed, and the IT 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.

    According to Scott Santucci, sales enablement analyst at Forrester, “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.

    Fight Frugalnomics with Outcome Selling?

    At the Forrester Technology Sales Enablement Forum earlier this year Forrester introduced an umbrella term to describe these practices, Outcome Selling, defined as “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.

    On the surface, this may not seem like a big shift for many companies, but when you think about the current way most sell and market, it is no less than dramatic.

    Product Selling No Longer Works

    Visit most IT websites, or view a sales professionals presentations, and you will find many are still centered around product features, functions and price -  focused on the vendors solutions versus the value the solutions deliver. This approach relies on the buyer to figure out what pain points the solution can address, and the specific outcomes the solution might deliver.

    In fact, when buyers were asked to characterize sales professionals, over 27% indicated that “They only want to tell me about their products and services.”

    With less resources than ever before, buyers demand more proactive consultative advice and support throughout the buying cycle. Expecting buyers to figure out what a solution can do for them, what value it can deliver is sure to lead to stalled buying decisions, and elongated sales cycles. Worse, the vendor is viewed as commodity provider versus trusted advisor.

    Solution Selling Puts Focus on Pain Relief, But Not on Delivering Tangible Outcomes

    The good news is that many IT marketers have recognized the issues with the Product Selling approach, and have advanced to a Solution Selling, where sales and marketing tries to uncover buyer pain points, an inquiry of “what keeps the buyer up at night”, and map solutions that can help quiet the indicated ailment.

    Although better than Product Selling, the Solution Selling approach relies on the buyer to accurately know and clearly communicate their pain points. Today we find buyers struggling with too few resources, and as a result, they are often misdiagnosing ailments, unaware of serious issues they have, or how these pains should be prioritized to meet specific business goals.

    For the IT seller, solution selling focuses stakeholders on remedying the immediate pain, but often fails to deliver a cure by not focusing on the outcome – the tangible value the buyer may or may not receive as a result of the solution.

    Do buyers think solution selling is working? When asked, buyers categorized over 41% of sales professionals as “listening for keywords and then quickly diving into prepared pitches, without truly understanding the true business outcome that the buyer is seeking.” This was the most common characterization of IT sales professionals, so it’s no wonder that only 13% of buyers think sales meetings are valuable.

    For marketers, solution based web sites and content are certainly better than the old product brochure website approach, helping guiding users to the right solution to remedy an immediate pain point, but a lack of outcome focus means that buyers perceive marketing content and campaigns as adding too little value in helping to facilitate buying decisions and partnership success.








    Buyers Categorization of Sales People from Forrester Technology Sales Enablement Conference Presentation – February 2010

    Outcome (Value) Selling to Drive “Trusted Advisor” Relationship

    A continued focus by sales and marketing on the cure, Product Selling, or a on a quick remedy to the known pains, Solution Selling, has failed to deliver promised results to buyers. What is needed is a holistic focus not on the cure or pain, but on the outcome – a holistic approach to wellness.

    A shift to the value outcomes, according to Forrester’s advice, requires that sales professionals and marketers move from the legacy 4Ps of sales and marketing – Product, Place, Promotion and Price, and move to a new mantra of Problem, Pattern, Path and Proof.

    The Move from 4-Ps of Product / Solution Selling to the 4-Ps of Outcome Selling from Forrester Technology Sales Enablement Conference Presentation – February 2010

    The 4-Ps of Outcome (Value) Selling include:

    • 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?
    • Pattern – How will your solution solve their problem? Who will use your product?
    • Path – How will it be purchased and how can you help facilitate the decision cycle? What does the customer need to be successful?
    • 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?

    The recommended course to elevate sales and marketing to outcome (value) selling includes:

    1. Diagnose Buyers Issues and Needs – buyers need help on properly identifying and diagnosing issues / opportunities. White papers can help provide ideas of what issues researchers see as important, but today, you need something more personal. The most successful providers will provide assessments to help  buyers benchmark their performance versus a best practice framework, competitors and leaders – an outcome focus. The diagnosis can help highlight proactively where the buyer is doing well already, or illuminate where they should direct resources and investments. From the benchmarks, the buyer now has a framework for urgency, helping to drive decision cycles to change the status quo. From a quantified diagnostic, the sales team can now recommend the right solution roadmap to best step-wise resolve the priority issues and drive the desired best practice / competitive outcomes.
    2. Build a Value Framework and Financial Justification System – In today’s frugal environment it is easier to do nothing than take the risk of making the wrong investment. The buyer needs help in understanding the “cost of doing nothing”, and the potential value of making a change. Financial justification is required to make the business case for change, helping the buyer quantify the total incremental investment requirements, quantified benefits and potential risks. Key financials such as return on investment (ROI) and payback can help summarize the value the proposed investments have compared to alternatives under consideration.
    3. Exploit Competitor Weaknesses and Prove Superior Value – frugal buyers today demand that they get the best deal on every purchase. You can be the best strategic advisor, but still lose the deal because another vendor offered a “similar” solution at a cheaper price.  Sales and marketing teams must realize that every deal is economically competitive, and superior value / lower total cost of ownership (TCO) must be proven to reduce unnecessary discounting and competitive losses.

    The Bottom Line

    IT buyers have fundamentally changed to be more empowered, skeptical and frugal, changing the way they assess and purchase solutions.  Savvy sales professionals and marketers realize this shift and are quickly moving from product / solution selling to outcome (value) selling in order to prevent  becoming a commodity provider and elevate to reach “trusted advisor” status.

    Focusing on the buyer’s problems, patterns, path and proof, the new 4Ps, help sales and marketing teams understand what is needed. While a roadmap of content and tools can help empower marketing campaigns and sales engagements to success, including Diagnostic Assessments, Financial Justifications and Competitive Comparisons.

    IT vendors can gain substantial advantages, including assuring that they avoid the coming commodity-trap. The benefits include:

    1. a seat at the table to help drive business strategy vs. just responding to RFPs
    2. high value sales with more reliable growth
    3. maximized client satisfaction for improved up-sell / cross-sell and references

    Done right, buyers also get significant benefits as well, which is what makes outcome (value) selling successful, including:

    1. Unbiased insight to help diagnose and illuminate issues
    2. Assistance in setting priorities and building solution roadmaps
    3. Business case justification
    4. Measurable performance improvements










    Changing the relationship with buyers from commodity to strategic using Outcome (Value) Selling is proven to deliver substantial results.

    Tom Pisello founded Alinean Inc. in 2001 where he coined the term, “Frugalnomics.” Prior to Alinean, Mr. Pisello founded Interpose, a provider of total cost of ownership (TCO) measurement and analysis software tools and training, which he founded in 1993 and sold to Gartner in 1998. At Gartner, Mr. Pisello served as Managing VP and was instrumental in Gartner’s software becoming the industry standard for TCO assessment.  After leaving Gartner, Mr. Pisello launched and developed several innovative companies and is a regular contributor to various publications, including ComputerWorld, CIOInsight, CIO Decisions and other TechTarget online journals.  You can read his daily blog at Tom Pisello: The ROI Guy.

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