Ian Campbell is the author of Wall Street Journal Best Seller “The Value Sale”. As Chief Executive Officer of Nucleus Research he is responsible for the company’s investigative research approach, product set, and overall corporate direction. He is a recognized expert on the return on investment (ROI) and total cost of ownership (TCO) analysis of technology and has written and presented extensively on a range of organizational topics and the importance of matching technology to business organizational objectives.
In this episode, Ian shares how you can create optimal pricing by understanding how customers use your product and find value in them.
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Why you have to check out today’s podcast:
- Learn how to quantify a product’s value in measurable terms
- Find out the three value propositions you can derive from when helping people find and understand their product’s value
- Discover how to restructure your conversations to help people recognize the value you offer and you get empowered to price that value
“Look at the customer value, how is the customer achieving value from your product and price according to that.”
– Ian Campbell
Topics Covered:
01:42 – How he got into pricing
02:23 – What Nucleus Research is all about
03:26 – Understanding value with how customers use the product rather than vendor claims
05:20 – Defining Value
06:48 – The challenge with quantifying ROI with non-monetary value [customers’ happiness]
09:00 – Thoughts on Mark’s statement about B2B being more cognizant of value they want to receive
10:05 – Translating ‘happier employees’ into quantifiable terms
11:19 – Selling risk and who bears the most burden in dealing with security threats
15:32 – What’s it like selling for emotional reasons
19:14 – How emotional decisions relate to Danny Kahneman’s decision-making theories
20:29 – Why he uses the three-year horizon [but what if a client insist on using a 5-year time frame]
24:00 – Why there are only three value propositions you can derive from
26:15 – Helping people [existing and new customers] find value in your product
28:22 – How to structure your conversation that people understands and find value in your product
29:50 – Ian’s pricing advice
Key Takeaways:
“Technology is around delivering value, not necessarily what’s the best, but what’s the best for you and understanding that.” – Ian Campbell
“When you talk about value, we look at value in four different categories, and there are value categories that are for instance happier employees. And that’s not something I can necessarily quantify, but for a customer and for a company, that could be something very, very valuable for them and that could be their objective.” – Ian Campbell
“Today, more than ever, it’s important to draw a link between what you sell and how you deliver bottom line benefits. Otherwise, you’re going to have a tougher time beating out not just your competitors, but all of the other projects they could be doing.” – Ian Campbell
“If you’re selling with value, realize that value is a tool to help you sell. Value is not a consulting project, don’t turn it into a consulting project. Turn it into a tool that helps you close the deal.” – Ian Campbell
Resources/People Mentioned:
- Daniel Kahneman: https://en.wikipedia.org/wiki/Daniel_Kahnemanhttps://en.wikipedia.org/wiki/Daniel_Kahneman
- Salesforce: https://www.salesforce.com
- Gartner: https://www.gartner.com/enhttps://www.gartner.com/e
- Forrester: https://www.forrester.com/boldhttps://www.forrester.com/bold
Connect with Ian Campbell:
- LinkedIn: https://www.linkedin.com/in/iancampbellnucleusresearch/
- Email: [email protected]
Connect with Mark Stiving:
- LinkedIn: https://www.linkedin.com/in/stiving/
- Email: [email protected]
Full Interview Transcript
(Note: This transcript was created with an AI transcription service. Please forgive any transcription or grammatical errors. We probably sounded better in real life.)
Ian Campbell
Look at the customer value, how is the customer achieving value from your product and price according to that.
[Intro]
Mark Stiving
Today’s podcast is sponsored by Jennings Executive Search. I had a great conversation with John Jennings about the skills needed in different pricing roles. He and I think a lot alike. If you’re looking for a new pricing role, or if you’re trying to hire just the right pricing person, I strongly suggest you reach out to Jennings Executive Search. They specialize in placing pricing people. Say that three times fast.
Mark Stiving
Welcome to Impact Pricing, the podcast where we discuss pricing, value, and the lagged relationship between them. I’m Mark Stiving, and our guest today is Ian Campbell. Here are three things you want to know about Ian before we start. He is and has been the CEO of Nucleus Research for 23 years. He is and has been an adjunct professor at Babson College for 32 years. He’s the author of the New Wall Street Journal bestselling book, The Value Sale. Oh, he rescues huskies and we just wasted 20 minutes talking about flying airplanes because he’s a pilot. Welcome, Ian.
Ian Campbell
Hey, Mark. Thanks for inviting me.
Mark Stiving
Oh, you’re very welcome. It’s great to get you on the podcast. I always open with this question. I don’t know if you think it fits you or not, but take a shot. How did you get into pricing?
Ian Campbell
Pricing and really value. I’ve been an analyst in the tech industry for years, and as an analyst we have a lot of opinions. And over the years of opinions, I realized that a lot of the decisions are really around value and around ROI, so Nucleus and The Value of Sale is all built, not around what an analyst thinks, but what an analyst found, did this work or not. So it’s a long path, but I came to the realization that technology is about delivering value, not necessarily what’s the best, but what’s the best for you and understanding that. So diving into that topic was really what I’ve been doing over the last 20 years.
Mark Stiving
And so, Nucleus Research, is it a consulting firm?
Ian Campbell
I think it’s like any other research firm out there like a Gartner or a Forrester. We’re very similar to those folks. We have advisory services, we have analysts. They cover different areas. But the difference is, it’s not about what our analysts think, but around case studies of actual deployments. What’s the ROI that people have experienced? So we tend to be better at identifying those small cool companies that start up to deliver great value because those are the ones that may not be at the top of some list, but may be able to deliver greater value for a particular customer in a particular situation. So we’re around value as opposed to analyst opinions.
Mark Stiving
Oh my gosh. So in my mind, when I think about value and the value sale or selling value, which was my book, I always think about how do we help companies understand the true value of what they’re delivering to their customers? But if I understand you correctly, what you do is you go out and find companies, you determine how much value they’re adding, and then you use that as an analyst to advise where people should invest their resources or their money, which companies to buy.
Ian Campbell
Right. So what we would look at is take the CRM market, for instance, if we want to stay in tech, there are certainly a lot of big players in there. Everyone knows Salesforce, but there are other players in that market, Sugar being a good one or Zoho being another good one that delivers value at different price points and different types of value. So, for Salesforce, they have a lot of features, great products, everybody knows them, but it’s also a premium price. So is that really the best product for you? You can look at the car market, you could take a Ferrari and a pickup truck. Well, both are valuable vehicles, but they’re valuable in different ways for different kinds of use cases. So the idea is not that there is one list of great value, but what’s the best one?
The other thing we looked at is not necessarily what a vendor would tell us they do, but how a customer actually uses the product. So the example I always use is, you know, you may sell a screwdriver, but if they use that screwdriver to open paint cans, then you sell a paint can opener. So how is that delivering value as a paint can opener regardless of what you think it does? So from our point of view, getting out there and in the trenches with somebody who has deployed a product and saying, how are you using it? How are you achieving value? How is this product delivering a return for you?
And then bringing that back to the vendor to say, this is what your customers are actually doing, this is how they’re actually getting value from it, and this is the magnitude of the value. And then advising other companies on, hey, if you think about this particular piece of technology, here’s how it delivers value. Here’s some other products like that that could deliver value as well. So really take it from the deployment back to the vendor as opposed from the vendor out to the marketing message and out to the customer.
Mark Stiving
Nice. So you use the word value a lot, as do I, and I spend a ton of time trying to figure out how to define the word value. So let me toss you the softball and I want to hear you define it in any way you want.
Ian Campbell
Oh, well, value is how much more utility you believe you receive from a particular product relative to the cost or the utility you’ve given away for that product. So what’s the difference between what it costs you for something versus the return that you believe you’re getting either in direct or indirect benefits?
Mark Stiving
So you’re defining it almost as ROI, even if it’s not quantitative, right? If we could take the return and call that utility in economics terms.
Ian Campbell
Right. And I’m trying to not say ROI in that case because when you talk about value, we look at value in four different orders, different categories, and there are value categories that are for instance happier employees. And that’s not something I can necessarily quantify, but for a customer and for a company, that could be something very, very valuable for them, and that could be what their objective is. So value could also be a K P I. KPIs don’t tend to drive sales, which is what we’re looking for often, but KPIs are something you might be interested in. So value can be a lot more holistic than just ROI numbers.
Mark Stiving
Got it. And so when you say employee satisfaction or happier employees, if you were coaching someone who builds a product that makes happier employees for whatever reason, would you or would you not try to help them determine the ROI, the financial benefit of happier employees?
Ian Campbell
Right. So, yeah, that’s a great challenge for companies that do things like that. And when we look at benefits, we would say, this is what we call a fourth order benefit. And we can talk about those kinds of benefits. But this is a benefit that’s very distant and you have two challenges as a company making a product that would make happier employees. The first is, how do I articulate the benefit? So happier employees are good. Why do I want happier employees? And , if you’ve dealt with any cable company or your cell phone company, you realize that having happier customers is not something they care about. They just care about money. So having happier customers, having happier employees is not necessarily something that matters. So how do I have happier employees?
And maybe there’s another way to look at it. So for a company that has happier employees, you could say, it creates a product that makes happier employees. You could say, well, this is great, but you also reduce turnover. And by reducing turnover you can get a quantifiable benefit. So, I have a theory that every company that creates a product ultimately knows that it does something that delivers a quantifiable benefit in some way. Otherwise it’s sort of worthless. You could say buying t-shirts for the staff is something that doesn’t really have a quantifiable benefit. But people don’t do that over big technology investments. And that’s really the second problem for a vendor like that. I can create a great product that has happier employees or that creates happier employees, but if I can’t sell it because no CFO will spend money on it, then I’m out of luck.
So you do need to be in business eventually, that means you do need to get money to be able to pay your salary and to stay in business. So creating an ROI calculation around happier employees is a challenge. That’s obviously the biggest challenge. And there are some big ones like that, but it depends on the type of sale and how you would approach it, but we would look at a company like that and say, how can we do this a little bit better?
Mark Stiving
Yeah. So let me tell you something that I often think and say, and I’m going to separate B2B from B2C for a second. And in the world of B2B, I really like B2B because somebody’s not going to buy my product unless they know it’s going to make them more profit. Right? I’ll just stop there. Is that a true statement, a bad statement?
Ian Campbell
Unless I am so flush with cash, it doesn’t matter. That is exactly right that unless it helps me in some way to either reduce cost or increase productivity, your product won’t sell in a B2B environment. So you have to have some kind of message that talks to those two points more. So in an economy like this, as the economy tightens, as that free cash disappears, you’ve got a tougher time selling a product that’s nice to have as opposed to delivering an absolute quantifiable benefit. So today, more than ever, it’s important to draw a link between what you sell and how you deliver bottom line benefits. Otherwise you’re going to have a tougher time beating out not just your competitors, but all of the other projects they could be doing.
Mark Stiving
Yeah. And so if we go back to happier employees, in my view of the world, the only way you sell that product is if you say, well, how do happier employees make you more profit? Well, that could be, lower turnover, it could be increased productivity, right? It could be happier customers because your employees are happier. But there’s going to be some place where we tie that back to here’s how you make more profit.
Ian Campbell
That’s exactly right. And so there would be a number of strategies we would take with a vendor that’s selling a product that has happier employees. And obviously this is the toughest one to do. There are a lot of easier ones than this. So in that case, it would be the reduced turnover would be a good one to look at, or increased productivity would be a good one to look at. There might be some other cost things we can look at as well. Increased productivity could be nothing more than, so you could survey your customers, you can survey your employees to say, if you had this feature in the company, if you had free soda in the company, how much more productive can you be? Well, we wouldn’t go to the store during lunch or we’d bring a lunch more, something like that so we could get five or 10 minutes of more work. Now does that actually turn into work? And we can talk about correction factors and how we correct from time saved to time worked, but we were trying to identify some sort of benefit to take it from a nice to have to a, it’s nice to have and it also has a quantifiable return.
Mark Stiving
Yeah. So since we’re on the B2B side and we’re talking about really hard ones, here’s the one that I didn’t see in your book that I find hardest of all. And that is, I can reduce your risk. And so you can think of this as just selling insurance. What’s your thought process on that?
Ian Campbell
Yeah, and I’m glad you pointed out because that was actually, it’s a topic we spent a lot of time on. So that’s actually one that we do a lot here. And it’s a big one. I sort of avoided it in the book because it could be its own chapter on risk avoidance. And with the book, I wanted to get to the point where people felt they could get out and get something out of it and could get some work done and use it. And that was one that I think would kinda go off on a tangent. So risk is a really good one. The clean way to do that is, what is the cost of a risk event? So it doesn’t matter what it is, but let’s estimate that if we had a break in our systems and somebody hacked in and stole our stuff, it would cost us at least, say, $50,000 to notify our clients, whatever the cost is.
What are the odds of an event happening in any given year? And that number can be greater than a hundred percent. It could be two times a year. It could be the odds, right? So it’d be 200%. So I know what the risk is, I know what the odds are, then I can come up with an expected value. And , I’ve got people that say, well, , you don’t know. And what I would say to those folks is, look, if it is like buying insurance, so if you had a ship and you can insure it for a dollar a year, you would do that. If you had to insure it for a hundred million dollars a year, you might not do that. So like your car, you wouldn’t insure up to a certain point and after that you wouldn’t insure it.
You just take the risk of letting it get damaged. So we all have that general feeling of what’s the risk and what’s my risk tolerance? What are my odds of something happening? And we all do that math, whether we do it intuitively just by the scenes or whether we actually write it down. So risk is always a cost of a potential loss. Now, where we go off on a little bit more of a complex question is when someone says, well, if this happens, our company could go out of business. So the risk could be infinite, okay, you’re right. But, you can’t take that approach otherwise you’d never go forward. So you have to say, that’s not going to happen, but what’s the most likely thing that could happen? And that’s the approach we tend to take in making the rational business decision to a CFO and why they want to take something that undertakes or that helps them reduce risk.
Mark Stiving
Yeah. And I think CFOs think through this really well. If I could give you the department or the executive that I think has the hardest job of all around this, that is, the chief security officer in it. Because there have to be a hundred thousand different threats and they have to choose where they’re going to put their resources.
Ian Campbell
Yeah. I totally agree. The security folks tend to be the most vocal about the sky is falling strategy for getting budget and also have the toughest time in figuring out which it’s sort of like whack-a-mole, which way do I go to try to fix all the potential security problems I have. In security there’s a baseline. You’ve going to at least reach some baseline of level of security so that I can sleep well at night and so that the company can sleep well. And after that it’s just where’s the biggest threat that you could say, threats like people breaking into your pc locking up ransomware threats that’s sort of new meaning the last five years it’s become the common threat. So putting more effort towards those kinds of threats.
And those often involve more education. So that may not be a technology solution as much as let’s make sure all of our users are educated in what they can and can’t click on, and being a little more savvy about it. And so, those threats change every day. And I would agree with you, I don’t think there’s no ROI answer to that. That’s why they’re employed and that’s why they’re called a chief security officer, right? And not just the security manager, listen, you got the big title, but with the big title comes the big risk and responsibility and the lack of sleep. So, enjoy it. But, yeah, it wouldn’t be that job if it weren’t difficult.
Mark Stiving
Okay. So I mentioned that I love B2B because everything’s in profit, it’s in dollars. I can do that. Let’s talk about B2C for a second. In your book you talk about driving Ferraris or before we had this meeting, you talked about moving your people to Miami, right? And so these are not B2B profit-driven decisions. These are emotional decisions,
Ian Campbell
Right? And so, in the book we look at, first we really do have to understand what kind of decision it is. And, I boiled it down to four categories, although it really depends on what sales strategy you have. There are plenty of categories, but I boil it down to emotional, obligatory, painful, and then financial. And financial is clearly B2B. That’s where a hard financial decision will win the deal. But if we start with emotional, there are plenty of things we do for emotional reasons. And we were talking earlier about how to rescue huskies and so we’ve got one sitting under my desk right now. Now, there is no positive ROI from these huskies. I’ve bought multiple telephones, multiple TV remotes and gone through a whole bunch of other items that have been chewed up by these dogs.
So this is strictly a cost but it’s an emotional sale. So you do it for most reasons. That’s okay. And you can say that LVMH, a big luxury goods brand, is for the most part built on emotional sales. People want to buy something. Is there an ROI from a Ferrari? Yeah, no, I mean, it’s just, there’s no way you’re going to be able to calculate the return on investment from that. That is strictly an emotional sale, but that’s okay. Once you recognize that that’s an emotional sale, your sales strategy for that is to sell to the emotions. I want a Ferrari or I want to rescue huskies or whatever it is, the emotional part of it. And there are non-tangible reasons why we do things. Companies don’t tend to do that, people do that. So people will do something like that.
But then we get into sales like obligatory where we’re told to do something painful, where we try to find that pain point and say, I’m sick of taking public transportation. I’m going to buy a car, for instance. So those can start to blend a little bit and say, well, is it now a B2B kind of sale or is it still a B2C? Painful can go both ways, and obligatory can go both ways, but emotional is almost always B2C. And there are some big companies built around emotional sales.
Mark Stiving
So I am often challenged because like you, I’ve spent all my time in value and profit and B2B, and people often say to me, yeah, but people buy emotionally and they justify rationally.
Ian Campbell
What I would say is people present a decision emotionally and can do that, but CFOs don’t spend money on emotional sales. So as the buying process has become more rational, and again, we’re seeing that economy move toward, I can only spend money on the things that deliver value, you’ll see those emotional sales start to disappear. What you would see for emotional is, I’ve made a decision to do something and then I’m going to plead my case to the CFO to give me money to do that, as opposed to making my case to do that. And I think we’ll see more making the case unless pleading the case. But, ultimately are things an emotional sale? I think there’s always a component of emotion. Do I trust this company? Do I want to do business with them?
Do I believe they’ll do the right thing? Those are emotional factors that factor into why it would work with one business over another. But when it comes to will the CFO or a financial decision maker write a check that usually needs a business case in some way. Otherwise they may say it’s great, but they might write that check for some other opportunity they have. And that’s your biggest challenge today. Not, should I buy the CRM system, but what are the three other things they could be doing with that limited amount of money they have and how do I get mine to the top of the list?
Mark Stiving
Yeah. And I’d never thought of this before, and let me just ask you your opinion since this just came up. Do you think when people say that they make decisions emotionally and justify rationally, could it be that emotional is the same thing as Danny Kahneman’s system one, system two thinking where it’s the, hey, I’m going to make a decision quickly and now I have to justify it?
Ian Campbell
Certainly I think those were a lot of the days, again, pre now where you would find people using, fortunately research firms like us to justify a decision they’ve already made. So they’ll say, oh, well it’s top of the Gartner Magic Quadrant, so obviously, you know, it’s a good idea. So they’ve made a decision, then they figure out a way to justify that decision by gathering up whatever research justifies that. Yeah, I do believe that that was a big part of decision making in the past. I think that’s why we see a lot of the top of a leader quadrant being the default answer, well, I’ll just go with whatever the number one product is as opposed to make a more rational decision. I do think it’s going to be tougher to do that going forward.
Mark Stiving
Yeah, it’s easier to decide if all you do is choose the best.
Ian Campbell
It is, but it’s not necessarily the best for you. And what I’ll point out to some of our end user clients is that may be good, but if your competitor chose a product that’s half the cost, what does that do to you when you need to reduce your price to remain competitive? Because now you’re at a competitive disadvantage. You may choose the most expensive or the best, but if that’s not really the best, you’re in trouble compared to your own competitors.
Mark Stiving
Yeah. In your book you used a three year planning horizon, do you always use a three year planning horizon? And why is that the right number?
Ian Campbell
Yeah, we always use a three year horizon and I’m militant about this one. So I’ve had people who have insisted on five and 10 year horizons. We’re calculating ROI, which is an average annual number. So, the first year or two you’ve got some variation. In the first year, you may have lower benefits because you’re just bringing a product up to speed, you’re just getting it deployed. By year two, you should be okay. And by year three it should be stable for most technology, most purchases. So if we average that out over the first three years, you should have received a pretty reasonable average ROI that should number, should be good enough to make a decision once we go out five or six years then you’re making guesses on what could happen. And a lot of things happen by year five.
There could be new products out, you could have to upgrade, you could change or expand your deployment. A lot of things can happen by then. And by year 10 you’re making guesses that just don’t make any sense. Now I’m making estimates on what my benefits could be, but since it’s an average ROI not some kind of cumulative number, then if it didn’t average out to a good number by year three, it’s probably not going to work for you and you should think about something else. So that’s why three years is a good horizon to figure out, to make good estimates. It’s a good horizon to stabilize the benefits, but it’s not going out so far that I’m being sort of ridiculous and hoping that, gee, by year eight this project turns positive. If you’re hoping for that, maybe take a step back and rethink.
Mark Stiving
Okay, I’m going to push back for just a second. So I can understand completely how as a research company you would want a consistent answer every time you give an ROI number. And so you say three years is the year, three years is the number. I could imagine walking in as a salesperson. And the customer says to me, we use a five year planning horizon. Suddenly I’m thinking five years, not three years. And by the way, it makes my ROI numbers look better too.
Ian Campbell
Right? Well, and I’m going to argue, it might make your ROI number look better, but think about the ROI is sort of, if I do it in year one, the ROI is going to be lower, by year two, the ROI has gone up because they’ve got lower benefits in the first year and then they go up, by year three, they’re sort of stabilized. And if I take the average over those three years, it’s not bad. If I go out to year four and five, it’s going to tweak up, it’s going to go up a little bit, but not by enough to make the decision worthwhile. So yes, it will go up because you’re just averaging over a longer period of time. And those benefits in those future years will be consistently higher than in year one. So I am getting a slightly higher ROI but it’s not high enough that the number that jumps is going to be less and less each time to make it a decision factor.
But look, I’m the first one and when I do sales training, I tell the sales folks, listen, do what the customer wants. If the customer wants a five-year horizon, smile and do a five-year horizon. We can talk about IRR which is another one of my pet peeves. But if they want to use IRR, smile and use IRR. Your job is to close the deal. As a salesperson, your job is not to create the perfect business case unless you sell business cases. And that’s really an important part about sales and value. If you’re selling with value, realize that value is a tool to help you sell. Value is not a consulting project, don’t turn it into a consulting project. Turn it into a tool that helps you close the deal. Because you only win with the signed contract. That’s the only thing that really matters at the end of the day as a salesperson.
Mark Stiving
Yeah. One of the things that I liked that you said is there’s two or three value propositions or places where you’re going to find value. What are those?
Ian Campbell
Yeah, and we’ve published 1500 ROI case studies, maybe 2,000 by now. I don’t even know how many case studies. But we went through a lot of the past case studies and we’ve never, ever never seen more than five benefits. There are two good ones, one or two good ones, two or three supporting benefits, and that’s it. So in the first two benefits, what are the first two reasons why somebody does something? And those first two big reasons are really what’s going to give you enough ROI to close a deal. So what I tell salespeople is if you have more than five benefits that you’re looking at that you’re trying to evaluate, you’ve made a mistake because those extra benefits are not making your deal better. The first two, those are going to close the deal. The next three, those will be nice to have. And there is a strategy that says identify the next three, but throw them away. Just say, Hey, you’re going to get this benefit, but I’m not going to calculate it and include it in the business case. Now people will know the ROI is better than it is, they feel better about it. But take those two, put all your energy around those first one or two, and then the rest of them are supportive. Never go over five because you’ve only made a mistake if you do.
Mark Stiving
Yeah. And I can imagine if you can prove a huge ROI with two, this is a no brainer, right? We don’t have to go farther than that.
Ian Campbell
That’s exactly it. And think about the elevator pitch. As a salesperson, you are prompting your evangelist to give the elevator pitch to that financial decision maker. What’s the one reason I deploy a CRM system? For instance, I want to increase the productivity of my sales reps. Okay, focus on that. So if you went to the CFO and said, we’re buying this new CRM system because we think it will increase sales rep productivity by 20%, you’re done. That’s all you need to do. Of course it does a lot of other things, but you don’t need to go through the entire list of features, you just need to give them those one or two points that help them justify that decision. So that’s really the two big benefits. What are those?
Mark Stiving
Yeah. And okay, so now I find that when I walk into companies, they almost never know the answer to that question, right? So what are those one to two benefits or what’s the value that your customers are really getting from your products? A, why don’t they? Because it seems so obvious to me that they should, and B, how do we help them find it? How do you help them find it?
Ian Campbell
Right? So, and really if it’s a new sale or an existing sale, so if it’s a new customer, the easiest thing to do is just engage in a conversation. Why are you talking to me? What is it you’re hoping to accomplish? What is it you really want? Now what you’re thinking as a sales rep is you are really not having a conversation. You’re digging for information. What you’re looking for really is what are those one or two things that I can quantify? So they’re not going to start by saying, I want happier sales reps. No one’s going to say that. They’re going to say, we think we’re not efficient in our sales process, or we don’t think our sales reps can do any more work because they’re overloaded. They’ll say things like that. And you’re flipping that to say, okay, remember the tool is I can only do three things.
I can either reduce cost, increase productivity, or as a byproduct of that I can increase profitability. So every time they talk, just say, is this a cost reduction thing or an increase in productivity thing? So the only two things I’m looking for, so once you start putting in those buckets, it becomes very easy to say, okay, well it seems like you’re trying to increase sales rep productivity and you’re also trying to reduce the cost of bad contracts because you want an automatic assembly of contracts. You want consistency in your contracts. Does that make sense to you? So talk back to them. Now you’ve got those two benefits, it’s very easy. So for a new customer that’s good, for an existing customer, it becomes a lot tougher because the customer’s going to start throwing out a whole lot of things to you. And just one method could be to say, if I took it away, what are the two things that would really bother you, if we didn’t have this, what are the two things you would have to do to fix it if you didn’t have our product, what would you have to do to overcome the lack of our product? So you could think of it of it in a negative way, but it’s the same thing. It’s a conversation around how are you using it, what’s going on? And then keeping in mind those two things, productivity or cost, they’re going to fall into those two buckets in some way.
Mark Stiving
And so would you recommend a salesperson have a list of, I’m just going to say 10 different value propositions that they’re essentially looking for. And as they have the conversation with the buyer, the buyer says, oh, we want the sales team to be more productive. Awesome. Got that one.
Ian Campbell
Yes. And that’s exactly how you do it. And that’s exactly what sales reps do. As a sales rep, you know what the 10 things are going to be. It’s not going to be more than ten, but that’s pretty much it, right? So you know what those are, and all you’re doing is looking for those categories in what the customer’s telling you. So let’s go back to the screwdriver, right? How many different ways can I use a screwdriver? I can use it to punch holes in something, I can use it to open paint cans. So I can come up with 10 different ways to use a screwdriver. I use it as a chisel. Okay? So I’ve got my ways of using a screwdriver. Now I just asked the person, how are you using the screwdriver?
Well, that’s fantastic for breaking up cinder blocks. Great. I’m using it as a chisel. Let’s do the chisel calculation, right? So it becomes very easy once you figure it out, and this is just a matter of paying attention. Again, I know what my customers are doing. The more I listen to that and put those in those two categories, the more I’m going to come up with my own list of 10. But if you’re a marketing person, training sales reps, that’s one of the best things you can do is say, here are the 10 different primary ways people use our product and here are the ways to look at turning what they say into a calculation that has some number behind it. Easy, very easy once you structure it that way.
Mark Stiving
Nice. I could have this conversation for a lot longer, but we’re running out of time. So if I could ask you my final question, what’s one piece of pricing advice you’d give our listeners that you think could have a big impact on their business?
Ian Campbell
Look at the customer value, how is the customer achieving value from your product and price value according to that. Of course, for competitive situations where you need to go below that, but understanding the customer and how they’re using your product and how they’re getting value will help you understand how to best price your product so they achieve that value and easily recognize that value.
Mark Stiving
Beautiful answer. Thank you so much for your time today and if anybody wants to contact you, how can they do that?
Ian Campbell
Mark, thank you very much. Yeah, through LinkedIn is a fantastic way to get a hold of me. You can do that or you could email me directly at [email protected]. I love this topic, happy to talk with anybody about that. So really appreciate you inviting me on.
Mark Stiving
Awesome. Thank you so much. And to our listeners, thank you for your time. If you enjoyed this, would you please leave us a rating and a review and I read all of my recommendations or reviews and you’ll know that’s true with what I’m about to read you. I got my very first iTunes, one star recommendation from NBSFMC. This person wrote:
“Rough and Patronizing. Host is pretty arrogant and tough to take. Some of the guests are interesting. Why even invite people as guests when you’re sure you know everything?”
So I read it all. Let me assure you, I try really hard not to be arrogant, but I am amazingly confident and sometimes that comes across as arrogance. And when I put together this podcast, I always think of it as a conversation between me and my guest. It is not necessarily an interview show, but I’m so sorry that it came across that way. And hopefully next time you listen, it won’t. And finally, if you have any questions or comments about this podcast or pricing in general, feel free to email me, [email protected]. Now, go make an impact!
Mark Stiving
Thanks again to Jennings Executive Search for sponsoring our podcast. If you’re looking to hire someone in pricing, I suggest you contact someone who knows pricing people contact Jennings Executive Search.
