Scaling Sales: Arming & Aiming – Objection Handling

Posted on Nov 2, 2010 | 27 comments


The original post of this article on appeared on GigaOm in a more concise version here.

I previously covered how early phase sales teams should be “evangelical” and consultative in nature.  As a tech startup grows it needs to develop more process & management if it is to scale.  I call this “arming & aiming” your salesforce.  The first post on scaling sales dealt with “aiming” your sales teams – making sure they were focused on the right opportunities.  This one deals with “arming” your teams – preparing them for battle by giving them the right tools to increase their win rates.

One of the biggest areas I’ve noticed many sales teams don’t spend time on to train their staff is “objection handling.”  When I talk to people about sales I often describe the sales process as a series of hurdles (objections) that are put up to avoid making a purchase and your responsibility is to work through these common objections with your customer.

[update: as per Phil Sugar’s excellent comments below – you need to first be sure that the customer has a need that you can solve and is ready to buy. The first rule is sales is qualify, qualify, qualify so you don’t spend time overcoming hurdles only to find out there is no buyer.]

In the evangelical phase you’re working through these with customers on the fly.  Some objections are real and they end up becoming changes to your product, your service plan or your pricing / bundling.  Some objections are just excuses not to buy that can be overcome with enough time, effort and evidence.

As a founder, when you’ve been dealing with these kinds of objections for a couple of years it becomes natural and you easily handle objections on price, product & competition without much thought.  It is tacit knowledge.  But to effectively scale a sales team you need to codify it, train your sales teams, monitor results, refine your messages and then refine the training / rollout to your teams.

Some examples of common objections across many companies:

1. Prices are too high –  Inexperienced sales reps will try to convince you they need to lower price to win deals.  More experienced sales leaders seldom compete on price.  They’ll discount – sure.  But they want to establish a baseline in the customer’s mind of the value they will get by using your product.  And the only way to do that is to help them calculate the ROI (return on investment) of using your product.  As a company you need to invest in ROI calculators (spreadsheets) that are easy for sales reps to plug in basic customer metrics and pop out with an expected benefit.  It is even better when the spreadsheets were established with your early customers and therefore the baseline for the calculations are real.  Even better if that customer is referenceable!  Referenceable customers are the holy grail of sales.

2. You’re more expensive than competitors – “Of course we are.  We’re a premium product.  Let me walk you through the comparison set of our offering versus our competitors…”  You need to talk them through your advantages.  For example, if you’ve raised 3x the funding of your nearest competitor then you talk about the investment dollars you’re putting into your product versus the competition.  “It’s not about buying the product only where it’s at today – even though we’re advanced there – it’s about where the product is going.  We’ve investing in R&D at a faster rate than the competition which is why we raised $10 million to fund extra development.”

3. We’d rather buy the “all-in-one” solution - Let me show you our API’s and how we integrate. You can have best of both worlds.  All-in-one solutions may initially seem appealing but you end up getting inferior innovation.  Our big, integrated competitor is investing across 12 different product sets.  We only do 2 and therefore those two are much deeper / better functionality / more focused.  Let me show you how you can use both of our products seamlessly.

Whatever.

These are made-up examples but they are typical of the kind of knowledge you gain over time for how to win an increased percentage of competitive deals.  You need to codify all of your knowledge, put it into writing that can be disseminated to distributed sales reps and run training exercises where you drill people on the most raised objections.

And importantly you also need to get feedback from your sales reps who are on the front line every day what is working and what isn’t.  Don’t think that you have all the answers in the ivory tower.

If you don’t arm sales people with the knowledge of how to overcome these obvious hurdles then each one will be competing without the collective wisdom of your company’s years of experience.

The next post will talk about more of the munitions your sales reps need.

  • http://rbeale.com RBeale

    Great Post, Mark. Point #1 is huge. Arming a sales team with an ROI Calculator is a total game changer. Conversations with an ROI Calculator not only prove your product/service's worth, but it positions the sales rep as a trusted advisor.

  • http://bothsidesofthetable.com msuster

    As a company you may even need 2 ROI calculators – one simple & one complex. The first is when you're early in the process and the customer may not yet feel comfortable giving you all of the data you need for a detailed business case. I've seen instances where using too much data, too early, can be a barrier. It's really a delicate act of asking a prospect for sensitive information to try and help them.

  • philsugar

    I love talking about sales and I love that you don't give it some squishy title like business development. Great post, I respect you are the only one doing this on sales and that's because you've been out there. You have to have a set response to questions people are going to ask. I like to have some of them be “take-aways” “we're not the company if you're looking for a commodity” etc.

    The only thing I would caution people about viewing sales as overcoming a series of objections, is there are some objections where no means no and the response there has to be to learn as much as possible and position the company in the best way possible, you have to prep your reps for this as well.

    We've all encountered sales people (you must get this every day as much as you're pitched) that think they can bludgeon you into submission by never stopping overcoming your objections. Instead of listening and working to understand what you are saying they almost can't wait for you to finish talking so they can go on the attack. The natural response is to stop talking and stop responding which is worst case scenario because you can never win an argument with a customer.

    I am in no way diminishing the value of your posts. I love this series and can't wait to get to forecasting because I view sales as binary not as a percentage, and am going to enjoy seeing your framework, although I'm guessing its going to be very similar to the salesforce.com model :-).

    I guess my point is like anything if you take it too literally it won't work. Like the rep who has been taught to respond to a question with a question. Many times its super valuable to work to understand where the question is coming from so you can actually provide the right answer to the customer. You are helping to guide them on the process. However there is nothing more annoying than asking a direct clear question and not getting a straight answer.

  • http://bothsidesofthetable.com msuster

    You're totally right & if I gave a different impression then I set the wrong tone. I'm going to go back and re-read (and maybe edit).

    two rules of sales:
    1. qualify, qualify, qualify (as in make sure you're talking to somebody who really has a need to buy your product and that need is now)
    2. you need to be sure that your selling process is aligned with their buying process – as in “they are ready to buy” – I talked about this a bit in the last post about segmenting deals.

    So I totally agree with your comments. Thank you.

  • philsugar

    I don't think you set the wrong tone at all.

    My point is that in every single one of the dozen or so sales books I love and are invaluable…if you follow a certain process blindly its really annoying.

    I have been pushing so hard to have a college course where you read each one of these books each week and listen to an actual salesperson come in and discuss. However t is considered SOOO beneath the academic standards of my esteemed alma matter.

    You know learning about sales is kind of like learning about sex. Its really important but nobody likes talking about it. So most people end up fumbling around until they learn. If you read books on either subject and blindly try to apply the advice it won't work. That doesn't mean its not important to read many books on the subject and have a good toolkit.

  • http://bothsidesofthetable.com msuster

    Yeah, real problem. Same is true for young entrepreneurs – too many see sales as “beneath them” when it is actually the lifeblood of commerce. Easier to hide behind a product.

  • troygroberg

    Well said. Until the customer sees actual numbers the sales rep is just speaking empty words. An ounce of data is worth a pound of opinion. The ROI calculator, while speculative, is still based on real numbers given to the sales rep by the customer. When the sales rep can become the “trusted adviser” as opposed to the guy who just wants your money, miracles happen.

  • Dan Munro

    Better too if the ROI calculators are 3rd party tools – not homegrown spreadsheets. These aren't expensive – but having a 3rd party logo/imprimatur helps to strengthen credibility.

  • http://www.gobalto.com/studystartup goBalto

    Hey Mark,

    Great series of posts. I religiously follow your blog and have found them particularly helpful as we build our business. Could you point me to some resources or references to help guide me in building the ROI calculator?

    Thanks!
    Jae

  • Ciprian Patrulescu

    Agreed. Sales are the lifeblood of a company – without sales there would be no R&D, marketing, etc.

  • http://bothsidesofthetable.com msuster

    I don't have one – we built ours homegrown. Anyone else know?

  • http://twitter.com/matthewhdavis Matthew Davis

    One of the most important points in objection handling isn't your response, but why the objection is being offered in the first place. Once you know the source of the objection, you know how best to respond!

  • Bhastings

    I'm happy about the latest round of sales posts as part of the sales series. I'm been waiting for these to ramp up since I added you to Google Reader almost a year ago.

    Way back in April you talked about the PUCCKA methodology. Are you still going to flesh that out and are these posts related in some way? I agree with you that “sales is the lifeblood of commerce”; because of that I think these are the most important posts you write. Especially for the businesses that are growing/bootstrapping organically and will never take VC funds. Which, if readers are honest with themselves, is the majority of entrepreneurs who follow this blog.

    Keep'm coming!!!

  • http://twitter.com/wfjackson3 Willis F Jackson III

    I like having two calculators for the two levels of technical audiences. 1 for the boardroom, and another more detailed version for the engineering staff (when appropriate). If they don't see sufficient detail, they might dismiss you too soon. Do other folks see this as appropriate too?

  • http://twitter.com/wfjackson3 Willis F Jackson III

    It really depends on the kind of product or service you are offering. In my opinion, you should be able to build a basic ROI calculator based on the assumptions you have in your value proposition. It might take you a while, but I think you probably should build it from scratch. Start on paper if you have to.

  • http://twitter.com/ericgonzalez Eric Gonzalez

    Something Mark posted in the comments here is worth underlining: use a simple and a complex ROI calculator. I know for a fact my company would have lost two deals had we not provided a detailed ROI calculator to a financial due diligence person and a simpler one to the ultimate decision maker.

    Also: worth noting.. the simple ROI calculator will usually go to a key decision maker, so make that one reflect increases in sales as much as possible, rather than cost savings. There's no “emotional high” in buying a cost saver for execs.

    Happy to share our ROI calculators if anyone wants (but I won't post them online as I don't want to train my competition :) ), just hit me up at eric@virtualdoubloon.com if you'd like them.

  • Matt Cameron

    Jae,

    I have built several of these for different organisations I have worked at and you really need to build you own. I would counsel that the best way to do it is go sit with a friendly existing customer and build one together. They will help you think more broadly about where the ROI is coming from than you otherwise might have. The process also helps you cut through the reality distortion field where we start plugging in soft dollar benefits that just don't carry weight in their world.

  • Belushi

    …talk to the hand :)

  • http://bothsidesofthetable.com msuster

    Thanks, Matt!

  • http://bothsidesofthetable.com msuster

    Well … it's true that seeing the objection is helpful in-and-of itself. But there are so many garden variety objections that are really just prompts for you to test whether you have the right potential buyer:
    - I'm not sure we can afford your service?
    - I saw one of these much cheaper at a competitor
    - How come you don't offer features a,b,c
    - Doesn't Google offer this for free?
    etc.

  • http://bothsidesofthetable.com msuster

    Thank you. I have one more this week – maybe today? Already written. I still have to write PUCCKA and will soon. Funny, I get two reactions. I get some people who love the sales posts and some that apparently don't (or the RT counts would be higher on Twitter). But … I think it is some of the most important stuff for startups so I'll carry on unless people complain loudly!

  • http://bothsidesofthetable.com msuster

    Thanks, Eric! That's great.

  • http://bothsidesofthetable.com msuster

    cuz the face ain't listenen ….

  • http://arnoldwaldstein.com awaldstein

    Really good post Mark.

    In my experience, most sales objection handling is all about price when it should be all about value. The best salespeople have marketing DNA. They don't simply mimic the complaints of the customer, they should be articulating the value of the offering. If there is none, this is not a qualified customer regardless.

  • http://www.gordonbowman.com Gordon Bowman

    I think a key part of training sales reps on objection handling is to get them to learn what the customer is basing their opinion on too.

    i.e. “Your prices are too high.” “Oh yeah, compared to what?”

    Sales reps become much more effective when they have a basis to go off instead of just launching on the offensive.

  • http://www.gordonbowman.com Gordon Bowman

    Ha! So true. Great analogy, I'm definitely using that one.

  • http://twitter.com/mclpro Dave McLoughlin

    I completely agree that early attempts should be very consultative in nature. In my industry, the promotional products industry, I create ROI solutions using QR codes to drive web analytics, scanning analytics and such off a promo product so that brand marketers can not only get the existing promotion, but at the same time they have some measurable numbers to build their brand on! They can learn from the stats!