Chapter 22: Turning Financial Analysis Into A Value Discussion

photo-30By now you may be chomping at the bit, wondering when you get to do your PowerPoint or demo.  After all, your competitors have already given their presentations, and here you are, still asking questions instead of talking features and benefits. Steady…stay on target…we’re setting the table here, not going straight to dessert.

In Chapter 21, we looked at how to turn soft, hard, or inferred data into a form of impact. The degree of financial analysis required will depend on your industry and the order of magnitude of the problem to be solved.  It is important to not get too bogged down in the early stages. Consider the problems of a traditional detailed financial cost analysis:

  1. Determine the project’s cost savings impact over 3-5 years (a guess)
  2. Determine the project’s cost over 3-5 years (another guess)
  3. Subtract #2 from #1 for the project’s total cost savings (guess – guess = guess²)
  4. Factor in the average weight of capital to the equation (the mother of all guesses)

That is a lot of guessing. And there are obviously many more steps than in this simplistic example; imagine how all of those guesses keep skewing the results! And what happens if you or your clients aren’t happy with the numbers you generated? Be honest…you most likely go back and tweak the numbers until you end up with something closer to what you were expecting.  Guessing and manipulation – that’s a recipe for disaster.

The art of getting useful results out of this process will depend heavily on how you take the exercise and turn it into a discussion, not a complete financial analysis. After all, your goal is to help your client understand the problem and its impact, help place you in the role of a trusted advisor, and of course, help you continue to qualify your prospect. Besides, if you are like most salespeople, you are not a spreadsheet genius who delights in the world of credits, debits, and pivot tables. Fortunately, if you can help your 4th grader with math homework, you have all the financial skills necessary for this phase.

In How To Take Data And Turn It Into Impact, we used the example of rekeying the locks at a university to illustrate how to create a very basic understanding of the financial impact of a problem. This type of financial analysis is obviously simple, often referred to as “back of the envelope” math. The exercise reduces the amount of guessing (or makes it obvious to you and your client that you are guessing and agree that you are using round numbers to get a general understanding of the problem). You are now in a position to take your ballpark numbers and talk about them in a way that not only starts to firm up your mutual understanding of the problem, but may also allow you to uncover additional problems that your company can solve.

You both need to work this together

Besides the obvious face time this gives you and the client buy-in it produces, it will give you additional insight into your client’s opinions, allow you to test your assumptions, and enable better, more educated guesses (yes, we’re still guessing at this point, but that’s okay). As you talk about the problem, you will need to put your findings into the language of money. After all, the solution you offer will be based on money. In the end, if your client can’t apply a viable ROI to your solution,  even the biggest problem won’t get the funding to solve it.

HP-12C

Yes, they still make the trusty HP-12C

Keep the math simple, and keep things centered on positive and negative numbers. This is not the place for percentages or ratios, and it certainly is not the place to show off your MBA skills with your trusty HP-12C calculator. If the numbers come up larger than expected, your client may start to distrust the process, even though you both contributed to that process. If this happens, take the conservative route  and say something like, “That seems a little high…is this what you were expecting?”

Pay careful attention here…you are about to either get solution buy-in or problem abandonment

If they answer that the number seems about right or might actually be underestimated, keep moving forward. If they answer that the number seems high, work with them until you both reach a conservative number that you not only believe, but can later prove to the client’s senior management who ultimately will write the check for your solution. Then ask one final question:  “Is this problem big enough to require a solution?” Because while your solution might solve a problem with an annual ROI of $100,000, that might mean nothing to a $50 billion company with other priorities.

If after all of your work together you get to the point where your client is not seeing numbers that justify moving forward, you need to take a deep breath and evaluate where you are. Should you keep pushing and try to get to a number that works? If you have been lazy with your qualifying over the past few meetings, you may be fooled into pushing forward. If you have been constantly qualifying your prospect throughout your entire engagement, you will probably see that you have reached the point where further time will not pay off. That’s a tough call, but an important one. Don’t keep trying to push that rope uphill. Move on.

But wait, not so fast. There are few absolutes in business. It may make sense to continue on with what appears to be an unqualified prospect. What if there is more to this problem’s ROI than can be easily measured financially? Just as there are soft costs, there is also soft data. We’ll look at soft data and how it impacts your client in Chapter 23.

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Chapter 7: Earning Trust Before You Ask the Tough Questions

To fully succeed at sales, we must think and act with a client-centric mindset at all times.  To do that, we need to first gather accurate information from our prospect, and to get that information, we must have trust.

We can’t have trust until we earn trust.

What happens if at our first meeting, we ask, “what were the three biggest failures of your department last year?”  Count yourself lucky if instead of a door in the face, you only get a blank stare followed by a variation of, “our department has had no major issues over the past fiscal year.”  Either way, you are shut out, possibly for good. But you read “Chapter 6:  Partnering with your Prospect,” and you understand the need to ask those tough questions.  Why are our prospects afraid to answer those questions?  Don’t they want to help their company by doing a better job?

People are people, and whether it is due to personal ego, petty internal politics, the inability to get to useful information, or just because there has been so little trust built with past salespeople, most prospects have built up wide moats and massive walls to protect their world from people like you.  Don’t take it personally – it is just part of the dysfunctional sales dynamic that was built long before you were born.

How do you ask 100 MPH hardball questions when your prospect is used to underhand slow pitched softballs?  Or maybe even even used to hitting off the Tee?

(A note to my international friends:  sorry for the baseball sports analogy.  While I understand your puzzlement with an American sport that has an event called the World Series but negates to invite teams from outside North America, my shameful lack of cricket or rugby analogies forces my hand here.  Client-Centric Sales will endeavor to keep sports metaphors to a minimum.)

If you haven’t already, read Chapter 3:  Becoming an Expert in Order to Qualify Successfully.   When you become an expert on your prospect’s industry, company, and problems, you are taking down the first set of barriers that prospects usually put up. They will open the door quite a bit wider for you if they have “discovered” you through your previous industry networking on LinkedIn, through trade associations, or by referral.  If you managed to invite yourself for a meeting to discuss industry best practices and how upcoming regulations may impact their business, they may drop their defenses even further.  If you keep your corporate brochures and PowerPoints under lock and key (believe it or not, they don’t want to see your 12 slides of org charts), you have the possibility of opening up a real dialog.  And if during that initial dialog, which may take place over several meetings, you can keep your mind off your quota and instead focus on your prospects issues, you may become successful at avoiding the salesperson’s biggest offense:  Listening With Intent To Sell.

We’ve all done that.  We get a great dialog going and then 20% into the discussion, we start to tune out and figure out how we are going to sell the prospect the new POS-2150 GlurpMaster 2.0 with an extended warranty agreement.

Wrong.

Keep listening.  Don’t think solutions yet – that’s a ways off.  Listen some more.  Ask questions that help you both discover the deep sources of the problem instead of the more easily recognized topical symptoms.  Your competitors have already tried to sell bandaids; you, my friend, are going to do surgery. So listen.  When the prospect comes to what he or she believes is the end of the answer, keep digging. Your prospect may declare that he or she has reached a conclusion, and that you are ready to discuss a solution.  Don’t take the easy way out and stop there.  If you are working on what appears to be a promising line of questioning, keep going.  It is often as easy as taking a short pause, and asking, “what else?”

Asking “what else?” is an amazingly powerful question.  A local Fortune 500 company turned into a long term client due mainly to the fact that I kept asking that question. When the prospect got to the point that he thought he was done, I would ask “what else?” It was only after asking “what else?” 14 more times that we finally drilled down far enough for us both to understand the problem.  Reaching that understanding allowed us to zero in on a solution which saved the client almost $1M.

I didn’t sell anything that day.  I helped someone understand his business, identify a problem, and enact a solution.  The solution was simple and had nothing to do with my company or what I had to sell.  But you can bet the next time I met with this company, I was treated as a trusted advisor, not a salesman.  At that point, I was in a position to ask the really tough questions, discuss the elephants in the room, and mutually engage with this company to look at other issues that I could directly help them resolve.

Chapter 6 – Partnering with your Prospect

In the last chapter we looked at the three most common ways to fail at sales.  Those three methodologies have been repeated and perfected through the years, and are very effective at making sure the client doesn’t get what he or she wants while turning you into ineffective salesperson.  As you have probably guessed, there is a better way.

Let’s work with a simple example.  Do you have a friend who is a gadget freak? Someone who drools over technical specs, compares all the different models, and camps out overnight at the Apple store every time a new product is released?  If you were in the market for a new cell phone, you might seek guidance from this person, discussing the pros and cons of different models and operating systems, all the while interacting as equals.  Perhaps at the end of your discussion, you might trust his judgement in this purchase more than you would your own.  This friend has little or nothing to gain in advising you, and you would probably take the advice given as trusted, impartial, and based on your true needs, resulting in your purchase of a perfect new cell phone.

It is this kind of dynamic that we are trying to create with a client-centric sale.

In the real world of sales, this isn’t always easy.  Most prospects have been trained over the years to expect salespeople telling them what they need (usually based on selling what they have) without really understanding their business.  As the saying goes, “If all you sell are hammers, after a while everything starts to look like a nail.”  If not that, prospects are used to telling salespeople what they want, eschewing any kind of value-add dialog from the salesperson that might benefit the prospect’s company.  If it is a large, complex, or technical sale, it is very likely that there will be a great deal of guessing by both the salesperson and the prospect.  These dysfunctional selling practices were covered in greater detail in Chapter 5.

A better way is to focus on a collaborative and consultative sale, acting as if you were not on commission, but instead were hired to help your client complete a successful project. Just as a hired consultant would do research with the client in able to unearth useful data, you will need to do the same with your prospect. During this question asking process, it is very likely that your client will not have all of the answers you require to create an optimum solution.  This is good news, not bad.  I have learned over the years that in the end, the salesman with the best answers does not win the sale.  My experience has shown the opposite:  the salesman with the best questions wins.

It is here that Client-Centric Sales takes a sharp turn away from the well known traditional consultative sales techniques that have been taught for decades.  At first, things might appear very similar to what you are used to.  But as we get deeper into the salesperson-prospect relationship, you will see that success comes from asking questions that your contact won’t be able to answer.  This opens up the opportunity for both you and your prospect to engage others within the organization.  Besides creating a greater sense of corporate buy-in, you may learn, for example, that you have been talking to the wrong person, that the project doesn’t have firm funding, that the European division wants the same solution, or that the president has squashed the project several times in the past. The right questions will help you continually qualify your prospect.

Client-Centric Sales is based on this methodology.  The chapters that follow will help you learn how to ask tough questions, obtain relevant data, meet key people within the organization, verify funding, cooperatively build a business case, jointly present it, and reach a definitive decision.

So roll up your sleeves.  We’re about to get our hands dirty.

Chapter 5: Three Ways to Fail During a Sales Presentation

What happens when a client can’t properly articulate his or her company’s needs?

That’s easy.  We do what most salespeople love to do…we TALK. Oh, how we love the sounds of our own voices. We interrupt our clients so that we can finish making our point. We keep talking after they have told us they want to buy from us, because we’re not done with our sales pitch.

For example, I needed two tablet PCs to use as part of a major presentation to a Fortune 50 company. The choice of tablet PC was easy, as the prospect had a key relationship with one of the tablet PC makers. With no research to do, I walked into the store and said, “I’d like to buy two of those tablet PCs.” The correct answer? “Yes sir, here you go.”

What answer did I get? “You know, those have dual-core processors.” Now this might seem like a minor sales transgression, but if I had more time on my hands, I would have said, “Oh, in that case, I don’t want them” and walked out of the store and into another. But I stayed, and endured hearing about all the technical features that this tablet PC had, the cool apps you could get for it, and so on. He committed one of the most terrible sins of all sales sins:  he kept pitching after he had the sale, potentially talking me out of the sale.

In your sales world, what else is wrong with going through your rehearsed presentation? Instead of working to understand your prospect, are you just telling them what to do? Without a back and forth discussion, you risk a one-sided solution, potentially resulting in a lack of buy-in from your prospect. If the project fails, guess who will get the blame? Besides appearing arrogant, your force-fed presentation may keep you from learning about other problems that your company could solve.

When is not okay to take the money and run?

What if the client knows exactly what they want (like me when I bought the tablet PCs)? If you are going to have a long term relationship with this client, then you risk that they are wrong when they tell you what they want to buy. Again, guess who gets the blame? There are other problems, however. If we haven’t added any value to the transaction, then we have just entered the dreaded world of commodity sales. And if we haven’t established a base dialog on the prospect’s issues, we will never understand the root causes of the problems they face, and once again we won’t be able to solve any additional problems they may have.

The only thing worse than these two sales transgressions is what I see over and over again – guessing. Of course, we don’t call it guessing at all. We have a short meeting, form opinions, declare that the problem can be solved with the product or service that we just happen to sell, and then formalize this mass of guessing into a glorious, search-and-replace, cut-and-paste rehashed document called a proposal. The thicker the better.

I’m betting that the majority of the client interactions done in the world of large, technical, or complex sales fall into one of the above three categories. Is there a better way? Perhaps a way that keeps us from wasting our time and increases the odds that the prospect will become a long-term, profitable client who values our wisdom and expertise so much that they become the gatekeeper who excludes our competitors from knocking on their door?

There is a way that has served me and others well over the years. In Chapter 6, “Partnering With Your Prospect,” I will give you an overview of this alternate way of doing business with your clients.

Chapter 3: Becoming an Expert in Order to Qualify Successfully

If you had no need for money, but still wanted to work for your company, how would you treat your customers?  With no need to hit a quota, earn a commission, or impress a boss, would you interact in the same way as you do now? Let’s assume that you wouldn’t.  Let’s assume that you would only spend your time with clients who had problems you could solve, that you would work hard to put together the right solution to solve those problems, and that the client had the resources to enact your solution.

Now wouldn’t that be an enjoyable working relationship?

What if you are like most of us, and you need to hit your quota, earn your commission, and impress your boss?  You can have it all – great relationships with your clients, happy customers, and a great income, but you and your clients will have to change how you interact.  It means that in order to be an effective salesperson, you will have to greatly increase your knowledge of your prospects and their industries.  It means that you will have to earn the trust of the key people within those prospects.  And it means that you will need to push your prospects to dig for information that they don’t even know exists.

Joseph Stiglitz won a Nobel Prize for his work in economics.  One popular phrase to come out of that work is that “There is no such thing as perfect information.”  It has always surprised me that when I quizzed salespeople about a prospect that they were working on almost no information.  Often, all they knew was that there was an RFQ on the street. Salespeople would work hours and hours responding to these projects.  A handful of competitors would do the same, with nobody (often including the company who issued the RFQ) really understood the problems that the prospect was trying to solve.

How do you get this information?  It starts by increasing your knowledge of your prospects industry and the challenges that companies within it face.  For example, if you sell to the healthcare industry, do you know about HIPAA requirements and how they affect your prospect’s business?  While your product or service may not directly affect a hospital’s HIPAA requirements, this is something that greatly affects many aspects of a hospital’s business, and the more you understand the business drivers of your prospect, the better chance you have of becoming a trusted expert with integrity.

Those who only sell products become commoditized; those who provide wisdom and guidance become trusted experts who can’t be displaced by a competitor with a lower price.

There is no secret to learning a prospect’s industry.  The internet is an obvious place to start, and we won’t spend time discussing such basic things.  Learning about the major problems faced by the prospect’s industry in general is also straight forward, and just requires a commitment to spend the time learning about those problems.  Learning about the problems and key business drivers of a particular prospect is more difficult.  But this work is essential, and is part of the qualifying process that we discussed in Chapter 2.

One way to start this process is to join industry groups on LinkedIn or industry trade sites and respond to the postings there with comments or advice.  Join online groups associated with the problems and solutions that companies in your prospect’s industry are experiencing.  An important note: LinkedIn groups should be used to establish competence – this is not a place to give even a hint of a sales pitch.

You can use LinkedIn to determine who are the important people at your prospect’s company.  Join the groups that they have joined, comment on posts that they may be reading, and get introductions to them through your other connections.  With a bit of diligence, you can become an expert who is sought after instead of a salesperson to be avoided.  By doing this prep work up front before first contact with your prospect, you will be way ahead of your competitors.

Chapter 1: Why the World Hates Salespeople (and Why they Should)

Wouldn’t it be great if your prospect gave you a checklist to complete, and if you followed that checklist, they would buy from you?  Of course it would – what fool wouldn’t follow a set of directions handed to them by the person who writes the check?  And yet it happened to me this week. Six times.  And all I was trying to do was buy a new car.

That’s right.  I was dealing with one of the most despised creatures on earth:  the car salesperson.

The checklist was simple.  It gave the exact make and model, the options I wanted, and the color.  In addition, I explained that I would not be paying for any other factory options or dealer ad-ons like floor mats.  If they didn’t have the exact car I wanted or couldn’t get it, they could hit the magic delete button on my e-mail.  All I asked for was the price of the car, the monthly lease fee, and all the other nickel and dime things up front before I stepped in the dealer’s showroom.  I wanted the paperwork all done through e-mail before I picked up the car, and wanted to spend no more than 45 minutes in the showroom the day I took delivery, no test drive needed.  Nowhere did I say I would choose a car based on price.  Simple, right?

Well, no.

All six dealers sent me form letter e-mails, inviting me come in for a chat, look at the colors and options, discuss my budget, and take a test drive or two.  So with all of my “buying signals” given to them in writing, how is it that six different companies blew a sure thing sale?  Professional salespeople attend expensive week long seminars to learn how to detect these buying signals.  Senior level sales professionals are paid more than junior level sales professionals because they have decades of experience which enable them to pick up on these barely visible signs that buyers try to hide.

Is there a more dysfunctional selling paradigm than that of the automobile sale?

Doubtful.

And yet I see variations of this every day, from the simple consumer electronics gadget sale to the multi-million dollar global IT system sale.  Why is this?  Why are so many salespeople so bad?

Maybe that is an unfair questions, but not because most salespeople are good.  It is an unfair question because half of the blame resides with the customer.  That’s right.  The guy on the other side of the table, the one with the checkbook, the furrowed browed guy who keeps looking at the price page of your proposal?  Yes, that guy.  He has been taught by you and dozens of your peers over the years that he needs to protect his company against you and your ilk, because he thinks that you’re out for yourself, trying to charge as high a price as possible, and will then head off to your condo in Maui for two weeks and ignore his phone calls.

Is it the buyer’s fault that they see salespeople as adversaries instead of partners?  I don’t think so.  But there is a better way forward for salespeople.  If you choose your prospects and clients carefully, if you can develop a relationship to the level where they are willing to learn from you why your product or service is the best overall value, and you can then have them bring you up through their company to the decision makers, then you can dramatically improve your sales and waste far less time.

This is not hard stuff.  I’ve been successful selling this way for decades, and I’m as lazy as a salesman can get.  Maximum results for minimum effort is my goal.  I have taught these skills around the world in various formats, from two day crash courses to week long full immersion courses.  You can get the same information right here (minus the important student interaction portions, unfortunately) on this blog.  So go ahead and bookmark this page and come back to it for the next chapter at least once a week.  I’ll do my best to make it worth your while.

And the car fiasco?  Finally, one dealership figured out how I wanted to buy, followed my format, and sold me the car.  He wasn’t the cheapest, but he made it the easiest for me, and with this purchase, that is what I was looking for.

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