Impact Pricing Podcast

Ep152: How to Choose the Right Key Performance Indicators (KPIs) for Your Value-Based Business with Luigi Prestinenzi

 

Luigi Prestinenzi is Sales IQ Group’s Co-Founder and Head of Growth. He founded this company in 2014 and has been helping companies unlock the full potential of their sales teams since then. Luigi has been in sales his entire career. He hosts the Sales IQ Podcast where he talks with various leaders from around the globe to discuss the art and science of sales and marketing, personal development, and the mindset required to sell more every day.

In this episode, Luigi discusses the importance of creating value in your practice, and why understanding your customers is crucial.

Why you have to check out today’s podcast:

  • Find out why you must know what your customer values in order to provide them with what they want
  • Learn why understanding ICPs and KPIs is important for your sales growth
  • Rather than losing a client because you thought you did what was right, find out how to close deals effectively

              

Before even going to a point of price and advocating any solutions, ask yourself a question. Do you know the problem they’re trying to solve? Do you know the impact, the problem you’d help them achieve? Do you know the outcome that they’re looking to achieve? If you can’t answer those three questions, you’re pricing too early and it’s completely irrelevant. 

Luigi Prestinenzi

           

Topics Covered:

01:49 – Luigi’s narrative on how he got into sales

03:09 – Talking about Sales IQ Group and the importance of knowing what your customer values

05:57 – How does Sales IQ Group help people identify their ideal customer profile (ICP)?

07:39 – Why is it important to understand the KPIs in relation to knowing what your customers value?

10:16 – Mark’s dark days in the sales industry and how it reflects two things that really matter the most whenever one sells anything

13:23 – Luigi talks about derived value as he reminds us that we’re not heroes, just byproducts of what we help people achieve

15:18 – The perspective that effectively works in helping clients find the value piece

19:28 – A CPO client who chose the more expensive option in finding an integrator for areeba; creating value in seeing unrecognized needs

22:33 – Talking about RFPs; People not going for experts and fixing the problems all by themselves

25:44 – What is Luigi’s pricing advice that could have a big impact on people’s business?

         

Key Takeaways: 

“How can you help extract value if you don’t understand what the customer’s goals and objectives are, and ultimately, what they value? This is where there’s a misalignment in the sales profession.” – Luigi Prestinenzi

“Companies that are happy with the customer base – they just don’t have enough customers – and often what they do is they’ve got one message for everyone. They’ve got the same message for an accountant that they might be selling to and a manufacturing business, when fundamentally, those businesses behave very differently. They’ve got different needs. Their goals and objectives are different. The challenges and their trends are different. They should segment them and then start to think about the message that resonates for the industry sector that they’re dealing with.” – Luigi Prestinenzi

“They’re the two things that really matter when we’re selling anything. We’re either helping them achieve a better result, or helping them fix a problem that helps them achieve a better result, or it’s de-risking something within the business that could have essentially stopped them from achieving a particular result. Anything outside of that, it doesn’t become a priority. The biggest competitor a seller or a company selling a product or service he’s competing with is not the competitor; it’s the status quo.” – Luigi Prestinenzi

“We’re not the hero. We’re just a byproduct of the outcome we’re helping the person achieve. We’ve got to continue to remember that – we are not the heroes in the conversation.” – Luigi Prestinenzi

“Your pricing conversation is not what they’re buying. They’re buying the outcome that your pricing conversation allows them to achieve, and that starts at the very first level of interaction that we have with someone.” – Luigi Prestinenzi

             

People / Resources Mentioned:

                 

Connect with Luigi Prestinenzi:

                    

Connect with Mark Stiving:   

                          

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.)

Luigi Prestinenzi                 

Before even going to a point of price and advocating any solutions, ask yourself a question. Do you know the problem they’re trying to solve? Do you know the impact, the problem you’d help them achieve? Do you know the outcome that they’re looking to achieve? If you can’t answer those three questions, you’re pricing too early and it’s completely irrelevant.

[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 smart relationship between them. I’m Mark Stiving and my mission is to help your company win more business at higher prices. Today, our guest is Luigi Prestinenzi, and here are three things you’d want to learn about Luigi before we start.

He has been in sales his entire career, at least that’s what his LinkedIn page says. In 2014, he co-founded the Sales IQ Group – which I can’t wait to hear about – and he also hosts the Sales IQ Podcast. And by the way, he is a cancer survivor from age 21. Wow, that’s impressive. He looks to be about 82. Okay, maybe 40.

Welcome, Luigi.

Luigi Prestinenzi

Thanks, Mark. That’s a nice introduction. Thanks for having me on your show.

Mark Stiving

Hey, I always ask “how did you get into pricing” – and you aren’t – so how did you get into sales?

Luigi Prestinenzi

Well, I’m pretty lucky. I fell into sales at an early age because I can’t do anything with my hands. I’m not very technically gifted. And so yeah, I’m really lucky. During school, I used to hustle, make money, find ways to make money, but then I got my first kind of real sales job at 17, and then the rest is history.

Mark Stiving

The story you’re telling reminds me of my best friend growing up where he wasn’t overly technical, mathematical, but oh my god, he was so gifted with his mouth. He can build relationships and he became a great salesperson.

Luigi Prestinenzi

Yeah. I didn’t do very well at school. The whole school type of concept for me, I just struggled with, so yeah. But working in sales, constructing deals, building rapport with people, I found my space. And I’ve obviously been through some highs and lows through the career, but it’s been probably the best experience of my life.

Mark Stiving

Yeah, I’m jealous. That is a skill I do not have. I’m happy being by myself.

So first, let’s start with what is Sales IQ Group? Tell us what that is, how that works, and what you guys do?

Luigi Prestinenzi

Yeah. So, we essentially serve sellers to help them be the best they can be, and what do I mean by that? So essentially, we work with organizations in helping them enable their sales team to create more quality opportunity pipeline. In a world where sellers are really struggling to generate enough pipeline, just to generate enough opportunities for themselves. You know, inbound marketing doesn’t keep you fed 100% of the time. If you’re a seller, you have to be out there generating pipeline, but how do you do it? And so, we work with organizations in really enabling their people to understand who their target market is, how to create the right message, and then how to implement an outreach process that brings their buyers into the funnel.

Through all of that, there’s other things that we do. Go to market planning, building sales processes playbooks, but fundamentally, it’s designed to do that one thing – help sellers create more pipeline and close more deals. So, we teach them the art of that process.

Mark Stiving

Nice. Reminds me of a section that I put in the new book that’s coming out – Selling Value. One of the things that we do is we think about what customers get value, and so which customers or which market segment or which cohort – however you want to phrase that – gets the most value from our products, and then how do we go after that segment? So, are you doing something like that in your education?

Luigi Prestinenzi

Yeah. So, we cover what’s called an ICP, which is an Ideal Customer Profile, and we help sellers really think about what part of the TAM – the total addressable market – is the bright part of the market for them to engage with. We’re training a really large professional services firm. They’ve got accountants, M&A advisors, etc. And when you ask him sort of who is your ICP? Family business. That’s not an ICP; that’s very wide. You could have a family business doing a million dollars, you could have a family business doing a billion dollars, right? You know, what are the makeup? What’s the attributes of that family business that has a higher propensity to buy from you and spend what do you want to charge?

So, we help them really define their ideal customer profile and then help them to find their buyer personas. And I think this is where the big gap that I see. How can you help extract value if you don’t understand what the customer’s goals and objectives are, and ultimately, what they value? And this is where there’s a misalignment in the sales profession.

Mark Stiving

I think those words could have come out of my mouth. Thank you. I think that’s spot on. Let’s jump back, though. How do you help people figure out what their ICP is? You have an exercise that you do?

Luigi Prestinenzi

Yes. There’s a couple of ways. If they’re happy, if they’re saying, “Look, this is the customer set that we want to talk to, these are the people that are buying from us, we just need more of them buying from us,” great. Let’s have a look at the characteristics that make up the attributes or makeup these people. Let’s pull 20-30 of your customers. Let’s actually find out which sector they’re sitting within. Is it financial services? Is it insurance? Is it tech? And let’s then start to really categorize what they look like.

If you’re a business that’s saying, “You know what? These are the customers that I’m currently working with, but I don’t want to work with them moving forward. They’re low yield, they’re high touch, they’re too much, they just don’t see value in what we offer and they’re always trying to screw us down on price. We have to make that shift from SMB to mid-market.” Okay, let’s have a look at what that big market profile looks like, and then how does your product suit that mid-market customer.

So, they’re the two key steps that we go through. Again, companies that are happy with the customer base – they just don’t have enough customers – and often what they do is they’ve got one message for everyone. They’ve got the same message for an accountant that they might be selling to and a manufacturing business, when fundamentally, those businesses behave very differently. They’ve got different needs. Their goals and objectives are different, right? The challenges and their trends are different. So, they should segment them and then start to think about the message that resonates for the industry sector that they’re dealing with.

Mark Stiving

Yeah, so that launches us right back to the concept of value and how is it that you help companies figure out what their customers actually value. Because I have to say, if there’s one problem that I see pretty generically in every company I deal with, it’s that they don’t think about value from their customers’ perspective; they think about it from their own perspective.

Luigi Prestinenzi

Yeah, I say that all the time. I had trained a bunch of incredibly young, good sales persons yesterday from a very live CRM and marketing automation company, and they’re selling into the SMB market, sort of 1 to 10 million revenue. Most of them are business owners. There was a question I asked. I said, what are the KPIs that drive this person, that drive this buyer? And they were talking about sort of key marketing campaigns and features, and I said, guys, from a small business, 1 to 10 mil is worth about how much revenue? What’s my cost to run my business? How much operating cash flow? Do I need to have to ensure I’m not going too low? And how much profit am I making? Like, it’s fundamentally the things that matter to him or her, right?

And again, I say this like yourself, most people don’t know this. Most people don’t go deep enough to understand those KPIs, those key objectives. And again, a small medium business is very different to a mid-market enterprise. Mid-market enterprise, they’re not worried about the tax bill. They’re not worried about – it depends on if they’re a CFO, they might worry about it – but they’re not worrying about operating cash flow, etc. But an SMB, who’s putting his own hand in his pocket to cover some of the expenses or pulling out money to pay for his kids school fees, etc. They’re very different needs and wants so they value things differently.

And again, this is what we do with organizations. We even bring the personas or customers into the sessions so they can interview them and we ask them questions so they can really learn what’s important to the buyer and what they value, because it changes. It’s a bit of a paradigm shift for the seller. “I didn’t know that. I didn’t know that that’s what’s important to him. I didn’t know that these are three KPIs that matters the most.” Because if you don’t know that, then fundamentally what are you presenting to them? You’re just selling stuff that you think is important to them, and it might completely missed the mark, then you wonder why you’re stuck in a battle of price.

Mark Stiving

This reminds me of one of my more embarrassing stories. I was a salesperson for a few years. I was a horrible salesperson; I’ll show you that. And I remember I would go list features that my product has and look at the person’s eyes hoping that you’d see some gleam of interest in some feature that I listed. Now that I look back at that in retrospect, first off, no wonder I was horrible. But secondly, if you think about it, if I was talking to an expert, I could probably do that. I could list features and they could say, Yep, I got it here. So that makes me more money. Yet, how many of our buyers are truly experts?

Luigi Prestinenzi

Yeah. But they’re not.

Mark Stiving

Right. And so now we have to have the conversation of how do we help you make more profit.

Luigi Prestinenzi

And it’s not that they’re not experts, but there are things that our buyers do. How they make money vs. there are things that we do that can help them fix a problem or achieve and improve results. And remember, they’re the two things that really matter when we’re selling anything. We’re either helping them achieve a better result, or helping them fix a problem that helps them achieve a better result, or it’s de-risking something within the business that could have essentially stopped them from achieving a particular result. Anything outside of that, it doesn’t become a priority. And we know that the biggest competitor a seller or a company selling a product or service he’s competing with is not the competitor; it’s the status quo, right? It’s doing nothing.

And if a company, for example, didn’t have to pay you Mark, if they could find a way to get the outcome that you help them achieve without paying you, they’ll probably try to do it, but the reality is there’s a gap. That’s why they pay people like me and you to help them, because they recognize the gap or we help them recognize there’s a gap, and we show them there’s a better way. But ultimately, companies don’t want to buy more tech. Companies don’t want to buy more stuff. They’re only buying it because they need it, because it’s what they need.

Mark Stiving

I feel like I’m talking to myself.

So, I created a concept a little while ago. I call it a value table. And you’ll love this, I think, but what a value table essentially is, is let’s start with what’s a marketable product feature. So, what’s a feature that you love to talk about with your product? Why’d you build it? What problem does it solve for who? If someone solves that problem with your feature, what result might they get? And then the last table is, what’s the dollar value of that result?

In B2B sales, we can use our business acumen and figure out what that dollar value is to our customers. And you said those exact words. I love this conversation.

Luigi Prestinenzi

And I think the other thing that I find that sellers do not to extract enough value from the equation right is “I talk to a customer or a prospect, and as a seller, I have no patience.” And the minute you say, this is a problem, as a seller, I go into, well, this is how we can help you, right? And I’m only addressing one problem, but the reality is derived value.

I’m a big believer in derived value. In that “There’s a problem here. Where else does that impact? Which other department? How does it impact that person, supply chain, distribution, whatever it might be?” Then all of a sudden, you can derive and go, “Well actually, this particular problem, the root cause is happening down here. Now it’s impacting six areas of the business. If we fix it, we’re not actually just saving $10 in your department; we’re saving $100 across all six departments.” Now all of a sudden, that value equation is far greater than what it was before. Then we have a real compelling reason for the customer to think about change. And the business case is much more significant than what it was if you just responded to the first need that you hear. And again, that’s because sellers hold back, and it’s not a bad thing. It’s actually hard to hold back. It’s hard to not respond. It’s hard to say, you know, I’m here because I got to sell to this guy or sell to this female. It’s actually, we’re not the hero. We’re just a byproduct of the outcome we’re helping the person achieve. We’ve got to continue to remember that – that we are not the heroes in the conversation.

Mark Stiving

Yeah, that’s absolutely right. We have to help our client be the hero, essentially, as we do that.

So, how do you help clients find that value piece?

Luigi Prestinenzi

Yeah. So again, I’ll go back to the persona and really get them thinking about the persona and what’s important to the persona. And if we can say, “Hey, these are the three or four things that matter to them,” then that everything from a narrative perspective, our messaging needs to be focused on that.

Mark Stiving

Let me pause you for just a second. I’m with you. I agree. But earlier, when I asked the question, you said, everybody wants to increase profit, reduce costs, increase revenue, lower risk, right? So, these are the generic; every CFO, CEO in the world wants to do these things, right?

Luigi Prestinenzi

Yeah.

Mark Stiving

So, if I walk into a company and I say, “Do you want me to help you increase profit?” They’re like, “Get out of here,” right? So, there’s an intermediate step of we’ve got to recognize where the value is going to come from.

Luigi Prestinenzi

And that’s where- if I’m prospecting for example, Mark, I’d be looking for a reason to connect what I do to what they do. Sure, there’s got to be some form, like I just ring up a CEO or a CFO, say, “Hey Mark, I think it’s a way for you to make more profit and drop down your cost so you can pull more money out each month,” they’d be like, “Sorry, what’s this about?” Right?

It’s about saying, “Hey Mark, I’ve noticed that you guys are advertising in this region and it’s actually new for you guys, so that’s telling me that you’re looking to grow your business. I think there’s a way for you to do that and also strip out 15 to 20% of your marketing cost so that you can achieve a higher profit. Do you mind me asking? What’s triggered you guys to start marketing in this new area?”

So, what you do is use a trigger event, use something – a level of personalization, a level of relevance. And again, not enough sellers do this because it takes a bit more time. Or you see something in the news, you might say, I do these with CMOs, banks, large organizations are raising their capital, and you use that to connect to the reason why you call them, and it gives context. So, he’s saying, “Well, I’ve read your financial report. You’ve mentioned that you’re moving away from a licensing-based pricing model to a subscription-based pricing model, right? And you’ve made mention of that to your shareholders. And I think there’s a way for you to do that, accelerate that objective, so that you can make shareholders’ demands. Also, in a way, that doesn’t require you to spend a whole bunch of amount on marketing to get that message to the market.” Very different right now, because the way in which we open kind of sets up the next stage of the process.

And if I open with feature, the problem is there’s only a certain portion of the market in any given time that’s thinking about change, right? Well, that’s thinking about buying what we’re selling at that given that point in time. Now, if I do happen to lead with feature, “Hey Mark, we help customers with pricing issues.” “Actually, we’ve just been talking about that.” Great. If I do happen to get a small percentage of the market, very small window that say, “Yes, let’s talk,” the problem is we’re going to be talking about the features in the product, right? We’re going to be talking about that particular conversation thread instead of, “Okay, let’s think about the bigger impact here. Let’s think about what are we trying to achieve as an organization?” – the future state, the business outcomes, the commercial value that you can help them achieve.

Because again, your pricing conversation is not what they’re buying. They’re buying the outcome that your pricing conversation allows them to achieve, and that starts at the very first level of interaction that we have with someone. Because otherwise what happens is, at some point, they’re going to go, “Well Mark, let’s go get somebody else to give us a price.” And then all of a sudden, you’re in the realm of a spreadsheet or comparison going, “They all do the same thing. How do you differentiate that?” Right?

And I’ve got a really interesting story. I was interviewing the Chief Procurement Officer for a very large waste management organization across Asia for one of our clients’ project that we’re doing. And the CPO said, “We’ve just embarked on a process of implementing a platform called areeba” – the huge procurements SAP product. And he said, “We have to use an integrator.” Usually, these integrations are hundreds or thousands of dollars. So we went to the market, got three integrators to give us a price. We knocked one off straightaway, because they just weren’t fit the purpose, and we had two guys interesting. One was 50% higher than the other. But we chose the more expensive provider, and the salespeople were like, gob smacked. They’re like, “why he goes…” Actually, because the one that offered a more expensive product actually learned from us that we are a very reactive company. And when we’ve done projects of this nature before, we always go off scope and impacted the deliverables and timed out. So, what they did is they factored in extra resources to ensure that if it did happen, they would have the resources to keep him on scope, and make sure they deliver by the time required. And he says, “As a CPO, what’s important for me is managing risk and procuring a strategic outcome.” So that one vendor took the time to really understand how they behaved in the past, which dictates how they behave in the future. The other just thought, “Let’s just go long in the price to win this deal.” So, it’s interesting that the buyer actually went with the more expensive option.

Mark Stiving

And I think what happens not only in this case but in similar cases is if you’re the salesperson who helps the company learn what they really need to do, how they’re going to go solve their problems, you’ve built the relationship and the trust that even if they go out for bid, you’ve got the big advantage there.

Luigi Prestinenzi

Yeah, absolutely. And I think I love what you just said there, right? Because there’s different types of needs when we engage with a customer. There’s the obvious need, there’s the emerging need, there’s the unrecognized need. And when we’re actually able to deal with a prospect or a customer – whoever – and help them identify an unrecognized need, we’re actually creating value. And if we do that in the sales process before they’ve even bought from us, and they’re talking to other people, and we’re the ones that help them recognize something they hadn’t considered first, we’ve created value. You know, they’re having a conversation in the boardroom going, “Luigi mentioned this and we haven’t considered this, guys. What are we going to do to work through this?” Now, they’re seeing me as that level of expert – the person that can help them through this. That’s value, right? That in term is value.

Mark Stiving

Absolutely right.

Before we wrap this up, I want to ask. We brought up RFPs. My personal attitude towards an RFP for my business, I never bid on an RFP. Absolutely never. I coached clients often to not do that, but sometimes they have to. Sometimes, it’s the industry. They have no choice. But if I wasn’t involved in helping write the RFP and helping create it, I’ve got close to 0% chance of winning it. I just don’t have a desire to waste my time.

Luigi Prestinenzi

You know, one of the interesting things, if I’m getting the RFP, they’re inviting me and I had no clue about it, I’m too late to the table.

I have a story. I think you’ll like this. One of Australia’s largest retailers, they build this incredible new distribution center, and as they were building, they had to get all the automated racking stuff. Now, I was coaching the sales leader from a racking company and he was talking about this opportunity. And I said, “You know, because your RFP is coming out in six months, I say okay. What do you know about it?” When we did some deep dive, his competitor was already working with them in a pre-sale, helping them do their plans to put into the RFP. Now, the challenge that that presented him was a building that plan to be, he would have probably made it very specific to the how they could answer and how they could deliver. He was too late, he didn’t win that deal, and the probability was he was already never going to win that deal, right?

And I’m in the same camp as you. Like again, if I get pulled in, I’ll have to, but then I’ll try to reposition things or try to find out something, get myself in there. I’ve got to be. Otherwise, I’m just going through a process of building an RFP which is just wasting my time for nothing.

Mark Stiving

And the other thing – just to beat up RFPs a little bit more, if you think about what an RFP really is, it’s a customer who said, “I have a problem. If I were going to solve this, let me design the solution to it.” And then they write that on a piece of paper and they send that as an RFP. Now, how many of our customers could do as good a job as we could do at designing the solution to their problem?

Luigi Prestinenzi

And the thing is they don’t. If they did, they fixed it themselves, right? And so going, “I need a tech platform. I’m going to tell these tech platforms that spent billions of dollars a year on technology. But because I spend 100 grand a year, I know what’s best for my business. I’ll go to the doctor. I’ll get cancer. I’ll go to the doctor say, ‘Hey Doctor, this is how you treat me.’” Right?

Mark Stiving

“I put together my treatment plan. Here’s what I want to do.”

Luigi Prestinenzi

Yeah. “You’ve done 10 years of education, but don’t worry. I did a bit of research on Google.”

Mark Stiving

Right. Alright. Luigi, we’re going to have to wrap this up, but I’m going to ask you the final question I asked everybody. What’s one piece of pricing advice you would give our listeners that you think could have a big impact on their business?

Luigi Prestinenzi

Before even going to a point of price and advocating any solutions, ask yourself a question. Do you know the problem they’re trying to solve? Do you know the impact, the problem you’d help them achieve? Do you know the outcome that they’re looking to achieve? If you can’t answer those three questions, you’re pricing too early and it’s completely irrelevant.

Mark Stiving

Nice. So, I’m going to take what you just said and say, sell value before giving price.

Luigi Prestinenzi

Yep. Perfect. Yes.

Mark Stiving

Nice.

Luigi, thank you so much for your time today. If anybody wants to contact you, how can they do that?

Luigi Prestinenzi

I’m very active on LinkedIn – Luigi Prestinenzi. There’s not many of me on LinkedIn. And also https://www.salesiqglobal.com. We have a whole bunch of resources. We’ve got four podcasts, releasing a fifth podcast all around kind of how to drive sales revenue in June, etc. So that’s the best places to find us and to find me.

Mark Stiving

Nice. I have thoroughly enjoyed this conversation, so thank you very much. I really did feel like I was talking to myself so that was good.

Luigi Prestinenzi

Thanks for having me on the show, Mark.

Mark Stiving

It’s my pleasure. And to our listeners, thanks for listening. If you enjoyed this, would you please leave us a rating and a review on whatever your favorite podcast download site is? And if you have any questions or comments about the podcast or pricing in general, feel free to email me – mark@impactpricing.com. 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.

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