In markets that are increasingly competitive, many organisations find themselves at the whims of customers who are making supplier-switching decisions based primarily on price.
The results can be devastating to businesses whose margins are already thin and whose sales revenues have been impacted by Covid-19.
The Impact of COVID-19 on Sales Revenue
ThinkSales Global, a management consultancy that blends strategy with execution to help companies reach Sales Organisation Maturity and achieve market-leading results, launched its inaugural State of B2B Sales in South Africa Survey in 2021.
According to the survey the majority of respondents, who were primarily drawn from organisations with domestic annual turnovers ranging from R50 million to R1 billion plus, reported negative financial impacts stemming from the pandemic.
The top three sales challenges reported were:
- Decreases in sales revenue: Two thirds of respondents (66%) reported decreases and substantial decreases in sales revenue relative to the same period in the previous year.
- Drop-off in the average number of new deals: 72% reported a drop-off (ranging from low to extreme) in the average number of new deals closed since the onset of Covid-19 compared to the same period in the previous year.
- Doubts over hitting annual sales target: 52% expressed doubts regarding achieving or surpassing their sales targets for their current financial year.
With negative pressures mounting and successful deals increasingly coming down to the lowest price on offer, the strongest performers in our survey have intensified their focus on value, bucking the trend of negative sales results, and displaying confidence in their ability to meet targets in 2021.
The Value of Value
Value emerging as a key theme that separates the Strongest Performers* from the Weakest is not a surprise.
“Strong Sales Organisations always focus on value and the challenges of 2020 and 2021 have made this an even more critical area of focus,” says Andrew Honey, chairman of ThinkSales Global, a specialist management consultancy with experienced revenue growth consultants focused on strategy and execution.
“The key challenge facing companies is to understand the customer’s perception of total value received and not just the lowest price. There are two reasons for this. First, some of our customers are being forced to sell products and services at prices lower than their business model allows; this is obviously a massive problem.”
“Second, many of the companies we interact with know there are deals they should or must win, and yet they are losing them. This is often because their sales force and sales and marketing collateral are not geared towards fully articulating the value of their services – the customer therefore cannot comprehend the value and so defers to the easiest measurement, which is price. The result for the organisation is value leakage, the greatest threat to profit realisation.”
With an ongoing pandemic and a recession acting as backdrops to business uncertainty, non-essential spending remains in lockdown – and so demonstrating value (and by inference, relevance) has never been more important.
“It’s simple, value wins. The top performers in this economy will be sellers who can reach decision-makers through value-messaging, and who can then build compelling business cases that match real client needs and challenges to co-create effective solutions,” says Honey.
“The ability to demonstrate how you are best-positioned to enable your clients to optimise their operations, leverage a competitive opportunity or mitigate risk, will separate those who out-perform the market from those who don’t. Out-performing the market is a critical factor in protecting margins and withstanding the pressure to discount prices.”
Strong performers are staking their 2021 revenue on value creation
Interestingly, while 75% of the survey’s Weakest Performers recognised that the need to articulate value to buyers has increased substantially since the onset of Covid-19, only 68% of them have actively refined their value proposition to ensure that it connects effectively with prospects and customers on why they should be selected as a supplier of choice.
In addition, only 45% of the Weakest Performers have added value to make existing products and service offerings more attractive, while 40% have added value instead of discounting.
By contrast, 84% of the Strongest Performers have refined their value proposition, 60% added value to make existing products and service offerings more attractive instead of discounting.
Similarly, 76% of Strongest Performers indicated that their sales reps are equipped with effective sales enablement collateral to help them build credibility, establish a business case and overcome scepticism in the current environment to close deals, versus 52% of their weaker counterparts. They also out-performed the weaker performers in increasing thought leadership contentby 60% versus 37,5%.
In terms of discounting, only 8% of strong performers indicated that discounted pricing was their top action in response to the pandemic, while 25% of weak performers relied on this tactic to close deals.
Conclusion
“Our results reveal that the strongest market performers view value creation as a critical success factor in ensuring that targets are met in 2021,” says Honey.
“Quite simply, if organisations don’t clearly articulate value, their buyers won’t be aware of why they should select their product from all the options available to them, and what essential benefits they offer that can solve the key challenges their customers are facing.”
“In our experience, many companies have positive differentiators, but more often than not, these are not clearly articulated to customers through the buying journey or through marketing and sales collateral and conversations.”
The result? Businesses fail to differentiate themselves or prove value to potential buyers. The good news is that there is a solution. In adopting value-based selling, you align your solution to the buying journey and prove that your business understands its customers’ challenges and that you are the ideal partner to solve them.”