Value-based selling for the UX Centric Enterprise

Silvia Podestà at UXDX Community: EMEA Online Series. Video: https://youtu.be/g7RTSKbh-94

Readable transcript: edited from the recording's captions for readability (fillers and false starts removed, punctuation and section headings added). Wording is the speaker's own. Timestamps are positions in the video. Names marked [?] could not be verified against the audio.

What value based selling actually is

[00:00:00] Today I think it's also important to discuss this from a strategy, innovation and design perspective, and I also want to show what we are doing in IBM client engineering, and how we are using the principles of this approach to foster the innovation journey of our clients and also to promote more user centric solutions and better experiences.

[00:00:24] So it makes sense to start from defining what value based selling actually is, starting from a definition of value that caught my attention. This is from Seth Godin's blog, the famous marketing guru, which reminds us that value is not the price, or is not just the price of an item. So two items that retail with a different price might have cost the same to produce. But even if we know that, we are still willing to pay for that price difference. And if you're not into wine, I think the metaphor applies to literally anything. And the reason why you're willing to pay for that price difference lies in something bigger, and that something bigger is what the product does for you. This is exactly what you want to demonstrate when you play around with value based selling.

[00:01:13] So value based selling really articulates this idea about sales as being broader than just shipping a product, and more about co-creating a solution with customers. The backdrop of this is that there's been a shift over the last decades from seeing sales primarily as a product or supply centric process to focusing much more seriously on the customer.

A brief history of sales: feature, solution, value

[00:01:39] I'm going to give you a brief and very simplistic overview of the evolution of sales epistemology. In the past decades it was primarily all about feature selling. That was kind of ideal, because there would always be a straightforward way to map a product capability to a specific business problem. But as problems became more complex and competition kept growing around the same very products, we reached the point where companies started to sprint away from product and feature selling and embrace solution selling, whereby they would create different versions of products for different needs. So they would basically try to cater for different customer segments.

[00:02:26] That really took off during the 80s, and particularly with companies who had highly customized products or would sell packages. Mobile companies for instance, but also IT companies who would provide additional services, say maintenance or security, on top of their existing platforms. Those would likely provide bundles for each of the different customers. And actually this led to product differentiation and to designing more sophisticated kinds of products, and would fit into a differentiation leadership kind of strategy.

[00:03:06] But with competition ever growing, and also with a customer base that was becoming more intelligent, and I will come back to this concept shortly, we reached a point where competing just on differentiation was still necessary but not sufficient to secure a deal. This is the point where we started to put an emphasis on this concept of value in the sales setting. At first as a kind of generic value selling, whereby sellers would provide buyers with very generic examples of the value that would accrue to other organizations through the use of these solutions. So it's something that was really convenient from a sales rep perspective, because they would just whisk out a preset success story to show the value of their solutions. But soon they realized that this kind of approach was a little bit too generic, too wishy-washy, and it would never persuade customers to buy the products or buy into the products. And so this is the point where we started to talk about more specific or differentiated methodologies for value based selling, and this is the point where we are today.

[00:04:17] So value based selling really is an approach to sales that focuses on how a product or a service provides value to a customer, rather than focusing just on price, on products, on product features. And what is it that qualifies value based selling? There's this strong focus on customer needs, so we are still in the solution selling realm, we are still in this customization domain. There is a quantification of the value, and this is very distinctive of value based selling, because, as in the previous talk we touched upon this point, value is a mouthful of a word and it can be really difficult to pinpoint to something specific. But if you're able to prove the value of your solution in terms of higher efficiency or increased revenues or employee retention or customer satisfaction, then you put a number behind these vague words. And this is what value sellers do. They quantify that value, they put a number to it, and against a specific business problem.

[00:05:24] This is important because, in this way, by quantifying, by putting a number, you are able to better communicate the reason why customers should buy into your solution, and at the same time customers are really able to understand what is the impact on the business model, on the business problem, on the ecosystem, and crucially they can do that before committing financially to a particular solution. So there is also this de-risking kind of element, which is appealing for them.

[00:05:56] Conversations in value based selling are quite particular and are different from the typical conversation, because they're far more engaging and far more interactive, and also sellers are taking on a more consultative approach. They're really striving to guide the customers into taking informed decisions, which ideally of course should lead also to the purchase of a particular solution.

Why now: customer caution, informed buyers and wicked problems

[00:06:22] Why now? Why do we need a new way of selling, first of all, and why now in particular? The backdrop to all of this is that something has changed in the sales world, and there are several challenges, and primarily they concern the sales teams. I don't want to talk about unprecedented challenges, but of course sales teams today are facing challenges that are tougher than in the past. Global uncertainties such as the Covid-19 crisis, worsening inflation, other cyclical crises unfolding in our economy, have really ushered in a new era of customer caution. Companies are making only the most essential expenditures, there's a high level of financial scrutiny, and this is making things tougher for sellers.

[00:07:17] But also there is a process which started with the advent of the internet and which is sort of magnified today, whereby easy access to information has shifted the balance of power from the seller to the customer. In the past customers would just pick up the phone, call a company and ask to speak to a sales rep. But since the advent of the internet that concept has been literally turned on its head. So now customers can really have information on products, they can request demos, they can read other people's opinions, they can look at different use cases on the web. So really the balance of power has shifted, and customers are typically entering the sales process much more knowledgeable and much more opinionated about a particular product.

[00:08:04] 77% of buyers say they contact a salesperson only after they've carried out the due diligence, their own research, on a particular product, and this is making things a little bit tougher for sellers. And on top of that, and increasing pressures to reduce cost, there is also this mounting skepticism around generic promises of product performance, and companies are asking more and more for tangible proof of the value of these solutions.

[00:08:37] But I think that by far the most important element that makes the case for value based selling goes beyond sales actually, and is about the increasing complexity of the business problem space, which as a result has an impact on the sales setting. As I said, because companies today are facing really tough challenges and what we call wicked problems. So problems that are ill-defined, ill-formulated, where there's lots of confusion, lots of ambiguity, there's a plethora of stakeholders, no one is really talking with the other, no one is really understanding what the others have to say. And crucially, where you don't see the long-term impact on your solution, on your ecosystem, how it's trickling down on your employees, your customers, all your systems. So you don't see the long-term effect on your innovation roadmap. Those are the wicked problems, and companies are really asking sometimes salespeople to understand these problems and to account for them, which is really, really difficult for them to do.

[00:09:41] So this is the backdrop of the storm that sales teams are called to weather. And really value based selling, we can define it as the last incarnation of solution selling but in an era of increased competition and increased complexity. The promise of value based selling really is that the sales argument is not any more, I've got a specific product for your specific need, but it's more about, with my solution you're going to achieve X and Y, I'm going to measure this value, I'm going to measure this value against your very problem. And this is good from both sides, because customers can relate, can understand when a solution relates to their particular problem, they can understand the impact, and also for them it's de-risking, because they can actually understand that before committing financially to a particular solution.

Co-creation, and why value has to be experienced

[00:10:44] One key element of value based selling is really co-creation. This is key, and methodology-wise is what really sets value based selling apart from other types of sales, and is really about involving customers in the creation of this value, in the creation of a solution. Actually what co-creation is all about is an exchange of resources among different actors. So actors interact together and they do share resources, they integrate other actors' resources, and crucially they do create also other resources along the way, along a kind of learning process.

[00:11:19] That's really key, and also co-creation actually has another benefit, because it creates engagement around the sales process. So it creates an experience around this process. And this is really important, and I'm still stealing from Seth Godin's blog here: the price of an item is obvious, it can be seen from a mile away, but value is more subtle and it often needs to be experienced to be understood. So what value based selling says is, if you are able to tangibly show what they stand to gain from a particular solution, how it's going to impact the business model, the business problems you are framing, you are creating intriguing value propositions that your prospects, your clients are going to be receptive to.

Value based selling and design thinking

[00:12:08] Now I want to investigate more the relationship between value based selling and design thinking, because I'm assuming that most of you tuning in today are designers, and we touched upon some things that might sound incredibly familiar to you: wicked problems, user centricity and co-creation. Actually I would argue that design thinking not only resonates with the value based selling scenario but can actually elevate it into a real path to innovation, and a path to the design of better experiences and more user centric experiences.

[00:12:45] This is the high level process for value based selling, and you can see how it is tremendously adhering to the high level steps of the design thinking framework. So there is an understanding, there is an exploration kind of part, there is a problem definition kind of phase, and then we go to the prototyping, the solution, the making phase, when we do create those artifacts that make the value visible and make the solution tangible. So this is really understanding, problem statement, and creating.

[00:13:26] This is a framework, and I like to think of frameworks as recipes. Any framework, that could be a strategy framework, a marketing framework. And recipes, you've got a recipe for an apple pie and all your ingredients are there, but then if you use your ingredients in a different way you might create a recipe which is still an apple pie but it better suits your liking. Frameworks work like that, in my opinion.

IBM's value engineering framework

[00:13:57] This is actually the high level framework, this is the take on this recipe that we have in the client engineering team in IBM. This is the high level framework, we call it the value engineering framework, that we use in IBM to break the wicked problems down and co-create with customers the solution to specific problems that we do identify. This is a very simplified version, actually the model is much more articulated because there's lots of engagements along the way, but actually it can be roughly halved into two.

[00:14:33] There is an innovate phase where we understand what the problem is. We do a full body scan of what the business problem actually is from a user centric perspective. So we really understand what are the business needs and the user needs, and we connect the two, and then we define a business opportunity that we want to focus on. And then there is a co-creation phase where we actually work with the client in a sort of agile, iterative way, to create a solution that can prove the value of the technology applied to a specific business problem. And crucially, what we do in the co-creation phase, we measure the value that would ensue once the features and the ideas that have been presented in the innovate phase are pushed into production.

[00:15:19] And the double diamond is there because what we really do is to open and close. So there is an exploratory phase, we do research, and then we close down, we converge on a business opportunity, and then again we open up again because we explore different things, we iterate with the client, and then we converge again on the MVP, which is the minimum viable part of the solution we are going to design, which is how the product should look like at the end.

[00:15:47] It's worth noticing that this kind of framework is very, I should say, unusual or counterintuitive in a sales setting, where traditionally the process has always been represented as a straight line, or I should say as a funnel, so progressively narrowing down to the closure of the deal. But actually in this case it is completely different. So it is a completely alternative approach to sales, that kind of supports sales in a way.

What designers do in this process

[00:16:17] I would like to dig a little bit deeper into the role of designers in this. During the innovation phase it's really a twofold kind of job, because we do have a more strategic role in the innovate phase, where we do research and where we do facilitate. And that's really important, because actually what we do in these engagements that we have with the clients, we do work in multidisciplinary teams, because projects are so complex that we actually need to reach out to different experts. And so our teams are very compact, where we actually reach out to different experts, because it's really important to have in the room all the disciplines and all the specialisms that are required to break down those wicked problems.

[00:17:03] One really important role that we designers have in this multidisciplinary team is actually that of connector, or bridge. So we bridge different specialisms. And there's an analogy which is beautiful, by Victor Papanek, the famous designer, and he used to say design is a kind of Esperanto language. This is actually what we can do at our best, is connecting different languages, connecting different specialisms in the room. And then that's the innovate phase. In the co-creation phase, that's the making, and this is where we build those artifacts, we build blueprints, MVPs, prototypes, or something completely different that could be a conversational AI, so that could be the content for the conversational AI. So something that has a tangible kind of outcome.

Why it's hard to operationalize

[00:17:55] So far so good, because we touched upon the theory of value based selling, how it's promising from a sales perspective but also from an innovation perspective, particularly when paired with design thinking, which is what we do in IBM. But when it comes to implementing this kind of approach, value based selling, that's a different story, because companies, we are seeing, are really learning value based selling the hard way, and many have only really started to understand the value of things like co-creation or understanding customer needs.

[00:18:31] So it's quite difficult, despite the bountiful opportunities that this approach brings, it is very difficult to operationalize. I stumbled upon several studies on the subject and they all point down to some key challenges for the sales teams to implement this kind of approach. The first is to demonstrate the impact of the solution in the short time frame of a sales process, because we are in the sales process to all intents and purposes.

[00:18:58] A second challenge lies in a reluctance or a resistance of sales teams themselves, because as this process tends to be longer than a usual sales process, it might be tedious for salespeople who are in a rush or do have tight targets to meet. A third element is around finding quantifiable value elements. So in some projects it might be difficult to find elements that you can measure the value on. And the third challenge is actually engaging the customer in co-creation, so getting the commitment to share those resources. As I said, co-creation is about sharing resources, so sometimes customers may be reluctant to do so, primarily because they don't know you, they don't trust you, they might share resources that are sensitive, that are actually proprietary. So you need to find a way to build that trust.

The cultural change that has to happen

[00:19:54] I think the answer to these challenges lies in a massive cultural change within organizations, which has to happen at multiple levels, and I tried to jot down a framework for that. The first change that needs to happen needs to happen at the sales teams level, and sales teams really need to shun the path of least resistance, meaning that when there is a pressure to close the deal it's all too easy to skip that research, to skip that full body scan of the business opportunity and of user needs. And it's very easy to default to searching for information about how to frame a problem from a single source of truth, that could be the CRM, that could be the internet, but this often results in a very partial and one-dimensional view of the customer, of the prospect, and of the problems they are trying to solve.

[00:20:47] So it's really important that we ingrain that kind of value based culture into sales teams. And this comes down also to, there needs to be a rethinking of how the sales process works, and also of the structures around the sales process. So primarily, how salespeople are measured. What are the metrics of value performance? These need to be tweaked in order to accommodate for value based selling kind of practices.

[00:21:22] A second point that needs to change is actually promoting an understanding of design thinking within the sales teams and the leadership teams. The message that has to pass is that design thinking is a solution based approach to solving problems, and it combines desirability from a human perspective with technology feasibility and with economic viability. And for that reason it really helps solve problems that are not conventionally associated with design. I always love to refer to this framework. This is Richard Buchanan, the four orders of design, and it really shows how design really encompasses everything that goes from the physical to the intangible, touching upon processes and systems. This is really what we need to nail down at every level of organizations, to really make them understand that design thinking is much more used and is increasingly successfully used also in innovation and in strategic contexts.

Abductive thinking, and what "user" really means

[00:22:36] In that respect I would like to highlight something, because design thinking works in a particular way which is more abductive, and this has a profound impact on sales strategy when you apply it. So traditionally there are two strategies in regard to sales. One is a more deductive kind of strategy, or push strategy, whereby the supplier assumes what customer needs are and so they provide an optimal solution, and that was the case of technical, say, feature selling. Another kind of approach is an inductive kind of sales, which is more a pull sales, where you basically ask your customer, what is it that you need, and your customers tell you what they assume they need.

[00:23:31] But value based selling says, no, we both know what the needs are, or what the needs that we should focus on are, what is the best opportunity that we should pursue, and therefore we are going to sit together, we are going to frame this opportunity together and we're going to co-create the solution. So it's not deductive, it's not inductive, it's an abductive kind of approach. So it's based on hypothesis and validation of those hypotheses. And this is precisely how also design thinking works, so how design thinking can really tweak the sales process.

[00:24:01] It's really important also to send the message to the sales teams that it doesn't have to be value based selling all the time, because sometimes problems are really well defined, they're not wicked problems. So you might resort to either of the first two approaches. In some cases you might just use a deductive kind of approach, a push kind of approach, or an inductive kind of approach. But in some other cases value based selling, particularly when you have to deal with wicked problems, is particularly helpful and is particularly meaningful.

[00:24:34] Another change that needs to happen is actually making sure that everyone in organizations, both buyers and sellers, understand what user centricity really is. It's actually really fascinating to see, in every engagement that we have, that the best business opportunities and the most pressing business needs always, invariably, come down to addressing a user's need.

[00:25:03] I think this concept of user centricity is really well captured in this quote by the legend Vivienne Westwood. Sadly she left us weeks ago. This is from a very old interview where she was commenting on the apparent decline of art culture in the 90s, and she famously bemoaned fashion houses because they don't design with a woman's body in mind. They spend a fortune on prototypes that actually can't be worn by anyone, and it's just the idea of a beautiful product. But luckily there are still a few, and she actually appointed herself to be one of those few who still care to design something that, when a woman wears it and walks down the street, nobody will look more wonderful than that woman. I think this is the key message, that you really need to design stuff that will benefit the life of someone and the work of someone at some point along the line.

[00:26:02] Actually one of the difficulties sometimes in communicating the value of a user centric culture is to really define this word user, because sometimes we tend to think of user in terms of the end user, so the one who pushes buttons on an interface, or the end users in the end market. Actually in an IT setting for instance, or in a B2B kind of scenario, it might be more difficult to identify what the user actually is, particularly in IT where sometimes you just have agents, you have systems that are benefited by a particular solution. But actually what's important to communicate is that, whatever you do, whatever solution you implement, there's always someone being benefited along the way at some point in the process. There's always someone pushing those applications, pushing those systems, and your value proposition needs to be tweaked around that.

[00:26:55] This is also important, to think in human terms, to scope down what you want to do into an MVP, because you're going to measure that MVP in terms of the benefit accrued to a real user when your solution is in production.

Scoping to an MVP, and wrapping up

[00:27:08] One last point is about this MVP and scoping down to the MVP, because actually, as I said, you don't have six months to carry out a project in a value based selling scenario. You are still in a selling kind of process, so you really need to close a deal, and you might have four weeks, six weeks or some weeks to close a deal. So what you need to do is to scope down on something that is enough to show the value but at the same time has the power to really make you envision what could be a future roadmap. So what could be a solution in the future, and what could be the implication on your ecosystem, and how can you scale up from this small portion, from this small bite of the cake? What could be the cake in the future? So what's going to be your innovation journey in the future, starting from this small experiment, so to speak.

[00:28:12] Just to wrap up, value based selling can be a transformative approach to sales, particularly when paired with design thinking, and can really transform the sales process into a path to innovation which is grounded and rooted in users' needs and in the value that accrues to users. And it really allows all parties to envision future ecosystems. At the same time it also allows for companies to implement these agile experiments that really fit into this space and time. The time to market and the pace of innovation, all of this is really tough for companies now, and value based selling really proves to be a way also for them to effectively try out new solutions and experiment, with the mindset that everything is a prototype. Nothing is ever really done and you can always improve along the way. And from a designer's perspective this is absolutely one of the most interesting spaces to be in at the moment. Thank you for listening to me, and apologies for the glitches that we had earlier, and thank you. I'm curious to hear if there are questions or comments around this topic. Thank you.

Q&A

[00:29:35] Host: Great, thank you very much. That is actually a topic that I'm really, really massively interested in, because I do think it's a better way of working. But I have so many questions of how does it actually work in practice. Before I jump into my questions, there was a question from Maha, who asked, can you expand a bit on the perfect design solution for that need, which was seen in phase two of the workflow diagram? I think what it was, was you were talking about your design thinking, where you come up with a wicked problem and then you need to experiment and get the empathy and understand what that solution could be.

[00:30:18] Silvia: I didn't quite catch the first part of the question. What page are you referring to?

[00:30:24] Host: It was phase two of the workflow diagram. And the question was, can you expand a bit on the perfect design solution for that?

[00:30:34] Silvia: Yeah. So that's really when I said that value based selling is the last incarnation of solution selling, because actually what you do, you really start from what the needs are of the business. But actually what you want to do is to find out what is the best business opportunity to pursue. And the best business opportunity usually is always related to some sort of user need. And the best solution that you can develop is something that meets the business need and the user need in the middle.

[00:31:15] Silvia: It really allows you to ground that design into an improvement of a human condition in a way. That could be an employee, that could be a customer, that could be a third party, a stakeholder. But by doing so you're really able to make it concrete in a way, make it tangible, and you can measure it in a way, you can put numbers behind it. So it's more concrete. I don't know if that answered your question.

[00:31:47] Silvia: But actually it really comes down to, when you do have a wicked problem you really need to break it down and always take it down to the user need. And what you do, because you might have a plethora of user needs, you need to prioritize, and that's an activity that you do with your customers. Particularly, as I said, if you want to develop something small, something that you can scale. So what we do usually is we prioritize and we say, this is what we are doing, the MVP, this is what is taken, this is a future goal. So it's really important, because you really need to keep an eye also on what you do. You really need to prove something in a short time frame, because you are in a sales process. So you really need to understand what are the most urgent needs that I want to solve. So you prioritize needs, or pain points, depending on the angle you want to frame it.

[00:32:46] Host: Great. I hope, Maha, that's answered your question. Unfortunately we're out of time, we're slightly over, but we had some technical issues so I let it run a little bit late. But thank you very much, Silvia, really enjoyed that. I do have a few more questions that I'll post into the Slack channel, and hopefully you've been invited there, so hopefully you'll be able to join us and answer those. Thank you very much.

[00:33:07] Silvia: Thank you.