Generating revenue is no longer about promoting the capabilities you have to offer, it’s about promoting the knowledge you have.
Having the experience and knowledge required to create value is rooted in the difference between your mastery of a particular subject, and the other side's lack of mastery on that subject. This is what makes you valid. If the other side understands the topic as well as you do, it will be difficult for you to create value beyond transactional value (understanding product features, pricing, etc.) What someone is willing to invest in what you know is the beginning of the value equation. If you have worked in any industry for at least one year, you can create some value for someone. You just need to have more subject matter expertise than they have. Remember the old saying, "In the land of the blind, the one eyed man is king.”
"In the land of the blind, the one eyed man is king.”
This is why for many services organizations, especially in the digital space, the concept of a ‘sales guy’ is officially a thing of the past. To generate revenue in a digital services business you need to create value for the customer, and value does not come in a box. Value requires experience, knowledge, and perspective.
To begin the process of creating value you need to prove three things, (1) validity, (2) commitment and, (3) likability.
Validity comes in two forms. The first one is subject matter expertise in your chosen field, and the second is an understanding of the buyer’s business. There are multiple paths to gaining each of these two forms of validity; first person and third party. The first person version requires an investment in acquiring and illustrating your aptitude and understating in your area of expertise, through proof of results.
Third party (external) validation means that your validity is delivered by someone who already has it. One method I have used with great success is a third-party consultant who is already recognized as a trusted advisor in the space and promotes your expertise. The third party path to validation significantly accelerates the process of value creation in that you step past the topic of validity altogether. In the same way that the world has begun to crowd source reviews for value on ecommerce platforms, having objective voices speak on your behalf is very powerful. Once you have a critical mass of evidence of success, external verification of validity is a little less important, but the appearance of objectivity in the review if your competence is always helpful.
Commitment is your ability to provide a predictable structure for a relationship. This includes you being completely accessible, but also requires that there is confirmation of commitment on the buyer side. Commitment builds trust which is a critical element of every meaningful relationship.
Although the concept of likability feels as though it harkens back to the days when just relationships drove the sales process, an important part of likability is that it is rooted in both validity and commitment. The third piece of the likability puzzle is your communication skills which are governed by your emotional quotient, or “EQ”. In their book on consulting on buyer seller relationships, "Let's Get Real or Let's Not Play", Mahan Khalsa and Randy Illig describe value creation as, "For top performing consultants it is the fusion of these skill sets that puts them at the pinnacle of their profession. They seamlessly blend IQ, EQ and XQ." In this example IQ is critical thinking skills and XQ is execution skills. The EQ required for likability also comes from a meaningful focus on the human that you were dealing with, and that there is an Invisible Version of that human. Again, understanding the type of relationships they have at home and their interests outside of the workplace can be a tremendous help in developing rapport and building likability.
In a post-Covid world where much communication is done electronically it may seem as though likability is even less important than it would have been previously, but I believe that there is evidence that the opposite is true. All of us are forced into new forms of digital communication that can create extremely mundane work scenarios. Working with people who have mastered these new mediums and can still project an upbeat and productive attitude can be even more important than they were before. Likewise, the next generation of business people has been raised with a completely new set of communication skills that rely heavily on mobile devices. We are coming into the first generation of "digital business natives" (those entering the workforce who have communicated primarily through mobile devices) and many of these people will lack the instincts and EQ that were honed by the face-to-face communications in generations past. Those who master these skills will likely have an advantage.
The Value Equation
The things that make you good at your job, especially what you learn working with others who face similar challenges, builds perspective that has value. The best services professionals learn through a combination of practical work experience, training and research. The more experienced and informed you are, the more value you can create. Any form of ‘been there, done that’ is experience that can help.
Some of the most valuable knowledge that you should have is data on what buyers with similar roles and needs are doing under similar circumstances. You have this knowledge because you’re talking to all of them, but they are not necessarily talking to each other. By regularly polling existing clients about current needs, challenges, and their perspective on things like market trends you can build a personal repository of knowledge. This knowledge will inform you about your offering and how to shape it, and serve as a tool for creating value.
Now that you’ve got information and perspective, go share it for free. OK, maybe not all of it, but you’ve got to be valid to potential clients for them to want to engage with you. Engage with new and prospective accounts and show them that you have something to offer. Regurgitating business news or what’s published in trade publications isn’t enough. They get that already.
They need the “why it matters” part. In other words, they need context. Context is the bridge between knowledge and revenue, so “the value equation” is knowledge + context = value.
The Value Equation:
Knowledge + Context = Value
The most important part of your value proposition is why it matters to the person you’re speaking to. This means you have to know who they are, how they measure success, and how that relates to your business. The script goes something like this…
“Hey Joe — Did you see that the government just changed the regulations on <XYZ>? I have a perspective on why it really matters to your business if you want to find some time to connect."
The Value Story
At OMNIGON we built a brand by taking a long view on client relationships. This means we were less focused on how much money we could make per deal or project, and more on the value of the relationship over time. This was a strategic decision that was an important part of the culture and brand we wanted to create. The basic rationale was that it’s easier to generate revenue from existing long-term account relationships than find new ones, and that this is a path to more predictable revenue, and profit.
We didn’t invent this concept.
According to the Harvard Business Review, “Depending on which study you believe, and what industry you’re in, acquiring a new customer is anywhere from five to twenty five times more expensive than retaining an existing one…consider research done by Frederick Reichheld of Bain & Company (the inventor of the net promoter score) that shows increasing customer retention rates by 5% increases profits by 25% to 95%.” If you can afford to take this view, and it aligns with your business culturally, you actually empower the team responsible for revenue with a value story instead of a cost story.
Short-Term Project Dollars vs. Long-Term Account Value
Smart commercial teams understand that short-term dollars via ‘projects’ can’t compare to the revenue generated from long-term account relationships. The challenge is generating revenue this way has to be baked into the DNA of your business. You can say the account relationship matters more than project earnings, but if the behavior of the client-facing team doesn’t support this belief it actually can hurt more than it helps.
Short term revenue always matters so it's a balancing act, and your senior management team will have to promote the theory of long-term account value (and its associated behavior) for it to work. It takes a certain talent and type of team member to generate revenue this way, and for some team members it may require an adjustment in mindset and/or an adjustment in performance incentives.
At the end of the day your team needs to believe in the value they deliver for clients. If they don’t believe it, why would anyone else?