We discussed in Part 1 of this series how the Power of One is your X-Factor in separating yourself from competitors and motivating clients to move more quickly to explore your solutions. As a quick reminder, the Power of One is the financial benefit gained from a 1% improvement in the operational key performance indicators (KPIs) related to an LOB’s strategies and those improved by your solutions. In this Part 2, we examine some best practices using the Power of One with client executives. We’ll then explore using the Power of One as part of account planning in Part 3. Including the Power of One early in engagements with client executives helps differentiate you from most competitors by engaging in a more financially-focus conversation; it also aids in developing insights into the executives’ financial goals used to assess the relative importance of your solutions’ financial benefits See the process flow below for an approach to using the Power of One. Notice how the Power of One is used only after discovering the executive’s strategies, expected areas of benefits, and also after you’ve shared your capabilities. Leading with the Power of One can often lead to a very short meeting. Many of your clients likely conduct their own internal Power of One analysis using their actual data, which is one reason why your Power of One will often be well received - it shows that you think like they do. Let’s explore an example applying the Power of One. From Part 1, your client is a retailer with $10 billion in revenue and a 7% operating income margin with a company-wide-goal of growing revenue. One of Marketing’s strategies to grow the top line is to enhance the customer experience by creating more appealing individualized offerings and to leverage omnichannel. The CMO has shared with you that expected benefits areas are:
- Cross-sell / up-sell
- Customer retention
- New customers
The graph below show the Power of One for these benefit areas using the client’s revenue, profit margin, and industry averages for the KPIs. So how do you introduce the Power of One into a conversation? Say you’re talking to a marketing executive whose focus is on growing revenue. Using the process flow above, you’ve completed steps 1 – 5 and are now at Step 6 – here’s an example of how you could start a discussion using the Power of One: “You’ve shared your strategies for growing revenue 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/up-sell adds $8 million to the top line, customer retention adds $4 million, and $15 million for new customers for a total top line improvement of $27 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 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 companies. Power of One 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 with your colleagues using the approach in the process flow above. 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. Stay tuned for Part 3 where we explore using the Power of One in account planning!