Manage episode 221166052 series 1409586
Steve Thompson, the author of Must-Win Deals: How to Close Them (and Why We Lose Them), has been closing deals for 20 years. He’s worked on more than $15 billion dollars’ worth of B2B sales in over a hundred different industries in 24 countries, for both selling and buying clients. This guy is a big time expert on this topic.
Steve’s going to break down the four biggest challenges that really make it difficult for customers to award these big, must-win deals. If you’re like me, you may not have even thought about some of these problems, some of these challenges.
I was really surprised by the fourth one, because it’s so simple, and yet we so often overlook this. If you are in sales or if you’re working in a business where you have to have certain deals with major clients go through, this is absolutely a must-listen episode.
Get Steve’s new book Must-Win Deals on Amazon.
Steve Thompson: I started noticing, across all of my clients, a common issue. Even though they may have thousands of corporate customers out there, there’s generally a handful of them that are critical. It could be for a given sales rep so that he or she could hit their quota. There’s just a couple of deals that they’ve got to bring in, and if they don’t, the year’s gone. It’s a bust.
The same thing if you roll up to a region or you roll up to a corporation. Usually the success in terms of hitting sales targets is dependent on a handful of critical deals.
What struck me is that we were treating those deals the same as all the others. It’s what I’ll call the 80/20 rule. You’ve probably heard of it. For many companies, it’s even more skewed than that. Maybe 10/90, something like that.
Those 10, if we don’t get them right, it really doesn’t matter what we do with the other 90. We’re not going to be successful. We’ve got to look at these differently and not do more of the same. There’s some critical things we need to do differently.
Not All Equal
Charlie Hoehn: Why do we treat everything equally when it’s clearly not?
Steve Thompson: They do segment them and they have more experienced people calling on the bigger customers and all that. But in general, they still have them doing the same things they’d be doing if they were calling on a smaller client.
Don’t get me wrong—it doesn’t mean the smaller clients aren’t important at the end of the day. But these big ones are the ones that make you look like a hero.
Usually, the direction that’s coming down from the executives and top management is you need to really buckle down. That means you need to work harder; you need to work harder, you need to do more of the same.
Well, if I’m not getting there doing what I’m doing now, doing more of it probably isn’t going to help.
Charlie Hoehn: What’s the path that led from noticing that to actually writing the book?
Steve Thompson: Well, there was another dimension to this, and that is about half of my clients are also on the buying side. I had what would have been their customers, if you will, that were retaining me to help them craft and negotiate critical deals with suppliers that they wanted to have a relationship with over the long haul.
When I juxtaposed those two things, what I was seeing on the buying side is, consistently, the suppliers that we’re trying to sell to were missing it on four things over and over.
They were actually making it hard for my clients, which were the buyers, to make a decision and choose them. It was both of those things coming together that was the genesis of the book and the ones that will follow.
Making it Harder Than Necessary
Charlie Hoehn: Yeah. So what were some of the things that they were doing to make it hard?
Steve Thompson: Well, here’s the number one thing that they do to make it hard: you don’t present a value proposition to the customer that is irresistible, that gets their attention, and gets them interested in buying from you.
Too often, sales people will rely on their marketing value proposition that’s put out there to everybody. Marketing is important, but the function of marketing is to cast the wide net and hopefully find a few people who are intrigued enough that they want to meet with you and talk with you.
Charlie Hoehn: So a generalized value prop that they’re giving to everybody, not tailored.
Steve Thompson: Exactly. Such as, “You know what? We’ll save you money.” Okay, I like that idea in general, but a sales value proposition would then get down to what money I would save you and how much I would save you and by when would you see those savings?
It’s all about you, the context of your situation, what you’re trying to accomplish.
They were missing the mark.
They were always coming in with the fancy brochures, what I call the show up and throw up slide deck that they’re armed with by the marketing department. By the way, it is all about them, their products, their services, the number of offices worldwide, how much they’ve grown.
To be honest, nobody cares at that point. It needs to be about the customer and what is it they’re trying to achieve.
I think I would add a third dimension to this, and this has been evolving over the last 15 years or so, and that’s the advent of a SaaS, what I would call Something as a Service.
More and more business are transitioning to that model, and that model requires that first you’ve got to win them, but then you got to keep them. You’ve got to grow them, because that model dissolves if you start having a lot of customer churn.
There’s a big hole in the bucket on the other end. If we could just fix these four things, we could dramatically improve the odds of not just winning but growing deals and closing them faster.
More Principles of Sales
Charlie Hoehn: What are the other three things?
Steve Thompson: If you look at B2B proposals, and I’m talking about deals of many millions of dollars, sometimes hundreds of millions of dollars are involved, most sales people treat their proposal as a check box exercise. Okay, it’s required, I have to give them a proposal.
They’ll probably have their favorite format that they’ve used over and over. I mean, they’re gorgeous, you know? They’ve got all kinds of pictures and diagrams and tables and all sorts of stuff. They’ll go through and do hopefully a search and replace and put the new customer’s name in.
They’ll change a few things that are relative to that customer, but the whole proposal is about them.
It’s not about the customer and what they’re trying to achieve. My buying clients, many times, will retain me to help evaluate supplier proposals. I hate that job.
It’s a waste of time.
I already know every supplier is going to be number one in their field. Now, I don’t know how it works that they’re all number one, but they are—world leading, innovative, the whole bit.
They all have great marketing departments, and the proposal’s going to be about them, their product, or service. And I read through them, and many times I say, “Does this sales rep even understand what my client’s trying to achieve?”
I can’t connect the dots. And that’s the problem: the customer can’t either.
Charlie Hoehn: I’ve seen it as well, I’m not doing deals like you are but I’ve seen it, been on the receiving end. As I’ve gotten older, I’ve noticed, “Oh wow, I was the person doing that.”
Steve Thompson: But you know, this is even bigger than just sales. The most successful business people that I’ve run in to in my career didn’t have all the answers. But I’ll tell you what they always had: the right questions. The ones that got to the heart of the matter very quickly.
For some reason, there’s a belief that if you’re in sales, you have to have all the answers.
I have to tell you, when I was in sales, if I had to have all the answers…I’m not that smart.
I don’t have them.
I found it was a lot easier and more natural motion for me to ask the right questions, and then they’re going to invite me to talk about how I can help them with my product, services, or whatever.
But back to the proposal context, it’s a huge opportunity that’s missed. Because it just becomes a check box. That’s the second key area where we make it hard for them to choose us, because if every supplier proposal basically looks the same. You just change the font and the color scheme and the logo on it, and they’re all saying the same thing.
How do you make an informed decision? That’s the challenge the customer is facing, because they want to make an informed decision.
The Purpose of a Proposal
Charlie Hoehn: They want to be in a committed relationship, so to speak, with somebody who actually understands them and knows where they’re coming from and where they’re trying to go.
Steve Thompson: So as I discuss in the book, you’ve got to first understand, what’s the purpose of a proposal? The actual purpose is the bridge from the selling to the negotiation, which is going to come if you’re successful. Now, the objectives of that proposal are to reinforce trust and credibility to make it easy for the customer to buy from you versus you selling.
You’ve also got to manage this thing called uncertainty, because in the real world, nothing ever fits a model. You’re never going to have perfect information.
Sales is messy, and B2B sales is getting even messier. More and more individuals are getting involved in the decision on the buying side, and if you’re a sales rep, you’re finding more and more people are helping on your side of the equation. Now you’ve got a whole lot of uncertainty and different moving parts.
We’ve got to manage that. The proposal is a great way to do so, but that isn’t happening. So that’s the second big mistake—or I shouldn’t say mistake as much as the challenge we present to customers that make it difficult for them to make a decision.
Then the third one is, let’s say they do choose us and we enter what’s called the formal part of the negotiation and we aren’t ready. We don’t have a plan.
As you can imagine, for every proposal you submit in your career in sales, there is one objection that every customer is going to come up with, and that is, “Your price is too high.”
How many times have they ever said it was too low? So you don’t have to worry about that one.
It’s coming every time, and yet we’re not ready for it. We don’t have a plan. When you’re selling in the B2B space, particularly the enterprise space, they’ve got a whole group of professional procurement people that have been trained in how to negotiate—and they’re ready, but we’re not.
Charlie Hoehn: So what does ready even look like? Is it just being able to respond with a counter offer?
Steve Thompson: Well, yes, it’s being able to counter what they’re requesting, but counter it in an intelligent way. Being ready is understanding the target you’re trying to hit. Meaning, what would a great deal look like?
What would it look like for the customer and for you? And then this deal is constructed or comprised of various elements—the products, the services, the volumes, the discounts, the payment terms. There’s a whole host of moving parts in there.
Being prepared means understanding how much can we move on each of those things.
“We’re going to ask for this, but if they push us, we could accept this.”
That’s what I mean by being prepared to negotiate, so that we’re not the ones that are delaying getting the deal closed. Often, the customer will make a demand and the sales rep is not empowered to make a decision, and they have to go, “Well time out, I have to go take this back to my management.” And they go scurrying back, and then they have this thing called the internal negotiation, which the truth is, it’s even more challenging than the external.
They’ve got to fight to get a bigger discount, to throw some additional services in, whatever the case may be.
This takes time—it’s delaying the deal and the momentum.
Then finally they have to reengage back with the customer, maybe it’s procurement, whatever it might be, to a committee. They present, “Okay, I’m able to give you this.”
Then I go, “Okay, that’s a good start. Now, what we want to talk about are the payment terms.”
Your competition, they’re not asking for payment upfront. If you really insist on it, we’re probably going to go, “Oh well, we’ve got to do another time out.” See, we’re not ready to negotiate. We’ve put things into the proposal and we’re not prepared to discuss them.
That not only delays the deal, but what I see on the buying side is the more you concede, the more things you give away to the customer as they demand it, the less comfortable they start feeling.
That may seem counterintuitive, because we think we’re making them happy, okay? But the truth is, we’ve told them what? “We’re the world-leading, number one, we’re giving you the best solution there is, and as soon as you push this on price, boom, we’re prepared to drop it.”
And they’re going, “Wait a minute, this isn’t quite right.” Then they push us on services and throwing them in for free, and we agree.
They’re going, “Whoa, something’s not right here.” I’ve actually seen on the buying side, clients of mine completely cancel. Because they started feeling so at risk by the behavior of the selling organization. They said, “They’re so desperate to do a deal, I’m starting to question their credibility on everything they’ve been telling us from day one.”
The Fourth Principle
Steve Thompson: Then the fourth element is, you’ve won the business. Let’s say this is an existing customer, they’ve been buying from your company for years. They don’t understand the value they’ve gotten from the products and services they’ve already bought. You’re trying to sell them more.
Charlie Hoehn: What do most companies do, what does it look like, and what is a great example of a company that shows, “Here’s the value of what we’ve been giving you.”?
Steve Thompson: Unfortunately, the problem is, there aren’t that many companies that are executing on this. Now, the SaaS companies are quickly figuring out they’ve got to execute on delivering the promise value. By the way, it’s not just enough to deliver it. You’ve got to get credit for delivering it.
You can’t be a hero in your own mind. You have to have them look you in the eye and say, “Yes. You have delivered the value that we were looking for.”
Let’s say that you’re selling software. You’ve jumped through all the technical hurdles, and your software can be installed into their infrastructure and integrated and all the kind of things that have to happen. But here’s the larger question: they just spent a couple million dollars on the software, how are they going to know it was money well spent? Why did they buy the software?
What are the outcomes that they are expecting to achieve?
They’re looking for a supplier and a partner who’s prepared to get in the boat with them and row to that destination of outcomes and success.
Why’d they buy the software? Well, we wanted to automate something. Okay, well let’s assume that you can automate it, what does it mean? Well what it actually means is that we can decrease the time to market for launching new products. Okay that’s a pretty significant outcome. Well, we can’t just sell them the software, cash the commission check, have a party and move on. We as an organization have got to show we’re committed to that software not only being installed and deployed but ensuring that they are getting the outcomes they were looking for. When you do that, this is what I call the last mile.
When you can close that gap, you’ve got a customer that is going to renew with you automatically.
So many sales people miss this dynamic of change. If you have a customer where nothing is changing, you are going to have a zero opportunities with them. If nothing is changing in the business, there is not an opportunity for you to sell to them.
The good news is there are no companies like that. The piece of change I submit is increasing in business. It is the change itself that generates new opportunities ,but you are not going to be able to capitalize on it with an existing customer if they first don’t say, “Yeah, what I bought from you in the past boy we got value out of that, and when things change I am going to talk to Charlie first because Charlie was with us on the last one. Maybe he can or maybe he can’t help us with this one, but I am going to give him first a shot.”
Charlie Hoehn: What are some of the excuses or obstacles that your clients or companies run into that prevent them from doing this?
Steve Thompson: Some things are more challenging than others, but again, let us put it in this context. Would you agree with the fundamental premise that, if a company is going to go spend hard earned money on a product or service, they expect something or some things to be better and different after they spent that money?
Charlie Hoehn: Yeah, of course.
Steve Thompson: Would you agree they probably wouldn’t go spend the money purposely trying to make things worse?
Charlie Hoehn: Yes.
Steve Thompson: Okay, so what are those things that they want better and different? Those are the outcomes. What we are really bringing this around to is the advent of what is called outcome-based selling.
This is the next genesis, if you will, of B2B selling, because on the customer side—I can say this because again, half of my business is consulting on that side—they are starting to ask the tough question:
“Man, we are spending a lot of money with this supplier. What are we getting for it?”
When they can’t answer it, suddenly that supplier has a big target painted on them.
But actually it is broader than that. The individual or the group of people who brought that supplier in and signed off on the check, they’ve got a big political target painted on them. People are going to question them, “You are not being a good steward of the company’s resources here.” So politically they’re at risk.
This is how you de-risk it for everybody.
I’ve got a cyber-security program on my laptop, and once a month it pops up and it shows me how many things we’ve blocked, this and this and this—and that is reinforcing to me that this is money well spent. I am not going to be thinking about you unless something goes wrong. But it’s reinforcing to me.
I’ve got no problem renewing with these guys because they are producing the results, but they are making sure that they are reminding me of that—not in an ostentatious way—and that they are getting credit for it.
That is what we are talking about here.
So that is really the fourth and final hurdle, and the truth is it is probably the one that gets in the way the most, of trying to sell to an existing customer. The sales rep doesn’t understand that that problem is out there, but behind the scenes on the customer side, there are people asking the questions.
So if they don’t know the value of what they bought from you in the past, why would you think they’d want to buy more, much less do a much bigger deal? Well they don’t. They don’t.
Results from Steve Thompon’s Principles
Charlie Hoehn: Tell me about some of the results that you have seen, the transformation when they have started fixing these problems.
Steve Thompson: Well, you know when it comes to B2B sales there are generally a few critical metrics. Number one, how much qualified pipeline do you have?
I will tell you that when you go to the trouble to ensure that you are delivering the value and getting credit, you are going to start generating more sales pipeline, meaning more potential opportunities, with your install base than you had any idea what’s out there. That’s been one of the dramatic changes.
By the way, the easiest sale in the world to make, the one that has the shortest sale cycle, is to an existing, happy customer.
The deals I am talking about are six to nine months and maybe even more. You can dramatically compress that. So can we compress the sales cycle, get the customer interested in buying quicker?
The third thing that we have seen is conversion rates or close rates of the opportunities you have in your pipeline, you’re converting a lot more of them into deals.
Then finally, the deals you are doing, on average, are a lot bigger.
So there’s a whole lot of goodness here and what I am not proposing to everybody is a whole new sales process. There is hundreds of them out there. They’re good. I am asked all the time, “What’s the best one?”
I have been trained and certified on almost all of them throughout my career, and my answer is always, “Whichever one you can execute,” okay?
What I am trying to do is crystallize everyone’s thinking, and do two things. One, I want you to flip from an inside out view, which is the way most sales people approach it, to an outside in view from the customer’s vantage point.
Charlie Hoehn: You mean have empathy?
Steve Thompson: Not only have empathy, but also bring them value by looking at it through their eyes.
“Wow is this what you are trying to accomplish? Okay, well we’ve got other customers who have done the same but I am surprised you’re also just only going that far. Do you know that there is an opportunity to go even further in this area?” Well they don’t know.
The customer doesn’t know. They haven’t bought this before.
So it is more than empathy. It is demonstrating that you are not measuring success by booking a deal with them, okay?
You are measuring success by their success.
Then after that, everything takes care of itself.
By the way, this approach, particularly the proposals and the other things, my clients have used on deals from $20,000 to deals well north of a billion.
Let’s talk about the proposal a second, which is actually the third book in the series. It’s just seven slides. Just seven straight-forward slides were used to have a dialogue with the key decision makers and deals well north of a billion dollars who agreed to it right then and there.
Now, afterwards there was a big thick proposal contract and everything, but that was just what I call adminisitrivia, okay? It was already done. That was just getting the paperwork done so the money starts flowing and the products and services start moving.
The world is getting more complicated, and the most successful people are the ones who can strip the complexity out.
It is easy to complicate stuff. It is really hard to strip it to the critical lessons so that you are helping the customer make an informed decision, one where they feel comfortable they are making the right decision. That is really what this is about at the end of the day.
The clearer and easier you can present it and hone in on what’s important to them, the easier it is for them to make the decision.
Sequels to Must-Win Deals
Charlie Hoehn: This is going to be a series of books breaking down how to conquer these problems and what is the estimated release dates for the other books?
Steve Thompson: Sure, the second book is The Irresistible Value Proposition. I am tackling the first challenge first, and it follows the same timeline sequence, if you will, of a selling campaign. That one will be out early in January, because literally before I stepped in here with you, I got from my editor his cut on the final edit on it. I’ve got to review that, and he says there are a few things we need to tweak. We’ll get that done and get it in your hands.
The third one which is called The Compelling Proposal, which is the seven simple slides—that one I have already written and he’s already done one pass on it. My intentions are to get it out some time in the late February, and then the fourth one, which is The Purposeful Negotiation.
The final book is the one that I have not written yet. The rough draft is done. So it will go to the editor when we get far enough through the third one.
But the final book, which I don’t even think I’ve got a title for it yet but it is going to fundamentally be the painless renewal or past value delivered, somewhere in there is going to be in the title. That one I haven’t written yet but that’s the one that pulls it all together and okay, how do you manage this through the lifecycle?
Charlie Hoehn: What is the best way for listeners to either connect with you or follow you if you want them to do that?
Steve Thompson: Sure, well number one they can follow me on LinkedIn, and on LinkedIn by the way, there are links to my previous books. I publish blogs regularly, and in fact right now I am publishing a series that basically follows the books. This series is The 10 Critical Questions That Haunt Sales Management, and they have to do with these must-win deals.
It follows the same logic and the same sequence that you are going to find in the books, and I am putting out those blogs about one every two weeks so that you will get a taste of what the book is about and what the concepts are about.
So that is the easiest way. Certainly you can email me, it is email@example.com and I’ll be more than happy to respond to that.
Charlie Hoehn: What is one thing from your book that they can do this week that will have a positive impact?
Steve Thompson: All right, I think I am going to give them two challenges then. So I am going to take advantage of my airtime.
My target here is B2B sales people—that’s who would read this book and if you are in the middle of the sales campaign right now, my challenge is for you to stop and ask yourself the question, “If they buy what I am selling them and they use it, implement it, deploy it, whatever it may be, three to four months after that, how are they going to know that it was a good purchase?”
If you are not thinking that way, then you might be selling the wrong things to the wrong people.
At the end of the day, the biggest disconnect that is occurring right now in B2B sales is the sales reps are too focused on selling to a deal, which then means quota and commission check and that is what they are paid to do. I get that.
But see, customers aren’t buying to a deal. They are buying to an outcome. So my challenge to you is to first ask yourself, are you selling just a deal, or are you selling to an outcome?
Now, if it is an existing customer, I want you to ask yourself, “If you were that customer and you looked at all the products and services that they bought from you, could you articulate the value that you have delivered to them?
Because if you can’t, I can assure you they are not spending time trying to figure it out.
My second challenge is you need to start working on that okay? Try to help them understand the value they’ve gotten from you, because it is going to get in the way of this opportunity you are pursuing right now.
Get Steve’s new book Must-Win Deals on Amazon.
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