In a customer workshop on the Nine Buying Decision Influences a discussion emerged around who should own the Total Cost of Ownership (TCO) within the Account Team. In Disruption Selling we always work backwards from the customer, so lets look at splitting ownership of Buying Decision Influences across the team from a customer perspective using TCO and Value Proposition as an example.
TCO
TCO “includes the purchase price of a particular asset, plus operating costs, over the asset’s life span” (Investopedia).
TCO is used to compare alternative solutions amongst each other and with the customer’s current setup. While some elements of the TCO are well defined (e.g., purchase price, maintenance, power consumption), others are estimations based on assumptions (e.g. implementation effort, learning curve, inflation rates, availability, meantime to repair).
As a vendor we must not only aim to control the TCO calculation of our own solution, but also of our competitors' solutions and the customer’s current setup. To make things even more complicated, there are repercussions between alternative solution designs on our own side and the Value Proposition we put in front of the customer: a strong Value Proposition can come with a higher TCO and vice versa.
Value Proposition
In Disruption Selling terminology the Value Proposition describes the Reward and Risks of our Proposal. Both Reward and Risk are based on assumptions and hence subject to the buyer’s perception. As a vendor we must influence the buyer’s perception by increasing the perceived Reward and decreasing the perceived Risk of our Proposal, thus improving the perceived Risk/Reward ratio.
Ownership
In Disruption Selling we define ownership as the responsibility for delivering an outcome. Ownership doesn't automatically include all the activities required to deliver the outcome. These can be allocated across a number or roles and resources based on skills and availability.
Ownership on Customer Side
In B2B buying decisions Technical Buyers own the TCO while Economic Buyers own the Business Case as it impacts their respective business goals. So it will be the Technical Buyer’s ownership to look at all the estimations and their underlying assumptions as they relate to the fixed and variable costs of the investment, while the Economic Buyer will look at how the investment impacts their business goals.
E.g., for the procurement of a new manufacturing solution the Technical Buyer will look at elements like procurement costs, depreciation, power consumption, scrap rates, planned and unplanned downtime, while the Economic Buyer will focus on topics like volume, quality, and margin improvements.
Ownership on Vendor Side
Now that we understand the ownership on the customer’s side we can exactly allocate ownership of TCO and Value Proposition on our side.
By definition, the technical relationship with the customer is owned by what we call Technology Managers (aka Sales Consultant, Solution Architect, Presales …) while the commercial relationship is owned by the Account Manager. This way we maintain a 1to1 relationship for the respective buyer persona minimizing communication effort and friction while fostering trust and intimacy.
How Not To Do It
Leave TCO Ownership Undefined
If we do not clearly allocate ownership within the account team we run the risk of missing out on influencing the customer’s TCO calculation because nobody feels responsible for it.
Allocate TCO With Account Manager
If we allocate ownership of TCO with the Account Manager we blur the line between technical relationship the Technical Buyer has with our Technology Manager and the commercial discussions the Economic Buyer has with the Account Manager. As a result, we run the risk of sending conflicting messages to the Technical Buyer and - even worse - we might not find the most cost-efficient solution for our customer.
Scaling Issues
As we have shown, misallocation of ownership damages our customer relationship with two roles on our side (Account and Technology Manager) communicating with the Technical Buyer. The problem becomes even bigger as we add additional roles to our Account Team as our organization matures.
Enter Partner Manager
For achieving Disruption Selling Maturity Level 3 (Ecosystem Fit) we add Partner Managers to the Account Team owning the relationship with partners involved in a sales cycle.
Partners own the relationship with the Technical Buyer in cases where the customer engagement is partner-led. Accordingly, we must shift ownership for TCO from the Technology to the Partner Manager on our side in this case in order to maintain a single-threaded ownership for the partner relationship.
Note: This doesn't mean the Technology Manager stops talking to the Technical Buyer as they still own the technical relationship with them. It only impacts statements related to the TCO calculation which now must come via the partner.
Enter Delivery Manager
For achieving Disruption Selling Maturity Level 4 (Solution Package) a Delivery Manager (aka Customer Success Manager, Technical Account Manager, Project Manager ...) is added to the Account Team owning the delivery relationship with the customer.
If we leave ownership of the TCO with the Technology or Partner Manager we must establish a complex handover process after the contract was closed to transfer all the know-how to the Delivery Manager which is time-consuming and error-prone. We also run the risk of missing or providing incorrect input for the customer's TCO leading to friction and customer dissatisfaction during the delivery phase.
A better solution is to introduce the Delivery Manager as early as possible and make them own those parts of the TCO which are related to implementation and ongoing costs.
Conclusion
As our organization matures across the Disruption Selling Maturity Levels we must reallocate ownership of Buying Decision Influences within the Account Team:
Maturity Level 1 (Product Market Fit):
Starts with founder-led sales and, as there isn’t a dedicated sales role established yet, ownership of the TCO naturally sits with the Technology Manager while the Value Proposition sits with the founder.
Maturity Level 2 (Go-to-Market Fit):
Account Managers move in and take over ownership of the Value Proposition from the founder.
Maturity Level 3 (Ecosystem Fit):
Ownership of the Value Proposition remains with the Account Manager while ownership of the TCO moves to the Partner Manager in cases where the sales cycle is partner-led.
Maturity Level 4 (Solution Package):
We carve out the TCO elements related to post-sales activities and allocate ownership with the Delivery Manager.
The example shows that the allocation of ownerships within the sales team must be adjusted as a venture moves through the Maturity Levels. Missing to communicate and implement these changes in the organization in time will lead to friction and efficiency losses and ultimately inhibit the organizational maturation process.
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