By Sam Klaidman, principal adviser, Middlesex Consulting
Customers only purchase products and services for one reason — to achieve their desired business outcomes (results). It doesn’t matter whether we are talking about products or services, large or small, capital or expense. As long as they are spending money, customers demand an improvement in their desired business outcomes. And the value of the increased outcomes must be greater that what they are being asked to pay. No ifs, ands, or buts!
We first became aware of this idea in the late 1960s when Harvard Business School Professor Ted Levitt wrote, “People don’t want a ¼-inch drill, they want a ¼–inch hole.” The drill is the product and the hole is the outcome.
What Is A Desired Business Outcome?
According to Forrester, a desired business outcome is:
In simple terms, it is verified business result that supports a high-level initiative that has been defined by the accountable individual, after careful conversations with the other stakeholders.
For example, the CEO, in conjunction with the Board of Directors and the Senior Management team, usually establishes an annual profit target. The actual profit earned is tracked by the CFO and verified quarterly by the Audit firm.
Another example is when the Head of Service, in conjunction with the CEO, CFO, and service leadership team, set the annual service revenue budget. The progress against budget is measured monthly by the CFO and probably discussed at the monthly management meeting. The Service Head will then create goals for the various operating departments of the Service organization and the department heads may treat these goals as desirable business outcomes.
This is a good thing, because taking these goals seriously is necessary if the company is going to meet its shareholders expectations. This means that everyone keeps his job for another year!
Categories Of Desired Business Outcomes
It is important to recognize that there are four different categories of desired business outcomes:
Pain in the present: They are experiencing a problem and need it fixed immediately.
Pain in the future: They are anticipating a problem and want to start mitigating it now.
Pleasure in the present: They are looking for something to fulfill an immediate need or desire.
Pleasure in the future: They want to invest now to reap the rewards later.
Keep these four categories in mind as you start becoming sensitive to the reason someone may purchase your services or products.
Helping Customers Achieve Desired Business Outcomes
In most cases, when a B2B customer buys a product, they also buy some level of service. The service is purchased because customers know that products inevitably fail and the desired business outcome is required on a steady basis. This purchase could fall into either the pain in the future or pleasure in the future categories.
When thinking about where service fits into satisfying a customer’s desired business outcome, you may find this table helpful. The table shows where many of the common services offered or discussed during the sale fit into the four categories of desired business outcomes. And, if you offer services that do not fit into this table, take a look at the service’s sales. These services may not improve a customer’s desired business outcome and should be changed or dropped completely.
During the sales process, it is always okay to discuss the range of services you offer. If your services solve a present pain or provide a future pleasure, then the buyers will feel secure about making the purchase and may even purchase the service along with the product.
On the other hand, if the service(s) prevent future pain or provide future pleasure, the buyers will, at a minimum, include the item(s) in a future budget. Again, they will feel secure to make the product purchase because they see a path to a less stressful future with your company than with any of the rest of the short-list.
As you start talking about this subject with your peers in sales and marketing, you will probably run into some serious resistance. Many of these people are from the old school and are still afraid of bringing up the subject of equipment failures and the like. This attitude is insulting to many buyers. Customers know that products fail, problems arise, and end-users cause issues and require re-training. They are concerned about how the potential sellers will handle the situations and how much, if anything, the buyer’s company will have to pay (an example of future pain).
Always do the right thing and objectively discuss what can and should happen after the equipment is installed and how your service team will support the equipment and users. This is just a respectful way to deal with the people who are trying to select a supplier they can work with during the equipment’s projected lifetime.