In the Win Without Pitching Workshop you heard me say that I think the ability to navigate the value conversation is the most valuable skill in all of business.
Then we gave you the framework, a few hours of practice and we sent you on your way. Don’t worry if you haven’t mastered this important skill yet. You’d be a WWP prodigy if you did!
I’m going to try to address here a common value conversation challenge that people encounter post-workshop, but the reality is feedback on your technique is invaluable. You can access that through coaching (one-to-one or one-to-many) which I recommend for any new business skill you want to improve, but for your value conversation skills in particular.
Okay, the common challenge as expressed by a recent workshop attendee…
Q: How do I translate difficult-to-quantify forms of value (like staff morale) into a price?
Let’s recap the four-step value conversation framework:
- Uncover or commit the client to their desired future state (DFS)
- Identify the metrics of success
- Determine the value of hitting these metrics
- Set pricing guidance
It’s likely that you’re finding the pricing guidance (step four) difficult because you’ve run into problems earlier at step two (metrics) or three (value). I suspect it’s a metrics issue. Let’s review and provide some scenarios and example language.
Step Two: Agree on Metrics
Under DFS you uncover that the client wants to improve morale. Moving to metrics, the conversation might begin with, “You said you want to improve staff morale. I’d like to try to quantify that. Are you measuring morale objectively now or is it just a feeling that morale is poor?”
If the client does have a measure of morale (e.g. “We think employee retention is a good measure and right now it’s low. People stay in their roles on average 16 months—the lowest we’ve ever had.”) then your next step is to uncover or help set a quantifiable goal for improvement. You might ask, “Can you give me some benchmarks for what you would see as acceptable, good and great average tenure length?”
If the client can’t come up with numbers, keep helping. “You say the average is 16 months now. What’s the highest you’ve had?” If you hear “24 months, on average” you might lead the client and say, “Why don’t we set 24 months as a ‘good’ target and then aim for 32 months—doubling the current average—as our stretch target. How does that sound?”
Keep going. Morale affects things beyond average tenure and resulting hiring and training costs. “What other measurable items improve with morale? Do you think performance goes up? What would that look like? Do you want to take a stab at some numbers?”
Without committing the client to the measures of success it’s hard to discern value and then extrapolate a price. One of the areas where you will improve quickly with guided practice is finding something to measure when at first glance you see nothing. A little further below we’ll cover a scenario when there is nothing to measure.
Step Three: Determine the Value
So the desired future state is improved morale and the metrics of success are measured in improving employee tenure beyond the current average of 16 months to the new target of 32 months. From there it’s easy to move to value.
“What’s the value of doubling the average employee tenure from 16 months to 32 months?”
If the client needs help to calculate the value, do the math with them. “I’m sure some aspects of the improved retention that comes from an increase in morale are easy to measure, like hiring and training costs. How much might you save if average tenure went from 16 months to 32 months?”
Let’s say the client doesn’t know. Keep facilitating. “Well, your training costs would be cut in half. Do you know the hard and soft costs of onboarding an employee?”
Sometimes you have the answers and sometimes you merely have the questions. Play it both ways, be collaborative. You and the client are working together to try to solve a puzzle.
Once you have the metrics identified, quantifying value becomes easier and arriving at a price range will flow naturally. So this is almost always an issue of metrics. But metrics aren’t always readily available which might mean you have to change course a bit.
Sell a Diagnostic When There are No Baseline Metrics
Let’s back up and imagine a scenario where the client says that while it’s widely understood that morale is down, they haven’t ever properly measured it. If the client has no objective measure of morale (eg. attrition/retention numbers, NPS scores or other surveys, etc.) then that might be where your engagement begins.
“Would you be willing to spend a little bit of money now to objectively measure morale today and set some benchmarks so we can be more certain that we have improved it?”
We didn’t cover diagnostics in the workshop other than to mention that most firms are likely to begin their engagements by selling a diagnostic first and then treating the diagnostic results delivery meeting as the closing conversation in which you would present your multi-option proposal. One reason to sell a diagnostic is to quantify the problem and the value of a solution. If you need baseline data then propose the client hire you for a short engagement where you go get that data. If the data can be had easily without you doing too much work, then get it as part of the sales cycle and keep moving.
When you present the outcomes of your diagnostic (findings) you will also present recommendations including three different ways the client can engage you. So yes, these findings and recommendations meeting becomes a closing conversation. Make sure you have all the decision makers in the room and you have your multi-option, one-page proposal ready with a high anchor.