Welcome back to another Whiteboard Wednesday, and this is number five in my series on Artful Discovery, my professionally-produced Whiteboard Wednesday series.
If you’ve been following along, we’ve been talking about discovery best practices as well as specific techniques within the discovery process. Today’s conversation is really another, I will say, high level or conceptual one, but very important and that is, “Why exactly or when exactly will prospects invest?” Notice I use the word “invest” versus “buy,” because I really do believe that selling is about providing a solution to a problem or helping a prospect access an opportunity that they’re going to put their cash into, i.e. invest, in order to generate a return.
So in a lot of respects it’s not buying as we think about it. It’s investing in something that they want, a desired future. If you’ve been following along as well, you will remember that we’ve talked a lot about the pillars of discovery process that’s really understanding need, understanding the buying process (in our next video, we will actually dig into what I mean by the “buying process,”), also about understanding the impact, the specific business impact of a solution that they might want to implement.
As we think about what are actually the drivers of a sale, when does a sale become a sale, I would suggest that there are two primary components that must be understood by the prospect, two values that must be at least quantified. One of those is actual (related to this impact concept), and that is what I refer to as “quantification of benefit,” and when I’m talking about quantification of benefit, I’m speaking in terms of dollars.
It could be also terms of anything else that could be quantified, but fundamentally, when we think about the purchase, when we think about investment, this little concept of ROI comes into play. As you probably know, hopefully, ROI stands for Return On Investment. Now, investment is what the prospect is going to do with their money (with their greenbacks here, we will put a one dollar bill and some sort of presidential-looking feature here), and the return is what they expect to receive.
So in situations where the quantification of benefit is an abstraction – more, better, prefer what’s going on, not happy with the way things are, my life is too difficult – when we have benefits that are an abstraction, the likelihood, the probability of that deal coming to fruition at all – and not just buying from us, but buying from anybody – goes down dramatically. That is my belief (and I think in a lot of people’s belief) the reason that so many opportunities end in a no decision.
So we’re not going to talk so much about quantification of benefit. What we are going to talk about is basically understanding and, more important, mitigation (you can be looking that word up), mitigation of risk. This is where we’re going to spend our time for most of this presentation because fundamentally, it’s straightforward to quantify benefit or determine that a particular solution either doesn’t have enough benefit to justify the cost or we’re not going to be able to realize that benefit in an equal time frame.
The bigger challenge I find in most sales processes is the fact that every buying opportunity, every buying cycle presents the concept of risk. When we’re talking about risk, we’re talking about risk to the buyer. So if they were going to invest their money, their time, then there’s always a risk, and we will talk about risk in a second here.
I will refer to the Harvard Business Review article on why deals don’t close (←we will put that in the notes some place here), but fundamentally, the biggest challenge for a seller is to ensure that the risks of the buyer come to the surface. They’re going to be there. Oftentimes, they may be glossed over. It may not be discussed in a lot of details.
Let’s talk a little bit about the kind of risks that are implicit in any buying process, in any sale. What are the things that could happen or not happen to cause the benefit to disappear? Maybe one way to think about this is to imagine that we’re going to Las Vegas, and when you go to Las Vegas, you’re presented with a whole series of opportunities to spend your money and to invest, if you will, your money for a return. (I’m trying to draw a slot machine here guys, so bear with me.)
We understand very clearly that in Las Vegas there is an ability (I will make this some sort of funny old machine, here’s our thing there), we understand that we can put our money on the table and we can win something. In almost all situations, the return on a given investment, the odds if you will, are well-known. The other side of that though is the concept of risk. If we think about slot machines or a roulette wheel (which I won’t draw because it will take way too long), the reality is we know we can walk up to a roulette wheel, put down $100 and it lands on our number, we can double our money or many more times our money.
However, the reason most people who don’t have some sort of problem, addiction, et cetera, is that the risk outweighs the quantification of benefit. There is more risk or at least more risk that could take our money than the investment that we’re willing to make. So to me, that’s a good example of in Las Vegas, the offset of reward and risk, of benefit, return and risk are very well-understood, but in a lot of cases, in the sales process, they’re sort of glossed over.
So let’s get into those a little bit. What can go wrong? What might stand in the way of a buyer realizing the return on investment? I mean, we’ve done the business case. We showed them the technology, and it’s demonstrated that it’s going to yield a significant benefit, reduction in cost, of labor, of time wasted, of defects, access to the market, et cetera, but what’s going to go wrong?
Let’s talk about technical failure. Anybody who has grown up selling or implementing software anytime in their career understands that not all software implementations work. There’s a statistic back in the – I think it was late 90s, early 2000s, that upwards of two-thirds of CRM implementations never got out of the box, never got off the shelf. That could be a result of technical failure of the software, of the solution, of the services just not working.
It also could be a function of utilization or acceptance. One of the fastest growing parts of my business right now is what I think of as a kind of a CRM makeover. Most of the clients that I walk into have had Salesforce.com for two to three years, maybe four years, and they’ve got, I don’t know, a tenth of their workforce using it. Maybe a third, maybe 25 percent; but they’re not really fully utilizing it.
So somewhere along the line, they were sold the benefit of CRM. However, three years into this thing, just because people aren’t using it, because of it’s user-friendly or user-friendliness or because of how it’s being managed, or because of the technology; but whether or not this thing ever actually gains acceptance, again, that software, that services, that sort of things, I might not get what I want.
A real obvious one is what I will put in the category of the actual results and the impact. We could be fundamentally wrong. All that wonderful work that we did at one point to do the spreadsheets with all the data, showing the return on investment, and how we’re going to get the payback, et cetera, we could have just gotten it wrong. Maybe our forecast for people or customers adopting this were too much, maybe our assumptions about cost bases, what have you. Whatever the reason could be that all the work you did at the beginning of the sale was just off-base.
Understand I’m talking about these aspects of risk as things that are definitely going to play in the mind of your prospect at the beginning of the sales process. If they do not think about, understand, accept, and then basically in their own mind have a paradigm for mitigating that risk, it’s going to be a barrier to the actual purchase.
So, as we talk through these, I really want you to think about, how are you going to ensure that these concepts are not just abstractions but something that you and your prospect talk about, that even while you’re getting excited with the potential benefit and the ROI and all those wonderful terms, you’re making sure to draw out from them and prompt the conversation of, “Well, what happens if the results are not what we think? Do you worry about that? Do you have any concerns that perhaps the end users won’t adopt this as much as we thought and that’s going to impact our ROI assumptions?” You really have to go with that.
Another element of risk is the concept of investment. Nobody wants to go back to “the well” is a simple way of thinking about it. In any purchase, in any buying scenario, there’s this tension always between the cost of the solution, the required investment, and the return, the concept of budget, et cetera. Most solutions, most complex sales are not kind of a one-time hit. You may have to make the investment over a period of years, certainly over a period of months.
So one of the things that prospects worry about is, have they properly factored the amount and length of the investment? So think about this. Just as the prospect is having to negotiate aggressively and be conservative from a budgetary standpoint, in the back of their mind, they’re worried they’re not going to have enough money for this thing actually to work.
So it’s really important to have a conversation about not just the price and the investment they’re making, but where do they sit in terms of thinking that this is the right amount and provides enough funding over a period of time? What are they going to do in year two to ensure expansion, utilization? What kind of technical requirements will be required, et cetera? So think about that stuff.
Really important, very often sales professionals fail to understand and manage through the political risks that our buyers face. I’m talking both in terms of internal corporate politics, but also external politics. What do I mean by that? Well, that could be referring to their market. That could be referring to their competitors. That could be referring to heck, even the actual political environment that they’re existing in. So to what extent do political factors play into their thinking or not about risk?
This list could go on and on. We could probably talk about this for hours, but I would suggest that whenever you’re dealing with a prospect and they’re thinking about implementing anything new, buying something new, they’re always going to ask, “How does this affect my brand and reputation?” (Let’s spell that right.) Particularly in the world of social media, information travels at an incredibly fast pace, “how will this new technology, if it changes the way I interact with my products, spread on Facebook if I drop the ball?”
I worked a number of years ago (I had the opportunity, I should say) to work around a major sports franchise. They weren’t a client of mine but they were a client of a client’s. One of the things that really was impressed upon me was the degree to which they held brand and reputation sacred above all else. In fact, anything they did, any purchase, any investment, any decision, any slight little tweak in the formula, was put through this lens of, “Will it do anything to affect our brand or our reputation?”
I will tell you if this question produced any result, if a particular potential new initiative in any way could detract from the brand or reputation, there was no amount of benefit that would override that. So even when we were proposing very significant return on investment solutions, we had to look first at brand and reputation as almost the lowest common denominator. So that was a real eye-opener for me.
Like I said, this could go on for quite a while, and we could go through all the various forms of risk that a prospect is going to face. The point of this talk really is just to make sure that as you’re working through the discovery process, as you’re doing all the great things to quantify need, buying process, impact, capture all this information, understand that every decision, every action in a corporation, in your clients’ worlds implies some component of risk.
Whether or not they know it’s there, whether or not they acknowledge or whether or not they even care remains to be seen, but it’s up to you to initiate this conversation. The most important comparative you can have and really my only coaching to you is you’ve got to have a conversation about this because if risk is something that is left unsaid, un-talked about, it’s going to be sitting in the background and oftentimes, it will unhook the deal and you won’t even know why.
We hear things like, “Well, we’re moving to next quarter. We’re going to spend a little more time evaluating our options.” You’re going to get some sort of fuzzy “not-now” feedback, but that’s not going to help you help them realize the benefits that are there so make sure you have a conversation.
I appreciate you watching this video. I did add – there should be a link below here for you to sign-up and get the whole series delivered right to your inbox. Also you can sign up for my blog, my post that I put out every week. I also invite you to leave your comments. I really would love to hear examples from you guys about maybe risks that you failed to identify that hurt you in the sales process. You learned about them later. That would be a good thing to comment below.
Thanks again for watching and see you next time on Whiteboard Wednesday.
By Townsend Wardlaw