Let’s Talk About Value – Uncovering the Delta

A Never Stop Learning! Article

To paraphrase Mark Twain’s comment about the weather, everyone talks about value, but very few people actually do something about it. Clearly value is important: The lack of a clear value equation lengthens or kills sales cycles and is one of the main reasons for “No Decision” outcomes.

So, let’s explore how to make uncovering and communicating value an advantage for you!

What’s in this article for you?

Why specific value numbers are much more compelling than platitudes
Why prospects’ value numbers are much more compelling than vendor or industry numbers
Why the lack of sufficient value contributes to No Decision outcomes
How to capture and calculate specific value numbers – the Deltas
How to communicate value so that it resonates with your prospect
How to differentiate via Value Realization Events

Hope you find this article valuable!

Why Specific Value Numbers Are Much More Compelling Than Platitudes: Value Statements

Compare the following exchanges:

Scenario One:

“If you use our product, you’ll save time and money…!” offers the vendor rep.
“Blah blah blah blah blah blah blah…” thinks the prospect.

Scenario Two:

“If you use our product, you’ll save time and money…!” says the sales rep.
“That isn’t particular compelling,” thinks the prospect, “we’ll revisit this project next year…”

Scenario Three:

“Industry averages show savings of a half a million dollars a year…!” declares the rep.
“But we’re not ‘industry average,’” thinks the prospect, “we’re not even the same size as the average company in our space.”

Scenario Four:

“Other customers in the same space, similar to you, enjoyed savings of $400,000 per year,” offers the vendor rep.
“Well, that’s better,” thinks the prospect, “that’s a good datapoint, but I need our own, specific numbers to get this project approved!”

Scenario Five:

“When we spoke last week, I believe you said you hope to recover $275,000 annually as a result of addressing your problem,” says the vendor.
“That’s right,” replies the prospect, “that’s the kind of change I need to meet my objectives.”

Which approach is more compelling?

In the first case, the vendor sounds like they are reciting from a marketing brochure, and it clearly doesn’t connect with the prospect (sorry, marketing folks…!).

In the second scenario, the rep has offered the same unhelpful value statement, unintentionally contributing to a No Decision outcome!

The third case shows some improvement, but value numbers from Gartner and other industry analysts are still insufficient to support prospects’ needs to build compelling business cases.

The fourth scenario is even better, and can be helpful for the prospect, but it still lacks the required specifics for prospects’ business cases.

In the fifth scenario, the rep had done sufficient discovery to uncover the prospect’s perception of the value of the solution, and the deal is moving forward nicely!

With these five examples, we can quickly understand three key ideas about value and value communication:

Specific numbers are much more compelling than word phrases.
Prospects’ numbers are much more compelling than vendor or industry numbers.
The lack of sufficient value, as perceived by the prospect, can contribute to a No Decision outcome. (For more on the 40-60% of forecasted opportunities that end as No Decisions, see this article.)

That’s clear, but how do you uncover specific value numbers for your prospects?

The Delta

Value can be easily defined as, “The difference between the way things are done today vs the way they could be done or need to be done with a solution in place, expressed in terms of tangible numbers.”

In the Great Demo! and Doing Discovery methodologies, this difference is called the Delta, the tangible assessment of the value of making the change, expressed in terms of specific units of time, people or money. For example:

Reduce process completion time by 50%
Redeploy four FTE to other, more productive activities
Save $275,000 annually

While value can include both tangible and intangible elements, the tangible elements of value are much more important in sales and buying processes and are much more convincing. Very simply, the prospect cannot use intangible aspects of value to persuade senior management to invest in purchasing software. A reasonable ROI or business analysis is required to make a purchase happen. Numbers drive purchases, not platitudes!

So, how do you gather these Deltas?

Easy Deltas

Many Deltas are easy to uncover and communicate. Consider the following portion of a conversation with a prospect, in this case the prospect is the head of sales of a mid-size SaaS company:

You ask, “So tell me, please, where are you with respect to your quota this year?”

The reply, “I’m currently at 72% of quota – $7.2 million out of $10 million – and we’ve got about 125 more days in the year… I must find a way to get that $2.8 million gap closed!”

You smile, quietly, to yourself: The Delta is $2.8 million, a very tangible, compelling number! Even better, this Delta is also tied to the head of sales’ Critical Business Issue, which is to achieve or exceed quota.

This is, for you, the best-case scenario, as it incorporates three key elements of a Great Demo! Situation Slide:

Critical Business Issue : Achieve or exceed annual quota.

Delta : $2.8 million gap

Critical Date : End of the head of sales’ fiscal year

Here are a few more examples of easy-to-uncover Deltas:

The difference between the project deadline and the current estimated completion date (the Delta is the number of days that the project is expected to run over).
The current number of leads converted vs what was listed in the marketing VP’s quarterly goals (the Delta is the number of leads needed to meet that goal).
An accounting example might be the need to reduce DSO (Days Sales Outstanding) from the current number to a specific lower value.
Examples for AI tools could include improving Prediction Accuracy from A to B, and/or Confidence Scores from C to D.
And a great presales Delta is seeking to improve a team’s Revenue$/demo from X to Y.

The two types of questions to ask in these cases are:

Where are you today? (To uncover your prospect’s current)
Where do you need to be? (To determine your prospect’s desired future )

You simply need to subtract the current state from the desired future state to calculate the Delta. Easy!

Those are simple situations; you only need to ask the two questions and do the math. Let’s now look at slightly more complex scenarios.

Operational and Workflow Deltas

Many operations-oriented and workflow-based Deltas can be uncovered during discovery, conversationally.

For example, your prospect says, “It takes us way too long to complete this process today…!”

You respond, “Sorry to hear this. On average, how much time does it currently take for each person to complete the process?”

“Hmmm – I’d say about one and a half days, on average,” is your prospect’s response.

You continue with another factor, “And how often does this process take place for each person?”

“Every week – it’s a major portion of our jobs,” says your prospect.

“So that’s about fifty times a year,” you comment. “Tell me, how many people are executing the process today?”

“Twenty folks,” is the reply.

Now let’s do the math: 20 people x 50 times per year x 1.5 days each time = 1500 person-days.

You summarize and then query, “So, it looks like this is currently consuming 1500 days each year of your team’s time. What would you like it to be, or what does it need to be, to feel that you have solved the problem?”

Your prospect replies, “Good question – if I could just reduce this to a half-day per person, I’d be a hero to my team, and I know I’d meet my objectives.”

Ah ha! Just two more calculations yield this Delta:

Current Situation: 20 people x 50 times per year x 1.5 days each time = 1500 person-days
Desired Future State: 20 people x 50 times per year x 0.5 days each time = 500 person-days
Subtracting 500 from 1500 you get 1000 person-days – that’s the Delta!

1000 person-days. That’s the difference between the way things are today and the desired future state. Best of all, the numbers came from your prospect’s lips!

Three notes on this:

Annualized numbers are (by definition!) much larger than per-cycle numbers and are accordingly much more compelling. Compare the per-cycle difference of 1 day in this example vs the annualized number of 1000 person-days. That’s a big difference, which leads to the next point…
When you comment that “So, it looks like this is currently consuming 1500 days each year…” many prospects will say, “Wow, I had no idea the problem was that big!” What a great way to help move your prospect’s perception of the problem from simply a pain to the realization that it is, most likely, a Critical Business Issue!
A subtlety: When your prospect says, “If I could reduce this to a half-day per person…” you may know that your solution can complete the task in less time, but hold back on this. Give yourself the ability to set expectations reasonably and enjoy the opportunity to truly delight your customer when they realize later that less time was consumed than they expected.

OK, so uncovering the value by calculating a Delta can be done conversationally, with sometimes surprising results for your prospect when large numbers emerge from the discussion!

When Should You Explore the Delta?

When many vendor team members hear their prospect admit pain in a discovery conversation, the sales team thinks, “Ah ha – we have uncovered their problem, so now we can present a solution…!” Truly great sales teams hold back at this point and, instead of leaping to offer a solution, they ask a few more questions about the value of making the change.

When you hear any of the following phrases from your prospect, consider each as an opportunity to explore the Deltas:

Prospect says, “It takes us forever to get this done today…!”

You should ask, “How many people are involved, how often do you do this, and how long does it currently take? What would you like it to be?”

Prospect notes, “We have too many people focused on this…”

You should enquire, “How many people, how often, how long? What would you like it to be?”

Prospect admits, “We have considerable project overruns…”

You should explore, “How many projects, how many overruns, and by how much? What reductions are needed?”

Prospect realizes, “I can’t get this done with the current staff.”

You should pursue with, “How many staff today, how many extra team members are needed?”

Any time you hear your prospect admit pain it represents an opportunity to explore and uncover one or more Deltas for that pain. Don’t let those opportunities escape uncaptured!

Communicating Value

“And if you use our tool,” said the salesperson, “you’ll save millions every year!”

The response from the prospect team was indifferent, even quietly hostile. Why?

The group were all individual contributors, and in response to the salesperson’s claim they were thinking, “Sure, and we’ll never see any of that money…!”

There are three interchangeable expressions of value: time, people and money. These are simply three ways of expressing the consumption, redeployment or liberation of resources associated with solving a problem. Generally speaking, people at different levels of an organization perceive value through different filters, aligned with these three parameters:

High Level (e.g., C-Suite, SVP, VP): These people are typically most interested in gaining or saving money. Senior management needs to see an ROI analysis before they will agree to move forward with a major software purchase; intangibles are rarely applicable.
Middle Level (Sr. Directors, Directors and other middle managers): While arguable, these folks are generally concerned with people resources. For example, at budget time most middle managers will say, “I need more staff members to meet my objectives…!”
Low Level (e.g., staff and individual contributors): “I just want to end my day on time…!” Individual contributors’ main concern is time. Time saved so that they can focus on other, more productive tasks or projects, for example.

So, when discussing value, we need to articulate it in alignment with the person we are speaking with.

(It is even worse when the salesperson says to lower-level folks, “And if you use our AI tool, you’ll save millions every year!”

Now, not only is the group thinking, “We’ll never see any of that money…!” but they are also worrying, “And that AI may be taking our jobs!”)

Returning to our earlier operational example, we uncovered the following information in discovery:

Current Situation: 20 people x 50 times per year x 1.5 days each time = 1500 person-days
Desired Future State: 20 people x 50 times per year x 0.5 days each time = 500 person-days
Subtracting 500 from 1500 gives a Delta of 1000 person-days

So, enabling our prospect to solve their workflow problem will save them 1000 person-days per year. But most people can’t visualize “1000-person-days,” so we need to translate that quantity into the corresponding numbers for money, people, and time.

But to do this we need two more pieces of information:

What is the fully burdened cost of each employee on the prospect’s team?
And what is the number of working days per year?

Our prospect tells us it is 250 days per year (tough company!).

Now we can complete the translation from “1000 person-days” to money, people, and time:

High Level: Money saved or gained annually
1000 person-days / 250 working days per year = 4 FTE; 4 FTE * $100K = $400K
The Delta for the senior management is: $400K annual savings

Middle Level: Number of people redeployed (or new hires avoided)
1000 person-days / 250 working days = 4 FTE
The Delta for the middle managers is: 4 FTEs who can be redeployed to other, more productive tasks

Low Level: Time saved
This one is straightforward: ½ day each time the workflow is executed
The Delta for each staff member is: ½ day each week

Now, your communication of value, via Deltas, is both precise and in alignment with your prospect’s job levels!

Whose Numbers?

Let’s revisit the five scenarios at the start of this article. If a vendor doesn’t uncover the prospect’s numbers when discussing value, what happens? What is the effect?

“If you use our product, you’ll save $500,000 a year…” says the vendor to the prospect.

The prospect looks skeptical but doesn’t say anything.

Have you ever seen this happen in a meeting with a prospect? Very simply, vendors’ numbers are not believable and aren’t helpful in moving the buying process forward.

There are normally four categories of Value Numbers (OK, five if you count “No numbers!”):

The prospect’s own numbers
Other similar customers’ numbers
Industry numbers
Vendor’s numbers
No numbers

Whose numbers are most believable? Your prospect’s numbers, of course.

“I believe you said you are looking to save $400,000 a year – is that still correct?”
“That’s right,” replies your prospect, “That’s exactly our situation.”

You gathered this information during your explorations of specific Deltas in your discovery conversation with this prospect. Your prospect’s own numbers are the most compelling and most believable.

But what if you were unable to get specific numbers from your prospect, because they don’t know them? Whose numbers are next best?

Other, similar customers. That is, organizations that are perceived as peers to your target prospect. Their numbers are next best and can be very compelling, particularly for Vision Generation demos and to help discovery conversations more forward. For example:

You say, “Other customers that we’ve worked with, who are very similar to what you’ve outlined to us so far, reported that they were able to save $200,000, $300,000 and sometimes as much $500,000 each year…”

“Very interesting,” responds your prospect, “I think we are likely in that same range.”

This sets you up to explore your prospect’s specific situation in more detail.

What if you have no reasonable starting point with existing customers and the value they have enjoyed? Whose numbers are next on the list?

Industry and analyst numbers: Gartner, for example. Prospect perception of the relevance of these numbers is pretty low, however, since they represent broad swaths of customer types, sizes, and geographies. These estimates are not particularly compelling or believable for an individual prospect.

For example, the average height of an American male today is 5’ 9” (1.77m). If you are 6’ 3” (1.91m) you would be skeptical of the claim, “Perfect size for the average man…”

And while these industry number might serve as a starting point for a discussion, they are rather weak. (If you currently lack specific numbers for your current customers, here’s a solution!)

And whose numbers are at the very bottom of the list? (Let’s all say it together!) The vendor’s numbers. These are, without question, the least believable by prospects:

“You’ll save $500,000 each year…” The result? Disbelief and skeptical looks.

Note also that vendor-generated “ROI Calculators” and “Value Calculators” suffer a similar fate. Even though the prospect may plug in their own numbers, the calculations are done by the vendor, which makes the results suspect!

Next, is there a way to elegantly close the loop regarding value expected and value enjoyed? Yes, indeed – and this can be a huge differentiator in your favor!

Value Realization

Have you ever made a major software purchase? If you have, you’ll recognize the following; if you haven’t, be aware that the following is what your buyer or buying committee is going through!

The moment you signed that license agreement and issued that purchase order, immense pressure descended heavily onto your shoulders: The pressure of the responsibility of realizing the ROI, the return on your investment.

When was that pressure released?

Was it released when implementation took place? Likely not. What about after initial roll-out? Maybe, but only for solutions that yield immediate returns. In most cases with large software purchases it can take a while before customers begin to enjoy their desired gains.

Accordingly, the pressure begins to be lifted when the person or team who made the purchase enjoys a Value Realization Event: An early victory when a small, but relevant portion of value is realized. A small, but important “win.” This is not when the full ROI of the solution is enjoyed, which might take months or even years, it is a small, but important success along the way towards full ROI.

Consider the following vendor actions:

Typical salespeople: They pursue their sales process through getting the order, then move on to the next sales opportunity.
Good sales teams: They follow the process through implementation and “Go Live” events. That’s better, but you can go further.
Truly great sales teams: They track and support the process from “hello” all the way through to the point in time where the buyer or buyer team can “declare a victory” – the point in time where one or more Value Realization Events are realized. This vendor is demonstrating through their actions that they are truly invested in their customers’ success.

The discussion of an implementation timeline and Value Realization Events establishes a “Transition Vision,” your prospect’s vision of how they will move from their current painful situation through “Go Live” all the way to achieving key Value Realization Events enroute to their full ROI. This is a key element of Doing Discovery, and the vendor that does this well enjoys a distinct competitive advantage over vendors who do not!

That suggests a few additional discovery questions, such as:

“How will you measure successes along the way towards your full ROI?”
“How would you define an initial success?”
“What key milestones or changes are you looking for after initial deployment?”

Note also that the point in time when initial Value Realization Events are achieved is also the point in time when your customer will be open to becoming a reference and paves the way for renewals! Intrigued? If you haven’t done so already, read more about Value Realization Events here!

Back to Twain

So, everyone talks about value, but very few vendors actually do something about it. Most vendors fail to adequately uncover and communicate value, and they suffer slowed sales processes and high No Decision rates as outcomes.

You and your organization can join the select few who do uncover tangible expressions of value, right from your prospects’ lips, and enjoy crisper sales and buying processes, markedly reduced No Decision rates, accelerated renewals, expansion, and delighted customers!

To learn the methods introduced above, consider enrolling in a Great Demo! Doing Discovery or Demonstration Skills Workshop. For more demo and discovery tips, best practices, tools and techniques, explore our blog and articles on the Resources pages of our website at https://GreatDemo.com and join the Great Demo! & Doing Discovery LinkedIn Group to learn from others and share your experiences.

Let’s Talk About Value – Uncovering the Delta