The Biggest Reason Most Sales Campaigns Don’t Close

Posted on Jun 23, 2013 | 22 comments


Every sales organization with more than a handful of reps or that is across multiple offices or time zones would benefit from having a sales methodology. There are many out there and many books have been written on the topic.

talk to the handI’ve been writing a series on a simple methodology that we used at my first enterprise software company.

It was useful because I was new to sales and as the CEO it gave me some comfort to feel more informed about how our leads where going and to know the likelihood of our hitting our quarterly goals.

We called our methodology PUCCKA (you can click on the link for a full explanation).

The first post covered the topic of “P” or pain. Simply, this is identifying a customer need that has economic value to them if they can solve it. This solves the customer question, “Why Buy Anything?”

The second post was about the “U” or Unique Selling Proposition, which in industry terms is often called a USP. If a customer knows they have a problem they need to select a vendor who best solves that problem (or they can build in-house tools).

The USP solves the, “Why Buy Me?” question.

But the number one reason sales stall when customers see the value in what you do is because they often don’t have a reason to buy NOW.

That is where a “compelling event” comes into play.

If you’ve done a good job in the sales process you’ve already written out a needs document in which your wrote out what you believe the customer problems are with specific examples.

In a perfect world you’d have a customer champion who would go through and validate your list.

A friend of mine who was a former sales manager used to call this, “Identify the need then get the need agreed.” That always stuck with me.

If you can’t get somebody motivated by proving things economically they often lack the will to follow through or the political support they need to get budget.  People only act when the have quantifiable pain in which not acting is worse. We used to call it a “burning platform” as in when your platform is burning you’re forced to take action.

The next logical piece of work is therefore to help your prospect quantify the problem so they can attribute economic value to your solution and help you complete your sale.

It’s true that some solutions are really hard to quantify and the most obvious example people point to is email. “You can’t quantify the value of email yet everybody needs it!”

Maybe they don’t? I know many modern software companies that are abandoning email in favor of more open systems as a way of reducing bureaucracy. I’ll bet that could be quantified.

Do the best you can to measure the success of your product in quantifiable terms. In an early-stage business where your product is less developed the business case might be higher level.

Or simply if you’re earlier in the sales cycle and you don’t want to get bogged down in too much detail until you have customer buy-in to your high-level value statement.

Often the business case is made in an ROI format – a high-level spreadsheet that outlines the return on investment. As your company grows the number of sales reps you have it is useful to build “ROI calculators” for them which are nothing more than spreadsheet templates where they can enter in variables and the spreadsheet will make a case for your product.

The easiest thing for you to quantify are the hard costs associated with your product.

For example, if by using your analytics product you believe customers will convert 8% higher prospects to sales then you’ll make that case. Preferably you’d have a customer testimonial where the customer reference will be able to talk through their economic benefits.

But many technology products have huge hidden benefits that if not properly laid out in a business case won’t be readily acknowledged by the customer.

For example, if you offer a product that a customer believes he or she can simply build themselves they often won’t factor in the development costs of building the product and even more importantly the maintenance costs of keeping the product up to date.

This is where the rubber hits the road because the most expensive resources for many companies are its people.

This part of the ROI analysis is often called the “Total Cost of Ownership” or TCO. TCO often swings deals widely when you can persuade customers to understand their true costs of not working with you.

The question I get most often is how detailed to make the business case. That as I said is a function of both the stage of your company and where in the sales process you are.

You probably don’t want to overwhelm a new relationship with an 8-tab spreadsheet after your first meeting but in a multi-million dollar sale you’ll need it.

Once you’ve calculated the ROI I often recommend sitting down with your prospect to walk them through it. This is effective for a few reasons.

First, it gives you a reason to meet with them again and let’s face it – out of sight, out of mind! Second, it gives you a chance to have another debate about the pain points and also to start to leave the TCO thought in their mind.

I recommend telling your prospect, “Look, this is my first pass through the business case so I’ve obviously had to make some assumptions. I’d love to see whether we could possibly work on this together so I could refine some of these numbers and make sure they reflect your point of view, too.”

Trust me when I tell you that buyers seldom do the quant work on their own volition and therefore eager buyers often lose the battle for budget to buy your product.

It’s your job to make their job easier to buy you.

By the way, I recommend the EXACT same process when a company is interested in acquiring your company. Acquiring companies seldom do the detailed analysis of the benefits of buying your company. Doing the heavy-lifting for them will help the champion who wants to buy you persuade the remaining powers-that-be.

Summary:

If you’ve documented their pain in economic terms, if your product uniquely solves this pain and if you build a compelling business case as to why implementing your product will make money, lower costs or reduce risks – you’re well on your way toward a new customer.

But you’re very unlikely to land a new customer without a champion who helps push through your sale.

And not all people who are nice to you at the prospect is a “champion.”

In order to be a champion they must have both “influence” and “authority.” And they have to want to buy your product.

We’ll cover that in the next post.

  • chokosabe

    Very interesting. You know any books you’d recommend that illustrate this well? i.e lays out all the arguments?

  • secretarycleary

    We’ve found that adding a temporal element to the value equation (e.g. you’re losing this much money a month, or would be making this much more money in a month) helps 1) prove out ROI and 2) add a sense of urgency to the sales process. The latter, in my view, is why most enterprise software deals fail: the client sees value in your product but doesn’t give it priority, so momentum is lost and the sale stalls.

  • http://www.startupmanagement.org/ William Mougayar

    “Strategic Selling” by Miller & Heiman is the Sales book classic I would recommend
    http://www.amazon.com/The-New-Strategic-Selling-Successful/dp/044669519X

  • JordanPE

    Mark, thank you for the sales series posts you’re doing! Having a compelling event is key and in b2b sales- an ROI calculation is absolutely compelling.

    I agree that you need the prospect to “buy in” on those numbers. Having the prospect actually agree with each input in your ROI spreadsheet does a lot psychologically with the prospect.

    I’m curious what your take on the “next steps” are after the ROI event.

  • http://www.tbkconsult.com/ Hans Peter Bech

    I certainly agree that using the RoI to create a compelling event can be very useful (if not mandatory). But you need to run the RoI with the budget folks. Users and gate keepers are typically not interested in RoI’s. You also have to realize that you are competing with other investment opportunities in completely different areas. Thus you need to understand why this particular project is rewarding financially AND strategically.

  • Costas Papadopoulos

    The “ultimate sales machine” by chet holmes. Simple techniques, Excellent read.

  • Costas Papadopoulos

    Great article Mark. Always enlightening.

  • http://www.justanentrepreneur.com Philip Sugar

    I think this is why if you need hyper growth you have to have a real compelling market event that causes a need. For us at EnviroMetrics it was the TitleV law passed that meant chemical companies needed to provide advanced reporting on their air emissions.

    Lacking that, you are going to have to generate that need. And that takes time. Plain and simple. You will get a ton of people asking who else is using this, give me tons of examples. Nothing wrong with this at all. As a matter of fact its a bit easier to build a sustainable company, but you will ramp slowly until you reach the tipping point. Just take it into account on your burn rate. You can’t boil that pot of water by burning $100 bills.

    One last thing. If your ROI is based on cost savings double the above paragraph again. If you can show top line growth that is a much easier story than cutting expenses.

  • https://dashboard.marketing.ai/a/signup Greg Marlin

    Compelling event is tough for a lot of people because what the prospect will tell you is the reason they came to you is not always (actually often not) why they will buy and buy now (i.e. the compelling event). For this reason, we look to identify two things: (1) What is the reason they came to us? (also not always what they tell you); and (2) What is the reason they will buy from us now? (and make sure we focus on getting that solidly on track and sink our teeth in until it’s been completed and acknowledged). This takes some solid consultative listening skills, good sales instincts and good negotiation.

    The compelling event is also indelibly linked to the PAIN you mentioned. To dive deeper, it’s helpful to understand pain on three different levels: Technical, Business, and Personal, and understand this for all players in the game, especially the influencer, the initiator and the decision-maker.

  • Riley Gibson

    This is very helpful and timely – thanks for the read. We have struggled to instill urgency in larger deals, so our sales cycles don’t have a lot of consistency. I think adding the step in our process of building a unique case for them and walking them through it ads a really nice touch point. Thanks again.

  • Matt Cameron

    Adding color to your “champion” label: I would add that a mistake I see time and again is a stunningly ‘compelling’ ROI model presented to someone with authority and influence who has nothing to gain personally from the deal = Deal death.

    The key to getting action is ensuring this person is personally impacted by the benefits of the ROI, which implies that you understand how they are remunerated/goaled. I can cite many examples where the ROI for the company is amazing, but it involved risk/effort from the person in authority who personally gained nothing from the project, so nothing happens.

  • http://www.justanentrepreneur.com Philip Sugar

    This is what I call the 5% rule.

    If they get a 5% raise for hitting it out of the park, and fired for making a mistake (many big companies). And by definition they are risk adverse because they work for a big company.

    Then you better find visionaries to begin with and then worry about convincing people they are laggards.

  • m_allan

    Great summary as usual. As a veteran of B2B start up selling only other perspective i would add re the ROI model is: Selling by its very nature is an emotional process for the buyer as much as it is a rational one. More often than not, the ROI model is there to reinforce – and to help sell it internally – a decision a prospect has already made in their own minds (even though they may not tell you so). Nearly every peddler that walks through the door of ‘big company X’ today has some sort of ROI story. Increasingly – say over the last 15-20 years – I see the ROI as not being the ‘reason’ the customer buys but is of course hugely important.

  • http://bothsidesofthetable.com msuster

    agreed. thanks.

  • http://bothsidesofthetable.com msuster

    get prospect to agree ROI. If they do, try to turn them into a “champion” to help you advocate for budget and a project. Covered in my next post.

  • http://bothsidesofthetable.com msuster

    hyper growth … I agree. Which is why it’s rare

  • http://bothsidesofthetable.com msuster

    I prefer to have business person buy into ROI and use it to advocate with budget holders

  • JordanPE

    I absolutely agree. You cannot forget the emotional/psychological aspect of the ROI story. How is the “prospect” affected by this potential project and what motivates them. How can you inspire them to make a change? We’ll see what Mark has to say about making someone your champion…becuz this is essentially converting someone into an evangelist and they need to be on board with more than just the ROI story.

  • JordanPE

    Look forward to it :)

  • http://www.justanentrepreneur.com Philip Sugar

    Agreed that is the classic and I add:

    ROI Selling by Nick and Koenig
    You can’t teach a kid to ride a bike at a seminar by Sandler and Hayes
    Solution Selling by Bosworth
    Power Base Selling by Holden

  • http://www.startupmanagement.org/ William Mougayar

    Yes. I was going to mention Power Base Selling but it focuses more on navigating the various influencers and is a bit more advanced reading & for large accounts. I have like 3 copies of that book because that was a key training when I was at HP. I even have his tapes and managers’ field book.

    Then you might as well add Consultative Selling by Mack Hanan, oriented on the ROI, profit improvements and cost reductions. I spent a day with Mack, RIP. He’s the real McCoy of selling.

    http://www.amazon.com/Consultative-Selling-Formula-High-Margin-Levels/dp/0814416179/ref=sr_1_1?s=books&ie=UTF8&qid=1372178109&sr=1-1&keywords=mack+hanan+selling

  • Joe Mallia

    Great Post! Another book I like is Customer Centric Selling by Bosworth.

    Mark or anyone else- would you have any advice on reading material when selling through distribution partners like VARS. I recently relocated to a part of the country where our company has had limited success in gaining traction-in large part this is due to how buyers tend to buy in this particular region where almost 90% of sales are made through VARS. We’ve generally always sold direct. Generating demand at the user level is key with good use of USP’s but being “politically” correct when dealing with distribution partners has been challenging and will be crucial for my success in this particular area. Any feedback is welcome. Thanks