EP57: What to Charge for a Trip to the Promised Land
As a follow-up to the recent Market Dominance Guys’ podcast, “Vanity, Vanity, Thy Name Is Value Metrics,” Chris and Corey continue here with part two of their conversation with Mike Genstil, co-founder and CEO of VisualizeROI. Mike and Chris share their insights into value metrics and how to construct and present statements about value propositions and returns on investment. These market dominance experts explain that it’s all dependent upon the job title of the customer rep being addressed, as well as where in the sales cycle you are with that company. Is risk mitigation the most appropriate metric? Is it perhaps better to talk about productivity gains? Or would a statement regarding cost savings be more enticing as a promised ROI? And, as Corey asks, whose job is it to craft the appropriate statement for the value prop or ROI?
Mike cautions listeners about the importance of being careful in the representation of value when talking to a prospect or customer, because it’s necessary that the stated ROI be credible.
He then gives examples of formulas for determining what you should charge a customer by relating it to the amount that company will gain by using your product or service. As with all Market Dominance Guys’ podcasts, you’ll find this sales-related topic both enlightening and helpful in your quest to dominate YOUR market!
About Our Guest Mike Genstil is co-founder and CEO of VisualizeROI, an innovative company that enables B2B sales and marketing professionals to easily create and share visually compelling value propositions with prospects and clients.
The complete transcript of this episode is below:
You are listening to the Market Dominance Guys with your host, Chris Beall of ConnectAndSell and Corey Frank of Uncommon Pro. As a follow-up to the recent Market Dominance Guys episode, vanity vanity, thy name is value metrics, Chris and Corey continue here with part two of their conversation with Mike Genstil, co-founder and CEO of VisualizeROI. Mike and Chris share their insights in the value metrics and how to construct and present statements about value propositions and returns on investment. These Market Dominance experts explain that it's all dependent upon the job title of the customer rep being addressed, as well as where in the sales cycle you are with that company.
Is risk mitigation the most appropriate metric? Is it perhaps better to talk about productivity gains or would a statement regarding cost savings be more enticing as a promise to ROI? And as Corey asks, whose job is it to craft the appropriate statement for the value prop or ROI? Mike cautions listeners about the importance of being careful in the representation of value when talking to a prospect or customer, because it's necessary that the stated ROI be credible. He then gives examples of formulas for determining what you should charge a customer by relating it to the amount that company will gain by using your product or service. As with all Market Dominance Guys podcast, you'll find this sales related topic both enlightening and helpful in your quest to dominate your market.
Corey Frank (02:07):
Welcome to a part two edition of the Market Dominance Guys with Corey Frank and the sage of sales, Chris Beall. I am not on camera today to save precious bandwidth because I would not want to have any iota of bytes or exabytes or terabytes wasted on looking at me when we have Mike and Chris, these two experts here where I'm going to try to get out of the way as much as possible. Last time, I think in part one of our exercise with Mike Genstil hear from VisualizeROI, we were talking a little about a lot of vanity metrics that big dumb sales farm animals like me use to try to justify or dazzle their board with how we're doing in sales. Certainly was a important episode, you should go back to the listen to in part one, but part two I thought, when we kick it off today gentlemen, let's talk a little bit about how that spark happens between sales reps and actually the prospect when we are in the language, we are right in the heat of battle so to speak of trying to communicate ROI during the sales process.
Oftentimes we'll talk about features and benefits and things of that nature of course, but how do we in a VisualizeROI world, they talk about justifiably earning Mike, the available budget and this value-based messaging that you talked about so eloquently in part one, how do you communicate that? How do you go beyond just a traditional budget type of conversation to paint a picture of how or why the ROI occurs? I think that would be a good place to start as we enter into the next episode of the Markets Dominance Guys here. Good to have you again Mike.
Mike Genstil (03:50):
Thanks Corey. We tend to help organizations who are trying to engage buyers around value. Think about four buckets of value, hard cost savings, revenue acceleration, productivity gains and risk mitigation and every buyer that you engage with, if they're truly interested in your service or solution, they will have to create a business case internally that will touch on at least one of those points and often it's several. The favorite one for buyers and sellers is hard cost savings, meaning you're spending X with this certain vendor today and you're spending Y with another vendor. If you shift that spend to us, you'll actually be able to save costs and that's dollars back in your pocket and the CFO will appreciate that argument as well as the advocate that you're selling to. You go down the line, most B2B organizations are selling something that gets productivity gains and productivity gains are a little bit tricky to quantify the value of, because you get a lot of hours back for people avoiding certain activities. What are those hours worth and it's hard to quantify that sometimes depending on what those people do.
For salespeople, if you get hours back from routine tasks, well, theoretically that's more time spent selling, which allows them to actually achieve their quotas more effectively. You could say those productivity gains equate to incremental revenue booked and that's going to appeal to every VP of sales, as well as CFO and CEO in that buyer decision-making unit. The next one is risk mitigation and so you've got every organization is making certain amount of mistakes, both in their internal accounting, internal processes as well as the product and services they offer to their customers. Everybody's making mistakes. Some of those mistakes are easily measured. A good example of it is an assembly line. People typically know the error rate on their assembly line. If I produce a thousand widgets, typically a half percent have something wrong with them, if I could reduce that, that would be a good thing.
To your point though Corey on visualization, there's two sides of visualization here. The first is the images themselves that the marketers are already doing a good job creating. Most B2B organizations that we engage with have marketing teams that are very effective at creating sales materials in the form of PowerPoint presentations or Google slides or other imagery that has very powerful images that describe value proposition, reduce carbon emissions and a picture of a cloud, reduce this, improve that, and those images are very powerful. What we do is we equip sales reps to overlay numbers on top of those powerful images that the sales reps are already using in their discussions.
That's part A, overlaying numbers and data on top of good images and making that data dynamic and then part B is charts and graphs. Depending on who you're selling to, some people appreciate images with data and others appreciate bar charts or pie charts, lets say you were spending X, that's coming down to Y. The best visuals that we equip our customers with are a combination of beautiful images with numbers as well as bar charts and pie charts and line charts, showing cost savings and revenue growth over time. That's kind of in a nutshell, how we think about it.
Corey Frank (07:04):
When I look at our cost savings or risk mitigation or productivity gains or into the other, is there one that you found Chris, maybe even from your world too in the ConnectAndSell world, that when I'm speaking the language of ROI that is more alluring or sexy or powerful than another, for instance is hard cost savings may appeal that this person, this persona, productivity may... are they all really kind of different heads at the same point?
Chris Beall (07:31):
I can speak to this from long experience, not just in ConnectAndSell but other companies. I've done consistently selling productivity gains that free up people's time. That sounds great until somebody thinks it through a little bit and then the question is, well, are they going to fire people in order to also save money? Probably not, and what do they thinks going to happen with that time? I remember the general counsel of General Electric once took me aside and said, when we were selling some productivity kind of oriented stuff and he said, Chris if it doesn't save a dollar that the CFO can see as a dollar, don't talk about it, we call that water cooler time and we value it at exactly zero.
That was fortune one at that point and very sophisticated viewpoint, somehow I managed to listen to them well enough to change the message around from the sole savior engineers two and a half hours per part that they find to this will save you $50,000 of vendor certification each time they find a part and 11 divisions of General Electric bought our product and we became important in the electronic catalog and space for engineering. Getting that right and getting over where that hard dollar cost savings was something that Mark [inaudible 00:08:49] needed. The chief counsel of all of General Electric could stand behind as he spoke with the CFO, that was really important. Now later in our relationship, he pounded his fist on the table and said, Chris, you are destroying the General Electric company, we had a different conversation but that was the conversation we had to get in and then there was the later one.
The other thing is people respond differently at different points in the sales cycle to different things. So very early in the sales cycle, there was an attraction to upside that is not followed through later and there is a distress, an emotional distress with risk that when risk is emphasized early, it's a wonderful thing. That is, if you say we completely eliminate, I believe we've discovered a break trip through that completely eliminates. The fundamental risk of X, whatever X is and then you'd say something that's emotional and the frustration with Y allowing you to do Z. That's pretty good. If you're trying to get a meeting, that combination works pretty well because completely eliminating fundamental risk, this is surprising after all it wouldn't still be there and be fundamental if that were easy, so that's a bold claim and wiping out an emotional stressor, which is always frustration by the way of business, always, always, always frustration.
Everybody's frustrated all the time in business because they're trying to do really well. You know what Deming taught us that's right. People have pride of work from show and they feel like they never quite have the time, the resources or the support to do their job as well as they hold themselves accountable for. Then they're trying to go somewhere and that's the upside. But if it's the upside of like and it makes you more dollars, that's probably not as appealing as it will let you accomplish the thing that's been sitting on your plate for three years, you've been unable to move toward because you're so busy doing other crap.
Mike Genstil (10:44):
Yeah. I think Chris, you talked about the persona and the different stages in the sales cycle and I think the way you articulated it was correct, where the CFO, particularly in conservative companies like GE are going to need that hard dollar savings, but to get to that CFO, you needed to get through some middle management layer. That middle management layer may or may not care about the hard cost savings because it doesn't affect their job and so as you're appealing to that person, you need to say, what is the job you're trying to do? You're trying to get more widgets through the assembly line more quickly, more effectively with fewer errors, at reasonable prices. You might talk about higher throughput and a lower error rate, those metrics that person might get as bonus based on those two things, throughput and error rate, so yes, the whizzbang thing that you're selling, today you're here, going forward you're here on your error rate reduction, et cetera. But then when you get to the CFO you flip the thing and you compute the actual hard cost savings per your metrics, it's vendor certification.
To kind of tie it together, you kind of build a matrix of persona on one axis and then the actual KPI's on the other and your business value story needs to be able to show the right metric to the right persona at the right time through the sales process. It's pretty elegant and sophisticated and you kind of need software to do that which is where we come in, but that's kind of the Holy grail because you have to consider the entire decision making unit and what each person cares about and putting the right numbers in front of right folks is tricky, but I would agree with Chris's point on hard cost savings is the number one thing.
Chris Beall (12:22):
We're certainly number one at the end, right?
Mike Genstil (12:25):
At the end?
Chris Beall (12:26):
But I love this. This is so important because often in sales, we get locked in to what we consider to be a value proposition. I remember walking into Sean McLaren's office when I first joined ConnectAndSell. I've been with the company for maybe a day and he was officing out of some company where he had made an investment because Sean's too smart to rent his own office so he was getting some sort of trade out office space. I walked into his office and I just wanted to sit with the guy. He's a genius and why not? I could learn a thing or two plus actually I'd been under the impression for years that he was dead, so watching that dead guy work is so cool. So I go and sit down and he's got a whiteboard and it's got two letters on it.
This whole whiteboard in big letters, they're like three feet high, PI, and then I said, what's that? He says personal impact. If you don't know what the personal impact of what you're offering is to the person you're speaking with right now, you will never make consistent progress through the sales process. So that's what this is about, is ROI is kind of abstract, PI is like PI personal impact is right now, but they're related to each other. They're related in a somewhat subtle way. The software that Mike's company provides lets you actually make a PI statement, personal impact statement that makes sense out of what would otherwise be an ROI generalization.
Corey Frank (13:57):
I love that. I love that. Contrary to rumors he's not dead, right?
Chris Beall (14:04):
Not very, not very at all. Every time I talked to him, he's very lively.
Corey Frank (14:08):
That's good a little bit. So to the point, Chris and Mike, who creates this as it come from, we talked I think a few episodes ago, Chris, about sales and marketing alignment, right? I think we've had 50 or 60 episodes in sales and marketing alignment, always seems to creep in there once in a while, but from your perspective on these value statements, these ROI, these PI statements, do they come from the messaging from the sales side best practices, should they come from marketing and this is what they use to empower all of their messaging. How does something like that spark or create, cause this is a philosophy but now I can point my finger and say, great, who's going to create it, marketing has all the content. Hey, sales guys, we don't do that kind of thing or do we? Where does it originate from?
Mike Genstil (15:00):
Yeah. It ends up being a bit of a hybrid responsibility Corey, is what we're seeing. If you think about the evolution of a new company, imagine a company being started or founded by a founder, that founder is going to go out and acquire his first customers and his first investors and he's going to create a pitch or she's going to create a pitch, which is visionary. It's going to describe problem areas that customers tend to have and how those problems can be solved with this revolutionary new thing. It'll have imagery that talk about these problems sizes and then benefits. It may have a couple of testimonials of people that have tried it and had success, et cetera.
On day one, you've got a visionary founder and then that person brings on some marketing folks that are really building out the story and the message. So you've got this nice compelling visionary message, which is largely qualitative, some nice images and problem statements and then a couple of testimonials. Over time then as you hire and scale a sales organization, you're getting past those early visionary customers to the early majority kind of coming back to crossing the chasm and then the late majority and the crossing the chasm was right, we should still talk about it more these days, I believe. Those buyers aren't as effective at getting budget for a very visionary concept, they need proof points. They need to see these ROI stories and then the CFO will need to be basically agree with those. What we're seeing is the people that are building that quantified message inside of organizations to supplement the visionary value props that were designed during the founding days and then in those several quarters after that tend to come either from product management. These folks tend to be highly analytical and quantitative, so sometimes they'll build the quantification.
Sometimes it's product marketing, the product marketing folks tend to think about segments of customers and the value of segments per customers and then there's also, some of our customers in emerging function which is called the value analyst or the business value analyst. We're seeing more and more companies that have these folks on staff used to be companies like SAP and Oracle, had small armies of business value analysts and now alumni of those organizations are heads of value at hundreds and nearly thousands of companies.
These people have a day job of building and refining value quantification for typically they get started on the biggest deals that the company is selling into and then over time they're scaling themselves by building self-service tools, sometimes through our platform, to make it accessible for the average rep and the average deal. But at scale, what we're seeing is a hybrid approach where the marketers are still generating beautiful slides with beautiful images and as the company releases new products with different variants of the value proposition, the value prop, there'll be different approaches of quantifying and describing the value prop, then overlaid with actual hard calculations from either again the product manager, the product marketer or the business value analyst.
Chris Beall (18:28):
That's what we're seeing. As we go through the sales process, it's interesting how these capabilities and the artifacts that come out of them are best used. Some sales job is actually to do two things. One is an assessment. Should we, does it make sense for us to move to the next step or not, to do more together? Should the relationship evolve or should the relationship stop evolving? That's the number one job of a salesperson. When they're testing that with somebody, these kinds of tools are incredibly valuable because if you're the salesperson and you reach into your bag of, I'll call them ROI tools or valued tools, and you pull out one that you think makes a lot of sense, you populate it with the relevant data that applies to the situation for this particular person that you're speaking with and their situation and they yearn well, you just learned something.
What you might've learned is, huh, we really don't have anything here for them or you might've learned, huh? I didn't get it. I need to go back into the tools and find the other one that they care about. I have a classic example, I mean it is true of almost every VP of sales. Corey, you've run sales organization, so you've heard me say this to you when you were my customer, Corey you got 102 people. I think 23 it'd be a better number. What do you think? You've heard that from me, right? What did you say? Chris ain't no way, right?
Corey Frank (20:02):
All of the limited self-worth I have as a man, Chris is all coalesced into the number of salespeople that I have under my payroll. I think I said something along that lines maybe not that eloquent, but that's basically what it meant.
Chris Beall (20:16):
Yeah. I think NFW came to mind, therefore this, Hey, here's this efficiency that will let you save money through reduced head count, I could show it to you all day long and it wasn't going to get anywhere. So I either had to find something else or we had to disengage one or the other, so that's sort of thing number one. Thing number two is, but if we go to the next step, new people get involved, new things happen, expectations are set and maybe expectations need to be met. So one thing that's different between marketing and sales involved in all this is, marketing paints a picture that can be arbitrarily large in value along the four dimensions that Mike mentioned.
Sales must constrain that picture to being just large enough to take the next step and do larger. It's really important for a successful sales cycle that you don't overstate value early, regardless of who you're talking to. So one of the jobs of sales is kind of odd, it's to not to attenuate an artificial way, but to be careful in their representation of value, whether it's risk reduction, whether it's cost savings, whatever. So that it's just enough to move to the next step and not so much that they get and this is a really good phrase for those of you who've ever done it physically out over their skits.
Mike Genstil (21:36):
Yeah. The way we address that is we always coach sales reps to say the first thing you need to find out before you do anything else is roughly what is the revenue of your customer? Because if you've got a customer you're selling into this doing $20 million in revenue, you can't give them $10 million in value next year, unless you're going to create a rocket ship, you're going to put the whole team in a rocket ship and send them to the moon and back and that's worth $10 million in value to them. You'd be lucky for a $20 million company, if you add $1 million in value, which is 5%. It would be phenomenal that there're another one to $2 million on top of that. Now, if you sell something like ConnectAndSell, which dramatically improves their sales results, well maybe you'd be getting on top of the 20 million and extra one, two $3 million in value.
But you should not say 10 million because it's not going to be credible. Now you might get those results, that's fine. We find that sometimes these models don't have these [inaudible 00:22:32] in them, as Chris said, you can't overstate but you also can't understate, so for that same $20 million company, to tell them they're going to get $20,000 in value, the CFO's probably not going to care at that point and your solution better be better cost no more than $5,000, if you're going to get $20,000 in value, maybe hopefully a little less than that. But the point would be, Hey, try to get that $20 million revenue company, a couple of hundred thousand dollars in value to a million bucks and charge them 20,000 bucks for that. That's a good exchange of value.
I'm going to give you a 20K, you're going to get a 100 to 200 to 400K back. That's worth a couple of percent on top of your $20 million in revenue. That's a story that you should be trying to tell and that's what we train against, starting with what's your price, what's the value and what does that relate to their overall top line and profit associated with that? There's variants of that, but that's kind of how to think about it.
Chris Beall (23:26):
Wow Mike, do you actually train this stuff? Cause I don't see anybody being trained like this. I mean, it's like talk about one size fits all. Every rep wants to say, you're going to get the sun, the moon, the stars, three galaxies and the unicorn and that's just the greatest thing in the world and what you're saying is you actually train folks. That's how we train reps too. We train them in a five sentence way of having an okay conversation, right? First conversation. We do it because our software quote unquote works, but it doesn't deliver as much value unless the conversation is good. So you're saying your software quote unquote works, but it doesn't do as much good unless they have a conversation that makes sense for that kind of customer. Is that what you're saying?
Mike Genstil (24:10):
Yeah. Every B2B rep is in the business of getting meetings and ultimately quoting prices and trying to get contracts on. When we do the training, we say, well, what's your average deal size? I'll say my average deal size is $50,000. Great. So then I'll ask the question to the room. Okay, what do you think your customer needs to get in terms of value, for that $50,000 to make sense? They'll say, I don't know, a $100,000. Well maybe, what would be better? $500,000? Yeah. 500 to a million bucks. 10 X to 20 X is a good story to tell, it's credible, it's reasonable. It's a good story to take to the CFO so it's okay, let's agree it's a million dollars in value for your $50,000 investor. How are you going to convince the customer there's a million dollars in value?
Do you believe it? How would you prove it? Let's say you've got two minutes in an elevator going back in the old days, when you rode elevators with the CEO of the company, how would you tell that CEO you're going to get them a million dollars in value. You better know to be able to talk to that pretty quickly as a function of the things that he does, what he's selling, how much revenue he's making and you go there and when we frame it that way, Chris as part of the training, it actually resonates because they're quoting prices and they've never really stopped to think about, huh, what should the value be? And it's simple math. Once you kind of get them thinking that way, it's easier to get the adoption and change the culture around value selling.
Corey Frank (25:30):
Yeah. I think we are wired. I think our good friend Oren Klaff from Pitch Anything, Chris where he talks or runs a big advocate of leveraging pessimism in your sales process, because I think Chris says you were alluding to, I mean, what type of professionals in the world are the most optimistic you've got entrepreneurs, especially when they're trying to present to an investor, their product and you've got salespeople. I mean, their job by definition is to seed optimism. They're programmed to promote this vision of the future while your biggest problems are solved, as he had said and you can live in the moon and the sun, as you're saying so. Given the nature, though what you're saying, Mike and Chris, I mean it's counter-intuitive because given the nature of our profession, salespeople like me, we're not programmed to be pessimistic. We're programmed to be optimistic and push you in that direction too.
I think this optimism that bubbles up from our emotional core, I think it sows those seeds of doubt, doesn't it Mike. Where it actually creates stress for the buyer you could say, because it's unbelievable. My goals and Chris, you talk a lot about this in the messaging about after the breakthrough, we do X that does Y and Z and some of those are emotional pieces of the messaging and some of them are logical, but so that pessimism does wreak. You need that pessimism. I think what you're saying to get a little bit more credibility. They shouldn't fight that as a salesperson. It sounds like giving them that autonomy to question. Yeah. That's reasonable. The goal of the value, the ROI that you're saying, I can buy into that and that gives me a little bit more autonomy and trust to move the conversation along.
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