However, certain sales performance metrics – usually activity-based – are tracked by Sales Performance Management and provide data used in the calculation of VOI. These activity-based metrics are categorized in a way to determine if it was value-add or simply a sales activity for the benefit of the selling organization.
Once you have some good VOI metrics from your sales performance reporting, your Sales team might use them to show prospects the additional value your company can provide over competitors. Also, your Account Managers can report to accounts the extra value your company has delivered over the past year or period.
So what goes into determining VOI? The 3 steps are:
- Determine value intangibles
- Quantify the value of those intangibles
- Calculate and report on the VOI
1. Determining what intangibles might be valuable to a client or prospect isn’t difficult – to start, look at the steps of your sales cycle. Some examples and the possible metric to track are listed in this table. Of course, you would have to ensure your CRM or SFA tool allowed for sufficient categories to track these different items.
Buyer Education – # of Presentations or Demos made. Always valuable if they help the prospect learn more about the topic at hand, not just your products.
Providing solution evaluation criteria – Number of times a Rep provided an evaluation plan with criteria. The criteria is valuable for the prospect to use in choosing a solution – which might even be the competitors!
Delivering discovery or assessment findings – Number of times a Rep delivered the problem findings, even if only a paragraph-worth in an engagement letter. Only use if this was NOT paid for by the prospect. The prospect now has validation of or new insight into a problem
Supplying marketing ideas Number of your company’s different brochures, white papers, etc. a Rep left with the prospect. If they are well done, this will give marketing brilliance to borrow from
Free consulting – Number of times a Rep gave best-practice advice (not just advice related to your company’s product), before the sale was closed.
Access to your firm’s thought leaders – Number of meetings that involved Managers, VPs, Advisors, SMEs, etc. during the sales cycle. After the sale, this would include access to blogs, white papers, user communities, etc. While some of these may be considered simply a cost of sales, there’s no reason why you can’t tout them as value you’ve added to the marketplace.
To add to this list, simply look at the post-sale implementation, transition (to account management), and ongoing support activities that are managed by an Account Manager role. Here are some examples. Again, you’d have to have the categories set up to track these – usually via an Activity Log type field in your CRM or SFA tool. More ideas here.
Customer Service Calls Number of calls to your customer service line. This would NOT be of value unless it is differentiated from the competition. Issues handled by Account Managers – Number of issues that the Account Manager handled instead of the corporate-based entity that should have handled it. This is only a value add if the Account Manager handled it faster and as well as could have been handled elsewhere. Conference invitations, discounts, etc. Number of times an Account Rep passed on information regarding upcoming conferences, webinars, etc. that the client didn’t know about. You could track a separate field for the amount of $$ in discounts given to the client. Special events (sport outings, for example) Number or dollar amount of social events the Acct Rep treated the client contact(s) to. Advice on advertising and marketing Amount of time spent by the Account Rep advising the client on how to attract consumers, if your company is dealing with resellers. News and insight on client’s competitors or industry Number of times the Account Rep gave information on the client’s industry-wide or competitor trends or happenings. Free consulting Amount of time the Account Rep spends giving general advice on how the client’s business might work better if employing a best practice
Flexible terms – Number of times the Account Rep went to bat for a client to delay or excuse late payment
2. Quantifying these value-adds is the difficult part. The main trick is to quantify the intangibles only when they are BETTER than the competition. Can you honestly say from the client’s perspective that the value from the intangible is truly better than a competitors? Or is it something that everyone does the same? If the same, don’t bother touting it. If you are providing best-practice, independent, 3rd-party objective value a client can use and the competition is not, that is quantifiable.
Assuming that these activities have been tracked in SPM accurately (at least for a period of time to obtain a sample baseline), you should have a total number of events in each category. Now, you need to apply some kind of cost factor to each category to determine the tangible financial value attributed to each. If desired, you could go further and norm these cost factors by Sales or Account Rep role level, product or offering type, or other weightings.
For example, you could assign a $10 per event cost to any of the activities done by a junior sales role and $15 for a senior role. I suggest keeping it all the same for ease in calculation and reporting. Some of these factors can also be modified because of other influences. For example, if your company has a US-based support staff (instead of offshore), you would be able to say you’ve added value over a competitor that uses offshore resources – the value being in the time gained from (and I hate to say it) not having to decipher the accent. Quantify that value by showing a 30 or 60 minute time savings multiplied by $100/hour (lost client time) for every customer service call logged to that account. But only do this if the response time is equal to or better than the offshore resource.
3. Once all your quantifications are determined for each of the intangible values, calculate the total value delivered as a one-liner wrapped up in a fancy marketing document, and backed up by a spreadsheet of each category’s value added. The spreadsheet could look like this:
It may seem like a lot of work to come up with a VOI. For a period of time to get a baseline, it truly is extra work for your Sales force. But in this day and age of becoming a commodity, being able to show extra value quantified can be a help.