Value Engineering & The ROI Discovery Process with Mike Genstil

Hi, I'm Warren Zenna, founder and CEO of the CRO Collective, and welcome to the CRO Spotlight Podcast. This show is focused exclusively on the success of Chief Revenue Officers. Each week we have an open, frank and freeform conversation with top experts in the revenue space about the CRO role and its critical impact on B2B businesses. This podcast is the place to be for CROs, sales and marketing leaders who aspire to become CROs, and founders who are looking to appoint a CRO or want to support their CRO to succeed. Thanks for listening. Now let's go mix it up. Hey, everybody. This next conversation that I have with Mike gensel over at ValueCorp is a sponsored conversation. Mike was great. They came over, they did a sponsorship, one of our CRO round tables. And, you know, I believe very much in what they're doing. I think they have an amazing offering and they solve a really major problem. So I asked Mike to have a conversation with me about their offering and the solution and the reason why it matters to Chief Revenue Officers. And it was a really great conversation. So look forward to hearing it. Listen, and I will see you soon. Hey, Mike.

Hey, Warren. How are you?

Good to see you. So, yeah, I wanted to do this because, you know, Mike and his company, ValueCorp, were great in supporting some of the work that we've done. And more importantly, I think that what it is that Value Corps is doing is really important to Chief Revenue Officers. I don't think they think about it enough. And I thought that Mike and I could have a really good conversation about what they do and why it matters and a little bit more about how they do it, because I do believe that I don't see enough conversation going on about value engineering when companies are selling products to their customers and analyzing them. So if you don't mind, I'd love to hear a bit more about you and your background, and then if you don't mind, talk a bit about this value engineering idea and why it matters today for CROs.

Sure. Thanks, Warren. So I started my career as a strategy consultant, joined a company in Boston which was a Bain spin off called Corporate Decisions. Ultimately was sold to Mercer. And I became quickly a student of how to calculate benefits, build models, show data visually. And over time, as I took on roles in product management and channel sales at places like Adobe, Cloudflare, New Relic, it became clear that this concept of helping buyers and sellers to engage around value was. Was a big problem. Basically, any kind of interaction with a partner that I was trying to recruit or a partner that I was trying to enable as a, as a channel manager, channel leader at places like Adobe and Cloudflare, and then as I supported the direct sales function at New Relic, when I became the leader of the value team. There's this gap, and we call it kind of the value gap, where the buyer comes to a call with some notion of what bundle of features they think they want. They have an idea of what they think they're going to pay or what budget they might have for this. The seller comes into the conversation hoping to close a sale at the maximum price and perhaps hit a square, put a square peg into a round hole to help the buyer agree to that price through a variety of negotiation tactics versus starting the conversation from the perspective of Mr. Or Mrs. Bayer. We're here today because there's a number of problems you probably have in your organization. We want to confirm what those issues are and we want to confirm what they might be costing your organization. Once we have gained alignment around that, we can talk about the value of our service and then we can talk about the price of our service to achieve those things. So that whole type of conversation is very rare in. Buyers often race to get a price quote from a customer from a sales rep, and a sales rep generally accommodates to give some type of price quote without that value conversation.

Yeah, it makes sense to me. I hear this a lot and, and I think that this sounds to me like it's a combination of issues. One is that organizations tend to be more driven around certain KPIs, which is, you know, if I'm on the phone with a customer and they give me a budget, that's an indication that they're serious. Right. So I'm going to get them to give me some budget and if they give me a budget number, then I'm able to put that in my CRM and then tell my manager that, well, look, they gave us a budget number, so now we know how much money they want to spend and they, that sends an upward signal to the organization that this is a good live deal and now they can pursue it as opposed to doing more diligence on how the product that they're selling is going to have an impact on the company, where sometimes they may even find more budget, if that can be determined, you know, and I, I don't. I'm curious to know if your view is like, I, I'm making an assumption like, because I've been doing a lot of management of sales teams in my career, so I know that this is the case, but why Is it you think that we're not seeing, let's call it the term value engineering more of just a commonplace thing that when an organization is speaking to a customer that before they get into talking about features, they do a much more diligent process of understanding what the bottom line impact is going to be on the organization and do some calculations on that to help verify for that person to sell through this offering to the rest of the people on their buying committee just exactly how much value we're going to get out of this thing and that you've done a way to show that it wasn't sort of theoretical, like there was actually data behind it and like I'm curious to know in your view why this is not something that's just like a matter of fact across organizations and it still needs to be like pushed. I'm amazed at that.

Yeah, it's a great question, Warren. And the corollary to the value engineer in many organizations is the sales engineer or the solution architect or the solution consultant. And just talking about organizations sell some type of technical solution, you'll typically see a ratio of, you know, one solution engineer or solution consultant to every two, three, four sales reps. And the assumption is if I'm going to sell a product to a customer, the customer is going to want to do a technical deep dive at some point. And that's where the solution architect was. Solution engineer comes in. Makes sense to everybody. So then to your question, why would you not see that same concept for value engineers? When you do see a value engineering team in place, the ratio is quite different. You'll tend to see one value engineer supporting between 20 and 50 sales reps, sometimes up to 100 sales reps. And so that person, you know, I've had that role ends up getting stretched a bit and there's a lot of triage involved. I think the reason that this is not commonplace, as you say, is a couple of things. Number one, the way this has been set up in many cases is, is a kind of a long interview slash data, data extraction process from the customer. Customer doesn't always have the data you would want them to have and or if they have it, they may not be fully willing to share it to give you everything you need to do a full value analysis. And I think that's, and I don't think that's a good excuse not to have a value engineer because I think even if the customer doesn't have or doesn't share all of that data, you still must accompany your price quote. Whether it's $50,000 or $200,000 with some rough estimate of value based on the data you do have. And you can't really put together a $200,000 price quote without understanding something about the customer's environment to put together the price quote in the first place. So that's kind of item number one. There's a, there's a willingness to share data. Number two is the people don't put the best met the best infrastructure in place to measure the success of these value engineers. In my experience, when people have had value engineers on staff, they pay for themselves 3x5x10x in terms of the salary you're paying them and relative to the booked business that they are associated with. So they are very effective in most cases. When it gets, you know, when budgets are tight, CFOs tend to want to keep folks that are quota caring versus people that are not quota carrying. And I would argue that these value engineers should have a quota component to their comp and they should be accountable for revenue and they can deliver it. So those are some of the aspects. But I agree with you. It is something that probably should be commonplace at this point.

Yeah, I agree. It also seems to me that it's probably something that is likely more akin to higher ticket products.

Right.

When you get a lot of committee buyers involved and there's going to be controller involved, maybe even some CFO is going to be involved. And you know, because certain product offerings reach a threshold where other people need to be brought into the conversation because it reaches that investment threshold. You know, if you're selling PLG motion where it's a sign up and it's, you know, 50 bucks a month, you know, obviously this might be something that you have to do longer term once they decide to bring in 100 more people. But at that point they've probably used it enough with one or two people that they see the ROI and now they just want to spread that across. If I'm selling in something that's very complex, you know, like a, you know, enterprise software, you know, enterprise system level stuff, you're going to get a buying committee and there's going to be a lot of scrutiny on. Even if, even if they're at the point where they, they know they need this, like they've made a determination that the organization needs this and they're in a process of evaluating other organizations. I think that a, my opinion is a value engineering process that's really good will probably make a difference in the way that you can get the buyer to believe. Because I think you're 100% correct about this. I see a need for and a utilization of sales engineers a lot. I mean, you need someone to come in that's smart and can talk about features and, you know, technologies and specific nuances of integrations into their business environment, whatnot. Those are important things. Because, you know, it's funny, but, you know, when you're talking to people who are buying products, they tend to have a lot of feature questions, you know, how does this work? And so you get all caught up in a lot of that stuff as opposed to, you know, what's the impact going to have? And I've believe that weirdly, buyers are not as conscious of this either. They tend to be really focused on features a lot of the time. Right. They want to know how this works. And you know, is it going to work in my system and what's it going to bump into? Is my IT company organization get, get pissed off about this? Are there regulatory issues, are there data issues? As opposed to saying, you know, I need you to do me a better job of walking me through exactly how this is going to help my bottom line. And you know, if you have someone introduced into the conversation earlier.

Right.

With a process that is really well designed, that is able to take information from the customer about that, I think two things happen. One is the obvious, which is that they get to see some numbers about, wow, okay, so we'll save this much money or we'll save this much time or we'll make this much more money, whatever those things are. But also the process of building a value engineering conversation is the best kind of discovery call because you're going to ask them all these questions about what they're currently doing right now and the inefficiencies they have. So I just see like there's like three or four obvious benefits to this process and I think it should be like table stakes for businesses.

Yeah, I would take it one step further. It's actually a little bit more robust and complex and analysis. So any buyer looking at a particular vendor solution has five to six choices. Right. Choice number one is do nothing, keep doing what they're doing. Choice number two is build some new capability. Choice number three is choose this vendor that I'm talking to. And then I've got choices four through seven, which are three to four competitive alternatives. That's a lot of choices in front of the buyer. And I can say in defense of organizations that perhaps don't have the full time value engineer, the value Engineer should truly be equipping the seller to sell against those six or seven decisions that that buyer is making. Because the buyer's job is really, really hard. They have to go back to their internal teams and say, not only am I asking for budget of dollars, but I'm asking for a bunch of people's time to spend money on this project as opposed to these other things, which is a huge opportunity cost. And there's no buyer that is going to be equipped to tell that fully robust story with all those options of our options for our time and our money, et cetera, to a cfo. And so I think where value engineering is going to be going, and thanks to AI, we're going to start getting there more quickly, is equipping that buyer with that robust set of choices which include, you know, the risk of all those options, the probability, success, etc. So in any case, to solve this is partially processed, partially people, but then also technology, which we're going to get to here.

Yeah, I'd like to hear about that. So now you mentioned that there are obviously this is a sector. I mean, how many companies are there out there right now that specialize in value engineering solutions? Is it like a big sector? Is it crowded? And if so, what's the typical customer look like? Where do you guys fit in the competitive ecosystem?

Yeah, so this space customer value management has evolved quite a bit in the last 10 to 15 years through about 4ish years ago. There were 4ish main players, us being one of them and others. We were known as Visualize ROI at that time. We launched this product in 2011. It was live on Salesforce AppExchange in 2012. So we are one of the companies that has been been innovating and pioneering in this space since day one. We've worked with the largest and best companies globally, from Cisco to SAP to Lenovo and many, many others. What's happened now in the past three to four years has been a crop of new entrants into the market that are leveraging some of the AI capabilities to build business cases quickly, efficiently, but perhaps not with the robustness that enterprise organizations will need to tie into the rest of your marketing, sales, customer success technology stacks. Listen to all the data they're getting out of the gong call recordings and then give the agility to the people that are creating the pricing models for the companies and the value models to be able to maintain and manage them effectively over time. So where ValueCore fits is we are leveraging the robust infrastructure we've built over time, which allows us to walk into any company and say if you have a value model today or a pricing model in the form of some type of questions, discovery guide, pricing sheet, spreadsheet, etc. We can ingest that and now bring it online and make it visually engaging and available to your to your entire pre sales and post sales teams. We can tie it into your CRM if you want or if you don't have a model, we can leverage what we can determine about your company from publicly available and privately available information, what your competitors and analysts are talking about in the industry to build a model for you very quickly and then give it give you the keys so you can maintain it over time. But, but the key, the key aspects to a platform here that are going to be highly adopted and highly usable over time are number one, it can help your pre sales team and your post sales team and it can be this. The same type of logic can flow from the pre sales model into the platform post sales model number two is visual appeal. So it has to be very visually engaging both for sellers as well as for buyers. Number three is output formats. It needs to be able to generate dynamic customer facing materials in the form of PowerPoint docs, Google Slides docs, PDF docs, Word docs that can be easily shared with customers and then finally integration. So it needs to be really easily tied into all of your pre sales and post sales systems which includes CRM, customer success platforms, data sets, et cetera, so that you get the biggest bang for the buck out of your whole stack.

Thank you so much again for listening to the CRO Spotlight Podcast. This podcast is an important plank in the Sierra Collective communication strategy and we're really thrilled to have such great guests on here. So listening and sharing the podcast with other people is really vital because we want to get as many people listening to this great stuff as possible. A couple things to note. If you're a aspiring CRO or a recently hired CRO or even a old salty CRO and you're looking to either become a Chief Revenue Officer or improve your chops and gain some more insights and improve your competencies as a Chief Revenue Officer, we offer the CRO accelerator course. It's five years now. It's the first CRO focused course that was out there. It's a 15 week course that is populated by aspiring Chief revenue officers and CROs. We're pretty selective in terms of who can be a member of the CRO Accelerator course. It's people who are probably like more like ready to be a CRO. Right now they have number of years under their belt as a revenue leader, whether it be a sales leader or a marketing leader or even rev ops leader. And they either want to move into the C suite or they're CROs that want to just make sure that they win in the role. So if you are interested in being a member of the next cohort, please just write me a note on LinkedIn. Just DM me CRO accelerator and we'll set up a time to talk and then I can send you more information, give you a brochure. Of course. So again, CRO accelerator course, 15 week program for aspiring and newly hired CROs. Take advantage of it, it's been great and you'll see some more information about it on the website.

Thanks.

And you don't mind me being a bit more specific now? So what is a typical, like maybe give me an anecdote of the type of ways in which you uncover that process and the data to verify what a investment return will be and then how is it evaluated after the sale to make sure that that in fact was realized.

Okay. I think what you're asking is for a given customer of ours, how do we specifically go through and quantify the value that their solution delivers to their customer?

Correct.

So there's an aspect which relates to the sector that they're selling into. So a cyber. So we work with cyber security companies, we work with HR tech vendors, we work with building automation vendors. All three very distinct value propositions for each of those. But what they have in common is a number of things. CFOs care about a set of items which they can wrap their minds around. Is it saving me money? Number one, are there hard cost savings? If I give this vendor $50,000, am I going to get $60,000 or more back from someone else? Number two, productivity gains. Is this solution going to help my team save time? Am I going to minimize my reliance on third party contractors, et cetera? Number three, revenue acceleration. Is this solution going to help me acquire more customers, retain more customers, accelerate my time to lead, reduce my customer acquisition cost, et cetera? If that can be measured in some way through some amount of attribution, that's great. I'm very excited about that as a cfo. Fourth is risk mitigation. Today, my, let's call it my billing, my billing system. I have a billing, I have a, I have a way of billing my customers. Right now, a certain percentage of my invoices that go out are incorrect. Certain percent of my invoices that get paid are paid late. So I have in my system areas to optimize to get better performance. Can this vendor optimize performance, my performance mitigate my risk so that I get better returns out of my system? So those are the four main buckets, Warren. And when we go into a specific customer, we look at their materials. How do you, how do you present your value proposition today? What does your website talk about, what your case studies talk about, what your competitors talk about? So we build a lexicon and taxonomy of value drivers for, for their particular product and service. And of course, we've done this long enough that we can walk into a cybersecurity company and have a good sense for what that's going to look like. And now we can kind of massage it and make it very fine tuned based on that customer's specific product and materials.

Gotcha. So how does AI play a role in this? People are probably eager to know what data points and what platforms you use to generate these things. What are the inputs that you need that AI can do? The work it does walk us through a bit more about how that looks and how it, how it happens.

Yeah. So AI is very, very helpful now in a couple of things. Number one, it's reviewing the information that is available about the company in public sources and effectively distilling it into a set of value drivers. We take it one step further and we really look very closely at all of the statistics associated with that company's value proposition so that we have a good library of those. The next thing that AI does is it allows you to effectively parse the conversations that have had between a seller and the customer and extract from those conversations pointers to the pain points that the customer has, the value that the customer wants to get out of a vendor solution, et cetera. So we can now have a much more robust view of value based on what's already in the CRM or call recordings, et cetera. And then number three, it can help us generate compelling images and visuals that will appeal to end customers and to sellers to help them tell their story most effectively.

Gotcha. And how's it going with you? Like, how are you doing around your particular. Because I know that you said there's a couple of competitors. So are you seeing that the stuff that you're doing is being adopted by your competitors or are you ahead of the curve? What's the sort of unique value proposal that ValueCore is bringing to this? When people are evaluating alternatives for this.

Type of solution, what is going very, very well is many of our customers and increasingly our newer customers are identifying new use cases for our solution very quickly. So we are across several of our customers that we have signed up in the last 12 to 18 months. Moving on to the second use case of the third use case that is starting with the sales organization, moving quickly into the customer success organization within a matter of months. Number two is our customers are very, very excited and happy with how we have leveraged AI to extract all of the key value statistics that they have worked so hard to assemble over the past several years. You know, we are, we are identifying those, ingesting those and now making those value statistics available to their end customers. Number three is roadmap. And they're, they're very excited about how we are leveraging AI today and over the next, you know, several weeks and months, turning it on to even additional use cases that allow them to do things that they have wanted to do for a long time very quickly. That is leverage conversations and data points that they have in their infrastructure to now convert that into more customer facing materials. That's, that points to the value they deliver. I would say at the same time the, you know, that in the sense that sales teams, marketing teams are experimenting with lots of different sales platforms, AI, coaching, solutions, etc. They have a lot on their plate. So to get the full management bandwidth and focus on how to integrate everything together is almost a new muscle that our customers are building at the same time. So there is a little bit of work to do there. I will say that being on site with people has been something we've been doing a lot and that goes a long way. Being on site, whiteboarding, bringing these things together. We are getting breakthroughs sometimes in some of those on site sessions.

What's the size of your company? How big is it?

Right now we have dozens of people globally across a variety of functions and we're doing very well. It's a healthy business, it's growing, profitable.

And who is your ideal customer?

Ideal customer is an organization that has 20 to 500 sales reps, that is selling a solution that costs between at least $50,000 up to several hundred thousand dollars in year one. Their sales cycles tend to take, you know, two to three months to several months. There tend to be several people involved in the buying process and they tend to exchange a good bit of information with the customer over the life of the sales process, understanding the customer's environment, doing some kind of technology audit, if you will. In fact, customers that do POC, if our customer does POCs for their customers. That can be a good thing because the POC then generates a data set that can be ingested and you can then forecast the value you can deliver to that com to that customer based on what's in the poc.

Yeah, I would imagine that that's a big need today. I mean, the POC issue is a huge thing that's confounding a lot of my clients and they need to be able to figure out some way to make the value of that short period of time show something that's measurable enough to get them to buy. And we see a lot of tire kickers who just do POC after POC after poc and they never convert. So that's an interesting issue that's going on with AI products in particular.

Yeah, I mean, imagine the handshake you would have with a customer to say, listen, yeah, I happen to do a poc. But coming out of the poc, here's the value analysis we're going to agree on. Did it save you here? Did it improve this? Did it improve this?

What?

Let's make sure we understand your current KPIs and statistics and where would you need to get to across each of these to make it worth your while? And if we do look, it's going to be worth an extra million bucks. Do we agree? Yes. Okay. And let's take the next step.

Well, great. Well, look, I'm excited for you. I think it's a great opportunity and I, and I do agree with you. I think I'm amazed. I took a lot of clients whom don't seem to have like a process for this and I could see how important it would be to make it a disciplinary like must have part of any sales engineering process. So appreciate it. And again, thanks for the support that you've been giving us and we look forward to having more opportunities to do some stuff together.

Thanks, Warren. Appreciate it.

You got it. Thank you for listening to the CRO Spotlight Podcast. The CRO Collective's mission is to help CROs succeed and help founders and CEOs build CRO Ready organizations. You can find out more information about our services and the crocollective.com that's thecrocollective.com and we look forward to having you join us next time.