Why don’t great products make it past the Value Analysis Committee? What you can do to change it?

Market-Partners work in the healthcare has highlighted the growing importance of understanding the Value Analysis Committee (VAC) and the role it plays in the Customer Buying Journey. In many cases, although physicians and hospitals may develop a strong interest in a particular product or therapy, the path from interest to usage and adoption is not always an easy one. This recently published paper explores the history and current trends behind the VAC and offers the effective Do’s and Don’ts when faced with having to sell to, through or past the VAC.

Read it here.

I have found that when companies don’t get the traction they would like to get in their market, most of them start to question their go-to-market approach – their messaging, their positioning. The sales force is often put under the microscope. Are they are presenting the product correctly, are they showing prospects the real value of the offering, have they indicated a positive return on investment? This is only natural, as the company that designs and develops the offering fully understands it and inherently believes in the value it would deliver to the customer. And therefore simple logic would seem to dictate that if the prospective customer understands and believes in that same value they would buy it, right? Wrong.

The simple failure of this apparent logic is at the heart of most revenue generation challenges today. Companies change their messaging, search for ever more powerful value propositions, train the sales force yet again to better nail down their customer’s interest and belief in the offering. However, all this activity is essentially solving the wrong problem. Our research has shown time and time again that prospective customers actually do “get it”. They understand the offering and truly believe in the value they would gain as a result of acquiring and adopting it. And yet they hesitate and fail to buy – not because of faults in the product or its presentation, but because something in their own buying journey is blocking the road.

From our research, we have discovered nine definable friction points that can occur in the Customer Buying Journey. They crop up later in the buying journey and occur as individuals try to gain organizational commitment to adopting a new offering. They occur as other individuals get involved with their own agendas and preferences. They occur as the organization starts to understand the implications of adopting the new offering and the changes involved in doing so. Counter-intuitive or not, we have found that when customers don’t buy it’s rarely due to a lack of belief in the offering – it’s all about the internal issues in their own buying journey.

The irony here is that most companies are solving the challenge of how to best present their offering to a prospective customer – but that isn’t the issue. The real issue is the lack of focus on the Customer Buying Journey. Sadly, for most sales entities, they are either unaware of the friction points their prospective customers are getting hung up on or they trivialize them. At best, the sales force tries to manage them – those that they’re actually aware of – on a reactive basis and often when it is too late to save the deal. This is both unfortunate and unnecessary because we have also found that for a particular offering in a target market, these friction points can be mapped. Once this is known, a strategy can then be developed to pro-actively manage or mitigate the friction points in the Customer Buying Journey.

For companies that would like to see accelerated revenue growth – stop solving the wrong problem. Stop thinking that the secret to success lies in better positioning, messaging and proving the value of the offering. Start by understanding the complete Customer Buying Journey, and especially what happens inside the prospect’s organization after they see the value of your offering.

For more information and to start a discussion, contact us today.

One of our practice areas is the healthcare industry and we have worked with many companies in the medical device field. I was recently reading a business plan for such a company that’s in the early stages of looking to attract investors. The section of the plan on sales and marketing stated “The product is of such a nature that traditional sales and marketing will not be required. Once the CEO of a hospital understands our product, they will direct the organization to acquire it”.

I can understand the logic and indeed the optimism behind the statement because the company’s product – a good one – reduced hospital acquired infections; always a major concern. The product had been thoroughly tested and had solid credentials attesting to its efficacy. The company could quantify the return on investment and demonstrate that a hospital could recover their upfront investment in a matter of eighteen months. So there it is, a straightforward bulletproof sales approach in four steps:

1. Get in front of the executive.
2. Explain the offering.
3. Prove the value.
4. Take the order.

Although I understand the logic that leads to this thinking, I can unequivocally state that the logic is dangerously flawed. I know it is flawed because we have talked to hundreds of buyers who did not buy when confronted with such a sales approach. So why do so many buyers not take advantage of a seemingly guaranteed ROI on an offering of undeniable quality?

It’s only by going behind the scenes and looking into the customers’ buying journey that the buying logic – as opposed to the selling logic – is revealed. Taking the example of this company, let’s look at just a few of the points that can stop such a sales approach from being successful.

 Firstly, in today’s world it would be extraordinary for a single executive to act alone in making a decision. The executive is supported by many individuals and teams that have been empowered to make such decisions.

 How then do you manage that network of decision influencers, and do you know everyone who is involved? In the example above we would have at least the Chief Nursing Officer, the Infection Control Committee, Material Management and several others who will all play a role.

 How do you displace their current priorities? If the reduction of hospital acquired infections is on their agenda – and yes, it probably is – they won’t be idly waiting for you to come along. They will most likely have dedicated considerable time and effort to addressing the issue and will have some sort of plan already in place.

 How do you become a priority? They are busy people and they have already planned what they are going to invest in and where they are going to spend their time. How do you jump over all the other initiatives (and sales reps) and become a high enough priority to even get air time?

 It may be hard to believe but you are also one of hundreds of offerings that are all aimed at the same problem and they are all viewed, at least by their supplier, as best in class.

The list of external factors goes on and on, all paying scant regard to any “no-brainer” sales approach. That’s the bad news. The good news is that the customer buying journey can be predicted. Most hospitals, and indeed most companies within any specific market will go through very similar buying journeys when faced with the possible acquisition of a new offering. It is imperative that the selling organization be fully aware of that journey and cognizant of the inevitable friction points that need to be mitigated or resolved between stages 3 and 4 of the sales approach given above.

Successful revenue generation must start with looking beyond the internal sales process to the external reality of how customers actually buy. There must be a comprehensive understanding of the customer buying journey and mapping out of all individuals, forces and roadblocks that are likely to be met along the way. A strategy then has to be developed for making that buying journey as frictionless as possible by managing and supporting each step of your customer’s journey to a successful conclusion. Yes, it is more work than that simplistic four-step approach, but there’s a big difference – it will be successful.

I was participating in a board meeting for a young software company and the CEO was asked by an investor how long their sales cycle was. The CEO started to respond, corrected himself several times and finally shared that once he got in front of the right person he could get their eyes to light up in less than 20 minutes. Another of the board members humorously asked if he had enough operations staff to handle all the orders that he would generate. I always recall that situation as it so representative of many enthusiastic folk I have worked with – they mistake interest in their offering as a commitment to buy. Needless to say it is a very costly mistake and more often than not a harbinger of missed forecasts and disappointing revenue growth.

Our research over the last few years has thrown significant light upon what happens in the buyer’s world after they – in the words of the story above – have had their eyes lit up by some new offering. Perhaps the most revealing observation is that in many cases the prospective buyer not only understands the new offering but also believes in the value it will bring their organization – and yet does not buy. Indeed, with a good ROI, a case could be made that they’ve been offered $20 bills for $12 each and still decide to pass. Ironically in these situations, the sales person usually continues to hammer away on the offering and the value it will deliver and when no purchase is forthcoming, the selling company either blames the messaging or questions the sales person’s ability (or inability) to deliver it. And remember, these are situations where the buyer is seriously interested in the offering.

Our research then looked deeper into what happens in the buyer’s journey between these two points of interest and acquisition and the short answer to what we found is, a lot. This is where all the internal effort of the buying process is concentrated. The prospective buyer has many hurdles and bridges to cross before getting an organizational commitment to move forward with an acquisition. Firstly, there are many more people involved in any buying decision than in the past. All of these different individuals can influence the buying journey in any number of ways due to their own motivations and agendas. Then there is the simple question of why and how an organization would divert time and resources from whatever they are doing to this new initiative. There then follow numerous questions and anxieties about the implications and changes that may be required if they invest in the offering. And as one CFO once shared with me, there is no shortage of great ideas coming at them of how they can gain greater business success.

Our research showed that even those sales proposals in which an organization is sincerely interested, the majority lose momentum in the buying journey due to one or more of nine specific buying concerns. These are the friction points that we have identified and documented that slow down and/or stop the buying journey, and in turn lead to those missed sales forecasts and lack of revenue growth. The key here is that these issues are all internal to the buyer and have little to do with the selling company.

We recommend taking a very hard look at your prospect’s buying journey, especially that critical zone between interest and commitment. By understanding this part of the buying process, actions can be taken to deal with the inevitable roadblocks and so smooth the way of your customer’s journey to acquisition. Sales must be looked at from the outside-in, because in today’s world it’s not what they buy, it’s how they buy.