The concept of business cause and effect and the Business Value Hierarchy model can be used in a wide variety of applications, too many to be adequately addressed in one chapter. One workshop attendee asked me, ‘Isn’t this BVH just a model for questioning?’ In one sense it is, but it is much more than that. It is a model for understanding and depicting the way in which your prospective customer goes about creating business value. Of course, questioning is one of the ways we learn what we need to know in order to understand, so questioning is more the means than the end.
Understanding your customer’s business isn’t the endgame either. The endgame is using this knowledge and understanding to position your products and services as ideal solutions to specific business problems in order to influence your customer’s decision criteria and buying process to close more business.
The following are just a few practical examples of the ways you can use the Business Value Hierarchy concept in your work.
Further Qualifying Opportunities
One major facet of qualifying sales opportunities is learning what ‘drives’ our customer to buy something. As we use BVH to assemble a representation of our prospective client’s business, we begin to see how the various groups, units, and departments work together to achieve shared objectives. By developing a model for ‘what serves which purpose’ in the overall operation of the company, it becomes clear which groups or individuals have something to gain or lose and thus might play a role in any particular buying decision.
Sharing Knowledge with Your Team
Using the BVH model, you can more easily collect and share your understanding of your client’s business with your management and other members of your sales team. Can you imagine how many words-written or spoken-it would take to communicate what is depicted? They say a picture is worth a thousand words. I seriously doubt a thousand words would come close to communicating what that illustration does.
A visual model like this can communicate a tremendous amount of information, perhaps some characteristics that could never be revealed by words alone. But more important, once we are all looking at the same picture, the quality of the dialogue and idea sharing among the team members improves exponentially. Used along with an accurate organization chart, it is very easy to see where certain responsibilities and concerns lay within the company, as well as who owns what element of value within your customer’s business.
Positioning and Presentation
Over the years I have used the Business Value Hierarchy model as a mechanism to position products and services both in discussions and in presentations to customers, with great success. Today, many of my clients use it, in various forms, in presentations to their customers. One senior vice president (SVP) I had worked with in preparing a custom client presentation using BVH offered to attend a training session I was doing for some other executives within her company. We both felt it would be a great way to demonstrate the power of the concept in actual application with a real client, which happened to be one of the biggest foods manufacturers in the world.
She did a fantastic job of explaining how she and her team had used BVH to construct a model of her client’s business strategy and how they leveraged the need and desire to get a broad and complete under- standing of their customer’s business to gain access to many top-level executives. Several of her client’s vice presidents ultimately invited her to present her findings and recommendations directly to their CEO. It was a smash hit, and the presentation led to a multimillion-dollar engagement.
She then showed my workshop participants the model that she had created for the client, which clearly revealed several great opportunities to apply their analytic services to improve the client’s business results. Then she went on to show the actual solution they had proposed to the customer, which included several studies and analyses that specifically addressed the issues that the BVH model had revealed.
One gentleman in my class felt compelled to burst out with, ‘Wow! This is one of the best business solutions I have ever seen. The way you positioned study X with analysis Y, and tied together with report Z, it’s incredible! We need to take this solution to every CEO in this industry.’
What had this gentleman missed? The reason the solution was so ‘dead on’ was that the SVP and her team had done the research and discovery first-had fully understood point ‘C’ if you will-and then presented the solution as the ‘B’ that could take them there.
I suspect that if they had simply taken the same solution and broadcast the advantages and benefits to every CEO in the industry, they would have experienced a weak response at best. What makes a solution a great solution is that it springs from a thorough understanding of your customer’s most important goals and objectives, as well as the unique challenges and business problems standing in their way.
My client used the BVH model and the diagnostic approach to better understand her customer’s business. When she demonstrated that knowledge and understanding, and presented her solution in that context, she earned the right to present to the CEO, she earned their respect, and she earned their business.
Validation of Your Solution
Once you’ve done your discovery and are ready to ‘play back’ to your client what you have learned in a presentation, it is sometimes helpful to use a more simplified or streamlined version of the BVH model. A ‘Value Pyramid,’ which is a powerful way to help your client understand exactly how the functional capabilities of your solution support the execution of their business plan.
Notice the ‘How?’ and ‘Why?’ in the upper right-hand corner that tie everything together. When done right, you should be able to use how and why to make this picture read like a narrative in your presentation. Here is an example of what a presentation like this might sound like:
‘Over the last three weeks, you have shared a lot with us about your corporate goals and objectives. We don’t profess to be able to solve all the world’s problems, but we can certainly help you with your goal of improving gross margin from the current 25 percent to at least 30 percent. The question is ‘How can we do that?’
‘We have determined together that the most effective way to quickly impact gross margin is by reducing materials costs. We looked at several different options of how to do that and concluded that the area of greatest opportunity lies in reducing scrap rates, which will reduce the waste of raw materials. The next question then is, ‘How can we do that?’
‘Again we considered the alternatives and have agreed that a slight change in the design of your product, as well as a redesign of the tooling used in manufacturing, could reduce or possibly eliminate the chance of machine operator error, and greatly improve the yield of product components that meet required specifications.
‘So, ‘How can we do that?’ you ask. Our team of ‘Design for Six Sigma’ specialists has put together a plan . . .’
Once you have explained the functional capabilities and how your solution does what you say it will do, you can tie it all back to their goals by working your way back up the pyramid with ‘Why?’
‘So, ‘Why should XYZ consider this proposal?’ The reason why a redesign is needed is for the purpose of reducing scrap and waste. Why reducing scrap and waste matters is that it can substantially reduce raw materials costs. And why should you worry about reducing materials costs? Because based on our estimates, which have been confirmed and validated by your materials manager and by your CFO, it is possible to reduce cost enough to increase gross margins from 25 percent to as much as 32 percent. If we begin today, we can have these design changes complete, fully deployed, and in production within six weeks. Do you have any questions, or are you ready to move forward?’
Please note, by looking at the left-hand side, that we are talking about their (your customer’s) goals, their strategies to achieve those goals, their tactics that they will employ to make the strategies work, and the functional capabilities of your products and services solutions.
Another alternative for presenting the Business Value Hierarchy in a more streamlined and simplified way. This model is used to illustrate how your solution offers one or more functional capabilities that facilitate the multiple tactics your customers may employ to support the strategies they will use to pursue their goals. Please note that the model will change depending on whom you are presenting to. If you are presenting to corporate management, you may choose to tie everything back to their primary objective of maximizing profits and the three high-level goals of increasing revenue, reducing costs, and better utilizing assets. On the other hand, if you are presenting to the executive vice president of sales and marketing, you can tie everything back to his primary objective, and the three (or five) goals he has established to ensure that the objective is met.
These two versions of the BVH model help to crystallize your client’s understanding of what your product and services solutions can do to impact their business, without the clutter of all the various strategies and tactics you may have identified throughout your discovery process. Together these two diagrams form the backbone of the Executive Presentation format we teach as part of our Selling at the C-Level® workshop.
Training a Sales Team
BVH is a great mechanism to transfer domain expertise from those with a great deal of business acumen and industry knowledge to those who are new or who have less business experience. For use in our workshops, we have developed examples of a Business Value Hierarchy model for more than a dozen different industries including high-tech manufacturing, consumer packaged goods (CPG) manufacturing, retail, wholesale distribution, food service, financial services, telecommunications, engineering and construction, not-for-profit health care, and several different federal and local government agencies.
Even after doing hundreds of workshops, I am still surprised to see how excited and enthusiastic participants get when they see a sample BVH model for the industry they sell to. For most of them, the goals, strategies, and tactics identified are nothing new. They hear their customers talking about these things all the time. But being able to look at them in a hierarchical model that illustrates the cause-and-effect relationships between them, and being able to quickly see exactly how their own products and services can impact their customer’s business, can be a major revelation.
We take participants through a process we call ‘Solution Mapping’ in order to link the specific functional capabilities of their products and services to the business problems their clients are likely to be faced with. I firmly believe that for most of us . . .
It’s not necessarily more product knowledge, but more problem knowledge that we need to develop.
Solution Mapping is simply taking each product or service that you sell, and first listing all of its functional capabilities (i.e., the things that it can do) and then translating those capabilities into what it will enable our customer to do. We look at each of these functional capabilities and ask, ‘Why would a customer want to be able to do this?’ Then we look at each of the business tactics that a typical client in a given industry might be employing and ask, ‘How could we enable or help our customer to improve this particular aspect of their business?’ Through a series of ‘Why?’ and ‘How?’ questions, participants begin to see the linkages between their capabilities and the tactics and strategies their customers use to pursue their business goals.
It is very important to point out that a pre-built BVH model, is only an example. It is based on a fictitious company and the things that this sample company might be doing to pursue their goals. Likewise, a solution map like the one described above, is only an example and should only be used for training and practice.
The real value of the cause and effect of business and the Business Value Hierarchy concept is not in developing a set of ‘cheat sheets’ we can use to presume what strategies and tactics our client might want to employ in order to pursue what we assume to be their goals. The value is in facilitating business conversations and asking ‘How?’ and ‘Why?’ in order to construct a real understanding of our client’s business, so that we can offer customized solutions that fit their specific situation and are designed to help them achieve the goals they already want to achieve.
Strategy Development and Clarification
For some of my clients, the BVH concept has become much more than a selling tool. If it is useful in modeling an understanding of our customer’s business strategy, then it could be used to bring clarity to our own business strategy as well. Business Value Hierarchy is a great mechanism for brainstorming about all the possible ways in which we can impact a particular Key Performance Indicator (KPI) or achieve a particular business objective.
I regularly use a sales-specific version of the BVH model in selling our own training and consulting services, as well as in the consulting work we do to help our clients determine where they may need to invest resources to ensure that they produce the sales results they have promised to deliver.
Several of my clients who offer consulting services have also adopted the BVH model and use it as an integral part of every client engagement. They use the model to depict their customer’s current business and brainstorm about other strategies and tactics that could help their customer achieve their business goals.