Welcome to the World of Outcome Selling
Major technology vendors including SAP, Adobe, ServiceNow, Mulesoft, New Relic and more are adopting outcome-based customer engagement.
What Salespeople Sell
Salespeople are taught to sell their products. They’re taught the features and functions, then taught how to explain the benefits. They may have a set of customer problems to target. And they’re shown how to offer a solution to those problems.
Many are also taught how to calculate the ROI. They may even have a Return on Investment calculator to show the customer or prospect the workings.
In the end, it’s about finding a way to convince a customer or prospect to buy the salesperson’s product. For the salesperson, it’s all about the product. But, while that’s what customers pay for, it’s not what they buy.
Buying is an Emotional Decision First
Buying has two distinct steps. First, we make an emotional decision. We decide we want something. Then, if necessary, we rationalise that decision. But, the rationalisation is secondary. We’ve already decided.
Let’s look at the buyers’ emotional decisions in technology purchases.
What the Users Buy
Users buy the hope of achieving a new to-be state or end state. One in which their job is easier. Or in which a persistent problem has disappeared. Or perhaps they’ve improved customer service and their customers love them for it. Or perhaps where their individual sales targets have been reached.
They see themselves in a new movie. One in which they are happier or wealthier or healthier.
If they don’t see themselves in a new and better movie, they’ll resist the changes needed.
What the Internal Champion Buys
There’s usually someone in the customer or prospect who’s driving the purchase. They see the new to-be state – the new movie. But they also buy a different hope. In their movie, the new to-be state has been achieved. And they’re getting credit for that new to-be state. They’re getting a promotion or a bonus or internal recognition.
The internal champion buys the chance to be the hero or heroine of this story.
What the Executives Buy
Executives are paid to deliver business results – the outcomes the company needs to thrive. And they’re under serious pressure to do so. They have a set of strategies they’re trying to execute. And they’re working to make those strategies work.
If they’re the author of the strategy, they buy the hope that their strategy will succeed. If they’re not the author, they buy the hope of achieving their assigned business outcomes. Or of reducing the pressure. Or perhaps of impressing the strategy’s author, who is probably their boss.
What Gets Approved
Companies make a submission to an approving body (we’ll call this body ‘the approvers’). It may be the board or the executive committee or the CEO, depending on the level of investment.
The submission is not to buy the vendor’s product. The submission is for approval of an internal project. The vendor’s products are part of that submission. If the submission is a good one, the internal project will be approved. And that will lead to the purchase of the vendor’s product.
But, not all submissions receive approval.
The ‘Do-Nothing’ Decision
The sales team has diligently taken the customer or prospect through a sales process. They’ve shown the benefits of their products. They’ll solve a bunch of problems. There’s a great ROI. The customer’s internal tests, such as hurdle rates, have all been exceeded.
And yet, the project isn’t approved. For tech vendors, it’s not uncommon. Many see their biggest competitor as the ‘do-nothing’ decision.
The ‘So-What’ Test
Sometimes, factors beyond the sales team’s control result in the ‘do-nothing’ decision. Perhaps the customer faces an external takeover bid. Or have a plan to change strategy. Or face a new set of government regulations.
At other times, approval fails because the sales team hasn’t answered the ‘so-what’ question. The approvers hear the submission, agree it passes all the tests, then ask ‘so-what?’. The approvers don’t see a big enough benefit or enough of a threat to act. Doing nothing is an acceptable outcome.
What Gets Approved
Here are three examples of submission-types with a strong chance of approval –
Insignificant – the project doesn’t have much impact on the approvers. The cost is low, the risk is low, there’s little time or effort required from them (someone else will do the work) and there’s little disruption. For example, it might be a submission to switch from one cloud-platform provider to another. Not a lot changes for the approvers, but the switch needs approval.
Loss Avoidance – there’s a threat. If action isn’t taken, the consequences are serious enough to affect the approvers. For example, a new competitor has appeared and disrupted the market. And that will drive down sales revenue for the approvers. They need to act.
New To-Be State – the proposal is to create a new to-be state that will reflect well on the approvers. Or will directly make them happier, wealthier or healthier. For example, there’s a proposal for greater digital engagement with customers. In the new to-be state, many interactions requiring the vendor’s staff will be possible as self-service. And a range of new options will be provided to customers. The new to-be state will not only increase customer satisfaction, it will reduce costs. The approvers feel they should have a stronger digital strategy, and this fits the bill.
Emotional Decisions for Approvers
The approvers are human. And like all other humans, the first step in their buying decisions are emotional. Then they consider the rational aspects.
If the submission is for something they consider insignificant, they’ll approve it unless there’s an objection.
If the submission is a significant one, then emotions play a part. If the submission creates no emotion, why would they act? If there’s no threat, or they can’t see themselves in a new and desirable to-be state, it’s easy to make a ‘do-nothing’ decision.
The Missing Link
If a vendor’s proposal isn’t insignificant or doesn’t address an immediate threat, they have the third option. The vendor needs to offer a new to-be state the approvers will find compelling. The approvers must see themselves in a new and desirable movie.
It’s hard for vendors to accept the customers don’t care about the vendor’s products. The customers only care about the to-be state they want to reach – the business outcome they want enabled. For many vendors, there’s a missing link. They’re strong on defining benefits of their products. They can show the necessary ROI. But, they’re not great at describing a new to-be state to which their products contribute.
And that’s where Outcome Selling comes in.
Whenever someone buys a product or service, they have an outcome to achieve. Think about anything people spend money on, and there’ll be an outcome that it addresses. They buy a hamburger to be full; they buy a movie ticket to be entertained; they buy a sports car to be noticed.
Two Types of Outcome
In technology, there are two types of outcome.
Product Outcomes are the direct benefit of using a product or service.
Success Outcomes are the bigger business outcome the customer needs to achieve.
The product outcome is a subset of the success outcome. It’s necessary, but not enough by itself.
To illustrate. Imagine someone goes to a hardware store to buy a drill bit. The hardware store manager knows the person doesn’t want to own a drill bit for its own sake. The person wants to drill a hole in the wall. The direct benefit of owning a drill bit is the hole in the wall. The hole is the product outcome.
But the customer doesn’t want a hole in the wall for its own sake either. They want to hang a photo or picture – perhaps a family photo. The family photo hanging on the lounge room wall is the success outcome.
Another example is a restaurant. The restaurant offers good food and service. People will go to the restaurant to enjoy the food and service. Enjoyable food is the product outcome – the direct benefit of the restaurant’s product and service.
However, people don’t go to the restaurant for the food alone. They go for an enjoyable evening with family or friends, or perhaps for a business meeting. The success outcome is a good evening out, or a successful business meal. Enjoyable food is part of the equation, but not enough by itself.
Why Care About the Success Outcome?
Imagine we were at the restaurant, and we were with a group of people. Two of them have an argument, and it spoils the night. Or there’s someone on the next table who’s loud and obnoxious, and that spoils the night.
The food and service might have been fine (the product outcome was delivered), but we didn’t achieve the Success Outcome of a great night out.
So, we’ll probably never go back to that restaurant. And that will cost the restaurant owner future revenue.
Similarly, we hang the family picture, step back to admire our work and it looks terrible. It’s in the wrong place. Next time there’s a home handyman job, we might hire a handyman. And not buy anything from the hardware store. And that will cost the hardware store future revenue.
The Golden Rule
The amount a customer spends next time… is driven by the success they have this time.
And success for a customer is not getting a product outcome. It’s achieving the Success Outcome.
The Task for Technology Vendors
The achievement of an outcome creates a new to-be state or end state. Every time.
If you were hungry and ate the hamburger, you’re now full.
If you bought a movie ticket and enjoy the movie, you’re entertained.
If you bought the sports car, and heads are turning, you’re noticed.
Technology vendors have one purpose – identify a success outcome they can enable for customers. And do everything they can to ensure the customer achieves the success outcome.
If the customer achieves their success outcome, they’ll renew and buy more.
If you’re an ERP vendor – customers buy ERP so their operations will run as effectively as possible. Your success outcome might be ‘effective operations’. That’s the to-be state you enable for your customers.
If you’re a marketing automation vendor – customers want to increase sales by increasing their pipeline of leads. Your success outcome might be ‘Target pipeline achieved’.
Now let’s go full-circle. Most technology sales teams are geared to sell products. Selling a concept like a success outcome presents new challenges. Which many sales team will find difficult.
We can solve that by productizing the success outcome we serve. Treat the success outcome as if it was a product. Teach the sales team the elements required to achieve the success outcome. Build an ecosystem of offerings that provide most of what the customer needs to achieve the success outcome. Teach the sales team the benefits for the customer of achieving the success outcome. Show them how to quantify those benefits – the ROI of the success outcome.
And send them into the world with a brand new, shiny, attractive set of ‘products’ to sell.
The Outcome Generation has emerged. They’ve moved past solution selling. They’ve realized customers don’t care about their products. The customers care about achieving the business outcome they need – their success outcome.
These new vendors are learning how to sell then enable the success outcomes.
And they’re thriving.
This article is extracted from the new book; The Outcome Generation: How a New Generation of Technology Vendors Thrives through True Customer Success
Paul Henderson is an author, speaker and consultant on outcomes and customer success for technology vendors. He spent 15 years leading the Asia Pacific region of an enterprise software company. He saw the potential that could come from delivering real and measurable business success for customers. So he initiated a customer success program based on customer outcomes. He and his colleagues developed, modified and proved the model over more than five years. He then spent one a half years researching and writing, culminating in the release of The Outcome Generation.
The founder, Paul Henderson, spent 15 years leading the Asia Pacific region of an enterprise software company. He saw the potential that could come from delivering real and measurable business success for customers. So he initiated a customer success program based on customer outcomes. He and his colleagues developed, modified and proved the model over more than five years.He’s writing his second book: The Outcome Generation –How A New Generation of Technology Vendors Thrive Through True Customer Success. He published his first book in 2016: The Chief Capability Officer – Delivering the Capability to Execute.