The Alternative to Consultative Selling - Value Portfolio Government Selling

In our last episode, we took on consultative selling for winning government contracts.  Today, we dig more deeply into the alternative.  I think you’ll like it.

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So, in the last episode we compared government buyers’ decision-making process to the same process as building a stock portfolio. Like you do when you build your portfolio, or talk with your financial advisor, you look at your goals, factor in your available resources, and look at the options.  Plus, you’re looking at the risks (or at least you should be).

The folks in the government buying maze are doing basically the same.  They’re looking at your proposed solution as a “value portfolio”...a set of individual pieces that add up to something of worth.  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. 

Yay, “Thanks for the personal finance lesson”, you reply,  “but how does that relate to government selling?”  Let’s apply this concept to consultative selling and see where it fills in the gaps.

We developed a worksheet to help. You can find it on the Govselling.dot.com website.  I won’t try to describe it to you here….

But, conceptuallyy,  it starts with examining requirements and fears….really, really, really important in the government space.

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. (Hopefully, some of our podcast episodes, our book, or our blogs helped you get there.)

You work to find out what fear is the prospect really trying to avoid?  

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 the software’s poor usability.  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 software will be continually updated without the expense of custom work. 

I could go on...and your list should be longer...but, you get it.

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.  They won’t have the same amount of “weight” in the buyer’s mind.  You’ll need to keep asking probing questions and confirming 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.  Yeah, different people in the organization may have different responses.  But, focus on your internal coaches.  If you’ve got good ones, they’ll help you know what fears are the most important.  If they can’t, find a new coach.  

So, after your good work, you’ve found six key factors and has 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, um, how they don’t.  And, since you’re doing this before the RFP is issued...you are doing that, right?....you may even be successful introducing new decision factors that,(through no accident, align with your offerings.

We’re not finished.  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 such as:  initial price, support costs, upgrade fees, total cost of ownership, replacement financing costs, and more.

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.  

Each decision factor has been broken down into pieces and given an importance weighting.  Now we know this is looking suspiciously like math.  Thankfully, the worksheet on the GovSelling.com website will help. 

The important thing for you 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. 

 So, 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. And, we 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.”  Or, if you like, use Fibonacci numbers.  If you don’t know what those are, again, go to your kids. Or, ask your developers. They’re probably using them in their scrums.  Don’t know what a scrum is, check out someone else’s podcast.  

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 weakness and highlight strengths.  

For example, our lower rating on company experience may be a result of our lack of background working with that particular type of organization.  So we might develop a case study that highlights our experience with the general challenges faced by similar customers, even if it’s not an exact match.  For addressing service quality shortfalls, compiling letters and emails from a few of our existing customers may be just the thing to combat any negative perception issues. 

VP Selling works great when we are the first to ask many of the required questions.  But what about situations where we discover the opportunity through a RFP process and all of the requirements are already defined?

VP Selling works there, too, though you may have less ability to influence new decision factors.  In fact, many customer procurement teams follow the basic concepts underlying VP Selling in their selection process.  They may even spell out some of the details for you.  It is not uncommon for RFPs to describe decision factors and importance weightings.

The real trick with RFPs is seeing the bigger picture.  When you are first in the prospect’s office, your job in the VP Selling process is to help define the value portfolio.  However, when analyzing an RFP which you have not influenced, your job in VP Selling is to reconstruct the value proposition typically outlined in great detail. 

VP 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 on the wall, you will increase your ability to build a strong value portfolio in the minds of the prospect.  You will win more deals.

As you can probably tell, I love talking about this stuff.  If you want to chat, send me an email to rick@govselling.com or go to the Gov Selling - dot- com website.  No charge.