I recently re-read “Hope is not a Strategy – The 6 Keys to Winning the Complex Sale” by Rick page. The book is fantastic and while below are some excerpts which I found valuable, it’s definitely worth a full read.
“The shrinking half life of technology means the window of competitive advantage for products is getting narrower. In today’s high tech world, product superiority may last only a couple of months, and competitors react quickly to reach demo parity. This means that differentiation often lies in the extended solution, including services, integration, partnerships, supply chain, financing, or trust.” We’ve seen this firsthand. Being a tech company for 5 years doesn’t mean you have a headstart on new entrants, it means your technology is 5 years old, and probably outdated, relative to those new entrants. To win in the long run, your competitive advantage has to be more than just technology.
“If business pain or political power for sponsorship is missing from the evaluation, it will sit on your forecast forever. Picking the right battles is the key to resource allocation. Most salespeople in the complex sale work at most, ten to twenty opportunities in a year.” In our view this applies to sales cycles that are 6+ months. Shameless plug: our portfolio company Revegy has a fantastic solution to navigate complex sales cycles like this.
“Proposals don’t sell, people do. The win rate of responses to unsolicited proposals is very low. The veterans know that if you didn’t help refine the requirements, someone else probably did.” Once again, applies to complex, long sales cycles.
“The key to consultative selling is to determine the client’s needs first. It is even better if you help them determine what their needs are. If you first learn of an opportunity when the requirements definition lands on your desk, you have already missed the first step in the sales cycle. You are to some degree already out of control, especially if someone else helped write the requirements.” Once again, applies to complex, long sales cycles.
“Why is it so difficult for salespeople to get an accurate understanding of where the prospect is in the complex sale? The reason is that it’s to the customer’s advantage to keep you in the dark. As long as they can do that, they have control. And if you knew where you really stood in these sales, you might go away, and they don’t want that to happen – yet. Rarely does a client say to a vendor ‘you really don’t have a chance at winning this business. You need to try somewhere else.’ It’s to their advantage to keep at least three vendors in the hunt. Why? i) They need to show they studied the leading vendors in the marketplace. In case the project fails, they don’t want to be accused of not having made a studied decision; ii) After the vendor is selected, the acquisition phase starts, and they will need multiple vendors at that point to drive the price down; iii) If they can’t come to legal terms and conditions on their first choice, they will need a backup.”
“The salesperson who discusses the competition too early or too aggressively will be perceived as unprofessional or defensive. But one who doesn’t differentiate or control the issues will be in constant reaction mode.”
“The best sales people have high listen-to-talk ratios. They used the classic tools of probing – who, what, where, when, why as well as reflexive probes such as “oh tell me more” to keep the client talking.”
“The first step is to find a latent business problem and create a vision of what life could be like if they solve it. They also create a vision of what bad things could happen if it’s not solved because their biggest competitor is ‘no action’. This creates a gap between where the client is and where the client could be. The next step is to quantify the gap and define the financial return on investment. Then they must find a sponsor with enough power to whom this gap is politically painful and emotional because again, pain doesn’t come from the problem, it comes from the political embarrassment or the chance for glory.”
“Competitive advantage falls into three categories: you’re either the low price vendor, value differentiated, or focused on a niche market.” Try not to be the low-price vendor: in tech, this advantage is fleeting as new solutions are introduced built more efficiently and cheaply on better architecture.
“IBM rarely had the best product the soonest. But it didn’t matter. They put the big blue label on it and drowned the client in enough service engineers to provide a technical solution. Clients paid a premium for low political risk because no one ever got fired for selecting IBM. They may not have had the best product at that time, but they had the best solution.” Nice example of using other things outside product features and tech to win a deal.
“Concentration of force is the first principal strategy. Spreading yourself too thin means not concentrating resources on the sales you could win because you are spreading time on lower quality prospects. Doing 90% of what it takes to win doesn’t result in 90% of the revenue, it results in zero. You must pick the battles you can win and win the battles you pick.”
“This is a critical part of the sale when we begin listening and outcaring the competition, thus building the bonds of rapport that will eventually lead to trust. Even if we know what the pains are, it’s not enough. The client needs to confess them.”
“A greater understanding of the requirements and how they were developed allowed us to 1) disconnect a requirement that we couldn’t meet from the real business problem; 2) refocus the buyer on the strategic problem; and 3) establish linkage between our capabilities and the bigger problem. Actually the first step was to gain access to executives above the project team.”
“Nobody asked for the VCR. Nobody put out a request for Windows. But customers knew they wanted it when they saw it. These were dormant pains.”
“One of our clients said this about a large defense contractor with multiple subsidiaries: ‘having business at one business unit not only doesn’t help me at the next one, it actually hurt me. They hate each other so much that if one business unit is for me, the other ones are against me. But they are all united in one value: they hate corporate. So the potential for working my way to the corporate offices and coming down as their worldwide standard is impossible in an account like this.” We have a portfolio company that has been able to sell across multiple divisions of a client, but it’s not as easy as expected – the divisions aren’t picking up the phone to talk about how great a new solution is. You can’t rely on internal referrals, but rather need to find a champion in each division.
“Pain doesn’t come from the business problem, it comes from the political embarrassment of the business problem. If the pain or lost opportunity is not visible, then it’s not embarrassing and it will not drive business buying activity to a close.”
“When evaluations stall or fail, one of two things is usually missing: either there is not a real business problem of great enough magnitude or the project lacks the proper political sponsorship.” Collecting more than one champion is critical, not only to win the sale but to make sure that sale doesn’t churn off if the champion leaves. During the onboarding process, you should make it a point to get everyone’s contact information and stay in regular communication with all of them.
“having established this channel of communication, never give it up. Always have a good reason to call this executive back. “Do you mind if I keep you appraised of how the project is going? And by the way, when we do the needs assessment, we’d like to spend some time with you to understand what the strategic objectives are for this project.”
“Mr Prospect, we’ve announced a 6% price increase. We’d hate to see you buy the same proposal later at a higher price, so we really need to get this business in by the end of the quarter to secure this price. – Not only is this technique predictable, but after months of building value for your solution, you have now commoditized yourself. You have turned it from value to price on order to close business at the end of the quarter. Once you have offered a discount, you have announced what kind of vendor you are and the only question now is the price. Let the games begin.” Don’t use high pressure sales tactics just to get a booking into a quarter. As an investor, we don’t care if you win the client in March or April, so long as you win them.
“The best of plans require critical thinking and that is perceived by some people as negative. It is true there is a self-fulfilling effect of positive thinking. However too often this results in assumptions or happy ears for salespeople who are always ignoring the facts. The account looks good, right up until it’s lost.”
“Bad news early is good news because we can either refine our strategy or withdraw from the account. Blind spots late are bad news.”
“Flanking strategies in sales situations actually mean one of five things:
-Changing the pain means either finding new issues to link into, linking into higher issues that haven’t been addressed before, or linking them to issues that are sponsored by more powerful people.
-Changing the power means encouraging your sponsors to exert their power or bring in influencers who have not been drawn to the evaluation yet.
-Changing the process means adding steps or taking out steps that would allow you to demonstrate your strengths and expose competitor’s weaknesses.
-Integration is one of the benefits that separates a solution from a product. If you can link your solution into a client’s existing technology, they will benefit from lower risk and the simplicity of leverage of dealing with fewer vendors.
-Expanding scope means broadening the proposal to include products or capabilities the competition cannot deliver.”
“You must refocus off the imagined political benefit of a lower price, and on the longer term benefits of the overall project. “Mr Prospect, how are you measured and what you will be remembered for three years from now won’t be the price, it will be the success of the project. If this goes well, the cost will be a detail. If the project goes poorly, no one will say ‘well at least we got a bargain.’”
“Never go into legal or purchasing alone. Bargain with your sponsors early when the price issue is not as important for them and ask them to accompany you into negotiations.”
“To a salesperson, project leaders can be gatekeepers. And they are often covered in political glue. Once you touch them you’re stuck. One approach is not to touch them at all. They may be nice people and they may be instrumental to your sale, but they can limit your navigation. Try not to take no from a person who can’t say yes.”