It’s not your fault – but it is your problem

They’ve been your customer for more than a year.  Your service is an integrated and valuable part of their business.  Heck, the marketing director even sent you a personal holiday card – they love you.  Which makes it all the more surprising when you get the word – the new finance director has ordered the program dumped.  How could this happen?

Times have changed – it’s happening all around us - it could happen to you.  In today’s environment, most companies are engaging in serious scrutiny of their expenditures, with marketing and advertising programs getting an especially critical eye.  The question that all programs are being held up to is as simple to ask as it is difficult to answer; “Does this program create a quantifiable financial benefit that exceeds its cost?”.  With management under the gun to cut costs, reduce waste and focus on profitable activities, the definition of a “successful” program, service or product has changed.  It’s no longer good enough to generate traffic, activity, usage or interest for a client; they want to know exactly how many contracts were closed, widgets sold and dollars made as a DIRECT result of using your product or service.  The kicker is that in many cases the customer isn’t sophisticated enough in terms of program tracking and analysis to answer their own question.  You’re giving them a fantastic service that you’re sure is driving lots of new business for them but they can’t say for certain how much their really getting out of it.  It’s not your fault – but it is your problem.

You can be pretty sure of two things this year: 1) Your clients will be asked to quantify how much money your product/service is making/saving them, and 2) If they don’t have a solid, defensible answer, you are in danger of getting the boot.  The fact that your internal champion at an account loves your product and thinks it’s valuable won’t be enough when corporate finance comes-a-callin’ to slash costs.  They need facts and they need your help to get them.  But first you have to do something that all entrepreneurs find difficult – you have to stop selling and listen.

While you can convince anyone of your products value, overcome any objection in a single bound, and justify the cost of your product to any prospect through sheer force of will alone, your customer cannot.  They have to look smart to their management team and have concrete reasons for using you that are consistent with the metrics that the organization uses to make decisions.  If you want to survive the budget cuts of 2009 you can’t rely on personal relationships and feel-good testimonials.  Facts, conversion rates and cost savings over competitive alternatives are the ammunition your clients need to defend your contract dollars.  You can help your clients and yourself by asking some basic questions like:

1. How do you measure return on my type of program expense?
2. What are the most important outcomes that you’re trying to achieve by using my product/service?
3. How much are those outcomes worth to the company?
4. What are the alternatives to my service that you’re currently using or would consider using if my service wasn’t available?

Listen carefully to the answers you get.  Are the metrics their company uses the same ones that you’re delivering on now?  Can you directly connect your service to profits or cost savings?  What is going on with market alternatives?  Are they getting cheaper or becoming more attractive?  How much money would THEY say they’ve made or saved because of you in the last year?

In this case, the old maxim “The best defense is a good offense” is absolutely true.  Don’t wait for a customer to ask you to help them figure out your value – work with them proactively.  Try including some value comparison metrics with their monthly invoices.  Give them a spreadsheet or email with a breakdown of how you’re critical to their business – suitable for forwarding to their boss or owner of course.  Create new metrics reporting on your side of the fence that mirrors or better aligns with the metrics they use.

But what if you can’t make a solid case for concrete value to your customers?  What if your clients are so unsophisticated that they don’t track results in a way that would allow you to prove your value?  This isn’t uncommon – but it’s still you’re problem.  Things you might consider:

1. Explore integration of your services with existing internal performance tracking, CRM, website systems, etc.  Figure out what they’ve got and try to work with it.
2. Partner with other companies in your vertical to give customers an integrated solution that has measured value.  Call tracking, lead-form tracking, call center servicing – if they won’t connect customer activity to orders then you need to help them.  You may even be able to create a new competitive advantage.
3. Shift your sales focus.  If your current clients can’t connect the dots on value then find some that can.  It’s the only way you’ll stay viable in the long-run.

Derek Preston is  a technology entrepreneur based in Seattle, WA.  He is the co-founder and CEO of SNAPforSeniors, Inc., an information services company specializing in national senior and transitional care data.  He serves on several advisory boards including the National Association of Realtors SRES group and the Eastern Michigan University College of Technology.