Trust-Based Selling: Finding and Keeping Customers for Life (2015)
Chapter 13. Qualifying and Developing Opportunity
However beautiful the strategy, you should occasionally look at the results.
Eventually you will get an opportunity. In order to develop opportunities, start with the end in mind.
Recall the elements required to win a deal:
· You’ve developed trust on a level playing field with the competition
· There’s a compelling event, which is a pain or desire with a time constraint
· You have the money, budget, value, or valid ROI
· You have a yes from power
· You have identified the decision process
When you have trust, qualifying opportunities becomes as simple as validating the other criteria in this list. In the sales cycle, you should not cross into the evaluation stage until you have identified the budget and a compelling event, you have or can gain access to power, and you know all the steps the customer and you will go through to close the deal. Do not waste time on demos or web-ex meetings, or respond to any administrative-type request from customers, unless you have identified these elements.
The good thing about having to identify these elements is that you remain focused on the customer, and on asking questions. This will inherently improve your sales skills. New salespeople often have a hard time asking tough questions about money, timeframes, access to power, and the decision process. These questions become especially hard when your pipeline is not at expected levels. You are almost afraid to ask out of fear you might upset the customer or they might not have the answer you want. Here is the truth:
· The tough questions are the most professional ones.
· It’s better to qualify to a “no” than waste time on a deal that has no chance.
Let Go of Poor Opportunities
Qualify to a “no.” What do I mean by, qualify to a no? It means that it’s better to lose early. Simply ask yourself, would you rather lose upfront or after you have spent six months working a deal? If you can’t identify the basic components of the deal, most likely you are wasting your time. It is as much of a waste of time as competing against an incumbent without the customer’s trust.
If you opt out of an opportunity, that does not mean the customer is forever lost to you. Hopefully, you have already qualified the customer as worth spending time with. It is okay for you to say no to a specific opportunity. The ability to tell a customer that you are not a good fit for a specific deal will instill trust.
It is okay to walk away from some business for which you are not a good fit. It will give you instant credibility. It shows you have the customer’s best interests at heart. You are putting their needs above your desire for financial gain.
So many salespeople and sales managers hold onto bad opportunities; they are opportunity hoarders. If you have ever seen the television show Hoarders, you have seen the absolute devastation that hoarding can bring to someone’s life. Hoarding is a psychological disorder whereby people never throw out anything. They are afraid if they get rid of something that they will lose everything. Their houses and cars fill up with so much junk that they can’t walk through their own homes. It gets to the point where it can be physically dangerous, and the illness ruins their lives.
Do not hoard opportunities. When strategizing with salespeople about specific opportunities, many times it becomes obvious that the deal has no chance. There is no access to power, no money, or no trust. As an impartial outside observer, you can see as plain as day that the right answer is to walk from bad deals. Their forecasts become so cluttered with deals, that the real opportunities are lost in the weeds. The salesperson (and sometimes the sales manager) makes every excuse in the book to hold on to a bad lead or deal, which keeps their pipeline filled with junk. It seriously is like watching hoarders justify why they need keep coupons that are past their expiration dates.
Some customers have trouble saying no. There are many buyers that just don’t like confrontation or feel they would hurt the seller’s feelings. So they say “maybe” a lot. If you sense this is the case, you must give the customer permission to say “no.” Again, this will show you are looking out for them, and that they can trust that you will not overreact. Working “maybe” opportunities can hurt trust. The customer is thinking, “can’t they take a hint?” Even though it’s the customer not being straightforward, the customer will be irritated with the constant focus on something they have no intention of moving forward with. It also stops you from discussing other issues that may be of greater concern with the customer.
Qualify, qualify, qualify. Do not waste time with deals that are not qualified. Do not fill your pipeline with junk.
Developing Opportunities Is an Art
Disclaimer: Developing opportunities is not the focus of this book, but it is necessary to include at some level, to show how to use trust throughout an opportunity life-cycle.
Your job is to facilitate sales and lower the barriers to purchasing. The greatest barriers are the qualifying elements. When qualifying, you are looking for an advantage in each element of the sales equation. Your job is to create that advantage, and to advance the sales cycle.
Let’s look at each of the elements needed to develop an opportunity.
I will assume that by now you have developed trust with your customers. If not, go back and read the first 12 chapters of this book. Without trust, you are generally not going to get the sale.
Create enough pain for the customers so they need to take ownership of their problem. A compelling event is pain with a time element. For example, if my car breaks down, the pain is immediate and the time element is acute. After all, I need to get to work. If I change jobs and need to move, there is a date I need to sell my home by. The customer might have a project that supports the opening of a new store. That store will have an opening date. Sometimes, the event is more subtle. If you can save the customer with a strong ROI, the longer they wait, the more they lose or the less they gain.
There are three types of pain: latent pain, admitted pain, and actively looking for a solution to the pain. Latent pain is pain customers are living with. They might not even know they have certain issues. Or, they realize that they have an issue, but they do not think there a solution, or a cost effective way to solve the problem. It is up the salesperson to either educate the customer or help the customer realize they have a specific issue.
Again, the IT field offers good examples of customers living with latent pain they do not know they have. The main function of the IT department is to provide computing services to the company, so employees can more efficiently complete their jobs. In IT, customers complain when things change. When they are steady state, or status quo, there is no complaint.
I used to run sales reports all the time, and most of them would take between 20–40 minutes to run. The first time I ran the reports, I asked a colleague if this was normal, and he said it’s always been that way. So, I never mentioned the issue to the IT department. If the reports suddenly took over an hour, most likely I would then complain. The latent pain here is that the business is running inefficiently due to poor-performing applications provided by the IT department. One of two things could be going on here.
1. The IT department is unaware of the reporting issue.
2. They are aware, but do not think there is a solution or a cost-effective solution.
The second level of pain is when customers know they have a problem. They know there is a solution, but they are not ready to look for a solution. Remember our home buyer from the sales cycle discussion? This is the type of pain he had. He knew his house was too small, and he knew his commute was too long, but for a variety of reasons he was not ready to look for a new home. Typically, the customer is one compelling event away from taking action.
The last level of pain is when the customer knows of the issue and is actively looking for a solution. You know the customer is at this level when you call them, or they call you, and say, “We are looking to fix that problem as we speak, and we are ready for a solution. Can you quote us, or send us a proposal? Here are the specifications we are looking for.”
When you ask most salespeople what is the best type of pain, they usually will answer the latter situation—where customers are looking for a solution. After all, they are ready to buy. However, the best pain you can uncover is latent pain. When you educate a customer on an issue, or a better way of doing something, you are setting the decision criteria for the sale. The window of opportunity is wide open. The second level of pain requires that you have perfect timing: a compelling event happens, and the customer has not discussed it with other venders. The window of opportunity is very narrow. If you engage a customer after they have started to investigate solutions, you most likely are too late.
The biggest impact you can have is therefore with latent pain.
When you establish trust outside the opportunity, you are increasing your chances of winning opportunities in three ways.
· When there is a real opportunity, you have enough trust to compete against the incumbent.
· You spend time with the customer, broadening the window of opportunity.
· You get the chance to educate the customer and find pains they have not addressed (latent pains).
When developing the sales cycle, I mentioned that customers will live with pain. When you’re spending time with the customer, you have the opportunity to expand the pain in a situation until they realize they have to act. When your customer complains about a stubbed toe, you make them feel as if it’s more like a broken leg. Your goal is to expand the pain to the point where the customer thinks, “Wow, this is a big problem. I need to do something about it.”
The second, and maybe even more important, reason to spend time with customers is that when a compelling event happens, you want to be there to capitalize on it. You want to be the first person the customer talks to after they experience this event. You create great timing by spending more time with the customer.
Business pain comes in many forms—high cost, low revenue, or huge risks. Are your customers struggling to generate revenue; do they need to reduce costs; or is there a regulatory issue that needs to be solved? When diving into pain, you want to assign a value to it. What is the cost of not solving the problem at hand, either in lost revenue or low financial efficiency? You should ask “quantity” questions, such as “How much? How many? How often?”
You have a meeting with a doctor, and you are trying to get him to realize how much of a problem he has. Right now, the doctor is in a status quo state. “Everything is great,” he says. He’s an “if it ain’t broke don’t fix it” kind of guy. If the salesperson walks into the room and says, “You can save time using our procedure in your office, and the profit is the same,” this doctor will not connect all the dots. You need to connect the dots for him. Although the customers must draw their own conclusion that they have a problem they need to solve, it is much more effective if you guide them there.
Consider a different example, where the a salesperson is attempting to sell to a doctor a solution that enables him to perform a procedure in his own office versus the way he is performing the procedure today, in a hospital. This is a classic example of a salesperson pointing out a pain the doctor does not even know he has. It’s a latent pain.
The salesperson starts with, “Doctor these procedures we are talking about, how many of these do you do a week?”
“Well let’s see. I would say three a week,” he replies.
“And are these done in your office?”
“No, they are done under general anesthesia, so we perform them at the hospital.”
“How much do you make from each procedure?”
He lists the price and the costs. “Well we charge $2,200 for the procedure, but the cost from the hospital and for the anesthesia is about $1,500, so we make about $700 per procedure.”
“Not bad for an hour of work. Can I ask you how long you are actually out of the office per procedure?”
“For this procedure, I try to do these all in one afternoon. So, when I have three, I am out all afternoon on Tuesday.”
The salesperson starts doing the math, “So, on average you are making $2,100 per afternoon of surgery. How many office visits can you do in an afternoon?”
“We do about approximately 5-6 clients an hour over four hours, so 20-25 patients in an afternoon.”
“At about $90 per visit, plus miscellaneous lab tests, and so on. You are looking at about $150 per visit?”
He replies, “Yes that’s about right.”
The salesperson says, “So in an afternoon, at 20 patients, you are grossing $3,000?”
The doctor is starting to get the picture that he is actually losing money when operating. He asks the salesperson, “How long does your procedure in the office take?”
Sometimes customers in the status quo stage need to understand that there is a problem. When it comes to the business, it is always about the numbers. However, there is also a personal side to pain.
How does this issue personally affect the person? If you can get to the personal or emotional level, you win.
While training a class on selling 101, I asked if anyone had the chance to bring a customer to personal pain. One person raised her hand, “Yes, I have.”
“Well, how did it go?”
The student explained, “I was talking to the customer about software to help them save time. I ask how this person spent their time during the day. The customer started listing all their responsibilities. I then asked him how much time each of these activities took. What happens if they do not get done? I was trying to get to the crucial activities. Without going into detail I was able to get the person to admit they worked more than 60 hours a week. Remembering part of our earlier conversation (he had just moved to the area), I asked him how he found time to meet anyone. Almost in tears, he replied, ‘I have no life, I have no time to meet anyone.’ At that moment I was his number one salesperson.”
I asked, “Well did you get the deal?”
“Within a week!”
“What is a typical sales cycle?”
“Four months at a minimum.”
This is an extreme example, but powerful. The salesperson got very quickly to this customer’s personal pain. His current way of doing things was ruining his personal life. This leads to the second that reason latent pain is so important. The salesperson makes the customer aware of an issue, and thus becomes a caring, trusted salesperson. Intent levels go through the roof.
Value is the logic behind the emotional decision. If there is enough pain, the customer will find the money. I don’t have a budget for a new car, but if the transmission in my current car suddenly drops out, I’ll find that money somewhere. Money can also be thought of as value. If your solution can provide the customer with significant cost savings or generate more revenue than the cost of the solution, the customer will buy. Is there a return on their investment? Once they agree they have an issue, and that your solution can fix that issue, you must show them the value of the investment.
Every company has a concept called the hurdle rate. Hurdle rate is the level of ROI at which the company will purchase or develop a project. Ask your customer if they know their company’s hurdle rate. The individual might not even know the term. If they don’t, explain it to them. The hurdle rate is the required rate of return. It is a more detailed ROI analysis that takes into account cash flow, capital costs, and risk analysis. In layman’s terms, it answers the question, “Does it make financial sense to purchase this product?”
It will cause customers to go to their finance departments and ask if they have a hurdle rate. If they do, you may have just opened up a whole new world for your customer. Obviously, you have to believe and demonstrate to the customer that your solution does exceed this hurdle rate. Your trust is then improved around capability and results. You are more than a product person—you are business savvy.
When you’re trying to uncover pain, many of the questions you ask are quantity questions, such as with the doctor example. When you ask how much, how many, how long, and so on, you are gathering data to support the value of the solution you will eventually present. Your goal is to figure out how much a problem is costing the customer, as well as how much you can help him save or make. Show customers how much it will cost them if they do not act.
Getting a “yes” from power—someone who can make purchasing decisions—requires that the power buyer has enough pain and has the budget to solve the problem. If your solution does not alleviate the power buyer’s pain, you do not have a chance.
Remember that everyone has different pains they are trying to ease over. You may be engaged with a person who is trying to solve a problem, like reports are taking too long, and that person is having to work through lunch to get his job done. However, the person that makes the purchasing decision might not care that your contact is working extra hours. She might start to care if the reports are missing critical deadlines to the business. So, you must, at a minimum, understand the pain points of the person(s) making the purchasing decisions. Ideally, you want access to power, so you can uncover the pain first hand, and help expand it for that person.
One of the most difficult challenges is how to get a meeting with the person of power. There are three avenues.
· Start at power. We have discussed this concept a few times. If you start at power, you will have easier access to power in the future. Your initial primary point of contact does not need to be power, but it’s best to get to your primary point of contact via power.
· Bargain your way to power. Along the sales cycle, your customer will ask you for information, for demos, or for evaluations. They will ask for something. Use this as a tool to bargain for access to power. “Yes I will run a demo, or show you a formal ROI, but if I do, can you get me an appointment with__________?”
· Gain secondhand access. Unfortunately, the business climate has changed over the last 10 years. Secondhand access to power is becoming more and more common. And, being new, this may be where you operate until you earn more trust. If you do not start with power, your access to power may be blocked. You need to work through your main contact. However, you need to make sure you know what their boss will require in a solution, and what pains they are trying to solve. If you have your contact proposing your solution to power, help them develop the message to their boss.
Before you start the evaluation stage, and start jumping through hoops, be sure that you understand the decision process. What do they want to see in a demo, and why? Who is involved with the demo? How is money budgeted? What is the decision process, and what is the procurement process? If you are reacting to every customer demand and request without knowing the steps you need to win the business, you are functioning on hope. Understand all the steps necessary to close business up front. Once you know all the steps, you can keep yourself and your customer on track to close the order. Always be aware of the next step. Trusted salespeople can move deals along. The customer will have fluctuating concerns throughout the buying cycle. While you must align with these concerns, you must also continue to bring to the forefront why they are working on this process. They have an issue; you are just trying to help them solve it. If you keep the customer focused on the pain, the time-sensitive, compelling event will move the process along.
Controlling this process can demonstrate more business trust than any other portion of the sale. First, understand every step. Then, take ownership of the customer’s problem. Show dedication to getting that problem solved. This involves holding the customer accountable for their portion of getting the deal done. Move your customer along; always keep them going to the next steps you define together. As you learn more about your customer’s decision process over time, you can take complete control of this process. A trusted advisor can sometimes know the customer’s process better than the customer. At this point, not only is trust strong, but the customer begins to rely on the salesperson to help him get things done.
Now that I have addressed the most important aspects of managing an opportunity, it’s time to discuss how to track and report on them.
Accurate forecasting should be a simple process. I also believe any administrative work a salesperson has to accomplish should also be a tool in helping them close business. All too often, forecasting becomes a chore that has to be done, and since it’s a chore, minimal effort is put forth. Therefore, the forecast is inaccurate. If you can use forecasting as a tool to drive business, you’ll try harder, and more accurate forecasting will be the result.
This discussion is meant to be a guideline for creating a forecasting system. Some companies have three levels of commitment, and some have four. I am using the more simple three levels.
· Pipeline—Something held in forecast as a placeholder.
· Upside—There is a clear path to closed business, but not all the elements of the sales equation are satisfied.
· Commit—Each element of the sales equation is satisfied. A purchase order is imminent.
The age-old challenge is how to create accurate forecasts. It’s as simple as asking four questions of your existing customers, and five questions of new customers.
If the answers to all four or five questions are yes, then the opportunity is a commit. If there are three or four yeses, then it’s an upside. Anything less makes it a pipeline opportunity. It’s the sales equation!
The first four questions are opportunity based:
· Does the compelling event land inside your forecast window?
· Do you have a yes from power?
· Does the customer see value? Or, is there an ROI showing value?
· Does the decision and purchase process put you inside the forecast window?
For new customers, there is one additional question.
· Have you made a conscious effort to address each of the trust elements? You can’t determine whether the customer trusts you, you can only know what actions you have taken.
The good news is you should be working only on deals that you have a great chance to close. You should be in upside with any deal that enters into the evaluation stage, because you can have most of these elements checked off.
· Is there a compelling event? If not, why are you and the customer wasting time?
· Do you understand the decision and purchase processes before evaluation?
· Does the customer see value? He should. The evaluation stage is about demonstrating that you can deliver the value you promised.
· Can you get a yes from power? This is really the only item left for a commitment.
· Lastly, you should have developed a certain level of trust before you enter into opportunity discussions.
I like this method because it helps you close the deal. It tells you and management exactly what needs to be done to close the deal. If the answer is no to any of the questions above, you need to get a yes. So, a no helps you define what is the next step in the sales effort. If there is no compelling event, can you create one? If you don’t understand the decision process, or it’s beyond the forecast window, can you change it?
The missing element from most forecasting methods is time. Each of these questions needs to be posed against a timeframe. You might have everything in place, but the decision process puts the deal into the next quarter. Well, that’s a “no” for that question in this quarter, but a “yes” in the next. Is there a chance that the decision process can be accelerated into this quarter? If yes, keep it upside, if no, it becomes a commit for the following quarter. This method allows you to be more accurate beyond your immediate month or quarter.
Lastly, do not inflate forecasts! Work on improving your odds of winning. Do not waste time managing deals that you have very little chance of closing.
Know the sales equation. It is the map you need to control the sales cycle. It is the tool you need to forecast accurately. When dealing with new customers, ensure you are inspecting for trust on each deal. Even though there are many sales processes out there, my suggestion is that you add the element of trust to it. If you do not have a process in place, you can download a simple sales process worksheet from my website at www.huntingwithtrust.com.
We have now completed building trust with a a new customer, and managing opportunities while keeping trust in the forefront of your mind. In order to do this, we started in the most difficult place—a new customer with no establish trust. In the next chapter we will look at trust from the incumbents point of view and discuss strategies for keeping your customer, by defending against your competition.