I write constantly about the buying process, understanding how customers buy, how we align our sales process with the customer’s buying process, and how we create value through the whole thing.
However, I realized I’ve overlooked something. It seems so obvious, but I’ve been surprised to see how few sales people understand this–at least early in the sales process. What I’m talking about is, “How do customers buy?” I mean, once they’ve made the decision for you, once you’ve settled on the price (or at least hopefully). What do they have to go through just to issue a purchase order and for you to start shipping product and invoicing them?
I just sat through a review. It was a very complex deal, it represented a significant revenue stream for my client for the next 5 years. The sales person had worked very hard on the deal and appeared to win it. Because of the complexity of the deal, because it was also a product that would be part of a medical device (my client had never done one of these deals before), and all sorts of other things, I asked, “What’s their contracting process, are there special terms and conditions, are there any liability issues, …….?”
I finished, with “What’s the process you have to go through to get a PO?”
The sales person looked at me, you could tell, he was thinking, “Why are you trying to derail my deal with these unimportant issues?” He actually said that–but more politely.
However, the deal was very complex, there were some important lead time issues. If they didn’t get the PO in a very short period of time, they wouldn’t be able to ship the products when the customer wanted, holding up $10′s of millions of the customer’s own production. There were a number of legal. liability, and other issues that had never been addressed.
The sales person kept saying, “All I need is the PO!” But when I asked, does the customer need anything more? When I turned to the EVP of Sales, I asked, “Given the potential legal issues, do you need anything more?”
As much as we dislike it, contracting, becoming an authorized vendor, doing all the paperwork necessary to enable the customer to issue a purchaser order, accept product/services, and issue payments on invoices is critical. It seems like a lot of bureaucratic work–often it is. Sometimes it seems to slow things down–particularly when lawyers have to review contracts and start talking to each other (I’ll stop here, this can fill dozens of posts).
We can’t actually get the order until all the detailed paperwork has been completed–by both the customer and us. Often, this can be very long, confusing, and time consuming. Occasionally, there are things in the contract that can kill deals (in the example I mentioned above, there were a huge number of things around liability, traceability, quality, vendor managed inventories, and others that my client was unaware of and had never done before.)
It’s important that we understand the mechanics of how the customer buys very early in the process. It’s important to understand if there are any paperwork, performance, or contractual issues that may impact our ability to do business–even if the customer chooses us. It’s important we understand the time frames involved in getting this done. If we are shooting for a deadline, we have to build these timeframes into our and the customer process.
The answer to this may seem simple. “Ask the customer!” But we have to be asking the right customer, particularly, if your customer doesn’t go through many of these types of transactions. Too often, the people we are dealing with, the people actually making the decision don’t know! If they don’t buy frequently, they may not know the details of the paperwork, contracts, and so forth. Some years ago, I closed a deal with a CEO of a large organization. Since they were a government contractor, I knew there would be a fairly intimidating contracting process with the client. When I asked the CEO about the process, he shrugged, said, “I really don’t know the details……” Fortunately, his executive assistant knew–she put me in touch with the contracts manager and we got all the detailed stuff done. But the CEO literally did not know their own process.
This is not unusual. Executives, engineers, others may understand how to make a decision, but they don’t know how to get a PO issued. After working so hard to earn the business, it’s terrible to have something like contracts and paperwork slow down or derail the process.
Do you know how your customers actually buy?
Every week I sit in reviews of all types. It may be a corporation or start-up’s business plan or business strategy. It may be a sales person’s territory plan, forecast, or pipeline review. It may be a sales manager or executive reviewing their overall business plan. It may be a marketing manager reviewing a new marketing program and the expected results or a product manager talking about a product forecast or launch.
In all of these people are making various claims about the numbers that will be achieved. But too often, it seems to be an exercise in proving that math works.
We all know that 2+3 will generally always add up to 5. Yet most of the reviews I participate in seem to be proving something similar–a person lays out a whole bunch of numbers and they add mathematically to produce the desired result. These exercises prove little other than proving that math works.
Yes ,we want to have the right numbers that add up to produce the desired result. But without understanding the underlying assumptions, strategies, and activities that will produce the numbers, the numbers are meaningless.
For example, I just finished a review with a team. They’ve realized they have to get better at closing large deals. They’ve presented what they think is a plan: We’re going to increase our average deal size by $X, we’re going to increase our win rate by Y, and we are going to close this many deals, producing, this much revenue.
I got it, the math worked, but I was troubled, so I started asking questions:
“To produce this result, you are going to have to find and qualify 10 times more opportunities than you ever have done before. How are you going to do that? What will you be doing differently now than you have done before?”
There was an uncomfortable silence.
“You’ve said you are going to increase your average deal value and the win rate. How are you going to do that?”
Someone meekly said, “We’re going to chase after bigger deals and win more of them…..”
I reply, “I understand that, but what are you doing to achieve this? How will you find those bigger deals now, when you’ve not found them in the past? What are you going to do to win them, where you haven’t won them in the past?”
Everyone started fidgeting and squirming.
“It’s what we have to do to achieve our goals!” someone finally said.
“I know you have to do it, but how are you going to do it? What are you doing now that you haven’t done before? What’s changed? Why do you think you will be successful in doing this (I decided not to add ‘When you’ve never done this before’)?”
Some more fidgeting and squirming…..
Not long ago, I was asked by some VC’s to participate in a business review. An enthusiastic entrepreneur was seeking funding for his business. He had charts and graphs that would make any investor’s mouth start to water.
He started with presenting a market analysis. He showed the market was huge, all he had to do was capture a couple percent share and his business would be producing millions in revenue. He then produced his revenue plan, “In the next 12 months, we will have X hundred thousand subscribers, producing, Y revenue.”
Everyone around the table could do the math, it was a nice number. But then the questions started coming in: “How many site visitors do you need? What are you going to do to convert them? How much will it cost to generate those visits?…….” The entrepreneur stumbled, he could answer (I think guess) some of the questions, but he really didn’t have a complete picture, he couldn’t connect the activities to the expected results.
What we do, how we execute, the things we do differently, the assumptions about why those things will allow us to achieve our goals all form the foundations for believing in the numbers.
Math works–almost all the time! Anyone can look at the numbers and see what they produce. But for us to believe the numbers it’s critical to address all the things that produce the numbers. Without that, it’s just wishful thinking.
Yesterday I had the privilege of spending a day with the founding team of one of the most exciting start-ups I’ve seen in years. These people are sharp, excited, and have an idea that can change the lives of business professionals as much as the telephone, email, and social applications have. But, I can’t go further — for the moment. I made a pinky swear of confidentiality with the CEO. They are in stealth mode but should be launching in a few months. Stay tuned.
But our meetings got me started thinking about how we–business professionals–spend certain parts of our day. I’d really like your feedback in the comments or if you want to keep it private, send an email to email@example.com.
Here’s what I’d like to hear from you:
How do you spend your first 30 minutes or so when you start your business day? Do you catch up on email, sip that cup of coffee, review your calendar for the day, update your to-do list, catch up on the latest news, look at your internal “group communications” using things like Chatter, Jive, or external networks, make a few phone calls, or something else. Do you spend time reflecting/prepping for the next meeting or two?
How do you spend the last 30 minutes of your business day? A final glance at your emails? Look at your calendar for the next day? Prep for the next day’s meetings? Peruse social networks or internal networks.
Finally, how do you spend the “spaces in between?” By that, I mean those few minutes between meetings or while you might be waiting for a customer, or like me right now–waiting for a flight in airport or those few minutes of unscheduled time you see on your calendars. Do you catch up on emails, a few calls, look at your social media sites, think about the next meeting/prep for it?
I’d really appreciate your feedback and it will be of enormous help to the team.
Since I’m asking you a huge favor, let me share my responses for the questions I’ve posed:
How I start my day: Well it depends. Normally, I spend the first 45-60 minutes on my blog and social media–for example, participating in discussions on LinkedIn or looking at twitter. The next 30 minutes is clearing email, quickly looking at my calendar and mentally setting my priorities for the day. If my day starts with a very early call, I shift all that stuff to later, but I spend 5 minutes before the call (religiously) prepping myself mentally–what do I want to accomplish, I may quickly look at the person’s social profile or their company’s web site to see if there has been a change that I should be aware of.
How I end my day: The last 30 minutes of my day is clean up and prep. I clean up my to-do’s, notes, etc. from the day. I look at my calendar for the next day, spend a few minutes thinking about each meeting/call, doing some prep, perhaps writing myself a few notes. I update my to-do’s, then stop my business day (well sort of, I’m compulsive, I’ll check email up until bed time, maybe a few tweets, and do a lot of business and recreational reading.
On the spaces in between. Before a meeting, I’m obsessive about reviewing my plan/agenda for the meeting and what we should accomplish. I don’t believe in meetings without an agenda. I don’t believe in walking into a meeting and winging it. If it’s a meeting with a client or anyone outside the company, I quickly do some research, I check their LinkedIn profiles, and social feeds to see if there is anything I should be aware of. I look to see if their company has made any announcements. If I have idle time, for example, at the airport, I carry a list of people I want to call. These are friends, colleagues, clients I may not have spoken with for some time. I try to connect with a minimum of 5 people a day (this is beyond my scheduled and prospecting calls.) I may look at twitter or some of my other social channels, or like now, whip out a quick blog post.
So how do you begin and finish? How do you fill the spaces in between?
Thanks so much for your help! (Please forward this to your friend/colleagues and tweet to get others to participate)
When you think about it, sales people have an awesome amount of freedom–but also a huge amount of personal responsibility. In many senses, we really are entrepreneurs.
Entrepreneurs run their own businesses. They have goals, translated both to financial (revenue, earnings, growth), and strategic (share, market visibility, brand reputation, etc.) They develop strategies and plans to achieve their goals, invest in resources (people, facilities, capital, etc.) to execute the plans.
Great entrepreneurs are relentless, driven, disciplined and focused. They make no personal excuses, and focus on optimizing the deployment of resources and performance within their organizations.
Being an entrepreneur gives one a great source of freedom, great accountability (which great entrepreneurs revel in), and responsibility. Success or failure is really in the hands of the entrepreneur.
Sales is a lot like this. Whether one works for a large or small company, we are given relatively large amounts of autonomy. Our companies entrust us with a “patch.” It could be an account, collection of accounts, industry segment, or geographic territory.
It’s up to us to maximize the results produced in that territory. Yes, our companies give us quotas and goals, but like great entrepreneurs, we really want to maximize our penetration, share, growth in the territory.
Our companies also entrust us with resources to leverage in producing results. They may be pre-sales specialists, support people, marketing people (with programs), customer service and others. They also provide us tools, programs, and other resources we can deploy as part of our plans and strategies. We have to use these resources well to maximize our achievement in the territory.
While our companies may provide us various levels of “guidance,” about our strategies for growing the territory and maximizing our results, it really is our job to figure it out. It’s our job to develop the strategies and plans, lead the execution to produce the best results.
Finally, and perhaps best, to customers, we really are “the company.” While we may have armies of people supporting us, we are the face and voice of the company. We are the people they work with everyday. We are the people they are entrusting to help them achieve their goals. We are the people accountable for the commitments our organization makes.
Within our “patches,” or territories, we are the company. We are the entrepreneurs running our companies and maximizing our abilities to achieve our goals.
Can you think of anything more fun or challenging? (At least business wise.)