Trust-Based Selling: Finding and Keeping Customers for Life (2015)
Chapter 2. Identify the Silent Sales Killers
You Never Had a Chance
Status quo, you know, is Latin for “the mess we’re in.”
We are starting with establishing trust from the beginning of the sales relationship, since this is the most difficult scenario in which to succeed. But let’s set aside the idea of trust for the time being and look at the challenges faced by sales reps even before they make first contact the customer.
Why are improved sales results so hard to drive? What are the root causes? To improve results, salespeople and management both grab onto tangible ideas like product training, working leads, work ethic, sales process, and sales skills training. But the difficulty of succeeding in sales is often not rooted in the salesperson’s lack of experience or sales skills. There are many seasoned sales professionals who fail to meet their goals. The reasons fall into the category of status quo.
There are many variations of the status quo:
· Potential customers are already doing business with an incumbent vendor
· Customers do not have a big enough issue to make a change
· Customers’ fear of change and the risks it brings is holding them back
· Customers have fallen into the rut of habitual purchasing—the automatic use of an incumbent vendor, without thought
· Customers have competing uses for capital—they have more important projects than than the one you are proposing
· Customers are not in the market—they buy what you sell only every few years, or longer
Let’s look at how each of these items works against developing new business in more depth.
“We Have a Guy for That”
Customers have standing relationships in place for almost everything they purchase. Whether they buy that product or service every week or every four years, they have a vendor. You may be a better, more caring, and more competent salesperson than the incumbent. You may work for a better company than the incumbent. And, you might have far better products or services than the incumbent. However, the incumbent salesperson has the most important asset in sales: the trusted business relationship.
Here’s an example. A reseller, VarTech, recently entered into a new relationship with a manufacturer, Brand Computer. Brand Computer has one of the largest product portfolios in the world, and they have resellers established in VarTech’s region. As seen in Figure 2-1, the customer base has the option to buy through a value added reseller, or directly from Brand Computer. Being a new reseller competing against incumbent resellers, VarTech needs a strategy for how to ramp with this new manufacturer.
Figure 2-1. Path to market
Brand offers endless product training for VarTech’s sales teams and engineers. Marketing programs are developed to introduce this new relationship to VarTech’s customer base. Field sales teams from both companies conduct countless account mapping and territory planning sessions. Yet after six months, the reseller has very little sales traction. Looking for answers, sales management turns to the manufacturer for help. Brand Computer’s answer is, predictably, more product training. Still, results do not improve.
A couple of months later, VarTech was able to hire two of Brand’s senior, successful salespeople. These individuals interviewed very well. They passed the personality/sales profile tests. Their references checked out flawlessly. Their product knowledge of Brand Computer products is, naturally, well beyond any VarTech salesperson, since that’s all they had been selling the previous five years.
Each of these new hires comes to the company with relationships with several customers. These relationships are at high levels, with the power buyers. That’s reflected in their results—together they sold $30 million worth of products in the previous year. Clearly, these are senior salespeople—experienced, hard-working, and full of product knowledge.
This was the answer to VarTech’s problems. The company’s goal is to sell $3 million of the manufacturer’s product in the first year. This goal is only 10% of what these individuals did the year before in their sales roles at Brand Computer.
But things didn’t go as planned. In their first year at VarTech, they booked $100,000 in sales—99.7% less than they did the year before.
Here are two experienced, hardworking salespeople with track records of success. They had full support from the company. They had no trouble getting their feet in the door with their old customers. Sales managers went on high-level calls with them to most of their old customers. So, what was the problem? Why such horrific sales results which, incidentally, resulted in their terminations within 12 months?
To understand what went wrong, we must analyze their previous year of success. What made them successful during their tenure at Brand Computer? What was the sales model?
They did 100% of their business through resellers.
Let me repeat that. They did 100% of their business through a reseller like VarTech. These salespeople thus had more of a “how is everything going” type of relationship with the customer. The resellers, on the other hand, owned the valued business relationships with the customers. How do you think the calls went with their old customers now that they worked for VarTech, a competitor for many of them?
Let’s analyze the initial conversation one had with an old customer. When asked by the customer, “Tell me about your new company,” one of the new salespeople, Susan, and her sales manager spent 30 minutes with the customer reviewing the capabilities of their company. At the end of the appointment, the customer was at least honest with the new rep, “Susan, thank you for the overview of your new company. Sounds like there is a lot you can offer, and we value the relationship we have had with you. Thank you for the hard work you have done over the years. However, as you know, I also have a relationship with Jim at VPH (another reseller of Brand Computer). I can’t just move my business to your new company. He has also been a great asset to our company, a trusted advisor. He probably has to screw up pretty big for us to change. They process our orders the way we like, our credit line is established, they are a preferred vendor in our system, and they have great engineering support.”
In other words, “We have a guy for that.”
The situation gets worse. The rep says, “We definitely understand that. I also liked working with Jim. So, what can we do to earn your business?” Two things here: She did not throw Jim under the bus. That’s good. But she gave up all her power. That’s bad.
The customer says, “Well as business comes up I can give you a chance to quote.”
Susan replies with a smile, “Thank you. All we ask for is a chance.”
Susan and the sales manager leave the call happy. The door is open! The customer is giving them a chance. The sad fact is that Susan and the manager think the only chance they have against Jim is to win on price, since he is giving them a chance to quote.
Does this turn out as they hope?
They get a chance, actually several, over the course of the year. However, Susan’s replacement at Brand Computer is working with Jim, the incumbent. In the IT industry, the first company to register the deal with the manufacturer enjoys a significant cost advantage over competing resellers, making it nearly impossible for VarTech to use lower pricing as a strategy. So, Susan never has a chance to win on price, which in itself is a bad way to earn business.
Why? Let’s say this “get a chance” strategy had worked. They get to quote on a project. The sales manager wants this customer, so they take the business at very low prices. With this strategy, they become the low-cost provider, a weak vendor, and not a partner. Winning on price just gives up your personal value to the customer.
But Susan never got even this far, and she was out of a job within a year. Later, I will outline the strategies Susan should have used to compete against the incumbent.
Habitual purchasing is a sales “relationship” in its lowest form: “We just buy all that stuff through Larry.” Customers who have high transaction rates will often fall into this category. They have a preferred vendor, the order process is routine, and pricing seems fair. They might even have certain items show up month after month. They might not have seen the salesperson in months. But, nonetheless, “We buy our stuff from Larry.”
Let’s say a new salesperson, Sara, is trying to sell dental supplies to a busy dentist. She visits his office every week, in the hope she can actually catch the dentist to talk to him. This dentist had a relationship with a salesperson, Ben. Ben was a relationship guy. He won over the dentist when the dentist was just starting out. For 10 years, the dentist bought all his dental supplies from Ben’s company. Ben retired two years ago, and Chris replaced him. Chris barely steps foot in the dentist’s office. Chris is young, and he has nothing in common with this dentist. Nonetheless, the dentist keeps ordering from Chris’s company.
Over the years, the dentist has had to deal with so many different salespeople, he got to the point he does not even take calls or appointments from anyone new. His automatic response, and his defense against new salespeople is, “I buy my stuff from Ben’s, or that new kid’s, company.” He probably repeats this so many times that he almost believes he is not allowed to go anywhere else.
This is habitual purchasing. The dentist has a “relationship,” but it is more out of habit. He does not have to think about it. At the end of the month they tally up their inventory and just send an order over. The dentist even says, “What I like about this new kid is that he does not try to sell me.” He views new salespeople as just trying to sell him something. He views the kid who he doesn’t know as his preferred supplier, “Because he understands I just want to order and not be sold.” In reality, Chris does not understand anything about this dentist. he has tried to meet with him often, and the dentist rebuffs her, saying, “We are good. We use you; no need to come in.” Chris eventually will just stop calling.
So, the new person, Sara, coming in has practically no chance. What can she do to talk to this dentist? I will share the strategies she uses to eventually win this dentist’s business later in the book.
Don’t give up on customers in “habitual purchase” mode. They meet the best quality of any customer—they are purchasing. Eventually they will understand that salespeople can help them do more business or save money.
Not in the Market
In most B2B sales, buying cycles are lengthy. I will define buying cycles in detail later, but here is a simple definition for this chapter—it’s the period of time between customer purchases. Do they buy what you sell every week, every year, every four years, 10 years, or 20 years? Your only chance of beating an incumbent vendor is to beat them to the punch. You need perfect timing to engage the customer when they decide they need to buy and before they call the incumbent. This window of opportunity is very small. If they purchase—or consider a vendor change—every four years, this window of opportunity is maybe two months prior to the customer seriously considering the solution. That is a probability of 4.2% to engage the customer at just the right time. I will explore this at length in Chapter 6, Build Business Relationships.
Most sales processes have you believe that if you can create enough pain, or expand on an issue the customer has, they will suddenly be in the market. This is not the answer. What if the customer just purchased? What if there really is no issue? What is your strategy at that point? Customers live with pain all the time. While pain must be present for the customer to make a purchase, you cannot always manufacture pain for the customer. Plus, customers often live with pain for various reasons.
The best way to demonstrate customers living with pain is through an example we can all relate to on a personal level. On a day-to-day basis, you live in a house. Typically, you buy what you can afford at the time. Over the course of the years, you start to make more money. You have your first kid. You start to accumulate more stuff, and the house starts to feel too small. Every day, you drive past a new neighborhood that is closer to work and where the homes are larger and nicer than the home you live in. You would love to move, and you now make enough money to afford a new home in this neighborhood. Even your ego is kicking in; your internal voice is saying, “Move up, you deserve it.”
You drive up to your existing home and see all the work you have put into the yard, you walk into the living room where you have laid the hardwood floor yourself. You see where your child took their first steps.
The next morning it’s Friday, but you are stuck in traffic and late for work, and you are sitting in front of that new neighborhood, “Wow, it would be nice to have saved 15 minutes on my commute. I would be past this traffic by now.” Then you start to seriously consider a move. As traffic eases up, you think about the effort it would take to move. You have to list your house, which means finding an agent. You will have to keep your house immaculate for the next three months. On the other side, you might have to deal with builders in the new neighborhood, and timing the sale of your current house with having the new house be move-in ready. The hassle of the physical move itself is a huge consideration. The new home will be bigger, which means you will need new furniture. You just finished hanging blinds in every window of the old house after five years. You will have to landscape and hang blinds in this new house. The list continues in your mind.
On the way home you start to wonder what your weekend plans should be, but you have nothing planned. You start to think, “The weather is great. You know what, I think I am going to go look for a new boat this weekend.” Thoughts of a new house have evaporated . . . for now.
This example points out several reasons why customers live with pain.
1. They are emotionally tied to a solution they presently have. In a business setting, they made a significant purchasing decision at some point. They may have tweaked the solution over the years. They are comfortable with their solution. They know the ins and outs of their current solution.
2. The thought of change, or of the unknown, is too overwhelming. The act of change will not be easy. They fear the learning curve of a new solution.
3. They have other uses for their money. They have more urgent projects.
In this example, you hate the commute and really want a new house that is bigger and in a better location. You know you have a long commute. You know you keep tripping on toys in your small home. But, you are not willing to change for a variety of reasons. Even if a real estate agent came in and starting selling features and benefits of the new home and neighborhood, you are still not ready to make the emotional decision to move. It is just easier to do nothing.
Understand that in many cases it is easier to do nothing than to entertain the idea of buying what you are selling. Even if your solution is superior, the thought of changing is too daunting for many. But there are ways to get people to look to you first when they do decide to buy.
More on the Status Quo
What I just described with the sections “Not in the Market, “We Have a Guy for That,” and “Habitual Purchasing” is status quo. Status quo is also known as making no decision. It’s the act of keeping the same solution, or doing business as usual. So even if you can convince the customer there is a need, how do you beat the incumbent? How do these challenges present themselves? How do you know when the customer is not in the market or if you are in a competitive environment? The customer will not always be direct. And here is the interesting part—in status quo, regardless of which category the buyer falls in, she will present the same way, usually with silence.
The most frustrating part of being a salesperson is that prospects don’t bother to call you back, return your voice messages, or acknowledge your e-mails. After all, they not only have a guy for that, but they have 10 other salespeople waiting in line to provide that service or product.
It’s frustrating. You make 50 cold calls a day. You attend networking events. You join lead-sharing groups. You do your education on the customer. You have the greatest new product on the market. But, your customer does not acknowledge any of this. You are just another person, and they hit delete before the voicemail system has a chance to play the message through to your name.
We have all been customers, and we know what customers face. Think about it, how many voicemails do you get a day, how many e-mails? Think about the inbox of your personal e-mail account. How many spam e-mails do you get? When you don’t recognize the name, do you bother to read the e-mail? When a telemarketer calls you, don’t you want to hang up as quickly as possible? Business customers are people with busy lives. They do not feel any different.
Throughout the book, I discuss tactics and methods to get past the silence and gain access to prospects.
Understand the Opportunity Trap
The “opportunity trap” is how you learn about the power of the status quo. Thanks to your efforts, you engage a customer with an opportunity. They seem to want your input and bid. But they have no intention of awarding you the deal. You can identify you are falling into this trap over and over again because you have a large pipeline but never seem to close anything. Most managers will come to believe that you have a problem with closing business.
With any customer, if you go straight after opportunity, your relationship is not nearly strong enough to unseat other vendors with more established relationships. You probably are losing most of your deals to “the guy we have for that.” The difference is now you have skin in the game. You now see the opportunity, spend time on the opportunity, forecast the opportunity, and usually lose the deal. The problem is that customers need to look at more than one solution, or proposal, whenever there is a large purchase. They need to do this either because of policy, where they require three proposals, or because they are looking to negotiate against their chosen vendor. The other vendors they use for comparison are called “column fodder.”
Let’s take an example that has nothing to do with sales, but will drive home the point: American Idol. If you have been living under a rock for the last 10 years, or this book is still in print 50 years from now, and you have not heard of it, American Idol is a singing contest television show. Each season, they start with literally thousands of contestants, and, through a series of eliminations, they crown one winner. Here is how the process works. Before the season starts, they go to eight or nine cities. They advertise for contestants and fill up a football stadium in each city with the hopefuls. Each meets with a producer of the show, to see if they can get a chance to perform for the celebrity judges, with a potential to get on TV in the early rounds. The celebrity judges then select maybe 200 contestants to advance in the competition. The 200 contestants over the course of a week get whittled down to 15 contestants who make the live shows. Then, viewers vote on their favorite singer, and the one with the least number of votes gets eliminated each week until there is a one winner.
In the very first elimination event, the producers screen thousands of hopefuls to put in front of the celebrity judges. The four types that make it to television are:
1. The great singers.
2. The singers that the producers need a second opinion about. They may have a unique quality or voice.
3. The “fun” people who do crazy things that will be fun to watch. They have no chance to win, and they know it. They are just happy to get on television.
4. The people who think they are good but are just awful. These people make for the best television because they can’t believe they are not good, and they go insane when they are eliminated from consideration.
How does this relate to sales? In sales you have a champion, a primary point of contact at the customer who guides you through the sales cycle. The champion is analogous to the producer. As with the producers, the champions have a mission, one that is in the best interest of the show or the company. Who does the champion advance in the sales cycle?
1. The incumbent, “the guy,” the great singer.
2. The hopeful, “the new guy they like.” The second option singer.
3. The vendors they are going use to beat up on price to keep the first two companies honest. But, unlike the category 3 singers on American Idol, you still might have a chance at this stage. Later, you’ll learn different strategies. Or, if they stick you in this category and you know it, you can minimize wasting your sales time by bowing out early.
4. This is the worst position as a salesperson. You think you have a great opportunity. And, you work it to the bitter end. You forecast it. You waste your time and company resources. However, you never had a chance in the first place. This is column fodder.
Where would you rather lose a deal—before the producers, or before the 20 million TV viewers? Would you rather qualify the deal out early or waste time—hours, weeks, or months—holding on to hope? On the show, the singers with little talent who are told by the producers they are good are devastated when they learn the truth from the celebrity judges. Salespeople in this category are frustrated and confused, because all along their “champion” was telling them they were winning the deal.
I will help you identify if you are number 1, 2, 3, or 4 in the process. This will help you understand why you lose so many deals in the first year, and it will help you avoid wasting that precious time. I will also help you identify if opportunities you uncover are worth working, or reporting in your forecast. But most importantly, I will discuss how to take advantage of opportunities that you do have a chance to win.
Avoiding the opportunity trap is not an easy problem to overcome. You will be pressured to build a pipeline. If you are not at quota, you will have personal and managerial pressure to work these deals hard to the bitter end. Along the way, you may feel your only chance to start doing business with a customer is through aggressive pricing. This is a mistake. It will only hurt your long-term relationship.
How Buyers View You
Beware of opportunities early in your relationship with potential customers. I have used the American Idol example to loosely define column fodder. An educated buyer will look at more than one vendor to compare and negotiate pricing. Professional buyers are taught to engage with three or four vendors with each deal. Let’s label the vendors as A, B, C, and D.
A is the vendor that the customer wants, the customer who has the trusted relationship. Determining if you are this vendor should not be difficult. Vendor A can be the incumbent, or the vendor that helped the customer discover a need and establish the purchasing criteria. This is the vendor that probably spent the most time with the customer. Vendor A will get access to the true decision-makers.
The customer can live with Vendor B, if they do not get the pricing or terms they believe are fair from A. You can identify yourself as B if you are not the incumbent but helped identify a need for the customer. You have a unique solution that offers greater value than A. The customer has spent a considerable amount of time with you. Vendor B has controlled access to power.
Vendors C and D for the most part are there to help negotiate the pricing of Vendors B and A. The customer spends very little time with these vendors. These vendors are late to the game and are given the requirements of the project, but they have no influence over the criteria. A lot of times, Vendors C and D will receive a call asking for pricing. Or, on the first few visits to the customer, the customer may say, “Great timing. Yes, we have something we need. Here are the criteria. Can you get us pricing?” If you are answering an RFP that you had no input on, you must consider yourself Vendor C or D.
If you didn’t help shape the RFP you are bidding on, understand that you are most likely a third- or fourth-tier vendor and have your work cut out for you. Or you have no chance of winning the sale no matter what you do.
Most sales processes teach that one of the criteria you must have to win a deal is a champion. This is an individual at the customer site who guides you through the process, sharing information like decision criteria, who the players are, who the competition is, and so on. Educated customers are taught to assign a champion to all the vendors in the running, even the ones they have no intention of purchasing from. Keep in the back of your mind the questions, “Did we earn this level of support from the customer?” If the answer is no, you most likely are Vendor C or D.
Here is the basic strategy of the multivendor approach, which is taught to most buyers. Each vendor is assigned a champion. The champion helps the vendor understand the requirements of the project. Champions for Vendors C and D will make them think they are winning, but they need better pricing. The customer will keep Vendors A and B insecure, never giving them the feeling they are winning.
Vendor D thinks all they need to do is provide better pricing, so they do. The customer takes that pricing and negotiates with Vendor C for better pricing. With a good price in hand, the customer now approaches Vendor B who, remember, has been kept insecure, and asks them for even deeper pricing than Vendor C. Now they have a strong price, a solution, and a vendor they can live with, Vendor B. They will say to Vendor A, “We have a vendor we like. You are now in the lead, but you need to match or come close to Vendor B’s offer.”
Figure 2-2. Column fodder
The trap is, if you are Vendor C or D, you have been engaged on this opportunity by the customer very early in the relationship. You have not built trust. You must question why they would trust you with such a large project. Have they investigated your capabilities? Probably not, which is a telling sign. That’s why you do not want to spend a lot of time on these opportunities early in the relationship. In short:
1. You will be forced to use lower pricing. This will pigeonhole you as the low-cost vendor.
2. You will get out of alignment with your customer if you think you are losing. You try too hard.
3. The deal becomes about your quota and not their project. Your perceived intentions with this customer can be forever damaged.
4. You can waste a ton of time on these deals and you can spend your time better establishing relationships with customers who might actually buy from you.
The opportunity trap becomes a vicious cycle that is hard to get out of. You end up wasting time on opportunities that you do not have a chance to close. So, your pipeline is weak, and you look for more opportunities that have little chance to close. This lack of strategy will put your job in jeopardy. It is the same strategy as the hunter grabbing a gun, walking into the woods, and chasing deer. The deer will just run away when they hear the hunter. The hunter is much better off understanding the land, studying the movement patterns of the deer, setting up his deer stand a good location, and allowing the prey to come to him.
These Leads Suck
You have a great marketing department. You get three to four leads a week, or a day, depending on your industry. You seem to be working harder than anyone, not passing up any lead, and working them until they close or die. The issue is that these leads are opportunity-focused.
Say you get a lead from marketing. It has all the details.
· Contact name
· Contact number
· Contact e-mail
· Brief description of interest
· Date for an appointment
· Expected purchase timeframe
You go into your Customer Resource Management (CRM) system and accept the lead. Next, you call the customer to confirm the call. Approximately 50% of the time, the customers will say they need to reschedule, and to please call back in a couple of weeks. But this time, the customer confirms. You are excited that you have an appointment, a “real” lead. You drive to the customer and start, “So you are interested in X.” The customer is confused and says, “That’s not what I told the person on the phone. I told them maybe next year.” So, you start to back-pedal a bit and begin to qualify the customer. The customer seems a bit guarded and does not share that much information. You go back to the office, sign into the CRM system, and update the status of the lead as dead. But, you put in a callback reminder six months out.
What went wrong? Why was the lead information wrong? What could you have done differently?
Your manager will track success with leads. Do you follow through with them? What close rate do you have? Marketing will want to cost-justify their lead programs and will also track the success of the leads passed to the field. Not being near your sales goals, leads become a crutch. You work every lead to the end. That’s what your gut instinct says to do, and your manager keeps saying, “Success will come; keep working your leads.”
Leads are a great tool, but only if you use them correctly. Leads are not the opportunity—leads are a foot in the door. Concentrating on the details of the lead will focus you specifically on opportunity, which means you’ll fall into the same dilemma as before: they have a guy for that. They engage you on deals you have no chance to close, or you don’t run into a dead end talking about a specific opportunity. If you start to qualify the customer, you leave the door open.
A company’s finance department is having a review with the president. The CFO brings to the president’s attention that an incumbent software provider is delivering less-than-acceptable support. The discussion becomes whether or not the vendor can be replaced. The CFO says that they are pretty much locked into the incumbent solution. Even though they do not like this vendor, it would be too costly and cumbersome to change the technology. So, what do they do to get better service from this vendor? The president says, “We need to find a competing technology. Our current vendor needs to think this is a real threat. The new vendor needs to think they are winning, so we can get a great proposal we can leverage against our current vendor.”
They engage a new vendor with all intentions of deceiving it. They are going to give some salesperson hope, but no chance. Would they do this to a vendor who has been working for their business? No, they actively seek out a “stranger.”
This is not an isolated case. I know of a major customer who has a strong relationship with a vendor. They need to refresh the equipment every four years. Every four years they find a competitor who is willing to “compete” for the business. Every four years, they take the competing proposal and negotiate price with the incumbent, and the incumbent wins. This customer has done this over the last 20 years, so most people in the industry know that working this deal is a waste of time. But, every four years, they find a hopeful, with “happy ears,” who is willing to take the bait—even when partners and other people in the industry are telling the salesperson they have no chance. This new salesperson wastes months of work on a losing effort.
You do the same thing as a consumer. You are buying a car and go to your nearest dealership. You negotiate what you think is a good price, but you head home to think about it. You want the car, but you want to make sure you are getting a good deal. When you get home, you call a dealer that is two hours away and you say, “I am looking to buy a car. I would be willing to drive the two hours if you give a great price.”
The salesperson on the other end of the phone says, “Let me see what I can do.” He goes to his manager and says he has a customer willing to drive down if they can give him a good price. He is engaged in the sales cycle, getting management involved, and so on. He calls the customer back and says, “Yes, we can meet the price you are looking for.”
The price is very similar to the local dealer’s price. You got the information you needed, “Thank you, let me think about it.”
The price from the original dealer is fair so now you know you got a good deal. Even if it was not fair, you most likely will take that price and try to negotiate with the local dealer. You never had any intention of driving two hours to buy from the other dealer, yet you engaged them with the carrot of a sale. You intentionally wasted a salesperson’s time. It happens all the time!
This chapter outlined the major challenges you face when trying to win business with a new customer. The number one issue is that they are unwilling to change the current solution or current vendor. I will explore each of these challenges in more detail and discuss the strategies you need to first gain access, then win the trust of the customer, then focus on opportunity, and finally close the deal. You need to think outside the opportunity. However, that is where I will start, with the basics of an opportunity. The best place to start learning about opporunity is to understand the process your customers follow when making purchasing decisions. I will cover that process in the next chapter.