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Benefits Realization

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Buyers have a new obsession. It is called 'benefits realization', or alternatively 'benefits delivery'. They have lost faith that promises made before the sale will actually materialize and are determined to intervene to ensure that they do. But if buyers are focused on benefits realization, then sellers must be too. In this article we will show you how you can use this important concept to boost your sales success.

Published in: Business, Economy & Finance

Benefits Realization

  1. 1. Retail Price: $29The New Focus Of Promise-Weary Buyers:Benefits RealizationWhy Promised Benefits No Longer Satisfy Buyers & What Sellers Can Do About It Buyers have a new obsession. It is called benefits realization, or alternatively benefits delivery. They have lost faith that promises made before the sale will actually materialize and are determined to intervene to ensure that they do. But if buyers are focused on benefits realization, then sellers must be too. In this article we will show you how you can use this important concept to boost your sales success.
  2. 2. Buyers Reach A New Level Of Benefits-ObsessionUnfortunately managing a project is not the same as managing itsbenefits. All too often projects are delivered on time and withinbudget, but without all the benefits being realized. In planning andmanaging benefits realization it is important to integrate the twohowever. That means setting out how key benefits will integrate withthe project plan, including its key dependencies, critical dates, reviewpoints and so on.It makes no sense for organizations to spend many months in planningthe right strategies, finding the optimum solutions and choosing thebest suppliers, simply to leave the most important element to chance “Managing a– that is the realization of benefits. project is notManagers have learned that benefits – just like anything else - must the same asbe planned, tracked and managed. They are increasingly seeing managing itsbenefits management as essential to the management of success. benefits.”Buyers Focus On The Full Costs-Benefits EquationCutting costs has long been a key driver for procurement. But, whathappens when costs cannot be cut much further? Well, the focusturns to the other side of the costs-benefits equation and ensuringthat benefits are fully realized. Managers have logically turned theirattention to benefits and performance.Traditionally most attention was focused on cutting costs in respect ofsuppliers and projects, with considerably less on maximising benefits.However, that is very much a one dimensional view of the bottomline. After all the price-value (or benefits) equation isnt just aboutprice negotiation, but performance management and most of allbenefits realization. Benefits realization is at the core of getting morefor less.P a g e |2© The ASG Group 2011
  3. 3. For purchases and projects that entail fixed costs or dedicatedresources (take for example in the public sector where there is lessroom to manoeuvre) driving benefits has by necessity taken equalpriority to cutting costs. For sellers this may be good news as benefits,rather than price, is where they would much prefer to compete.Why Benefits Realization Is So ImportantShow me the money is a popular movie-inspired catch-phrase thathas been discovered by buyers and reworded into show me thebenefits.1 It is a new mantra for internal project management andprogramme delivery. Moreover it is a taunt for suppliers who arebeing increasingly measured upon the fulfilment of their promises.The objectives of benefits realization are as follows:1. The objective is not only to ensure that benefits are realized, butthat they are also verified. All too often cold water is thrown onbenefit claims of project sponsors, or suppliers. What is required is anobjective standard (to which all stakeholders ascribe) by which therealization of benefits can be independently verified. That meansthere is no confusion about what is and is not achieved and who canand cannot take credit for it.Given that 3rd parties are often involved in validating, or scrutinisingprojects/purchases, clear evidence of benefits realization is essentialand this is something that the seller should facilitate. If it is amonetized benefit then finance had better give its approval to themethodology of calculation.2. Benefits realization is aimed at ensuring that all benefits aremaximized. That means, in the words of one buyer, squeezing outevery last benefit. That includes the last 20% which can easily gounexploited, but it does not stop there. It also includes going aboveand beyond what was originally anticipated. In this context the1Show Me The Money was popularized by the 1996 movie Jerry Maguire.P a g e |3© The ASG Group 2011
  4. 4. supplier who suggests ways in which additional benefits can bederived will certainly gain points from the buyer.3. Benefits may read well on paper, but when it comes to the practicalrealization there can be a host of factors upon which they depend.They can include external variables such as internal, or market placechanges. “It is essential to measure,Things change in the company and its marketplace that will impact communicateon the project and its planned benefits. That means a dynamic andproactive approach is required, on the part of both buyer and seller. and reinforce benefits...”4. Benefits realization is ongoing; it does not stop – at least not forthe lifetime of the project in question. It is aimed at ensuring thatbenefits are achieved and sustained in a repeatable manner.For the seller this means it is essential to measure, communicate andreinforce benefits on an ongoing basis. It alsomeans that account reviews and client reportsshould focus on benefits delivered andunderway.5. Managers reputations are on the line.Increasingly they are being called to accountfor the performance of their departments, aswell as their major projects and purchases. Inthe past the temptation has been to over-promise and under-deliver.However, the focus on benefits realizationcloses the loop as regards managers deliveringon their plans. Sellers therefore need to expectto be in the spotlight well beyond the point ofthe sale.P a g e |4© The ASG Group 2011
  5. 5. 6. Managers are now required to adopt a 360 degree view of thepurchase. That is a full lifecycle view that extends from validating theneed to selecting a supplier and onwards past the purchase order tomanaging the project and achieving the results.This is a view that sellers must adopt both in terms of writing theproposal and delivering the solution. It is at the core of benefitsrealization.7. Benefits realization is key to ensuring access to resources:In this era of cost cutting the very life of a project, or programme maydepend on its sponsors being able to confidently lay claim to itsbenefits and to defend them against the claim of competing projects.The next time a manager, department or team goes looking forfunding they had better be able to demonstrate a track record inrealising benefits.8. Benefits realization is key to managing stakeholders. In particular itmeans: Ensuring clarity on what all stakeholders require Getting buy-in around the benefits Managing expectations in terms of what is going to be delivered Being able to show stakeholders, including end customers what has been achieved. To demonstrate that the promises made to them have been met.P a g e |5© The ASG Group 2011
  6. 6. A Framework For Benefits RealizationEnsuring the realization of benefits requires a plan. Such a benefitsplan, ideally summarized in the form of a spreadsheet table listing allbenefits, should include the following elements:  A clear definition of the benefits  A grading/prioritization of those benefits  The KPIs or variables impacted upon  How each benefit will be measured and tracked (ideally with a before-after comparison)  When each benefit will be realized (including progress along the way)  Who benefits from the benefit (impact on various stakeholders)  Independencies between benefits and projects  Who will validate the project achievements/benefits and how “Benefits  The risks that the planned benefits will not be achieved, realization including the dependencies and tradeoffs that may be required  How progress towards the benefit will be tracked (including requires a review points) and any problems or deviations managed plan.”  Who is ultimately responsible for the achievement of the benefit and the process of tracking and managing it  The costs associated with benefits realization.While the benefits plan is normally the buyers concern, it is also apowerful tool for the seller. It is a new way for the seller to tell thebuyer that we are obsessed with your benefits too.Elements of the benefits plan can be used in terms of the needsanalysis and solutions definition steps of the sales process, as well asin the proposal writing and project planning or implementation stages.P a g e |6© The ASG Group 2011
  7. 7. Your Sales Gauge: Benefits RealizationThere are 8 items in the best practice checklist below. Use these togauge how effectively you are handling benefits realization and theimpact this could have on your sales success.Tick the ones for which you can answer Yes – that is those that arepresently being addressed, or covered by your sales approach. Payparticular attention to those that you cannot Tick – they could belimiting your success.How Suppliers Can Realize The BenefitsIt is no longer enough to simply promise benefits. You have to go onestep further and show how they will be realized. The introduction ofthe concept of benefits realization into proposals and pitches can trulydistinguish a supplier. With this in mind here are some steps forsellers to follow:  Find out how customers approach the issue of benefits realization and support them in this area by adapting your information reporting, key account plans, account review meetings, and so on to their needs.  Provide the customer with the information and the framework required for benefits management and planning. That means applying some, or all of the principles of a benefits plan (as outlined above).  Get better at defining, and as much as possible quantifying; benefits. Clarity around what will be delivered makes the management of benefits realization much easier.P a g e |7© The ASG Group 2011
  8. 8.  Integrate your project and account management around benefits management. For example it should be possible to review progress in benefit realization against key project milestones.  Agree a mechanism for tracking and measuring benefits and use it to continually communicate cumulative benefits.  Communicate your track record in realising benefits through customer success stories and quotes. Let buyers know that you deliver.  The challenge for the seller is to make benefits realization a key factor in supplier selection. That means broadening the focus from competing seller promises, or claims, but the ability to realize them.  After all buyers would settle for the supplier who offers 90% of the benefits but guarantees 100% realization – that is much better than the supplier offering 100% of the benefits, but reaching only 80% of the results. It is, in the words of one buyer-manager a classic case of a benefit in the hand is worth two in the bush.So, sellers set to it! Put benefits realization at the core of your sellingand see how it can boost your sales success.P a g e |8© The ASG Group 2011
  9. 9. What Should You Do Next?Use the checklist above to decide what you want to do next. Inparticular, see how many items were you able to tick Yes.If you ticked most, or all of them then you have benefits realizationunder control. So, you might like to navigate to some other aspect ofthe Repeat Sales Stage, or elsewhere in the sales process.If not, this area could be limiting your sales success. You can startaddressing it by tackling those items in the checklist that you couldnot tick. For each make a note of specific actions you can take – youwill find space to write earlier in this paper.The Science behind This PaperThese insights and tools are based on extensive research under 3headings:1. Buyer Research – our ground-breaking research into how modern buying decisions are made and the implications for sellers.2. Best Practice Research – Over 1 million pages of best practice sales case studies, books and research.3. Common Practice Research – Our peer comparison benchmark of 1,000s of your competitors and peers.The Sales Engine® and SellerNav are trademarks of The ASG Group.The entire contents of this document are copyright of The ASG Groupand cannot be reproduced in any format without written permission.Would you like help in tackling your sales challenges? Contact us at:enquiries@theASGgroup.comwww.theASGgroup.comP a g e |9© The ASG Group 2011

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