Outcome selling addresses the shifting landscape of how customers buy goods and services from sales people and organizations: They no longer want products, but a solution to a problem. They are looking for desired outcomes that make meaningful change to their organization. Customers expect sales people to propose solutions based on their expertise and understanding of the customer’s industry, market, and specific business challenges. A recent article describes how this works at GE Digital.
Marketing has an important role to play in enabling salespeople, installation people and other support groups. It must help all customer facing positions identify, articulate and deliver the outcomes customers are pursuing. Marketing can support outcome-based selling by developing an understanding of customer needs and supporting a consultative approach that provides industry and market insights rather than product specific benefits and features.
In this article we outline how marketing can lead your organization as you engage with your customers and think differently about how to become outcome-focused.
How to engage with your customers
An outcome-based approach turns your focus from what you have available to sell to partnering with customers to achieve their desired business outcomes. In other words, the solutions you present must clearly help customers accomplish specific jobs they view as important. Prioritizing customer needs over your need to sell products and services often requires a significant culture change in all areas of your organization. You must help your customers identify and quantify issues, align on key business objectives, and understand the urgency of solving the problem to achieve the desired outcome. And customer engagement doesn’t end when your solution has been purchased and implemented. The purchase is just the first step in implementing and monitoring the new solution to ensure the outcome is achieved.
Customers are changing the way they assess and purchase solutions. They are more empowered, skeptical, and frugal. And these shifts challenge your organization. You need to work with your customer to determine their specific objectives or jobs to be done. If you don’t have clear, documented, prioritized business outcomes from a customer, then it is impossible to do anything more than sell them products. How can you recommend the best solution when you are not clear as to what problem the solution is supposed to solve? By utilizing an outcome-based approach, you can gain substantial benefits including:
- Being a valued contributor to the customer’s strategy formulation process
- Higher profit-margin sales with more predictable growth
- Maximized client satisfaction for improved up-sell/cross-sell and references
- Increasing the value of the offerings your organization provides to customers
- Higher customer loyalty
- Improved differentiation from your competition
Customers greatly prefer the outcome-based sales approach. Four of the most important benefits they receive are:
- Outside expert insights to diagnose and illuminate important business issues
- Assistance in setting priorities and building solution roadmaps
- Business case justifications that help them gain internal approval to make critical business investments
- Measurable performance improvements that tie back to original ROI claims.
What does an outcome-based approach look like?
Let’s say you run an accounting and financial consulting firm. An engagement partner, Anna, has completed the audit of a major retailer client. One of her blue book findings is that asset turnover has declined. Unpacking that finding her team identified the fact that while revenues have grown substantially, working capital has grown disproportionately due in large part to an extension of receivables and days-outstanding.
Anna would love to take a “product” approach and pitch a consulting assignment. But she realizes that while your consultants are fully capable of diagnosing what is wrong and what should be done, this diagnosis won’t by itself increase asset turnover. She recognizes implementation of solutions will require modifications in the client’s ERP system, and perhaps shifts in customer segment targeting and even sales compensation.
Organizing a team of partner firms—an ERP specialist, a sales compensation specialist, marketing strategists—in addition to your financial experts and the client’s cross-functional implementation team, provides a value proposition that begins with diagnosis and proceeds through execution and results in the desired outcomes.
While a consulting assignment would certainly provide insight and direction, this selling approach is a “product-only” “sell-what-you’ve-got” sale and does not fully address the outcome. Proceeding with the product-only sale runs a high risk of commoditizing the sales and focusing the customer solely on price and discounts. It tempts them to turn to your competitors for their ideas and approaches.
Marketing can help Anna take an outcome-based approach.
It’s marketing’s role to understand the retail industry environment. It is likely that if one client needs to improve asset turnover, other market research may show a good proportion of others do too. In that case, marketing can anticipate the outcome sales process by recruiting and vetting consulting partners. Marketing can source or even develop software solutions that support improved processes and help Anna differentiate her approach from competitors by focusing not just on diagnosis but on the client’s desired outcome of improved asset turnover.
In the end, if what Anna cares about is helping her client achieve their desired outcomes, this attitude will differentiate and elevate Anna’s sales approach.
An outcome needs to be grounded in reality and include all of the things that the customer does in the future state. It’s more than defining the desired end state. Describing an outcome includes addressing the practical realities that the customer will face to achieve its business goals. Verified through measurable results. And marketing must support the sales organization in this work.
Going back to the asset turnover example, let’s say the audit committee of the Board of Directors, having read the blue book, became infatuated with the idea of a consulting study. The study cites chapter and verse of what’s wrong, but execution is too complex for the organization and the outcome is not achieved. When the Board disappointed they lose trust in the form. When trust is lost, the whole audit relationship is at risk.
Marketing-Sales Framework Overview
The single most promising potential feature of the relationship between marketing and sales is the use of Outcome Driven Innovation (ODI) and Jobs-to-be-Done (JTBD) methodologies. ODI is based on the theory that people buy products and services to get a “job” done and that customers use numerous metrics to evaluate success when getting a job done. These metrics can be defined by a special type of need statement that marketing develops called “desired outcomes,” and they create the foundation for sales to use in outcome selling.
By knowing how customers measure value when getting a job done, companies are able to align the actions of marketing, sales, planning development, R&D and operations with these metrics—and systematically create customer value.
Marketing can use ODI-based and JTBD-based diagnostic tools to generate critical insights about customers who share the same job-to-be-done. The results are often far more interesting than creating market segments based on demographics and firmographics. ODI tools specifyoutcomes that are currently being underserved, well-served or overserved. Overserved outcomes become opportunities to streamline your offer, increasing margins or reducing price. Well-served outcomes become opportunities to defend your position of parity. Underserved outcomes become opportunities for product innovation, differentiation, and competitive advantage.
Using MarTech to Empower Outcome Selling
The most compelling aspect of marketing technology, especially AI, big data and analytics, and the Cloud, is that that they can enable you to help your customers achieve important business outcomes. These approaches have been used to create solutions that have reduced fuel burn for airlines, predicted when machines in factories need servicing before they break down, maximized renewable energy production, and reduced patient wait time in hospitals, to name a few.
Martech can help you quickly build software solutions customized to customer needs, so they can drive high value outcomes. Using a collection of sensors on equipment and connecting to software in the cloud your customers can manage and share data securely across the internet. Moreover, analytic applications can identify patterns and anomalies in the data and can enable you to develop insights to act on.
To achieve the outcomes, you must change how you interact with customers, particularly at the beginning of an engagement when you discover their needs.
Tap into your customers’ Lean Startup Approaches
Many of your customers are using Eric Reis’ The Lean Start-upapproach to do process improvement and simplification internally. Lean startup aims to shorten development times with business-hypothesis-driven experimentation, iterative releases of products or processes, and validated learning.
Your sales work can tap into their lean startup approaches by enabling you to zero-in on the critical challenges your customers are facing, understand the outcomes they are looking to achieve, and guide your solution development process.
With the lean startup methodology and your customer’s business processes in mind, you can form hypotheses and leap-of-faith assumptions to discuss with customers to make sure you are solving the right problems. Gaining this validation from the customer enables you to deliver outcomes in a faster, cheaper, and more effective way, and will empower you to take greater calculated risk, and use experiments to co-create solutions with your customers.
Execution is the key
Using the lean startup methodology along with martech are compelling approaches. But unless you can master and combine all of these elements together to identify opportunities for delivering customer outcomes, you will lose out while your competitors catch up.
Here’s an example
A perfect example for how you can deliver better customer outcomes by combining The Lean Start-Upmethodology with martech is in the airline industry.
Airlines have scheduling and planning software able to predict estimated times of arrival (ETA), but being completely accurate is very complex, and should take real-time conditions into account. Therefore, airlines pad arrival times so they can meet customers’ expectations. ETA is an important metric to airlines, because it influences on-time performance (OTP). OTP is a “crown jewel” statistic that customers use to compare airline service quality, and one that is recorded in public record by regulators.
One start-up had their technology and systems linked with AI and Cloud services, to provide analytics and insights to improve ETA by up to 40%—a percentage that could allow airlines to increase the number of flights per day and reduce "block time." (Block time is the industry standard measure of aircraft utilization, measuring from the moment an aircraft pushes back from the departure gate, including taxi time, until the aircraft arrives at the destination gate).
The startup company met with over a dozen airline carriers (to test their minimally viable hypothesis), offering a solution that could better predict ETA. However, none of these customers felt that this was the linchpin to improving aircraft utilization. The exchange of value was not there.
Yet something more interesting happened, when the startup company demonstrated their software and data analytics capabilities, several airlines identified a different yet common pain point that they thought that the startup could solve. One airline stated that they wanted to be able to measure and take into consideration how multiple variables (such as the way the pilot flies the plane, specific aircraft performance in various weather conditions, aircraft configuration, and general air traffic conditions) affect flights.
The startup company was able to pivot from their initial leap-of-faith assumptions about what the airline industry needed, to address an outcome that the industry truly wanted. Using aircraft data and advanced analytics, the startup would be able to collect information about these variables and generate insights to help the airline improve fleet performance, adjust flight plans, and take planes that are less efficient and place them on less critical routes. Initial estimates predict that the outcome of this solution, will save one airline as much as $25 million per year.
Start the conversation
Like this aviation case, talk to your customers about simplifying processes, leveraging AI, the Cloud, and data & analytics capabilities before your competitors do—even if it means coming to them without a “fully-baked” solution. With a minimally viable hypothesis in mind, you can initiate discussions about potentially critical business outcomes to show your customers how your offering is better positioned to deliver outcomes than any other company on the planet.
To become the premier provider of outcome-based solutions to your customers, the entire commercial organization (sales, marketing, services, etc.) will need to become more mindful of what needs and desires your customers have and begin to act on these insights. New skills require practice and the only way to get fluent is to actively engage in conversations. If you can mobilize the thousands of sales and service personnel to start having outcome-based conversations, then you can begin to change your customer’s perception of your company and how you can contribute to achieving their business outcomes.
About the Author
Frank Grillo, CMO, brings creativity and an emphasis on customer centricity to the Harte Hanks brand. With more than 25 years of sales and marketing experience, Frank has helped many brands expand and transition their marketing strategies through periods of significant change, innovation and disruption in the marketplace. He is laser-focused on two of our clients’ critical needs—defining solutions for digital and data, and raising the Harte Hanks profile with external audiences like media, analysts and investors.More Content by Frank Grillo