Jose Palomino | Cracking the Code for Revenue Growth

by Nancy Calabrese | Jul 19, 2021 | Podcast

Business owners often struggle to connect their strategy, marketing, and sales efforts. Understanding how opportunities convert into revenue, diagnosing, and removing obstacles preventing the flow of opportunity into revenue is the expertise of our special guest this episode. Jose Palomino is the Founder and CEO of Value Prop and the developer of the Revenue Throughput System. For over 15 years, Jose has been giving companies a high-level view of their business, a clear game plan, and explosive revenue growth.

Jose is a true strategy wonk who is driven to help smaller, owner-led companies crack their revenue code, find the patterns of growth in their business, and reproduce them for greater success. In our conversation he goes into depth on:

• Why connecting strategy, marketing, and sales is a challenge
• The importance of evaluating the “way things have always been done”
• Asking, “what is within your power to improve?”
• How his Revenue Throughput System works
• And so much more…

Whether you are B2B or B2C, in manufacturing, service, or insurance, Jose has insights that will help. If you are looking to grow revenue with a purpose and are ready to see results in 90 days, this is the episode you want to hear!

Mentioned in this episode:

• https://valueprop.com

Transcript

Voiceover: You’re listening to the Conversational Selling podcast with Nancy Calabrese.

Nancy Calabrese: Hi, it’s Nancy Calabrese. And yes, it’s time for Conversational Selling, the podcast where sales leaders and business experts share what’s going on in sales and marketing today and it always starts with the human conversation. Today we are speaking with Jose Palomino founder and CEO of Value Prop. He started Value Prop Interactive over 15 years ago, because he saw business owners struggle to connect their strategy, marketing and sales efforts. They were frustrated by a lack of efficiency and revenue growth. 

And as a result to help them, he developed the revenue throughput system, a unique process that diagnosis the volume and velocity that a business converts opportunities into revenue. With the revenue throughput system, owners get a high level view of their business, a clear game plan for growth and explosive revenue growth. He’s the author of Value Prop. He’s also an adjunct professor at Villanova University, and a trusted advisor and national speaker for Vistage International. So what’s really jumping out to me, Jose is explosive revenue growth. And oh, yeah, that’s music to my ears for sure. So I’m so glad you can join us today. Jose, welcome to the show.

Jose Palomino: My pleasure, Nancy, happy to be here. It’s my favorite topic, too.

Nancy: Yeah, really? I think a lot of us have that in common. Right. So I want to go back to a statement that I made earlier. And I think it’s fair to say that most business owners struggle with connecting all of the components, you mentioned, strategy, marketing and sales. Why is it such a struggle for most of us?

Jose: Yeah, I think there’s just two categories, right. So there’s the owner who owns a business that’s big enough to have certain leadership team. So let’s say somebody’s running a manufacturing concern, and they’ve gotten it up to like 15 million a year or something like that. They probably have a COO, they have a CFO, perhaps they may have somebody who’s called like director of marketing, and maybe somebody head of sales. So now you have the an owner, who probably started the company, smaller grew it, unless they acquired the company. And now they have other people with ideas of what needs to happen. So they’re not necessarily used to that, especially if they’ve been doing this for a long time, 2030 years running this business. 

So it tends to be a business where everything flows to that person. So you would think that would bring about like an integrated idea. But what actually happens is everyone else who wants to speak up doesn’t speak up that well, that often. And, you know, certain owners don’t have a style that really invites, it’s almost like anyone have any other ideas that agree with mine. That’s all too often. That’s what you end up with. And so I think, I think the idea that, I think also looking at it as that strategy, marketing, sales has to be looked at, like dimensions of the whole. intellectually, they these are smart people, they know that, but they don’t live in that. So they tend to think about strategy is something we might think about once a year marketing, something Joe or Mary is doing on that website stuff. 

And sales. As you know, Larry has been running sales, we have four sales people. And you know, Larry, Larry knows the business. He knows the stuff. He’s doing what he’s doing. So they never elevate the conversation to say, well, what if we actually started talking about these things together? And thinking about how we can maybe look at the market with fresh eyes, maybe make some different assumptions, rather than the same old assumptions that we’ve been living by? And oh, by the way, it’s been three years since we’ve had substantial growth. We’re okay. But we haven’t pushed past. Why is that? That’s, I think that’s part of what goes to answer your question.

Nancy: Yeah. So it’s really looking at the whys and why not? Why can’t we do this? constantly thinking outside of the box? Would that be a simple way of putting it?

Jose: I think so. And of course, you know, even even that thoughts something they’ll say, Well, you know, I again, you gotta, you gotta, you got to pay for the box. You got to live in a box. You can’t go completely outside the box. And there’s a truth to that. And as you run the business, you run, you’re limited. You’re not, you’re not a division of Microsoft, or GE that has, you know, $50 million to burn. It’s all right. It’s all like, as they say, it’s all real money right at that point, and it’s yours and you have to keep it. But it is willing to challenge assumptions or challenge of orthodoxies, right the way we’ve always done things. 

Anytime you hear that, well, that’s how we always done it. That’s what our customers want. Whenever I work with a client or firm that’s in that situation, and they’re willing to start entertaining some other ideas. And they tell me something like, that’s the way it’s always been. I said, once the last time we checked into that? When you know, do we do we know that’s true? I mean, frankly, if you’re selling to like large corporations today, like let’s say you’re a manufacturer, and you sell to like you’re part of like the aerospace ecosystem in Connecticut. Well, chances are, that person you used to deal with 20 years ago is retired. 

Nancy: Yeah. 

Jose: And it’s been replaced by a millennial who doesn’t think the way that you know, good old Joe used to think. it’s very different. So adaptations, have you really, and then even asking yourself, like, you know, I wonder if the stuff we do, can we do it any better? Well, you know, we’re small company, we’re limited, we can’t do this. We can’t do that. I say, okay, well, can you do? And it’s amazing. Once you start asking the question, what can we do what’s in your power? Firstly, it’s a very empowering question to go through as a team. And secondly, it allows you freedom to think about things that aren’t necessarily and then we buy another big machine, because maybe that’s not on the budget this year. 

Nancy: Right.

Jose: But you could certainly do things like continuous improvement, you can you know, you can look at lean, you can improve your quality, you can improve your customer service policies, you can think about, you know, what are people calling us for all the time and like, do an inventory internally and find that, gee, it seems like everybody really wants that replacement spare part right away when they need it. What if we made it a spare parts subscription program? So we’re gonna say, we know, every three months, they’re going to need that were part, why wait for them to call us. It’s urgent, it has to be FedEx across the country. 

And now everybody’s heightened and upset, as opposed to say, Listen, you can save 20%, if you lock in this quarter, for the next two years, every three months, you’re going to get this ware part. Wow, totally changes the game. Increases recurring revenue, reduces the chance that they’ll call, they’ll call, you know, the local supply house to get that part, they’d rather get it from you, if you made the original machine. That’s the kind of thinking that doesn’t cost a lot of money. But you do need to be willing to say, okay, let’s let go of whatever we’re doing, and let’s start thinking about what else is possible.

Nancy: Alright, so you call yourself a strategy wonk. Why is that?

Jose: Oh, boy. Know, it’s interesting. It’s a great question. You know, it’s probably all throughout my, my career when I started out both in operations and in software development, and then eventually moved into sales roles, and then sales and marketing roles, and so on. I’ve always looked at it as an expression that it doesn’t get used as often anymore, but earlier on in my career was pretty common, like cracking the code. Right? Like thinking about is this something that if you’d learn that, if you could observe it, if you could reproduce it, you would actually get more consistent results over time? 

And so you’d always look to see who’s cracked the code? Is it something unique and how they approached it? Is it is that where in the lifecycle of a sales opportunity, do you introduce the idea of a demo, for example, depending on what you sell, whether it’s software services, or something, you know, just thinking about the processes that go into it. And when you know, if you took a clean sheet of paper and talked about my sales process, and if you saw anything that’s a capital good or large of professional service, you know, anything that runs into 10s of 1000s, or hundreds of 1000s of dollars, there’s actually a real process there that goes beyond I show up, I give you the contract, you sign it, and we collect checks, it’s not that easy.

Nancy: Really, I mean, come on.

Jose: It would be wonderful if it were. But in most cases, for you know, what we call a considered purchase, it’s going to require a lot of moving parts and a lot of different people. So thinking strategically, is really saying, I’m looking for patterns. Because I want leverage. If I find the patterns, I can reproduce them. That doesn’t mean every customer is the same every situation that they have, of course not. But I give you kind of pattern thinking. And you start realizing that everything is really connected. And I started realizing when I even 15 years ago when we started Value Prop and what really the birth of revenue throughput was working with a colleague and mentor of mine, Doug Chrisman. 

And we developed revenue throughput as an idea together because we started realizing that it wasn’t just a sales problem. It wasn’t just a marketing problem. It was sometimes a production problem. Sometimes it was a customer service problem. Sometimes it was a working capital issue that limited what a customer or what a company could do. And it was a system. So I’m a strategy wonk because the reality is businesses are systems. And it appeals to me just the way my mind is wired, I tend to look at all those parts. At the same time. I’m not saying it’s like a beautiful mind or anything like that. It’s just it just, but I really enjoy seeing the bigger picture taking a step back, right, and then you start seeing movements, he saw those things really flow together. 

That’s why that’s not working. I mean, you think you have a good sales team. And maybe they are. But the reason it good is your lead gen is so poor, they don’t have many, many proposals to work on. So they do a really good job on the few you give them. But if you amped up your lead generation, you’d find out that these guys or gals aren’t doing such a great job after all. That’s the kind of perspective I like to I like to engage in. And I’d like to share.

Nancy: So what I’m hearing, is everybody listening out there, we all need a strategy wonk. Wouldn’t that be great? You know, you just started talking about revenue, revenue throughput, I really want you to share your unique idea that is different and sets you apart, you might have, you know, touched on some of it. But are there any other points you want to bring out?

Jose: Yeah, no, thank you. That’s that’s something is, again, a favorite topic, because I think it really solves the problem for a lot of not tiny companies necessarily, but smaller companies, again, owner LED, not major corporations and a reason not so much for major corporations, although the principles would work for them as well. But in really big companies, you have a lot of fiefdoms. So you have the you know, the CMO or VP of Marketing does not want the VP of sales, telling them what’s wrong with their marketing, all the way through the chain. So, so you can’t get them all in the room really to talk together holistically. But in a company, let’s say below 50 million in revenue, where you generally are in the same location, the owners, the boss, and you can get the leadership team together. 

This really has resonance. And what it does, it’s and we you know, the formal thought is the volume of velocity with which your business converts operation to revenue. So if you’re in b2b, you have to convert opportunities. So you need to get opportunities at the front end the top of the funnel, so to speak, but you convert them. And if it’s a considered purchase, that’s a multi step process. People don’t just call up by and large, don’t just call up. You know, American Airlines doesn’t just call up a Rolls Royce to order engines on a whim, right? Because these are like, these are big purchases. And if you make a part for the engine, they still they they’re going to make you go through paces for that. 

So revenue throughput is, is visualizing your business. And we’d like to use this one visual, it’s not the only visual, but it’s a good one, in visualize your business as a pipe, opportunities come in one side of the pipe and come out the other as revenue. Simple enough, except there are eight valves on this pipe. And those valves could be open, in which case those opportunities flow freely, or the valve could be shut pretty tightly, in which case it stops. So let’s take the targeting or your target market is very fuzzy, you’re not sure who you really sell to well, whoever begins is, whoever has a PO to give us as our target market. That’s not really good target definition. For example, we would say that valve is pretty tight, it’s going to limit how many opportunities you really get. 

Let’s say your differentiation a second major valve. You’re not sure why you’re different. Essentially, your value proposition isn’t sharp. You’re not sure why people should buy from you other than you’d like him to buy from you. Which by the way, is not a buyer motivator, t’s a seller motivator. So that Valve would be shut tight. So you have to look at then marketing and all the things that go with marketing sales, but we also look at things like risk and leadership. Sometimes, it’s not that you don’t have good people, but you may not have enough of them. Or you may not have them in the right positions, or resources, which is of course the whole world of owner led businesses of working capital. 

It’s like do you have the you can have this grand strategy that we’re going to be in this is like a post pre and post COVID comment. Our grand strategy is we’re going to be at every industry tradeshow around the world to sell our machine. Well, you know, the average tradeshow for like, anytime type of industrial category is going to be $50,000 a pop. So if you have to do four of them, do you have a quarter million dollars lying around? A lot of companies like this don’t. So you have to look at all of that. And so we really say you have to look at a balanced view of that pipe and assess whether the valves are open or close. 

And if they’re closed, how do you open them? And that’s, you know, you get into the nitty gritties there, how you open those things. But looking at it that way you can actually optimize your business and sometimes it’s one valve, like all of them are open, but one is close tight? Well, if you think about flow through a pipe, if you even have one valve close, tight, doesn’t matter, the other ones are wide open, you’re going to get a drip. But when you fix that one valve, boom, now opportunities are flowing through the system.

Nancy: How long does a process like this take? How long? When you go into a company, typically how long does it take until it gets fixed?

Jose: You know, it’s interesting. That’s a Nancy, that’s a little bit like how long is a piece of string, but I will tell you from experience, you know it, you get results. First of all, two things happen if you really have an engaged leadership, and it has to be the owner, if it’s an owner of that business, the owner has to be involved. If the owner says this is my leadership team, they’re going to go through the process, Jose, I’m not interested. Because at the end of the day, the number one kind of control of whether a business succeeds or fails in an owner led business is going to be the owner. Owner behaviors 90% of it. 

So if the owner’s in the room really interested and really engaged, what will happen is within within probably a week or two of going through this process, they will have a really crisp understanding of where the bottlenecks are. What valves are closed, because we go into in quite a bit of discrete detail. Each Valve has like six dimensions. And we help you measure that we walk you through it, we walk your leadership team through it. It’s not a lot a lot, it’s probably like two two hour sessions. We go through it, we have software that supports this and gives you a score and all that good stuff. 

But the main thing is you have that crisp idea. So you know, knowledge is power, right? So knowing knowing where the blockages are, it’s kind of like if you had all of a sudden, let’s take the opposite situation you had your basement was flooding, you’d want to know where it’s coming from. That’s the first thought. So first thing is know that. The second thing is we say you cannot fix everything all at once. So you may have out of 48 total dimensions, eight major vowel six dimensions, each 48 dimensions, you may have 12, red areas, what we call constraints. Those 12 constraints is oh my goodness, my hair’s on fire, what am I going to do? We say, okay, stop, we find the critical path, because we have an algorithm that tells you of those 12, which ones that are most important ones to fix. 

And we advise you to work on maybe two. That’s it. Two. You can’t do 12, you’re going to do 12 half baked, you wouldn’t want to do that. Two, and that will probably take you about another 30 to 60 days to address those two, and therefore within 90 days from hello to there, you will start seeing things turn around. And then you can get into rinse repeat process, because you may have another different line of business. So for example, you make a machine, but you also have a machine shop, that’s not a typical for smaller manufacturers. Well, the machine you sell is to one audience, your machine shop services could be to a completely different audience. we’ve measured those separately. 

I mean, they obviously overlapping that they use the same physical infrastructure, same capitals, same leadership, but the buyer’s buying for different reasons. So that’s what we help you focus on. So you learn this as a skill, no different than companies learn how to do lean or continuous improvement in their manufacturing. This becomes that kind of a platform for you to think about revenue, but in the holistic sense of your whole business.

Nancy: Wow. Tell me something that’s true that nobody agrees with you on.

Jose: That’s a great question. You know, I think probably, it’s, it’s, I don’t know if almost nobody would agree with me. But I do get pushback on this. And it’s this idea of in sales. And I believe this is true. In b2b, nobody’s really sold anything. I think in b2c, you can find somebody you can sell on emotion, I mean, you can sell timeshares that way, right? You could sell a, you know, a dress or a pair of shoes or a watch or something people can buy on an impulse that a good salesperson can persuade somebody in that moment. 

But in b2b, if it’s a considered purchase, there’s too many eyes on something too many people get involved, you’re not going to sell anything, the best you can do is help them on their buying journey. So I would say a lot of people would disagree with me, especially sales, people who get involved in sales and saw that no, you can teach you can sell you know, you can learn to sell. And you know, at the end of the day, you really at the highest level if you’re selling big capital things, right, you really are there to help buyers buy. And it’s a it’s a it’s an inverted you know, paradigm but I think it’s really true and I have not seen it not be true. You’re just not going to browbeat or finagle or fast talk somebody into a $200,000 machine.

Nancy: Right? But you talking about high ticket items. What about smaller items? Is that the same? In your opinion, when you say nobody has really sold anything? I think, isn’t it the the goal of any sales person to engage in a conversation about what they need? Right? So they’re talking about it? Right.

Jose: Right. But they’re engaged. And that’s a great way to frame it. Nancy, they’re engaged in a conversation. Ideally, they’re engaged in a conversation with somebody who’s actually looking for somebody to solve their problem. 

Nancy: Yes. 

Jose: So it depends on how we define selling, and often, you know, people who don’t do this for a living, sometimes think of sales as like convincing somebody, or worse manipulating somebody to do something they otherwise would not want to do. Right? So I’d say no, that’s that. I mean, I’m not saying there aren’t people that are like can do Jedi mind tricks. And it all of a sudden you say, oh, my goodness, I bought that printer, and I wasn’t planning to that can happen. But by and large, it’s not really a good way to build a real portfolio. I think real success comes from, like you said, having the right kind of conversations, that doesn’t waste anybody’s time. 

That gets to the heart of the matter that reveals to that person, that you have a sincere interest in understanding what their issues are, what their challenges are. And if you can solve it, you want them to understand how you would help them. At that point, if you can’t help them, then there’s nothing to sell. And if you can, they’re going to feel very affirmed and confident, because you had a conversation that was respectful of them as intelligent, you know, agents have their own destiny, so to speak. 

And I think those things over time you build long term relationships, you build repeat business, and you’re right, it doesn’t always have to be a six figure thing. It could be a, it could be an insurance policy, or you know, it could be something smaller. But the same principle is like, you’re thinking about this, you’re looking for something. And I’m gonna ask you smart questions. And that’s really what more than anything, what reveals your competence? I believe in a selling situation is not how much you can tell somebody about your stuff. It’s your questions. People know.

Nancy: The quality of the the questions earn trust.

Jose: All right, that’s perfect.

Nancy: I cannot believe it. We’re at the end of our program. And I could go on and on with you. You let me just wrap it up with the another question or two, what is the one takeaway you’d like to leave the audience with?

Jose: I would think just look at your business as an interconnected system. When we look at a person, we don’t see an arm or leg or face, you know, we see a person, a complete person, you know. Your business is that. It has all these parts, they all contribute to this mission. And they all serve customers, and they all create value or they don’t, right. And that’s, that’s where you have the bottlenecks. But if you can look at your business as an interconnected system, and really start developing that vision for your business, you will see opportunities to create more value for customers to reduce costs, which might be unnecessary, and to optimize your presence in the market, you will be seen as a more valuable player as a result.

Nancy: Wow, most important, how can my audience find you?

Jose: Oh, that’s easy. Thank you. That’s just got a valueprop.com. That’s v a l u e p r o p.com. And you’ll learn about us about our system. And if anyone wants to reach out to me, there’s ways on that on that site to make contact with me. I’d be happy to just have a conversation with anybody if they think I can help them.

Nancy: Well, you know, I can only say a huge thank you for being on the show. Jose, this was fascinating. Thank you for all those listening in. And remember, reach out to Jose when you’re ready to get things right. And I think at some point for all of us, we know that we’ve got to do something, he’s the go to guy. So thanks again for being on the show. And make it a great sales day everyone.

Jose: My pleasure, thank you.

Voiceover: The Conversational Selling Podcast is sponsored by One of a Kind Sales. If you’re frustrated that you don’t have enough leads or your sales team complains that they just don’t have enough time to prospect, we can help. To work with Nancy and her team one on one to help you manage your sales team, install her proven outbound sales process and create more bottom line results, email her now at Nancy@oneofakindsales.com. To learn more about Nancy and her outbound sales secrets, grab your free copy of her book, The Inside Sales Solution at oneofakindsales.com/book.