PROTECT AND DEFEND WHAT IS MINE!
In a recent blog post, I talked about Selling Value to Existing Customers.
Selling to existing customers is fundamental to our businesses. Yet we often have pressure on those renewals either by a lack of understood value, budgetary pressures, or replacement efforts by competitors. Sometimes it’s one of the oldest plays in the sourcing/procurement book, to bait our competitors with the opportunity to “replace our incumbent if you get aggressive and really sharpen your pencil, etc., etc.” Or some combination of the above.
Sellers end up with customer churn, unnecessary
discounts and more.
But, if you communicate the “Value Realized” by customers, you have a fighting chance.
A DecisionLink customer had just such a situation with an existing client. It wasn’t just any client, it was a blue-chip company headquartered in the same city. Whether a ploy or not, the Champion at the client told them, “We’ve got significant budget pressure and one of your competitors has offered to replace you with a 50% price reduction”. Please help me!!!
Other than the Champion asking for help, that’s certainly not what any of us want to hear.
Focus on Value Realization
This threat was significant, a competitive loss in their hometown would be a disaster. The “upside” at this point was to meet or get close to the competitive price, knocking a 250K renewal down to 125K or so. Not good!
Our customer offered a “value assessment” which was quickly agreed. In the assessment, we determined the following (with agreement by the Champion):
- The client achieved over $1.25M in cost savings in the prior 12 months.
- Of that amount, almost $375K was competitively differentiated, that is, the $125K saved in subscription would equal $250K lost after netting out.
- They identified additional areas of value their client had not yet achieved, and put a plan in place to realize that value.
- They identified over $500K in additional value their client could achieve by upgrading to their premium offering (additional $155K subscription).
Reactions from the Prospect & The End Game
The champion was relieved, but also was able to make his case within the client organization which resulted in organizational esteem. Our customer gained valuable competitive insights they previously didn’t have. Best of all, our customer renewed the client at $405K (a 60% uplift over the projected renewal), established a framework of value with their client and sent the competitor packing.
One More Take-Away
Our customers like us, after all, they chose to do business with us. But how often does a seller treat a customer this way, helping them quantify, articulate and defend the choices and investments they made? Not often. Imagine the reference calls praising service and value after the sale, and the Net-Promoter scores that go along with that.
BTW, once again, these principles are not that different for selling a new prospect. That is what BUYERS want, and what CUSTOMERS also want. What is the value to ME?
Stay tuned for a blog about multiple customer/prospect personas. When we use the same conversation for Execs, LOB managers and evaluators, why are we surprised with some (or all) of them don’t connect so well!