Podcasts > Ep. 127 - Selling value trumps selling features
Download MP3
Ep. 127
Selling value trumps selling features
Stephen Timme, CEO, FinListics
Tuesday, May 03, 2022

In this episode, we discuss the need for technology sales teams to adopt an executive mindset and learn to communicate value rather than features. We also explore the challenges of selling a value proposition around strategic objectives rather than improvement of hard KPIs that can be qualified in a business case. 

Our guest today is Stephen Timme, CEO of FinListics. FinListics provides analysis of customers to help enterprise sales organisations harness and leverage the power of insight-led selling to engage prospects with value-driven narratives. Visit finlistics.com to learn more about Insight-Led Selling. Lots of value information in "resources". Follow FinListics and Stephen Timme on LinkedIn for future events on Insight-Led Selling.

IoT ONE is an IoT focused research and advisory firm. We provide research to enable you to grow in the digital age. Our services include market research, competitor information, customer research, market entry, partner scouting, and innovation programs. For more information, please visit iotone.com

Transcript.

Erik: Welcome to the Industrial IoT Spotlight, your number one spot for insight from industrial IoT thought leaders who are transforming businesses today with your host, Erik Walenza.

Welcome back to the Industrial IoT Spotlight podcast. I'm your host, Erik Walenza, CEO of IoT ONE, the consultancy that helps companies create value from data to accelerate growth. And our guest today is Stephen Timme, CEO of FinListics. FinListics provides analysis of customers to help enterprise sales organizations harness and leverage the power of insight led selling to engage prospects with value-driven narratives.

In this talk, we discuss the need for technology sales teams to adopt an executive mindset and learn to communicate value rather than features. We also explored the challenges of selling a value proposition around strategic objectives, rather than improvement of hard KPIs that can be quantified in a business case. If you find these conversations valuable, please leave us a comment and a five-star review. And if you'd like to share your company's story or recommend a speaker, please email us at team@IoTone.com. Finally, if you have an IoT research, strategy or training initiative that you'd like to discuss, you can email me directly at erik.walenza@IoTone.com. Thank you.

Stephen, thank you so much for joining us on the podcast today.

Stephen: Thank you so much, Erik. And thank you for everyone that's listening to this. I know you got very busy days. So Erik, and I will work very hard to make sure you get a good return on your investment of time.

Erik: So that's maybe a good place to actually begin, Stephen is understanding your focus on return on investment. And where did this passion come from? Because you've now built a business around that topic that you've been running for the past 20 years, but I imagine there was some backstory that led you into this path.

Stephen: So I studied finance as an undergraduate and I was so blessed to have a couple of professors who literally changed my life. And so they not only taught you all the textbook stuff, but they did a lot of consulting. And it was always about how to help companies be better, how to help them be stronger financially, and being a finance type, honestly, and that's the only perspective in the world. So I became very passionate about that.

I got my PhD in finance. I end up being a professor of finance at Emory University here in Atlanta, where I live, very fortunate to be able to work with a lot of companies, usually brought in by the CFO. But I would work in operations. My job was to work with sometimes plant managers, and hey, you got all these great ideas, here's how you add to the bottom line or product development, here's how you add to the top line. And Erik, by just pure chance, I was doing this open enrollment workshop, and a guy from the software company said, hey, have you ever applied this to sales? We push features and functions. But what buyers really want is, what am I needed cash flow-wise, well, I'm going to get ROI-wise. So I've always been very passionate about because I think that finance it's a common language of business. I got my PhD in 82. It's been it's been 40 years.

Erik: You have the guys in the plant who are trying to figure out how they translate some improvement in a KPI OEE improvement, whatever that might be into financial benefit. And then you have companies that are trying to sell technology to those plant managers, who again have to make that case. They were going to help you improve this part of your operations and it's then going to have a financial impact. But yeah, typically, they somehow don't get to the financial impact.

At least I think about it in terms of three tiers. First tier is here's our technology, technology is great. Then the second tier is hopefully they get to some kind of operational KPI at least. And then the third would be the finance. But maybe a good place to start is with the mindset. So the mindset of a technical salesperson, the mindset of a manufacturing engineer, for example, or an operational person and then the mindset of an executive. How do you think about the differences that these people tend to have?

Stephen: Especially if you're in manufacturing and of course, IoT applies to all kinds of different industries. Because a lot of times you're dealing with engineers, very, very bright people and so you mentioned OEE, as example. Like we want to have the highest OEE in the industry which is great and then you've got the folks from like, for example, Rockwell Automation, saying, okay, we can help you put in the sensors, we can help you do all these things. But then in the day, you're asking me to invest, or now more and more, it's on a SaaS type model.

But ultimately, to say, okay, we're going to make this decision. Okay, we're more efficient. For example, lorry manufacturing cost or let's say you're in consumer products, you're making cheese or wherever it might be, you're going to increase capacity utilization, what does that mean in terms of increased revenue? So those connections are being made more and more. That's one of the things that we really focus on is hey, we love the engineering stuff, we love the operational stuff, we love efficiency. But at the end of the day, you're asking me to invest, I better see some type of cash flow benefit and some type of return. But there is convergence going on there because more and more people are saying, this all sounds great, but what is not just the business benefits, but what are the financial benefits?

Erik: I think one of the challenges that salespeople have is that if you're selling an enterprise software solution or technology solution, you're not selling to one person, you're selling probably to five different people at different levels of the organization who are either the direct buyer or an important influencer and they all have different backgrounds and different priorities. That's a very challenging situation for a salesperson to be in. So how do you think about how a salesperson can approach this challenge of selling to different people, maybe at different points in the sales process who have different perspectives?

Stephen: Gartner came out with a study a couple years ago, that said for a lot of these major purchases are now 10 plus different stakeholders. So, let's say I'm selling some type of IoT solution that's not going to reduce costs but it's also going to help me increase capacity utilization, it's going to help me better manage inventories. So I just named three different people: I got to talk to the operations people, I got to talk to marketing and sales, I got to talk to distribution logistics.

So one of the things that we recommend, and we provide is to say, they're all lined with the same goal, that's great. Let's grow revenues, let's improve return on capital by doing these things. But you really got to tailor the message for each one of those three stakeholders I just mentioned. So a big, big part of that is a generic message is not going to work.

If you were to go talk to sales, and say, well, here's how we're going to improve your capacity utilization. They may even not know what that means. So what we have to do is break down each one of those stakeholders and say, well, what are their initiatives? And what is their dashboard? Or we just talking about what are their operational KPIs? So, for sales, I'd have to talk about we've got a solution and we know that you're really focused on bringing new product to market, or you're trying to reduce stock outs, or you're trying to increase cross sell, upsell.

Where I taught my friends in manufacturing, they're going to want to know things like, well, what are things like materials, labor and overhead per unit? What is unplanned machine downtime by unit? And then we're talking to our friends and distribution logistics, who can also help. They're looking at other things like on time deliveries. They're looking at logistics costs. So what's really required is to understand for each one of their buyers, what are their initiatives, or I like to call them use cases, and what's on their dashboard? So you can be providing a solution that can address, in this example, all three of those.

And one things that we have found is when you really start thinking that way, as you said, some are influencers, some are actually the buyers, you can really get larger deals, you can do less discounting, you can become more of a partner as opposed to a vendor.

Erik: And then you come to the implementation of it, which means that you have different ways that you communicate, everything from your elevator pitch, when you meet somebody first at a conference to how you communicate an email to your company intro deck to the sales presentation, then you have to kind of figure out okay, how do we manage this portfolio of communication materials, which on the one hand, we want to standardize, and on the other hand, we need to tailor. So how do you do that tactically?

Stephen: Well, tactically, it's a team sport. Because Forrester came out with this study that said that executive buyers think 80% of sellers don't understand their business. So you have to have sales enablement, for example, that’s helping them do this kind of thing. You have the industry experts. You have to have your use case experts. You have to have sales leaders that reinforce this.

So for example, on the quarterly business review, okay, what new buyers have you talked to? And what's the messaging? So it's really that establishing the baseline, which is a lot of work. There's no question about it. If you look at an industry level, it's a lot of work. The good news is it scalable across a whole bunch of companies and industry. But if you don't have sales enablement providing that constant nourishment, if you do not have sales leaders doing the reinforcement in terms of like the quarterly business reviews, making it part of the count planning, I asked companies all the time, they'll say, oh, we're customer-centric, and I ask them, okay, well, how much of their goals and strategies and individual buyers do you have in your account plans? And I got to tell you, the vast majority say, no, not really. I said, well, you're saying customer first in words only, you're really not customer first. It's got to be a team effort. It's got to be commitment. The CEO has got to be here's how we think about the world. If not, you're going to spend a lot of money, you're not going to get a lot of results.

Erik: So I want to approach this maybe then from just to get a bit more into the details from two perspectives. One perspective is the material that accompanies preparing and presenting to their customers. And what should that portfolio look like so that, again, you can balance this tension between on the one hand having standardization of how we communicate but on the other hand having documents that we know are targeting different stakeholders.

And then the other perspective is, as the salespeople are collecting information, every time they have a conversation with a customer, they're collecting information around what does this customer prioritize, what are their strategic objectives, how do you aggregate that into a format where you can over time build up a better understanding of the customer so you can really be customer-centric, as opposed to just saying, we know where they are in the funnel because I feel like that's also a big weakness for a lot of companies? But maybe we take those one at a time.

Stephen: So the first part, what I recommend people do is build an industry playbook. And to do that, it starts off with, okay, what are the common goals? So, for example, in consumer products right now in other industries, what they're saying is, hey, we want to improve operational efficiency. In fact, there's one I know of that said we want to improve operational efficiencies, not just in operations, but in finance, in accounting, and all these other areas, to generate $600 million in annual cash flow benefits that we want to put back into the company.

So the first half I recommend is pick a couple of your industries that are really key names, maybe not all of them, and find out what are the most common goals, what are the most common strategies, and then really start thinking about this from the perspective of the customer which then says, okay, I'm the CEO, I’m the CFO, we want to take $600 million out and Erik, you're in supply chain, you get $200 million of that; you're in general administrative, you get another $100 million; you're in manufacturing, you get the remainder that balance.

And so, one, don't think about solution quite yet just really focus on what are the most common issues within the industry, and then start thinking about, well, who are all the people that are involved in that? So then start really breaking that down into doing some research. And that's actually one of the things we provide for about 25 industries. But it says okay, within manufacturing, what are their 10 key initiatives? In general administrative, what are their initiatives; distribution logistics, what are their initiatives; and then breaking that down into, as I mentioned earlier, their KPIs and then then start thinking about your solution.

And why always tell people first, don't jump to the numbers first. I'm a finance person, people can't really ever say that. But now start thinking about those different use cases or initiatives, start brainstorming around, okay, what they're trying to do is reduce unplanned machine downtime as an example. What are the couple of things that we could do around that in terms of the sensors, okay, the motors going to go out faster than we thought, whatever it might be?

So what I really recommend people do is come up with a standardized house statements, how we can help you reduce unplanned machine downtime, how we can help you reduce stock outs, how we can help you improve on time deliveries. And what you find is once you've done that, you can be talking to dozens of companies across an industry. They do have these common initiatives or use cases. And now what you've got is a portfolio of how statements that are relevant to these individual stakeholders.

So it's not an insignificant investment. I tell people that all the time. But nowadays given what executives want you to tell them, so for example, I wrote a book last year with my coauthor, Melody Astley, and we interviewed like a dozen executives and one of the top things they told us is tell me something you don't know, show me the business and financial benefits and make my life easier. Well, if you don't have a customized message, it's just so generic. It's not even meaningful. We can help you increase revenues. We can help you reduce costs. What does that mean? So you have to make that investment to help sellers be successful. You’ve got to be on top of the industry because we know the world changes. So how do we change those how statements?

Erik: So you have a how statement and then you ideally would want to translate that into some kind of also financial benefit, I guess, ideally, you want to do this as precisely as possible, which means you have to some extent, extrapolate from maybe past cases; so we've done this for 15 companies and here was kind of the average benefit that they received. And then you can maybe communicate that. But every company feels like their situation is unique. So they might kind of push back against that. So how do you translate this in a way that is credible to the customer and doesn't feel like you're just kind of throwing a random number, like, hey, we can save you 10%, whatever, it's just kind of a random generated number?

Stephen: You got to have those case studies, because that's what executives focus on. Tell me where you've done it before. Because you can throw all the math out there you want, they're going to okay, great. Have you ever done this before? So tell me in our industry, ideally, where, for example, you have increased capacity utilization. How did you do that? Here were the bottlenecks. Here was this and that.

And then what I suggest people do, most industries, if we are talking about manufacturing, they don't publish capacity utilization. I mean, oil and gas does like here at the refinery or whatever it was, but the vast majority of you're looking at like a Colgate, Palmolive, or you're looking at Procter and Gamble, you're nowhere going to find in their discussions here's our capacity utilization. So what we do is we say, for starters, their sources of here's the average capacity utilization for someone in CPG, as an example.

So we recommend you do tell the how story, build credibility, then apply an industry average. And if you want to say on average, we done it 3-5%, or we talked about as his power one for company your size, each 1% improvement would be worth 50 million, you do not say upfront, oh, we're pretty confident we can save you this much money. You don't know them yet. So I agree completely what you just said.

So we recommend that you tell a strong how story, you rely on some industry averages around KPIs. Because we all know that these buying groups like 70% down the buying cycle period and talk to the seller and I’ll say, here's what you're trying to do, here's how we helped others, hey, just using some industry averages for a company your size. We did not say, hey, Procter and Gamble, we feel like we can save you this.

Then use those industry averages and use some industry averages, a 1% improvement for this or for other customers we've been able to improve that 3-5%. And again, for a company your size, it'd be worth this. We're not promising it. But you're just throwing it out there to provide this financial focus much sooner. Because if you just go in and say, oh, we’re confident we can save you 200 million, that meetings going to be over pretty quickly.

Erik: Let me present a case to you and see how you might think through this. So this is a case that we're working on right now and it's a chemical company that has a new product that it's more sustainable. But there's kind of a difficult value proposition behind it. So it's called Mass Balanced, which is not so important. But it basically means that you're presenting something as 100% sustainable. But the reality is that the batch is like maybe 5% renewable goods, you're mixing that with 95% virgin material, so petrochemical material, and then you're saying, to you as the customer, A, we're going to allocate 100% of the sustainable benefit, and to all the other customers that we sell this batch to, we're not going to allocate any of the benefits. So that's the Mass Balanced approach. There's a little bit of a challenge in explaining the proposition there. That's challenge number one.

And challenge number two is that in the end, it's a more expensive solution. So there really is not a direct financial benefit. You're selling this around kind of strategic positioning. You want to be viewed as a sustainable OEM that using good materials. And so that becomes then very particular to the company where you need to understand what is this company communicating to their institutional investors about their 2030 sustainability goals and so forth?

When you have situations like this, where maybe have a complex proposition and then you have more of a potentially a strategic benefit for the customer, but not easily defined direct financial benefit, how do you go about thinking through the right approach to communicate?

Stephen: So glad you brought up ESG because a lot of our customers are now asking, can you provide us more ESG data? And a lot of these investment companies or advisory services are actually assigning ESG scores breaking it down into three components. And so in something like that, because it's hard to say, well, if you do this, your sales are going to grow this much more because the people you're selling to are going to love you so much more.

So what I do in that case is one, I'm selling this new product that people I'm selling to have they made commitments to some zero carbon footprint by 2030, 2040, whatever it might be? So one, is it top of mind for them? Or they got this really low ESG scores, it’s like, you know what, you're just going to be wasting your time, they're not serious about this. So what I like to do is say, okay, so first of all, confirm we're on the same page. Are we both committed to the S part of ESG as an example?

And then what I like to do is say, look, it's hard to say that if you start offering these products that are more sustainable that your customers are going to want to buy more. So what I do I work backwards and say, okay, look, here's going to be your increased costs. This is not cost savings. But we can work backwards and say, well, given your profit margin, what would have to be the incremental revenues for this thing just to break even?

What that does at least says, we're talking about $100 million, executives are smart, they know their customer to say we think that's in the range of reasonableness or a billion dollars is crazy, then it's really more up to them about what is their commitment to ESG? Like security is another one, it's really hard. You can say, well, here's the average cost of a breach is in that. But some of these things are like very, very hard, like marketing, brand awareness. So I like to do is work backwards, at least give someone a starting point to say, could we generate this much more in revenues as an example? Or can we reduce this much more in cost somewhere else in the organization?

And then from that, if they say, look, we just really don't know, but it’s something we think we ought to do, then you say, okay, here's the cost of doing, like branding. So I'm a big believer in this breakeven analysis. One, make sure there's alignment. Second thing is, do we know what the cost is? We usually know what the cost is. And then in this example you just gave, would that customer who I'm selling to, how much more would they want to buy from us because of their perception what they think people are going to perceive them in the markets?

Erik: These companies, obviously, they have often large portfolios of products and the ESG focus might be on a couple categories or a couple products within a category. Do you think it's reasonable to try to communicate that having one category or a couple of products in a particular category as strongly branded around ESG would have a benefit for the company as a whole in terms of improving the brand equity of the company? And also that might have some benefit on other products that are not being impacted by this? Or would you typically focus specifically look at it on a product by product basis or a category by category basis when you're trying to evaluate this calculation that you've just outlined?

Stephen: And so we've done research, and it's really at a high level, because that's one of the questions I ask being in a finance type to our customers is okay, so if you do all this, are you going to sell more, which is mainly going to be a branding thing? The verdict is still really add on that, if you are more focused on ESG that people are going to buy more your product or going to do this or that or whatever? So, I don't have a really good answer to that.

Just know that from the research, there's some high level research that indicates that if you're perceived as being more ESG like, that you'll sell more, but the correlation is still very, very low. Except there really has to be that commitment if they say this is something we feel is right, but there's very low correlation between ESG and we sell more, we leverage our costs or we're more profitable those type of things.

Erik: I think for the end consumer, whether it's B2B or B2C, I think this whole ESG topic is still a bit fuzzy. So it'll be interesting to see how this evolves in…

Stephen: And I think there's some companies not a lot that now on the consumer side is saying, okay, here's the carbon footprint associated with this anywhere from making it clothing, you continue to wash it, whatever it might be. It's kind of like the caloric intake. But it's still in such early stages. I think to say there's a correlation between that and driving revenues, the verdict is still out.

Erik: What are your thoughts on the impact of COVID on the sales process, and the process of building credibility and trust and relationships? And how has that impacted how we should be doing sales today?

Stephen: It's been a significant impact. I mean, already before COVID, I think it was like 70% of sales were really virtual, which to me is kind of sad, because you and I are going to be partners, I want to get to know you and everything. So what we're finding is that almost all of our customers, over the last two years, everything is virtual. So it's really more challenging to develop those personal relationships. So what it means is that I have to more quickly say, alright, Erik, I understand these are your goals, you're trying to expand profit margins, much more quickly I got to tell you, here's where we've done it before and then what we're seeing is more and more is that people are saying, well, give me an idea of the financial benefits.

So it's really required sellers and sales organizations. I want to put all this burden on sellers. Again, it's a team sport is that to very more quickly get to here's how we can help you, here's what we've done before, here's how we can help you, hey, using some industry averages, it might be worth this much money. So they've got to more quickly get to tell me how you're aligned with my goals and strategies, tell me where to the business benefits, and then ultimately, what are the financial benefits.

We got some customers that are now seeing customers face to face again. Like in our case, we used to do like how many dozens of workshops worldwide. Everything's virtual. And just this week, I found out there's two scheduled for this year, but I don't see that changing. Same thing in the sales world, is tell me how you align with what I'm doing, where you've done this before, and give me some insights into the financial benefits. So you got to be even more precise and in more quickly get to what they want to think about. You don't have time to go play golf and go to dinner and all the things you used to do, which was not bad. It's just I don't see it happening anytime soon.

Erik: It's not necessarily a bad thing. It might mean that companies are making more value based decisions if they're making it based on this proposition rather than who they liked the most. Can we discuss the topic of building a business case? And maybe we can discuss this from the perspective of a traditional CapEx based technology investment and then a SaaS based? Because I think that's a new complexity that a lot of companies, also the customer organizations are struggling with right now.

Stephen: The dynamics have changed so much when you start talking about SaaS. First of all, they think of as a business case as opposed to a business plan. So the first part of building a business case or business plan or motivation for change, whatever you’re going to call it is what I like to call what is the qualitative analysis? So tell me how this aligns with our company goals? Tell me what has to be our change management plan? Tell me what are the critical success factors? Tell me what has to go right for this thing to work? Because the technology looks wonderful on paper.

But tell me what I have to do to get the end users bought into this because a lot of enterprise asset management, for example, I have friends that sell that, they implement it, but then you still got the engineers and the plants that won't let go their clipboards and they’re recording all this stuff. So the very first part is what is the qualitative benefits of this?

And I've been doing this for many, many years, and I can't tell you what the balance is between the qualitative critical success factors aligning with goals and strategies in the financial piece, which is the other 50%. But I can tell you, having built maybe hundreds of business cases over my life, having worked with a lot of CFOs, if you don't pass the qualitative part, you don't earn the right to talk about the financial piece.

So what gets left out of these business cases, people want to immediately jump to, here's the ROI, here's the cash flow benefit, here's the cost of delay. Us finance type, so I'm going to listen to you until you've convinced us, hey, this really makes sense for my company from this business perspective? Now, when we start looking at things like okay, now let's talk about the financial piece, that roll has completely changed. I mean, who wants to put $20 million into a bunch of routers? And then it's up to the buyer to figure out oh, are we going to get a good yield on this?

So what we're seeing more and more is that people were talking about either, here's the SaaS model, did you know we're going to pay for consumption? By the way, we want to see benefit a lot faster. Before we invested that $30 million and you told me, hey, it's going to take you 18-24 months to get your money back. Now it's like, okay, once it's implemented, I want to get my money back like immediately.

Those dynamics have changed completely in the sense of people wanting a much shorter payback around that, they want to see a much shorter time to benefits as an example. They don't want to have this big fixed cost sitting there. Because more and more internally, these decision makers are being held accountable. Hey, have you spent the $30 million, what kind of return do we get on that? So what you're seeing is that, especially with the SaaS, that's mainly what we see now.

We see very few, hey, punk a whole bunch of money into hardware, the solutions are perpetual software licenses, I mean, so much of that has moved to the SaaS world that it's really the focus on how do we help them get that return much, much faster? And then what is the impact on the key metrics like earnings per share and those type of things?

But I'm trying to think, I got to tell you, we deal with lots of companies. And I can't remember the last time in the last three or four years, we saw a traditional business case where put a whole bunch of money into your data center and then we hope you're successful.

Erik: When you get into more specific financial targets or operational targets, at that point, you also start to need to collect more information from the customer in order to make these relevant. What's your feeling about the right timing for that? Is that something that you should try to do? Especially for over the internet, like during kind of initial sales conversations to say, share with me some of your high level metrics and I'll let you know based on benchmarks what we can get? Or is it more do that later once you can maybe do a pilot? When is the right time? Because then that starts to get a little bit more sensitive. But obviously, you need to cross that bridge. So what's the time?

Stephen: What we're finding it's more mid funnel. Because once you demonstrated you've done it somewhere else, and you got these case studies in an ideal world, it's hard to do. They get to talk to different folks. But yeah, they actually helped us save the 10%.

So let's say, for example, I'm selling into consumer product goods, and I know the industry average for consumer product goods is capacity utilization of like 90%, alright, I'd say, look, Erik, this is all based on industry averages. I can't give you a more precise number until you and I work together because you need to get the customer’s fingerprints on it. What we find is, once you've established that credibility, once you've said, look, I'm being very honest, this is all based on industry averages. Here's where I've done it before, 3-5% improvement. But I really can't give you a more refined number until you and I work together.

And what we find a lot of times, people will earlier on in that funnel give you those numbers. Now, some companies, to be perfectly honest, they just say, look, here's the deal. Okay, we understand what you're doing for us. We're not going to give you those numbers. You tell us how much it cost, and then we'll figure out if we want to buy it or not. So there's still companies like that. I know some they’re not going to give you the numbers.

But more and more, what we find is that buyers want sales organizations to be successful. They don't want to have to have 10 different sales organizations. They know that hey, listen, we can have these true partners, both of us will be more successful. But I advocate all the time once you build the credibility, once you've established some financial potential benefits using industry averages, say I can't give you more precise number Erik. I want you and I to be the builder this business case. We just don't want to bring our consultants and haven't build it.

Erik: great. Well, let's now turn towards your company FinListics. Maybe we can start with the value proposition. But what are the problems that you're solving and for who?

Stephen: So the vast majority of our companies are some way related to technology. Is that how do you utilize technology really to solve problems. In fact, I tell our customers all the time, quit selling technology and start solving customer problems. So the problems that we solve for our customers, is if you listen to folks, everyone wants to call higher. Everyone knows that now there's more stakeholders. So how do we cut across those different stakeholders? Everybody wants to know what is the financial benefits of our solutions?

And the other aspect of that Erik, like, for example, one of our customers traditionally, provided supply chain solutions. And if you were to say, hey, Erik, you got 15 minutes to prep for this call to meet the VP of supply chain at Tesco as an example. They could go over there and have a great conversation. And then what they did, they came up with this new solution for omni-channel that all sudden, not just supply chain was involved, but you had like marketing was involved, you had was leading their omni-channel, you had store operations.

So what we find is that typically, enterprise sellers are very comfortable talking to one buying group. But nowadays, you got to cut across that. So the other challenge that we address is, okay, here's how you call hire, here's how you talk across these different channels, here's what you talk about and then here's how you tailor the message for those individual buyers. And ultimately, when you build your business case, here are all the considerations that should be included in that. So those are the key issues that we solve.

Erik: And how do you do this? Is this service-based, is it technology-based or combination?

Stephen: Yes, it's combination. So what we do is we have a sales intelligence platform that's called Client IQ. And so let's say as an example, I was calling on Toyota industry, and what we found in the book we wrote is that executives want you to understand their financial performance, not be a financial expert, but all my revenue is going up, my profit margin is going down, what aspects of cost management?

So we do is we provide a platform that literally in a matter of seconds, I could type in Toyota industries and it will say, oh, here's what they've done over the last five years. Oh, if they could go back to their best performing year, it'd be worth this. Oh, here's how they compare to their peers. So it helps them very quickly get these executive insights because all executives are focused on finance.

And then we've done for like 25 different industries says, okay, well, let's get underneath, let's say, like IOT has a huge impact on cost goods sold, materials, labor overhead, then what we do is we help them understand in a common sense way, because mostly people are not finance people, mostly people are not operations people, maybe I was a psychology major or something. So then we break it down and say, okay, well, here's the different folks associated with those different metrics and here are their different operational KPIs.

And then what we do is we customize the platform to say, oh, you're selling sensors as an example. Or you’re selling cloud that you can have the data, you're selling analytics around all this performance machine health information. So what we help them do is link their solutions to specific financial metrics to specific initiatives within the different stakeholders. And then we also help them create, what are some questions ought to be asking Erik? Erik is in operations and production, I'll be asking them these kinds of probing questions. And then ultimately, what we do is we put some valuation around that. So that's really the platform side.

The other thing that we're very, very fortunate to do is we have a bench of about 12 former executives that are now coaches worldwide. And so even if I understand all this financial stuff and the operations stuff, I've never talked to a chief operating officer as an example or I've never talked to someone in store operations. So what they do is they then say, look, we're not teaching you the tool. But we're going to teach you is the output from the tool, the insights from the tool, how do you use that with an executive, and you're not going to go in there and give them a financial history lesson.

So those are really the main things that we do to help the sales organizations be more relevant to executive buyers. Because most executive buyers think that sellers, I mentioned this earlier, 80% don't understand their business. So, people out there 80%, we're going to push them into that percentage that executive say, yeah, this makes a lot more sense.

Erik: I was working for a management consultancy about 10 years ago, and we had this very complex Excel tool where we'd scrape data from one of the financial reporting tools, and we then we'd show this kind of [inaudible 40:29] analysis of if you improve this metric, it'll have this impact on your profitability and so forth. And it was a bit like magic to the customer. And it was like this really finicky Excel document where if you have like one cell, it's the wrong date, everything breaks. And it sounds like this is to at least one of the features that you're doing here, but maybe in a much more user friendly, dynamic way.

Stephen: Because we have any word from field sellers using it, so it's like, look, we're not going to get in return on invested capital. If you said that to a field seller, they'd be like, oh, my gosh, it's worse than I thought. But then we also have like the value consultants or value engineers, they want to go deeper, sure, go ahead and go deeper.

But for example, we do surveys all the time about the value we add, is something like almost 100% of the users of the tool, say they save so much more time on the research part and they can spend much more time on the sales strategy and spend much more time around talking to the customers. In fact, what's really interesting is one of the stats, and I always say people sell, not tools. So I'm not saying it's because of client IQ.

But one of the stats we got is 89% of people utilizing the platform report deal size at 20% and higher. And I think part of that I'm convinced of this, is I actually get spend more time engaging with the customer. And at the same time, I do a much better job of articulating the true value of whatever I'm trying to sell.

Erik: So much of a salespersons time is spent doing kind of basic admin, as opposed to talking to people?

Stephen: Absolutely. And that's why a lot of times I don't like to use the stat about it save them time doing research, because you and I both know, you live this, I'm sure, you don't really for that first meeting, you're going to spend 20 plus hours. And what are they doing financially? What are their goals and strategies? The one I like is how are their executives compensated? And so what you find a lot of sellers just say, I don't have 20 hours to do this. I got five accounts, forget it. I'm just going to go in and hey, what keeps you awake at night? So I just think the fact you can automate that process is we know it's a great benefit. So you can actually do a better job of selling versus doing research, which a lot of highly paid salesperson, do you really want them looking at the financial statements, figuring out what cost of goods sold is or days in inventories? I don't think so.

Erik: And you even have this data like executive comp. And where are you pulling this from? I guess this is from annual different databases that have annual reports. Is this primarily public company information then?

Stephen: It is. And so to answer your question, we have a team of researchers that look at many companies a year. And so they'll say, here's the common goals and strategies, here's the executive compensation, here's their initiatives, those type of things. So what we do is for publicly traded companies will say, hey, here's the most common metrics that they're compensated on. And then we have links over to, like in the US it's called the proxy statement. And it's governance, all those kind of things. So if you want to dig down, take an extra five minutes and find out exactly what that is, sure, have at it.

Now for private companies, and we are always doing surveys, and a lot of our companies, our customers, they report 50% of their revenues are from private companies. Huge, right? So what we do is we actually have links to private companies, and you type in the name. So it was here's our best guesstimate what their revenues are. To me, the most important part is they're in this industry. They're making packaging equipment as an example.

So what we then do is we have literally thousands of industries worldwide. So it's broken down by geo, revenue size, whatever it is. So what it would say is, hey, Erik, look, this is a private company. And let's say they're making industrial products, okay. Here's our best guess of their revenue size. And what I find out is most sellers know their customers revenue size. So then what it does is when this industry cost of goods sold, their direct costs have kind of trended up. Well, hey, that's a great question to ask the person at that company say he wanted things we've noticed in this industry is direct costs to trended upwards. Have you experienced the same thing?

And then it also has things like, well, in this industry, the average cost is 70% of revenues. But the better performers are 65, where do you fall? And you'd be surprised how often people will share that with you. But what they want to know from you is, hey, Erik, tell me, the people are that 65 versus 70, what are they doing different from us? So what you can do is use this industry data have a great conversation, the KPIs I was talking to you about earlier. So let's say you got a private company, they’re 100 million, they’re industrial products, I can say, look, for a company your size, use an industry averages, each 1% improvements were this. How does that sound to your own internal analysis?

So what you find is, first of all, a lot of times private companies love this data because they're not getting that kind of benchmarking data. And in the seller, without going into a lot of detail, can say I notice cost to turn it up. Same thing happened to you, oh, yours is awesome. We understand it's like labor costs or transportation costs. So using industry data can get you pretty far. And I can tell you all kinds of stories about that, how there's been successful over the last for 20 years.

Erik: Maybe we can get into a couple of cases here. So please choose a couple that you think would be interesting to the audience. But it would be great to understand where they were before, what you did with them, and then how this change, maybe how they communicate?

Stephen: A number of our companies that we work with have already said, look, we've got to do something around value selling, or we call insight lead selling. But 20% of our people are there. What I find is 20% will never get it. It doesn't say anything about their intelligence. It's just not their DNA. So it's really that 60%.

They were very much feature function focus. They had a great technology. They did all this stuff around statistical analysis, and forecasting, and all those type of things. But they were stuck talking to folks that love statistics. So what we did we work with them to say, look, there's other people out there that want to hear your story, but they don't want to get into [inaudible 47:32] transformations and backward forecasting, all these things.

So what we do with that company is say, okay, first of all, what is it you do? Here's the industries you sell into. What are they trying to get accomplished? And then we work with them to come up with these different use cases that would actually allow them to talk to different people, elevate the conversation, because the people in the basement we call them Propeller Heads, God bless them. They're not the decision makers. And you're not going to get bigger deals from them.

But I remember one example, specifically, where they were talking to someone in retail. And what the retail companies trying to do is a better job of forecasting. So initially, they went in and talked about all their technology and reducing mean error forecast, or absolute forecast error, all this other kind of stuff. And they somehow got a conversation with people in marketing. And the person was like I have no clue what you're talking about. So we worked when they said, ask the person marketing what they want and what the person marketing said, hey, I want to do a better job of forecasting so we have a higher sell through rate so we have lower markdowns.

And so just one small example. We said, look, don't talk to them about their technology, tell them how you've helped others improve their forecasting and that resulted in higher sell through rates, lower markdowns, those type of things. So there's quite a few examples like we've helped companies working with their sales leaders, working with sales enablement, really transform themselves from a feature function, which by the way, I mentioned where I was doing surveys we did one recently and we asked that question, how often can you align what you do with a customer's goals?

Only 25% said they consistently do that. 30% said they still focus on features and functions. So we're all about the company provided automation for manufacturing. It was always a technical discussion. Almost never did they calculate an ROI, almost never they talk about oh my understanding your goal is to improve operational efficiencies and here's how improving OEE will do that. We work with companies to say okay, change how you think about your customers, change how you talk to your customers, and ultimately show them the financial benefits.

Erik: Are you working mostly with quite large, mature companies or also with like venture backed tech companies, what does their portfolio look like?

Stephen: It's all over the place. I mean, we got some of the big, big guys out there like the IBMs and the Cisco's and the Microsoft, which we love them. But we've also got technology coming. There's one that we signed up, I think it was two years ago, they were about 50 million venture backed, went public, oh my, God! So I wish I bought some of the stock and so that they've been growing, like at 200% a year. And if you look at our list, our ideal customer profile, it's all over the place from the billion dollar companies to, hey, here's one that's $30 million, $50 million, they just raised $100 million and they got a valuation of $2 billion, they're a unicorn plus.

So what we do is we look for are they providing tangible solutions? Have they bought into customer first insight-led selling? And a third thing we look at is have they gone through some type of value selling education ideally? And so it's all over the place. Like I said, on our ICP list, I think some are 20, 30 million because we want to be there when they grow. We're a small company. I love small companies. We want to help them grow. We want to be a part or as they go from their 20-100. In fact, I was talking to one today, they closed out last year 350 million, which is pretty good size. But they share with us look over the next three years, we want to get to a billion, help us do that. We can help you obviously, as a partner. So it's really all over the place.

Erik: On this podcast, I interview a lot of venture backed companies that are BC round. And a lot of them are coming from a very technical background, like very, very engineering focused founders, they have a great solution. And then they have to make that transition to okay, how do we then, like you said, grow 200% a year for the next five years? That's really a mindset change. And it's no longer the founders going out there pitching. It's now they have to build a sales force that can sell the product, not to sell the story.

Stephen: That's why we bring in our coaches. Like one of our coaches is the former senior VP of supply chain for a well-known consumer products companies, for Asia Pacific, she helped manage billions of dollars in revenue. So we bring her and say, look, this is done. She is bought hundreds of million dollars of product and services and all this stuff over the years. Let her tell you how she wants to be sold to. In fact, she didn't want to be sold to. She wants to tell you how you solve her problems

So yeah, it's really a change. We see this all the time, people who with super, super cool technology, and they're stuck selling to the wrong people. For example, real quick with one company, what they did is help people develop apps like in half the time. And so they were going to the CIO saying, hey, do you want to cut your app development costs by 50%? Oh, man, that'd be awesome. And I asked them, I said, well, what are these apps do? And they said, well, we just helped this one bank and it's going to take in mortgage proposals. I said, well, how much faster do you get to market? Oh, my God, it was like a year. I said how much revenue you think they generate over that year? I said, go talk to the people in marketing. Keep your friends in IT, marketing someone's going to benefit from this. So, a lot of times you got to really change your mindset around who to talk to and how you message it.

Erik: Is there anything that we didn't touch on that you think is critical for folks to know?

Stephen: We covered a lot and it's a blatant plug. But I would strongly recommend if you like this, I mentioned, we published this book last year called Insight-Led Selling, it's an Amazon bestseller. And look it up Insight-Led Selling, my name Steven Timme, Melody Astley, and we got it for the e book. It's like $1.99. We want people to be successful. I have this professor background, I still got that mad professor. I just think everyone should be informed. So what I would strongly recommend is do that.

What they can also do if they want to sample if they reach out to us at info@finlistics.com, I'll provide you the information and say that you know you were on Industrial IoT Spotlight, we will send you complimentary a PDF of the introduction of the book which already has a lot of good information in it. So, do that.

The other thing I would say is that we do about two webinars a month, brand executives like I'm doing one tomorrow on how to turn customer insights into value. Follow us on LinkedIn. Follow me on LinkedIn. No charge for these things, very powerful. Talking about executives, real world stuff. So, I would also recommend that, so reach out to us info@finlistics.com. Follow FinListics on LinkedIn. Follow me on LinkedIn. And then send us an email info@finlistics.com, get your free book. Go to FinListics, there's all kinds of free stuff out there.

Erik: Sounds like a lot of folks to follow up on, so I'll put all that in the show notes and stuff. Stephen, thanks again. Appreciate your time.

Stephen: Great, Erik. Thank you so much. And again, I want to thank everyone for spending time with Erik and me. And I hope you got a good ROI on your time invested.

Erik: Thanks for tuning in to another edition of the IoT Spotlight podcast. If you find these conversations valuable, please leave us a comment and a five-star review. And if you'd like to share your company's story or recommend a speaker, please email us at team@IoTone.com. Finally, if you have an IoT research, strategy, or training initiative that you'd like to discuss, you can email me directly at erik.walenza@IoTone.com. Thank you.

Contact us

Let's talk!

* Required
* Required
* Invalid email address
Yes, i want to receive the IoT ONE Insights - Newsletter.
Go to Action

Thank you for your message!
We will contact you soon.