January 27, 2017 | Stephen Timme
In this two-part series, we show you how to use the Power of One to provoke your client to explore your solutions and move more quickly. Part 1 of this two-part blog defines what the Power of One is and where it’s used in the sales cycle; part 2 provides insights into using it with your client’s executives. You’ve traveled far in your value selling journey. You have discussions with lines of business (LOBs) to understand how their strategies align with company-wide goals. Another giant step is to demonstrate your solutions’ business outcomes using industry-specific language that resonates with LOB executives. The result? You’ll leave competitors still selling feature/function and total cost of ownership in the dust. But your more enlightened foes have also transformed into value selling sales machines. An X-factor is needed to provoke your clients to explore your solutions and to explore them faster. The X-factor…provoke with 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 strategies and those improved by your solutions. I’ve heard from hundreds of sales professionals that the Power of One is a great way to break the ice in their value-selling conversations. Let’s explore a use case. A retail client has a company-wide goal of improving the customer experience as a means to grow revenue. A marketing executive has shared with you that one of their strategies aligned with improving the customer experience is to create more individualized offerings. You explain how your solutions align with Marketing’s strategy and share case studies illustrating how your solutions have helped other retailers improve operational KPIs including customer churn, cross-sell/up-sell, and new customer acquisition. Now it’s time to introduce the Power of One to demonstrate that you think like an executive and are focused on delivering 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. Use what you know about the client - in the above scenario, you know what revenue and profit margin are – and apply industry averages for the KPIs. The client has $10 billion in revenue, a 7 percent profit margin, and the industry cross-sell/up-sell 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 1 percent improvement in revenue is $8 million ($800M x 1%); and profits increase by $560,000 ($8M x 7%). The graph below is a summary of the Power of One for the KPIs related to Marketing’s strategy; the impact on both revenue and operating income is shown. A marketing executive is likely focused on the top line – or how your solutions increase revenue. The CFO, on the other hand, is likely more focused on the impact to profits. It shows that a 1% improvement in all three revenue-related KPIs increases revenues by $27 million and operating profits by $1.9 million. Your call to action: In Part 2, we provide insights into using the Power of One with client executives. For now, develop estimates of the Power of One for your clients’ strategies and your solutions.
Key Performance Indicator