Do you ever feel like glaciers move faster than your clients when it comes to making decisions? OK, maybe not a glacier but slower than a sloth? Of course you do and so does every sales person I’ve ever met. You need an X-factor to provoke your clients to explore your solutions and to explore them faster.
Here’s your X-factor: show how much your solutions contribute financially to your client’s company-wide goals. And more specifically, show what the contribution is to the different lines of businesses’ (LOB) initiatives supporting these goals.
I call this X-factor the Power of One! What exactly is the Power of One? It’s the financial benefit from a 1% improvement in the operational key performance indicators (KPIs) related to an LOB’s initiatives and those improved by your solutions. I’ve heard from hundreds of sales professionals that the Power of One is a great conversation starter and helps to focus on your solution’s potential financial benefits.
Let’s explore a use case. A retail client has a company-wide goal of enhancing the customer experience as a means to grow revenue. As part of your Insight-Led Selling approach you have:
- identified the lines of businesses supporting the goal
- discovered these LOBs’ individual initiatives they intend to pursue to contribute to the goal
- uncovered the financial and operational key performance indicators (KPIs) the LOBs will use to measure the success of their initiatives
- explained how your solutions can help the LOBs achieve their initiatives
Figure 1 is an illustrative mapping for the goal of enhancing the customer experience. It focused on two LOBs - Marketing and Distribution & Logistics. Let’s focus on Marketing.
Source: FinListics Solutions
The CMO has shared with you that two of Marketing’s initiatives are to provide more personalized offers, and to focus on evolving those offers to meet the changing ways customers interact through different channels. Some of the KPIs they’ll focus on include cross-sell/upsell, customer churn, and new customers. You explain how your solutions align with Marketing’s initiatives and share case studies illustrating how your solutions have helped other retailers improve the KPIs that are of interest to the CMO.
Now it’s time to introduce your X-factor – the Power of One to highlight that you’re focused on providing solutions that deliver business outcomes that enhance financial performance. But, it’s early in the sales cycle and you likely don’t know the value of the client’s KPIs, and you certainly don’t know if you can deliver the financial benefits that you’ve been able to provide to other clients.
Here’s a proven approach for introducing the Power of One. Start by using what you know about the client – in the scenario above, you know what revenue and profit margin are – and apply industry averages for the KPIs. The client has $10 billion in revenue, and the industry cross-sell/upsell rate is 8 percent of revenues. Cross-sell/up-sell revenues are $800 million ($10B x 8%) if the client looks like the industry average. A one percent improvement in revenue is $8 million ($800M x 1%).
Figure 2 shows a summary of the Power of One for marketing’s KPIs. It shows that a 1% improvement in all three of the KPIs increases revenues by $30 million.
Source: FinListics Solutions
So how do you introduce the Power of One into a conversation? Here’s an example.
“You’ve shared your initiatives for growing revenue by enhancing the customer experience and the areas in which you expect improvement. I’ve shared our capabilities in working with other retailers to help improve those areas; a major focus of mine is to help your company improve financial performance. It’s too early to give accurate details on the magnitude of financial benefits that could be delivered, but if I apply industry norms to a company your size, each one percent improvement in cross-sell/upsell adds $8 million to the top line, customer retention adds $7 million, and you’d gain about $15 million for new customers, for a total top line improvement of $30 million.”
Now pause and observe the executive’s reaction – they’re more than likely determining what a one percent improvement would be worth to their company.
“How do these benefits compare to a one percent improvement for your company? Would you be willing to share what your financial goals are for each of these areas?”
The executive may not have a set goal for the individual areas depending how far along they are in developing their strategies. This is a great opportunity to share your observations on the level of benefits received by other customers.
Power of One X-Factor Do’s and Don’ts
- DO make it a part of the conversation to highlight your desire to improve the client’s financial performance and to illustrate that you share their executive mindset.
- DO acknowledge the use of industry norms to arrive at your initial Power of One estimate… the one thing known with certainty is the initial estimate is incorrect as it applies to the client – the good news is that experience shows it is directionally correct.
- DON’T make a promise! It’s a conversation starter, not a contract to deliver the benefit.
Your call to action:
Identify 3 – 5 operational KPIs improved by your solutions and estimate the Power of One for each KPI. Practice using the Power of One approach in the process flow above with your colleagues. Finally, use this with one of your client’s executives; if you’re not already using the Power of One, I bet you’ll be pleasantly surprised by the reaction from the executive.