96% of technology companies have a distinct Customer Success function in place. But only 27.2% measure the business outcomes and value that their solutions deliver to customers. As an industry, we’ve spent millions building out these incredibly important customer success capabilities and then we don’t make the effort to understand the benefits that our customers experience. Don’t you find this peculiar? Especially given that the single largest area of investment over the last decade has been on the creation and development of customer success functions. The question is how can you truly focus on your customer’s success if you don’t understand how your offers contribute to the achievement of what matters most to the people who buy them.
Outcome-Based B2B Sales
Why is this so important? It’s really simple. When you sell subscription and consumption based offers, your entire economic success depends on the customer getting the value they expect from their investment. It’s like a Netflix subscription; if you don’t experience value for your $8.99 per month, you’re not going to upgrade and you’re less likely to renew.
The difference in a B2B world is that each industry you sell to has different priority outcomes, and each company is at a different stage in their evolution and will have nuances about what matters most to them. And then, each individual buyer (or member of a buying committee) will have a different set of motives and priorities.
So, assuming that you believe this, and you think you should do something about this, you have a choice:
- Do you wait until your CSM runs their “kick-off” call to ask them why they bought the solution that you’re now going to deliver to them?
- Or, do you start the process of understanding their priorities early in the sales process?
Imagine a world where all your customer-facing teams have access to all this information for each account and opportunity that they work. And then imagine how powerful the conversation is when you validate this with the customer:
The industry data is pretty conclusive that the earlier you start this conversation with the customer the more positive impacts you will have on your key metrics:
- Win rates increase significantly – on average by around 12 percentage points as a result of more clear differentiation and your ability to demonstrate a clear understanding of your customer’s business.
- Average deal size goes up – average increases of 7 percent because your insight-led discovery process will broaden scope and position the value of your complete solution.
It also makes a big difference to the hand-off experience between pre-sales and post-sales. At the point where the deal is moved to “Closed Won” everyone understands why the customer has bought what they’ve bought and what they are looking to achieve from their investment. This has a hugely positive impact on accelerating their onboarding and getting to revenue more quickly.
We have 95% confidence in the statement that within the next three to five years it will be common practice for every technology company to capture the information outlined earlier in this blog. We believe that within this timeframe we will look back and ask why we didn't always do this. It's a bit like looking back and imagining a time when salespeople did not use their CRM tool to forecast opportunities – it's inconceivable how we used to do this in Excel.
The Shift From Solution Selling to Outcome Selling
When we used to sell technology as a one-off capital expenditure item with a support and maintenance contract, most of us used “Solution Selling”, which was incredibly effective at helping us to identify the pain points a company was experiencing. Having identified these pain points, we would then match the features and functions of our solution to address these needs.
Solution selling was all about asking “How can we help?” This new approach, which we refer to as Outcome Selling, is about saying “Here’s how we help!”
This is a move that leading technology firms are starting to prioritize. Companies like Microsoft and Autodesk are leading the charge. Kate Johnson, Microsoft’s US President, could not have been more clear when she said, “Delivering business outcomes to customers is Microsoft’s only sustainable competitive advantage.”
Many companies have small teams focused on value selling but it’s never really scaled. Also, a lot of companies are starting to really put marketing focus on outcomes. But generally, customer-facing staff are very uncomfortable moving away from their traditional conversations – largely because they don’t know what to say and don’t know how to start a different conversation.
One of the things we've observed is that traditional training and sales enablement methods are just not helping sellers to make the transition to be effective at having outcome-based conversations. Simply giving a salesperson a new PowerPoint deck and some virtual training is not providing what many sellers need to be effective.
In order to make this a sustained change, companies will need to make the capture of customers’ business outcomes a part of the standard sales process. If it's not policy, it remains optional and will rely on the goodwill of the individual sellers.