Stop Making Your Sales Team Choose Between Revenue and Profit: The Importance of Selling Value

My wife regularly asks me questions like, "Do you want to go to this restaurant or that restaurant?" My answer: "Yes!"

Ask any executive whether they want to grow revenue or grow profit, and you'll get the same answer.

The problem is that most sales teams pick one. Some set targets on revenue growth. Others compensate on profitability. Which should it be? Again: yes.

Revenue and profit don't have to be a tradeoff. We like to think that growing revenue means sacrificing profit, or that becoming more profitable means accepting slower growth. That way of thinking becomes a self-fulfilling prophecy, and it's a limiting belief that hamstrings salespeople, managers, and executives alike.

If we believe high revenue leads to low profits, we'll give away the farm in exchange for growth. If we believe high profits mean sacrificing growth, we'll accept buyer objections when we should be pushing in.

So how do we change the mindset?

We stop thinking revenue or profit and start thinking value.

Value = Benefits − Costs

Benefits are the things a buyer sees as essential to reaching their goals or solving their problems.

Apple understands this. In a market littered with cheap phones and laptops, Apple still commands over $1,000 for a phone and over $2,000 for a laptop, and it has become one of the largest and most profitable companies in the world doing it. How? By focusing relentlessly on what its buyers actually value:

• An integrated system

• Ease of use

• Durability

• Status

What does this mean for sales teams?

1. Consultative Selling

To sell value, we have to understand what each buyer finds valuable. That begins with a fanatical obsession with understanding our buyers. First, reps do their homework. Then they ask great questions, combining sincere curiosity with active listening.

Early in my sales career I calculated how much money I made per cold call. It kept me motivated to make one more dial, walk through one more door. What if we did the same thing with questions?

Track the number of questions you ask a prospect. Divide the commission for the deal by that number, and you'll know what each question is worth. Let that motivate you to probe deeper in discovery.

2. Understanding Business Valuation

My focus these days is building SalesIndex into the world's most effective sales and sales management platform, but I still advise a handful of companies on valuation and value creation. Salespeople would sell differently if they understood how companies actually measure and create value.

Valuation has many drivers. A simple way to estimate what a company is worth is to multiply EBITDA or top-line revenue by a multiple. Those multiples vary by industry and range from low to high.

Say the range for an industry runs from 4X to 8X EBITDA. Two companies with identical profit numbers can have wildly different valuations. One might be worth twice as much as the other.

What separates them? Most of a company's valuation rests on intangibles. Is the business dependent on the owner or a few key employees? Is there recurring revenue? Are customer relationships handshakes or signed contracts? Are key processes documented? Dozens of factors like these move the number.

Salespeople need to understand this because value goes well beyond ROI and "here's how much we'll save you." Value lives in the intangibles.

I think of it like a piece of cake. A great slice has two components: the cake and the icing. Cake by itself is fine. Cake with icing is amazing. In sales, the cake is the financial ROI. The icing is everything intangible. Put the two together and you create value.

Apple has cake and icing. The cake is dependability. I know my iPhone will work and my MacBook won't crash. The icing is everything else: the way the product looks, the status of carrying the latest technology, the way all my devices talk to each other, the bundled services, the easy financing.

3. Selling Value

At SalesIndex, Selling Value is one of the core sales skills we measure. Predictably, it and its counterpart, Consultative Selling, are consistently among the lowest scores. That tells me most companies are leaving enormous amounts of revenue and profit on the table.

Value selling has to be trained. It does not come naturally.

Most companies never invest in sales training, leaving reps to fend for themselves. It's one of the most short-sighted mistakes an executive can make.

Selling value takes a full set of skills. Reaching decision makers who care about value rather than price. Building trust. Asking the consultative questions that surface what a buyer really cares about. Presenting that value clearly. Closing and negotiating to secure commitment.

4. Stinkin' Thinkin'

Zig Ziglar taught us to eradicate "stinkin' thinkin'." One thing we've learned at SalesIndex is that you can train consultative selling and value selling until you're blue in the face, but if you don't address mindset, it's like driving down the freeway with the parking brake on. You'll move, but you'll wonder why the car isn't going faster and what that smell is.

For many reps, the parking brake is a belief about how people should buy, and much of it traces back to how they were raised. I was raised to hunt for a ridiculously good deal. Nothing wrong with that on its own. But if I assume that's how my customers should buy, I'll lean toward giving away the farm every time, because deep down I believe it's the right thing to do. I'll avoid selling value entirely.

Other reps overthink their own purchases. They research endlessly and stall. Bring that assumption to the marketplace and you get a full pipeline that never closes.

Smart sales coaches know that mindset is where value selling either takes hold or dies.

The Bottom Line

Revenue and profit were never a fork in the road. They're two results of the same discipline.

When your team understands what buyers truly value, understands how value is created inside a business, has the skills to sell it, and has cleared the mental blocks that push them toward discounting, revenue and profit rise together. When any one of those four pieces is missing, your team defaults to price, and price is a race no one wins.

So take an honest look at your sales organization. Do your reps know what their buyers value, or do they assume it's the lowest number? Have you trained value selling, or hoped for it? Have you addressed mindset, or just the skills?

Do you want to grow revenue or profit?

The answer is yes. Go build the team that can deliver both.

Originally published on Darrell Amy's LinkedIn.