Seven Best Practices for Presales Starting in Value Engineering
Like every tool, value engineering should be used with a set of best practices to make the most of it. Everything in the process matters: language, timing, stakeholders, etc. In previous blogs, I shared 6 reasons why value engineering (VE) should belong in every Presales toolbox and I gave some practical examples of tools every Presales can build. In this third and last blog, I’ll share some best practices to follow when you use these tools.
1) Stay focused on the strategic value
When you start your value engineering journey, it is easy to fall into the trap of talking about your product and its technical differentiators (faster queries, higher scale, better UI/UX, etc.) rather than the value it brings. Another common trap is to include too many value drivers, which gets stakeholders confused and skeptical. Your real value is diluted. Value engineering should focus on the strategic value only.
The value pyramid is a great framework to focus on your customer’s strategic value. It is a mental model that shifts the discussions from solutions and product features up to the corporate and business objectives. It’s safe to assume that every customer you’re working with are focused on one of the three strategic goals: increase revenue, lower costs, or reduce risk. Your value analysis should start with one of these drivers and break it down to a level where you can map and measure the impact of your solution. More on the measure later.
Let’s take the following example: you’re selling a fast analytics platform to a bank. What you are the most excited about is how your solution will improve the customer experience through better product recommendations. However, you know that your prospect’s strategic objective driving this initiative is cost reduction. Here, you should focus on cost reduction. A good example of this is how your solution can reduce the time it takes a fraud analyst to decide if they should block or release a suspicious transaction and how this results in cost reduction for the fraud department.
2) Keep it simple
The purpose of value engineering is to justify why a customer should give you their money and what they will get out of it. The most elegant VE tools are the simplest ones. They have the advantage of being easy to build and easy to understand. A common trap is to build an advanced economical modelisation of their business that only a PhD in economics can understand. By venturing into a complex model, you will need more inputs, take more assumptions and increase the risk of shooting yourself in the foot.
Let’s go back to our previous fraud analysis example. You may be tempted to measure how your solution can process unstructured and high cardinality data and reduce the rate of false positives and false negatives. This will definitely lead to a better cost reduction. However, this will make the study much more complex. The stakeholders won’t trust the results if they do not understand the details.
3) Get your champion involved
Every VE study requires several inputs, such as the average cost of acquiring a new customer, the revenue increase by having an additional feature, the fine to pay in case of compliance issues, etc. This information is often confidential and hard to uncover. Your champion plays a key role here. They will be able to provide you with key insights and guidance on these numbers to start with realistic assumptions. If they don’t have them, a champion will go to get them from people that do. It has the additional benefit of testing your champion.
The final objective of the value engineering study is to present your findings to your customer’s executives. Typically, this presentation lies on the shoulders of your champion - you won’t even be in the room when they do it. This is why involving the champion early in the process is critical. They need to feel involved and accountable and will put their reputation (and sometimes their job) on the line to defend your solution. Even if you are the one presenting the study, your champion will be in the room and can intervene if needed. If your champion is not comfortable with the inputs or the outcomes of the study, you can forget about your deal.
4) Use the customer’s langage
When working with your customer in the study, make sure you keep an eye (ear?) on the language they use. This may seem like a minor thing, but trust me, it is not. The same study, leading to the same result, will be much more impactful when built from the customer point of view and uses their language.
Every customer thinks that they are unique. They will use their own words to describe industry standards, group things under a high visibility project name, and create new acronyms or keywords for this project. Just embrace it. Customize the VE tool for them and use their keywords. Also, keep in mind that your product is just a part of a solution they are building. Talk about their solution instead of your product.
This is a low-energy task that has three benefits:
- It makes everything easier to understand and to communicate.
- It avoids mis-understandings and false assumptions.
- It helps your customer envision themself in a world where they use your product. It’s their world with your product, not the other way around.
5) Be quantitative and objective
If you finish your VE study and the result is something like: we will drastically reduce your cost, we will improve your efficiency, or we will give you a better user experience, then you have missed the heart of the exercise. For VE to be powerful, you need to focus on measurable outputs. The number of dollars saved per month, the number of new customers acquired or protected from churn, and the increase in the company valuation are few examples of what your output should look like. A number that everyone understands and can measure. If you impact a metric M, make sure that you know its current value. You will always have non quantifiable value that you bring. Share them at the end like the cherry on the cake. But they can not be the cake.
6) Consider several options
In some cases, your champion won’t be able to get you some of the data you need to build your model. To move forward, you’ll have to make assumptions using industry standards and benchmarks (consulting firms publish updated studies on every field you can think of). You can also suggest educated guesses based on your experience working on similar projects or customers. If you helped several banks save an average of 30% of their cost when complying with the new risk regulation, there’s a high probability that you won’t be too far from this number with another bank.
This being said, make sure you validate all your hypotheses with your champion. They can tell you if these assumptions make sense in their context. They can challenge you and give you more realistic assumptions that will be easier to defend in front of other stakeholders. More importantly, make sure you have evaluated several scenarios like we did in the ROI calculator that I shared in the previous post. The outcome of the study will be shared with many stakeholders who may have different views of the same world. Having these scenarios built-in shows that you are a professional and that you are not trying to sell the moon. Be open and transparent about your assumptions and how you defined them.
7) Do it early, do it often
If you have read the first blog on why every Presales need value engineering, you should know that VE helps you close your deal faster and at a higher revenue. There’s no golden rule on when to use VE for a deal. Based on your sales process, you can build an opinion on when it makes sense. Your go/nogo criteria can include deal size, access to execs and business stakeholders, use case, etc. You can start with a fast high level study to gauge what the outcome will look like in the best and the worst scenarios and take the decision to engage or not in a more structured VE process with the customer. If you do your job correctly, it should be less expensive and time consuming to use/build/reuse/improve these tools over time.
Do you need a Value Engineering team?
I wanted to finish this series of blogs by a question that I get asked often: do you need a dedicated VE team?
Let me answer this as an SE would do: it depends!
I’ve seen companies go from one extreme to the other. They spend years having tech focused marketing, sales pitch and processes. Then, they want to hire a full army of VE consultants hoping that this will solve all their problems. This overnight transformation misses several points:
- VE consultants work with the account team. If the account team is not sold on value selling, they won’t engage the VE team, and the outcome will be limited.
- You need a coherent value mindset across the board. This starts from your website and how you talk about your product, to your demos and slide decks up to your sellers and Presales. Having a commando team won’t change things if the rest of your organization is not aligned.
- VE consultants are, like Presales, expensive and hard to hire. This is why you will find a ratio of 1 to 15 or even 1 to 50 in terms of VE Consultant / Sales. Often, VE consultants focus on the most strategic multi-million deals. You don’t have the luxury of having them engaged in mid- and low-tier deals.
- VE consultants are engaged in advanced sales cycles. You miss a lot of opportunities to show and talk about value in the sales cycle if value engineering lies at the feet of a small dedicated team.
For these reasons, I think that young organizations should start by hiring Presales who understand and believe in Value Engineering before building a dedicated Value Engineering team. This helps infuse the value culture deep in the sales organization from discovery, to demo, to solution design and evaluation. Having the Presales team building, sharing, and improving a value toolbox pushes the need of a dedicated Value team for later. This phase can last for years without missing many opportunities. It also makes sure that the foundation and the culture is ready for the next phase: hiring a dedicated VE team.
Having a dedicated team will be a natural next phase. The newly formed team can bring more sophisticated models and tools. They will help fine tune industry-specific sales plays to take your value selling to the next level. More importantly, they will face less friction as the whole GTM team shares the same vision and practices, giving them the runway for maximum impact. They can train PreSales and sales on the new tools they build, pick from the PreSales regional SMEs, and keep them close to the latest VE initiatives. These SMEs would cover the mid-tier opportunities and leverage the VE team in a more focused and efficient way.
A final thought
I hope I succeeded in sharing my view on Value Engineering from Presales lenses. I hope I convinced you to invest in this field if you are not doing it already. I believe that there’s a natural bridge between Presales and Value Engineering and that’s is our responsibility as Presales to cross this bridge. Thank you for taking the time to read this blog series. I would be more than happy to hear your thoughts and feedback.
Looking forward to hearing from you and happy selling!
Post photo designed by William Bout on Unsplash