Mastering the Complex Sale

I just finished Jeff Thull's bestselling book, Mastering the Complex Sale. 

I highly recommend it for individuals focused on complex and exploratory sales.  It gives some excellent perspective.  It points out that there have been three key phases in selling over the years. 

Era 1: Cold Calling, Presenting Your Features (me, me, me), Answering Objections

Era 2: Consultative Selling: Asking questions that lead the prospect down a path into your solution

The third era, and the one that Thull promotes, is around truly understanding a prospect's business and key business process and to diagnose problems and their impact.  Much like a doctor, Thull encourages you to spend time asking questions to determine whether the patient (prospect) has a problem at all and what is its impact.  Only after you and the prospect have a detailed understanding of the problem and the impact can you discuss a solution.  And in many cases, you may find that the prospect doesn’t have a problem or it isn’t a material problem, and you should walk away.  Just like a doctor wouldn’t operate on someone that didn’t need an operation, you shouldn't make a sale if there isn't a problem.  

Here were some of the key insights I took away from the book.  

• Don’t present.  Always have one foot out the door.
• You don’t want a decision on the solution, you want a decision on the problem
• There’s no such thing as a decision maker – there are multiple people involved in decisions.
• People make decisions based on emotion (Boeing is based in Chicago because the CEO wants to live in Chicago)
• There isn’t a decision to buy, there is a decision to change.
• Credibility comes from asking questions about the prospect's environment or situation that they haven’t thought of themselves.
• Most prospects have a positive present state, they don’t feel they need to change.
• Key question: How does the absence of my product manifest itself in my customer?
• Procurement creates a framework for a decision and they always make the right decision within their own framework.
• Most salespeople are selling with 90% of their product’s value behind their back because the problem isn't understood by the prospect.
• Include all costs in your ROI analysis – including the cost of their resources to implement.
• Talk about your top 3 pieces of value, but know all of them.
• When diagnosing, get to the people that are closest to the data.
• Don’t be a person that makes a sale, be a person that transforms your client’s company.
• Take the customer backwards to get them to move faster, focus on the problem.
• Don’t focus on bringing the prospect a positive future – a positive future implies they’re incompetent now.
• Good salespeople mention the side effects or potential negatives of their solutions (like a doctor).
• Don’t get emotionally involved, always be leaving.
• If you can’t quantify the cost of the prospect's problem then there is no problem.
• The decision to change is made during the diagnosis of the problem.
• Don’t talk about your value proposition, talk about value hypothesis (e.g. net profit).
• If you’re feeling pressure during the sales process you’re doing something wrong.
• Go for the no.
• Crisis drives change.
• You cannot sell a group.
• Find out out who owns the business metric that is impacted by your product and work with them to diagnose.
• The hardest part of a psychiatrist’s job is getting the patient to see that they have a problem.  Same thing for salespeople.
• When reaching out to someone cold, be sure that the message you send could not have been sent to anyone else in the world.
• When a prospect goes cold, use the rule of two to give them the opportunity to tell you the truth.  “When I don’t hear back from someone it’s usually for one of  two reasons: 1.) they’re really interested in moving forward but they have some legwork to do internally to get the pieces in place or 2.) they’re really just not interested.  Either one is fine of course.  Which one is the case here?”

Complexity Creates Jobs

Doing a deal with a big company is extremely complex.  That complexity leads to lots of jobs.   There are multiple boxes within the big company that need to be checked to get a deal done.  And each of those boxes has an owner.  There can be hundreds of boxes and dozens of owners. 

Your inclination, of course, is to speed up the deal by simplifying the deal process by minimizing or eliminating the need to check some of these boxes.  While this is the right approach, and it must be done, it’s critical to remember that each of those “box owners” likely believes that their box is extremely important.  And that checking their box is a critical part of the company’s business process.  And they’re also likely to become extremely threatened when their box is minimized or eliminated. 

It’s important to be aware of this reality when attempting to speed up a deal.  Be respectful of every owner in the process, and coginizant of the consequences that come from speeding things up.

A Sales Pipeline & Process for Startups

The other day an entrepreneur was asking me how to best setup and monitor a sales pipeline and process.  I thought I'd post my answer here.  Three simple steps: Step One: Setup Stages.  I like to use these six:

1. Qualified: you've identified the right individual to speak to
2. Meeting Set (with right individual)
3. Meeting Held (with right individual)
4. Proposal (your proposal has been received by the prospect)
5. Verbal (prospect has agreed to the terms of your proposal)
6. Closed Won (signed contract received)

Step Two: Identify your "conversion angles" for each stage of the process.  That is, what are the secrets to getting the sale from one stage to the next?  For example, to qualify a lead it might mean identifying the person's job title and name by using LinkedIn or Hoovers.  To get an opportunity from verbal to close it might be putting a product launch date on the IT team's calendar or a price break in return for a quicker close.  Putting conversion angles for each stage down in writing is critical -- start with at least two angles for each stage.

Step Three: Identify the bottlenecks.  Look at last quarter or even the current week (if you have enough opportunities) and place them in the appropriate stage.  Identify which conversions are working and which are not.  See the sample analysis below:

Based on this analysis, here's what's working and not:

Working: Qualifying Leads, Holding Meetings that get set

Not working: Setting meetings, Sending proposals out of meetings

With this information the team can dive into the details of these conversions to find out what's slowing the process down.  Is it effort?  Is it resources?  The angles?  Are some team members converting this well and others not?  When this converts quickly, what are people doing?  Are there specific segments of clients that are converting better than others?  Why?  Dive into the problems with these conversions.  To add a layer of complexity, you can add a column showing the number of days that opportunities are in each stage.

This kind of analysis is valuable as a one off, but it will be even more valuable as time goes on.  Managers can look at how these conversions are changing week over week or month over month.  Relative data is always more valuable than a snapshot in time.

Even with a good sales process, there can still be holes that need to be patched.  Different reps may interpret the stages differently or you may need to add steps to the process to have more transparency.  To deal with the potential holes in the process, in parallel, I like to monitor what I call "tipping points".  Tipping points are pieces of information, insights and actions taken by the prospect that increase my confidence that the deal is legitimate and moving at the right pace.  Tipping points are crucial to keeping a sales team and a sales process on track.

This post is already getting a bit long.  I'll write a post on tipping points in the next few weeks.

Touchpoint Frequency Graphed

A couple weeks ago I wrote about Touchpoint Frequency & the Attention Asset.  In short, if you touch a client or prospect too often with communications that are of poor quality, you will deteriorate the value of the attention you've built with them. I built the graph below to illustrate this concept.  The idea is to walk that fine line of communicating extremely high quality messages with the right frequency.  I believe that you can communicate every day, as long as the message is of high enough quality.  The challenge is staying on the blue line...

Touchpoint graph

Beware of the Low Hanging Fruit

One of the most significant challenges that comes with the launch of a new initiative is knowing whether or not it truly has long term potential.  

To make this assessment even harder, when most initiatives launch there's always some low hanging fruit that can give you the perception that the initiative is working.  Smart engineers or good business people can usually prioritize the quick wins and grit their way to some success in the first few days or weeks of a launch.  But what's hard to evaluate is what will happen once all of that low hanging fruit has fallen off the tree.  A couple ways to help address this:

1. Ask each team member to create one perfect case study of success out of the initiative as fast as they can.  Rather than going out and getting 30 wins, ask them to get one win and dive into the detail.  Why did that win work?  What were the challenges in getting it there?  What might make this win different than others?  What might make it similar?   By diving into intense detail and building a case study on a winning opportunity, managers will be able to understand the strengths and challenges that they didn't know about at the beginning or can't see just by looking at results.  So often the true path to success lies in the detail.
2. Keep a simple to read and easy to update log of initiatives; include learnings (what worked/didn't) and results against your goal.  Use this log to set a benchmark for future initiatives.  Over time, this log will help you get a good feel for when the initiative has turned the corner on the low hanging fruit and is picking up steam or fizzling out.

Low hanging fruit is a good thing.  It can help build momentum and excitement around a new initiative and is often a great way to pick up insights that help a team move faster or prioritize more effectively.  But it can be a trap that leads to over-investment.  The simple steps above have helped me avoid that trap in the past.

Charge More than your Competitors

Jim Keenan had a good post a while back titled, The "Lowest Price" is a Business Model not a "Sales Tactic". The key line in the post was:

Pricing is a business model, it's not a sales tactic.  Yes,  you can wiggle a little on price.  It's to be expected, but competing on price has no place in sales -- unless it's your business model.

It's a great post, I recommend checking it out when you get a chance.

That said, I'd like to extend the idea a bit.  In my mind, a good salesperson shouldn't want to compete on price; in fact, on the contrary, they should want to be the highest priced player in the market.  Not only does the highest price lead to higher commissions but it also implies that you're not afraid to compete on product (to justify the price, you must have good quality).  And it raises the bar on the quality of your sales talent and sales approach (you have to be better than the rest).

A while back, I was on a sales call and the prospect said, "you know, I've done some research and it seems that your product is more expensive than your competitors."

Our answer was this: "well, you can stop doing research on that, because our prices are higher than anyone else in the market, much higher."

While bold, most people would be amazed at how productive this can make the sales process.  It also goes right to the heart of the matter (gets the elephant out of the room) and levels the playing field in the process; i.e., "do you want to work with the best?"

Apple is a perfect example of this approach -- their prices are far higher than Dell, HP, Lenovo, etc. but they can justify it because they're perceived to have higher quality products.  Apple never competes on price strategically, and I'm sure their salespeople on the ground don't even try.

Of course, this sales tactic has to be supported by product quality and company strategy, but regardless, I want the salesperson that wants to sell a product that's of the highest quality and proudly quotes a price that is consistent with that value.

Touchpoint Frequency & the Attention Asset

We all know that the more spam you send or the more often you bother a sales prospect the more likely they are to begin ignoring you. Said differently, if you have built up a certain level of trust and credibility,  you have built up an "attention asset" with a user or prospect -- and spamming them will quickly deteriorate the value of that asset.

The conventional solution to this problem is to simply stop touching the user or prospect, or to at least do so less frequently.

While certainly intuitive, this is exactly the wrong solution.

Instead, I believe companies should strive to touch a prospect or user every single day, if not more often.  BUT, at the same time they should challenge themselves to bring the prospect or user enough value in every single touchpoint, every single day, so that not only do they not deteriorate the attention asset, but instead they increase the value of it.  I wrote a post back in April titled, Drip Marketing that outlines this approach.

In practice, of course, you don't have to reach out every day (be sensible) but I do believe that the approach of reaching out every single day will require you to create content that is compelling, interesting and highly valuable.  And that this is a far better approach than taking the easy way out and solving the problem by simply backing off.

"User-First" Client Acquisition

I built the simple framework below to help me think through the enterprise product conversation happening yesterday.

A B2B company could find itself in one of four situations.  The goal is to be in the top right quadrant (good sales talent, good product quality) so that you can simply accelerate what you’re doing.   But the most interesting to me – and the one that I think will be the fastest growing – is the top left quadrant: when you have a good enterprise product but little or no sales talent.  I’ve seen more and more startups come along that have super cool products but no enterprise sales experience or talent.

The old fashioned solution to this problem would be to hire, partner or find an experienced distributor that could move product for you.  But largely because of what I think is an increasing hesitancy among early stage companies to over-invest in sales & marketing, there’s a ‘user first’ strategy that seems to be gaining traction.  Companies like Yammer are providing value at no cost to individual users but charging the company for “premium upgrades”: system integration, security, admin rights, etc.

At its core, “User-First” seems like a no-brainer: get employees to use your product and love it so much that they demand their companies purchase the upgrade.  But like most things, the challenge may lie in the details of the sales process; i.e. how does this approach align with a potential client’s buying process?  Good B2B salespeople have adapted their process to match their prospects’ buying cycles.  And in my experience the buyers like the process, control, security (and bureaucracy) that these cycles allow.

Products that decide to go “User-First” will have to learn these details and adapt their upsell process to fit in neatly with institutionalized buying cycles.  If they can’t do that well, “User-First” will simply be a fancy lead generator and sales talent will continue to be a requirement for B2B success.

Start With The 'Why'

A colleague shared a Ted talk with me today from Simon Sinek, it's currently Ted's 19th most watched video.

It's about 18 minutes long and definitely worth watching.  You can watch it on YouTube here.

Simon's theory is that most companies and individuals sell and talk about features; i.e. "what we do".  He argues that this is a mistake.  That the super successful individuals and companies sell their inspiration, or the "why we do it".

To make his point, he asks the question: what makes Apple so different?  They're structurally the same as any other computer company.  But for some reason, we will buy computers, MP3 players, phones, music, almost anything from them.  Whereas for a while Dell sold great MP3 players and nobody would buy them.   And Gateway sold great flat screen TVs and nobody was interested.

He argues that the reason is that Apple is selling the "why" while the others are selling the "what".  Instead of saying we have the best computers or the lowest cost computers or the best designed computers (the "what"), they say: we're going to challenge the status quo with masterful design (the "why").  People don't buy what you do they buy why you do it.

The most compelling part of the talk is his comparison of TiVo (a failure) to Martin Luther King (an immense success).  TiVo had the best product on the market and aggressively sold their features: ability to skip commercials, pause live TV, see recommendations, etc.  Instead, they should have sold the 'why'.  Something like: we want to give you control over the smallest aspects of your life, by giving you the ability to skip commercials, pause live TV, etc, etc.

On the other hand, in 1963, Martin Luther King was able to bring 250,000 people to Washington, DC on a hot and humid day in August.  They all came on the right day and at the right time.  He didn't send an E-Vite and he didn't Tweet about the event.

These people didn't go to DC for him or to hear a plan that he concocted.  They went because of what he believed.  They believed what he believed.  He didn't even mention a plan.  He talked about his "dream", which was the same as their dream.  He inspired.  They didn't go there for him.  They went there for themselves.  

Similarly, people don't stand in line for 6 hours the day that the new iPhone comes out for Apple, or for the new camera on the phone or for the new screen on the phone.  No. They go there for themselves.  They buy the phone on the first day because it makes them feel a certain way.   Apple's cause or their "why" is aligned with their cause.

It's a great concept, and I've touched on this theory a bit over the years with colleagues and clients.  But I haven't heard it articulated this crisply in the past.  I suspect I'll be thinking (and perhaps writing) a bit about this in the coming weeks.

Missing Projections

Here's an interesting framework to use when considering why a group or company misses projections.  I'm sure it's not perfect, but it's interesting to think about it this way.

When you've missed goal by:

50% - Blame the strategy (it's way off)

20% - Blame the manager (you have an execution problem)

5% - Blame the team (they're either not paying attention or they're not accountable)

Drip Marketing Framework

A colleague of mine drew this framework on our whiteboard the other day.  I thought it was spot on so I'm posting it here. It basically outlines the drip marketing process that a salesperson uses to keep a prospect engaged.  I wrote about Drip Marketing in an earlier post.

The framework instructs you to drip the prospect with some information, if you get their attention work to understand what matters to them, if you know what matters to them align your product/service (if possible) to meet their need/pain point.

Bad Negotiators Use Emotion to Negotiate

I just went on a rant about this and a colleague told me I should blog about it so here goes. I had a call the other day with a big client. The call was a preliminary negotiation call. We’re going to discuss terms of an agreement extension in a couple weeks.

From the outset of the call, the client surprised me by being both rude and confrontational -- lots of sarcasm and sighing. They explained that they might want to go to RFP. Oh, and of course, they want a fee reduction this year.

Not a nice way to start off a call between two companies that have had a very positive relationship for many years. Why would they start the call this way? Are they just rude? Are they really mad?

I don’t think so. My answer is that they’re bad negotiators that don’t want to do the homework and preparation required to get what they want.

Good negotiators don’t do this. Good negotiators are polite, friendly, do their homework and have ruthless, rock solid business angles as to why they should get what they want. Good negotiators don’t simply threaten to go to RFP; rather, they build leverage by citing the rational, business reasons why they might end up going to RFP (budget cuts, poor performance, shifting priorities, changing markets, competition, etc.).

When negotiators don’t have rock solid, logical business arguments they’re forced to rely on fake, insincere emotion to make their argument.

My advice: rather than put yourself and the people on the other end of the phone through this nonsense, reschedule the call for a later date until you can do your homework and prepare your angles. That’s a lot more fun and productive than just pretending to be mad.

Product vs. Marketing

Fred Wilson and Jim Keenan, two bloggers that I admire, had a couple of interesting blog posts over the last few weeks that have got me thinking. Fred’s post was titled Marketing and the Bubble and was a follow up to his controversial Marketing post.  In Marketing and the Bubble he uses the really interesting graph below (submitted by a commenter) to illustrate how in the last few years the pendulum of focus for startups has shifted towards product and away from marketing (the focus of the last bubble.)  Fred says:

 “…I am certain that experience has caused me and my partners to view marketing oriented startups with a fair bit of caution.”  

Jim’s post is titled Product Surpasses Sales, the key line is:

“The Internet has shifted the balance of power from sales to product.  They’ve always worked together, but it has been sales leading the way.  Things have changed.  With the ubiquity of information, it’s the product that now leads sales.  A good, strong, innovative product is far more important today, than the best sales team in the world.”

Rather than taking a side in the debate over product versus marketing, I’d like to make two points that I think should be kept in mind:

1. How much you prioritize marketing investment depends on your lifecycle stage, industry, product, customer base and the current market.  An early-stage biotechnology startup trying to develop a vaccine for bacterial infections likely needs to focus mostly on product.  A startup distribution company that resells telecommunications equipment to small businesses probably needs to prioritize their marketing.
2. Regardless of the above, I believe that your best sales & marketing (externally facing) people should be doing two things: a.) supporting your product and product team by interacting with the market and early adopters, generating intelligence and identifying the products that your customers want but don’t yet know they want and b.) influencing customers and potential customers by telling stories that speed up the diffusion of your most innovative and next generation products into the market.  If you find that your product is so amazing that it gets ahead of your marketing people, it doesn’t mean that marketing isn’t a priority, it just means you need to get those people focused on the harder stuff -- the stuff that your product isn’t doing yet.

Upselling

I've spent a lot of time over the last couple of years trying to find ways to generate more revenue from existing clients; mostly by building and marketing new products that leverage our base product to solve top-of-mind client problems. This is a smart way to grow your business because you're marketing to an audience that already knows, trusts and likes you, your product and your company. In most cases, this puts you at a huge advantage over competition that doesn't have an existing relationship.

I've learned a few valuable lessons during this time about getting more from your current customers.

1. Clients have a strong perception of who you are and what your capabilities are. They actually pre-judge you more than they do a new provider. It can be really hard to get out of this box. The best ways that I've found to deal with this are:
   • Be super honest and upfront about what your limitations are with respect to added offerings. If you talk too big you'll lose trust.
   • Your clients know that you can do something well; if they didn't, they wouldn't be working with you. Clearly identify that thing and find a way to make this capability a part of what you're upselling. But make the story simple and make it make sense to the group that you're working with; i.e. a lab supply company can sell its logistics expertise to help clients manage lab inventory but it shouldn't start selling office supplies to the office manager.
2. Don't be afraid to test your pitch with some smaller clients; your first several passes will always be off the mark. But balance this with not taking the feedback from a couple of clients too seriously. If you think you're solving a real problem then stay on course for a while.
3. You have to be ultra sensitive of not appearing to "salesy." You've got a certain level of trust and a willingness to listen built up among existing clients. Don't damage that, it'll be hard to get back and it's not worth losing.
4. Because most deals can get done with a statement of work or an amendment to an existing contract, the sales cycles are much shorter than those with new clients. Leverage this to keep deals really simple and moving fast. In some cases you can simply invoice the added product or service without a signature which can avoid the involvement of busy lawyers and senior managers.

B2B Citizens

Once again the great Seth Godin and friends are changing the language of marketers.  I love when this happens so I hope it takes hold.

He's recommending that we stop referring to potential buyers as prospects and targets; rather we should refer to them as "citizens".  See the post here. 

While I love this word and agree with his motivation, doesn't this seem a bit B2C driven?  That is, I'm not sure we should refer to potential B2B buyers as citizens. 

What's the difference?  When I think of a consumer in this context, I think of a person that doesn't need me, that has choices, that has power.  When I think of a business in this context, there's less power.  That is, while a business may not need me, they do need solutions to big problems to keep their business running.  Citizen is a great word because there's this sense that they're just standing around and might never need to do anything other than eat and sleep.  I have to make something that's great to get them to act. 

Businesses aren't just standing around, they need to act to survive; they (in many cases) need me more than the consumer.

I think there's a difference.  Thoughts?