You’ve probably heard the sales gurus tell you that to win, particularly when dealing with long sales cycles, you’ve got to become consultative. However, it’s hard to be really good at it when selling to the government because there are too many barriers. Instead, think of yourself as a curator of a “value portfolio” for your government contract prospects.
Why Use This Method?
The folks in government are likely looking at your solution as a set of individual pieces that add up to something of worth that help relieve a particular pain that they need to go away. Just like a stock portfolio consists of individual components like “stocks,” “bonds” and “mutual funds,” a government buyer’s value portfolio for any given solution consists of individual components. They have names like “features,” “price,” “service level,” and “company reputation.”
While the worth of individual stocks and bonds is determined by the market, the worth of decision factors in the value portfolio is determined by buyers’ perceptions—their needs and their opinions of vendor performance. Through the selling process, a buyer forms an impression of each solution set (the whole package offered by you and your competitors), compares value portfolios across competitors, and selects a portfolio displaying the greatest “return” relative to risks.
Let’s say you’re trying to sell software to a local, state, or federal agency. You’ve worked your way to a good position of asking some probing questions. You work to find out what fear the prospect is really trying to avoid. You use the Information Objectives we’re always talking about to get the info you need.
Let’s say, they talk a lot about price. And, they’re thinking, "I’m afraid I’ll exceed my budget and be seen as a poor manager."
They talk a lot about ease of use. And, they’re thinking, "If this stuff is too complicated, people all over my agency will whine and complain. Somebody will make a big mistake and blame it on me. The whole thing will blow up, and I’ll be criticized as the idiot who supported it.”
They tell you they only want an “off-the-shelf solution”. They’re likely thinking, "I’m afraid custom software will eat up my budget and be too difficult to modify. I’ll be criticized for bringing in a one-off solution that locks us into an aging technology."
The Second Step
The second step in the Value Portfolio process is to translate the fears and problems into decision factors and determine weightings for how much influence each factor has on the prospect’s choice. You’ll need to work on your Information Objectives, keep asking probing questions and confirm what you’re hearing until you uncover the extent of importance. This is not easy work; you may not get your answers in one session.
So, after your good work, you’ve found several key factors and have made a judgment about the relative importance of each of these dimensions.
Throughout this process, you’re thinking about how each of these fit with your company’s offerings...and how they don’t. Since you’re doing this before the RFP is issued, you may even be successful introducing new decision factors that, through no accident, align with your offerings.
Decision Factor Components
Each of these categories will be made of smaller pieces—we call them “decision factor components.” Take price for instance. Price often has several related components including sub-factors like initial price, support costs, upgrade fees, the total cost of ownership, replacement financing costs, etc.
You’ll need to understand how the prospect defines price, and capture each component of the customer’s definition within the Value Portfolio process.
The relative importance of each of these components must also be uncovered. Is the customer more concerned with the initial price than the total cost of ownership over time? How much more so? Do budgets limit them from lease or subscription-based pricing? Understanding this detail is critical to creating a strong value portfolio. While we may never know with precision how important each component is, we can at least come up with theories since we’re asking boatloads of questions.
The important thing to do is focus on understanding how the customer defines value through this process. If you have trouble thinking in terms of “weighting,” ask your kids. They’ve studied it. They’ll know.
Now that we have explored the prospect’s decision factors, decision factor components, and their relative importance, we need to evaluate how well we perform on each of these factors. We also need to determine how well we stack up against the competition.
For each of the decision factor components, we can rate our standing using a 1 to 5 scale where 1 is “Greatly underperforms the competition”, 3 is “Equals the Competition”, and 5 is “Greatly outperforms the competition.”
The Final Step
As the last step, you calculate Value Portfolio scores for yourself... and the competition. This takes into account decision factors, importance, and your company’s estimated performance on each, and combines them into a single measure that indicates how customers will perceive the total value of our offering.
With this info in hand, you can develop your approach to prop up weaknesses and highlight strengths.
Value Portfolio Selling, overall, is a way to delve into customer “hot button” issues, consider relative importance and analyze how your offering stacks up against the competition. By focusing on the elements that drive value instead of throwing spaghetti at the wall, you will increase your ability to build a strong value portfolio in the minds of the prospect. You will win more deals.
If you'd like to talk about relationships in government sales, or any other government selling topic, schedule some time on my calendar at here.