You suck at sales if... you can't tell me your value prop.

October 19, 2020

In a recent study conducted at Stanford, a team of MBA students set up to look into 1438 sales professionals in the technology field to study successful sales strategies.

The team's real focus was to build a SaaS AI tool to connect to the CRM and start automagically make client connections and qualify leads.

The hypothesis was that if they could interview successful sales professionals and understand the strategies and tactics used over time, you could incorporate offensive and defensive sales tactics-fed findings into machine learning and have the AI engine make sales.

So they started with a picture of a funnel and a bunch of sticky notes and sharpies the researchers' favorite tools. They established sales stages. They then talked about what happens in each sales stage, both internal and external. e.g., at the top of the funnel, you identify the target market, and the market waits unidentified.

Then you make contact, and you A B test the value proposition, and the prospect responds positively, negatively, or with a not now and gets catalog in the AWS machine learning tool.

Thus continues until you describe the entire sales process detailing each stage micro view on each interaction and so on.

So 1439 sales professionals from various places in Hardware Sales, Software Sales, Services sales, and some telecom were interviewed.

The first part was straightforward, using several machine learning algorithms. The AI engine could sift thru databases of business information and company directories data to find the right companies within a geography that fit criteria and even the right person within the company to contact.

The researchers then collected the 5249 value proposition that the sales professional used in their customer interaction and fed that to the AWS AI.

Value Proposition is possibly the hardest key factor to master and it is a single biggest obstacle in sales performance.
Most often tied to a weak sales pipeline because if the sales professionals that can not verbalize a value proposition will be held back from prospecting for new business.

They constructed several websites in different fields with content dynamically arranged in an A B test to find the best value proposition for each target group.

The project abruptly halted when researchers found that 83% of the focus group could not verbalize a compelling value proposition that could convert on the fake websites. The other 17% of the focus group had a >1% conversion on the websites.

When further tested the 5249 value propositions in a peer-reviewed double-blind focus group, the individual value propositions were graded from A to F the largest concentration of grades in the D and E range.  

Thus, the researchers stated that individual sales success could not be attributed to the sales process's mastering but relationships or timing and luck.

Further data shows that sales success derived from a strong value proposition and driven via a sales process is 78% more repeatable vs. relying on relationships to start the sales process.

Lastly, the data set showed that the top 18% of sales professionals all had strong value propositions acumen and earned combined commission earnings of 68% of the total group.

I found the study results or lack thereof consistent with the companies that I have consulted. However, I don't attribute sales success solely to the ability to communicate a value proposition.

An excellent value proposition is usually a lagging indicator that aggregates a good knowledge of your target market and understands the usage of the product or services their companies serve to individual clients wrapped within the current economic climate.

In conclusion, relying on relationship selling has its limitations, unlike a deep understanding of the addressable Target market, problem statement, and in-depth knowledge of the benefits to the marketplace.

The researchers have pivoted to a value proposition testing an alternative hypothesis and believe they can return ones they have solved for this opportunity.

Marco Giunta

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