Trust-Based Selling: Finding and Keeping Customers for Life (2015)
Chapter 7. Understand the Sales Equation
Why Chasing Opportunities Does Not Work
Every sale has five basic obstacles: no need, no money, no hurry, no desire, no trust.
I have discussed that chasing opportunities is setting the sales person up for failure. However, it is obvious that you need opportunities to close business. The goal of this chapter is to introduce relationship, or trust, into the discussion about an opportunity. I will develop a simple formula that equals sales success with new customers.
In Chapter 4, I listed these elements as the core to winning deals.
· Pain. Without pain, or need, there is no order. A compelling event is pain with a time element. This is the best type of pain because it makes predicting and closing business easier. A compelling event means the customer has a deadline. Without a deadline, opportunities will drag on indefinitely.
· Solution. The customer needs to envision that your offering will solve the pain or fill the need. The customer needs to see value in your solution. The increased revenue or cost savings of the solution you provide must be greater than the cost of your solution.
· Authority. You need a “yes” from someone within the organization who has the authority to purchase. Otherwise known as power.
· Understanding. You need to identify the purchasing decision process.
These are the items that customers need to make a decision to purchase, but are they the items they need to purchase from you? The answer is no. Each bullet can be claimed by you—and by a competitor. If the customer has a compelling event, it’s a compelling event for you and for your competition. The competition will have a valuable solution. You hope you have more value. Both you and the competitor could have access to power. An incumbent most likely will have greater access. Both you and the competitor understand the decision process. Again, the incumbent will most likely know this better than you.
One last bullet needs to be added to the discussion.
· Relationship. You must have a trusted, valued business relationship with the customer.
I have been discussing this last bullet at length. I believe I have demonstrated how important it is to value the relationship as part of the sales equation. Without a good relationship, there is no sale. When you lose a deal to price, most likely you are losing because you did not have a good relationship. Price is the excuse the customer gives you because it is definitive and impersonal.
You must have all these elements for a sale, from which I can derive a simple formula for sales success:
CE x V x P x DP x (TR)2 = Sale
Here’s what each of the elements stands for:
· CE – Compelling event
· V – Value
· P – Yes from power
· DP – Decision process
· TR – Trusted relationship, which is squared due to its importance
The equation is multiplicative, meaning that if any one of the elements is zero, the sale does not exist. Therefore, with no relationship, there is no sale. The equation also squares the trust element. Trust has an exponential effect on your chances to win. When you are new, you have almost no trust, and with zero trust, you have zero chance to win. You must assume that the existing vendor is fully trusted (Figure 7-1).
Figure 7-1. Trust difference
What is the formula for trust? I have one, but first let me say that I understand relationships can’t be measured with a number or represented by a formula. The intent of this formula is to give you a mechanism to measure your relative strength against a competitor’s, using metrics rather than just gut feeling. It also helps you determine how to systematically drive toward a trusted relationship.
So here is a simple “formula” for trust.
Trust = I + C + D + R
Again, here’s what each item stands for:
· I = Intent
· C = Capability
· D = Dedication
· R = Results
Here, then, is the expanded sales equation:
CE x V x P x DP x (D+I+C+R)2 = Sale
While this might look a bit complicated, it really is simple. In order to win a sale with a new customer, you need to be concerned with every element of this equation, such as the opportunity-focused sales criteria of a compelling event, value, power, and the decision process. Especially with new customers, the trust elements must be taken into account: Intent, Capability, Dependability, and Results. This formula offers a deeper level of inspection of each opportunity.
Concentrating on the trust elements, each is rated 0 to 2. A score of 0 means you have not addressed this trust issue, so you must assume the buyer rates you a 0. Give yourself 1 point for trust that can be assumed based on referrals, or when you have implied a certain amount of trust through actions in the sales cycle. 2 points indicates that you have made an effort or otherwise measured within the element. For example, you have provided education to show good intent, done a product evaluation to show results, conducted seminars to show capability, and so on. This points system is obviously subjective. It is better to overate your competition and underrate yourself. You do not want a false sense of security. It’s better to identify weaknesses and take positive actions to strengthen them.
Figure 7-2 shows 0 points for results, 1 point each for dedication and intent, and 2 points for capability, which is a 4 out of a possible 8. You do not have a fair shot at the business, unless you have a unique value, a niche product, or are within 1-2 points of your competition.
Figure 7-2. Trust points
If you can get to the point where you have 6 out of 8, as shown in Figure 7-3, you have a much better chance of winning than with 4 out of 8.
Figure 7-3. More Equal Trust Levels
There are any number of trust combinations that will work. There may be cases where the incumbent has lost some element of trust with a customer, and that gives you a chance to compete or even have an advantage. Maybe there is a situation where you have demonstrated dedication, some intent, results, and capability. Maybe the incumbent has demonstrated results and capability, but dedication and intent have suffered due to lack of ongoing attention. Suddenly you just leveled the score to 5 vs. 5. Now you can compete evenly (Figure 7-4).
Figure 7-4. Equal Trust Levels
Allow me to repeat myself. I understand relationships can’t be measured. I understand that there is a mix of personal and business relationships with each customer. This method is a way to analyze your relative strength against your competitor’s. Your goal is not to walk into a customer like a robot with a relationship checklist. The intent of these strategies is to ensure you have taken conscious, proactive steps in developing a trusted business relationship.
The Great News
While the task of competing against an incumbent may seem daunting, it is by no means insurmountable; otherwise, new salespeople would never make it, nor would new companies ever get off the ground. In fact, it can be easy to unseat the incumbent. While you are focusing on systematically building trust, the incumbent is taking their customer for granted, looking for new customers, and waiting for their existing customers to call them with new orders. Figure 7-5 shows the buyer’s concern about relationship versus the typical salesperson.
Figure 7-5. Vendor-buyer relationship gap
As you can see, once a salesperson makes a sale, they typically don’t come back around and measure results or stay focused on the customer. Before the sale, the relationship is more important to the salesperson than to the customer. However, after the sale, the customer wants a stronger relationship. A lot of times the salesperson is off looking for other opportunities, or assumes the customer will just present them with the next opportunity. As a result, the trust meter of the incumbent is not as full as it could or should be. The customer’s expectations of the vendor are typically not met after the sale.
However, you must assume that incumbent trust is full and systematically address each element of trust so you can compete with confidence. It is possible that, by the time you’ve developed an opportunity with a new customer, you could be more trusted than the current vendor(s).
Always assume the incumbent vendor has a trust meter that is full or close to it. That will encourage you to develop your relationship fully and do your best to provide value that makes a difference to the customer’s business.
I have harped on relationships. But I think it is important to drive home the point from multiple angles. Your entire sales training—how you have been managed, how you have been measured and, intuitively, how you have tackled your territories—focused on opportunity. I hope by now I have shown, demonstrated, beat you over the head, and just repeated this concept to the point that you understand how important relationship-building is.
Now that you have the why behind you, you’re ready turn to the how. It is easy to tell salespeople to work on building a relationship, but you need systematic, creative approaches to build this trust. You must build trust before you have a chance to work on opportunity, so you will spend most of your time in the following chapters learning how to build trust in each stage of the sales cycle.