Value-based selling: what it takes before and after the sale

01

What is value-based selling?

Value-based selling is a practice of the whole selling company, from preparing before any deal to documenting the value after it.

In Töytäri and Rajala's 2015 study of nine industrial companies, the work starts before any deal, when the selling company chooses its segments, analyses its customers' processes and prepares tools such as value calculators and quantified reference stories. It continues after the deal, when the value created is verified and the case is documented for later use.

02

What value-based selling looks like in a deal

Follow the customer's value from an agreed starting point through to the result after delivery.

1. The customer's situation in its own figures. Name a priority of the customer, the problem in the way and its consequence, in measures the customer already uses. A value pyramid drawn from the customer's annual report is one way to prepare this before the first meeting.

2. A baseline the customer agrees to. The customer's current performance on that measure, taken from its own data, is what Keränen and Jalkala, in their study of ten suppliers among them SAP, Oracle, IBM and Accenture, call "a mutually agreed reference point" for judging the change after implementation. Customers were sometimes reluctant or unable to provide the data, and one supplier would not start a project without a baseline.

3. The expected value in the agreement. Before implementation, the suppliers set out the offering, the benefits the customer should expect and a joint implementation plan in a formal agreement.

4. The result measured and documented after delivery. Supplier and customer measure the same figure again after go-live and record what changed. Every supplier in the study found this phase critical and challenging: value usually arrives over a long period, and the supplier's contribution is hard to separate from the customer's own actions and from market conditions.

After go-live, measure the business outcome agreed before the sale, such as a cost reduction or revenue improvement, and link it to what the product does, as in MEDDICC Metrics in two layers.

03

Worked example with invented figures: field service software

A facilities management company agrees its return-visit figures with the seller before signing and measures them again a year after go-live.

Current reality: priorities, problems and consequences. The company has 400 technicians and wants fewer return visits. Its job records for the last six months show 8,000 jobs a month, 18 percent of them needing a second visit, and its finance team puts the cost of a return visit at 120 euros. The operations director and the seller agree those figures as the baseline.

Business value. The target is return visits on 12 percent of jobs within a year of go-live, measured from the same job records. At the same volume, that would mean 480 fewer return visits a month. At the finance team's cost per visit, those visits represent 57,600 euros a month. Finance still needs to establish which costs would actually fall and what the company would do with the technician time released.

Required capabilities. Ask why the second visits happen. If dispatchers are assigning technicians without the right skills or parts, any credible solution must give them that information when booking a job.

Your solution. The seller has no documented result from a company of this kind and proposes an eight-week Proof of Value in one region. Agree the region's own baseline and the outcomes that can reasonably be tested in eight weeks. Check whether its job mix and volume make the result useful for judging a wider rollout.

The agreement names the baseline, the target, the report both sides will use and who runs it. Three and twelve months after go-live, the customer's operations analyst and the supplier's customer success manager run that report together. They also record other changes in the customer's work that could help explain the result. If the customer agrees, the documented result becomes evidence for the next deal with a company of this kind.

04

When does value-based selling not fit?

Value-based selling needs a customer who will share its data and evaluate the offer on the value it creates.

A value-based approach is likely to fail when it does not match how the customer manages its suppliers, and it may not work with a customer who is not receptive to a value-based message. The case companies in Töytäri and Rajala's study stressed open communication and access to the customer's performance data, which value quantification requires. Enough bargaining power is often a condition for the seller to capture a fair share of the value created.

Quantifying value may be harder in information and communication technology, software included, than in those industrial cases: results take longer to show after implementation, many variables affect them, and without comparable reference data the quantification can be hard to make credible.

For a software deal, agree when the relevant business outcome can reasonably be measured, using data the customer can supply. Where benchmark data were missing, all the suppliers in Keränen and Jalkala's study ran small-scale experiments to estimate the effect of their offering, which the enterprise software supplier and the industrial equipment supplier called value prototyping. A Proof of Value can serve that purpose when its criteria test the customer's agreed business outcomes.

05

What should your team build first?

Start with the gap that stops your team assessing customer value.

For complex solutions whose value shows only over the longer term, value proposition development, trust and credibility building and reference cases may need particular attention, as Jaakkola, Frösén and Tikkanen point out.

Take the last five won deals that have gone live. Check whether each record holds the customer's figures with their source, an agreed baseline, the expected value in the agreement and a measurement after go-live. If a measurement is not due yet, check its owner and date. If reps cannot explain what the customer's figures mean, begin with training. If agreed figures are lost between sales and delivery, fix the deal template and handover. Where the figures and expected value are clear but the team does not return to them after go-live, begin with ownership of the review.

Training in the customer's business: how the customer makes money, the measures its leaders report on and how to quantify value. Töytäri and Rajala note that companies tend to focus their development on behaviours and generic selling skills instead.

A deal template that records each figure, where it came from and who at the customer confirmed it, and carries the baseline and the target into the agreement.

An owner for the measurement after go-live. Agree who will obtain the data, review it with the customer and document the result. Keränen and Jalkala found that leaving data management with sales made collecting post-delivery data difficult in some of the firms. Other firms defined responsibility by unit, or assigned key account teams or value specialists to work across the process.

A record of documented results to support claims about similar customers. One industrial supplier built up thousands of verified customer cases over ten years, and an enterprise software supplier held more than 10,000 completed surveys from over 3,000 organisations for benchmarking.

A shared Value Framework, with columns for current reality, business value, required capabilities and your solution. Building it is a separate task from any single deal. It gives marketing, sales, Sales Engineering, Customer Success and leadership a common language for customer value.