I’ve completed a few days of doing deal reviews with some really terrific sales teams. The teams had done outstanding jobs. They had great deals, they’d done pretty well in positioning themselves with the customers and were looking to win. They are much like the 1000’s of reviews I’ve been a part of. We’re talking about the situation, what’s going on with the customer, the competition, what we need to do next.
Time after time, we’re talking about what the customer is buying, what we’re selling, and what we need to do to win. Inevitably, we get to talking about closing the deal and price/cost comes up and the discussion turns to discounting. The talk turns to negotiating strategies, and how to minimize the inevitable discount.
It’s usually at this point I awkwardly ask the question, “Why are they buying this stuff?”
People eyeball me, I know they’re thinking “We’re paying for this guy to be here?????”
They politely say, “Well they called us and asked to talk about these products……” or “They need this tool…..”
I listen, struggling to understand, then usual say, “I get this, but why are they buying this stuff?”
And that’s the problem I see in way too many deals. Part of it is we’ve trained our customers too well. Our marketing has been effective, the customer has done their research, they want to talk to us about our products and we’re too eager to respond. Afterall, that’s what we want to talk about as well.
But something’s missing—often, even from the customers’ points of view. We’re all talking about what they want to buy and we forget about why they need to buy.
And that’s the secret sauce to closing deals–as well as maintaining our pricing.
Until we and the customer have really internalized why they need to buy, every deal is at risk.
What are they trying to achieve? Why are they trying to do it? What are the consequences of not doing it? Why is it important to them now? What’s driving their need to do something?
Maybe we and the customers talked a little about them early in the cycle, but as we progress, it’s all about the solution or the product.
But the real core of things is why they are buying. This is they question the customer must answer to their management when they look for approval for spending the money. This is the key to positioning our value and defending our pricing. Everything else is just supporting stuff.
As an example in yesterday’s reviews, in one deal, we were stalled. The customer desperately wanted to buy my client’s product. But we were stalled on pricing. The customer only wanted to pay a certain amount (why they had chosen that pricing was a mystery), my client–justifiably was reluctant to discount (I’m so proud the sales person held her ground–even though she was struggling because she wanted the deal.)
As we did the review and we were discussing the opportunity, many said, let’s give the discount. It wasn’t a whole lot in the scheme of things. Some rationalized it as “we get a foot in the door of this new customer and we can grow.” Others just wanted to get the deal done and move forward. At this point I asked, “Why are they buying?”
We retraced our steps, we quickly recalled, “Well they like our product because it makes their jobs much easier. It really improves their productivity!”
Then I asked, “By how much?” We didn’t know, we decided to call some of the people to understand this, but I asked, “Based on your experience with other customers, what’s the very worst case?” We chatted, came up with a number, I said, “Let’s take 20% of that very worst case number.” We went on to quickly look at the business case and were astounded at the result. The payback for this project was less than 1 month! This was on the worst possible case we could imagine!
Clearly the customer didn’t know or understand this. If they had, they wouldn’t be wasting their time or my client’s time quibbling over a the price. Every day they spent talking about price, they were losing huge amounts due to lost productivity!
The customer and my client had gotten so involve in what they were buying they had lost sight of why they were buying.
Why are they buying is the single most important issue we face. We can never lose sight of this, we can never let the customer lose sight of this. If we don’t know, we need to find out.
Without understanding this, we have no basis to sell and the customer has no basis to buy — so we are wasting each other’s time!