Why risk reduction is important for sales people

Managing risk is an important part of any business purchase, and indeed any large consumer purchase.  Salespeople who can manage risk perception and help customers reduce risk have an advantage over the competition.

Risk reduction is something that takes place right the way through the buying process.  Sales people who learn to help customers reduce risk and mitigate the perception of risk are more successful than their competitors.

Before a buyer decides who to meet with, they will have researched potential vendors.  For this reason it is important that they can easily find references and recommendations in the form of testimonials and case studies.  These need to be available on your website, from your blog, and from your social and business network profiles.

As the sale progresses the customer will want to confirm their initial assessment of your capabilities as a supplier by looking to add more information and detail to the information that they already have. They will want to reduce the risk further by talking with existing clients – those in your case studies or additional references.

Finally, in order for you to close the deal, customers may seek to reduce risks further in the form of guarantees or indemnities.

Not all referrals or recommendations are equal.  Customers typically place more reliance on people that are closer to them. They tend to trust, in descending order :

1. Personal experience.  If suppliers have performed well in the past they become a known factor which means the risk of working with them is reduced
2. Recommendations from colleagues. A vendor who has worked with other people in the same organisation represents a lower risk
3. Approved supplier lists.  Risk is shared if buyers use suppliers that have been approved by other people in their organisation
4. References provided by existing customers.  Working with suppliers that have previously worked with other people in your field provides evidence of experience and quality
5. Public opinion. While reputation is very rarely a reason to select a supplier it can be enough to make sure that they are put on to the shortlist
6. Guarantees and indemnities.  While these help to ensure the risk is shared between the buyer and supplier, they are indications that the perception of risk still exists.

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RFP or RFQ–how to deal with last minute requests

Receiving an RFP or RFQ out of the blue can present a dilemma. Should you respond or not?

The reality is, if you didn’t know about the RFP (request for proposal) or RFQ (request for quotation) before it was written, you are entering a game that you have little chance of winning. So, should you play or not?

The RFP or RFQ will not have come out of the blue!

Very few customers draft and issue an RFP or RFQ without first talking either to potential suppliers or retaining consultants (who will also have talked to potential suppliers).

This means that the information requested is based on a vision of the solution that has been created by one or more of your competitors.

Unless you were one of the people involved in the pre-issue discussions, you don’t fully understand the customer’s vision. This means that you don’t know where the value lies, you can’t engineer your solution to match their vision and you have no sponsor inside the organisation.

Given that you cannot compete effectively in this game, you must try to change the objective of the game.

The problem is that the customer will have spent a large number of man-hours and invested politically and emotionally in getting to the point at which they believe that they have the right solution vision. There will be a huge resistance to change.

Can the RFP or RFQ be changed by you?

Your first task is to work out if you can change the RFP or RFQ.

This means very carefully evaluating the request and determining a) what unique defining competence (UDC) you could add that the customer has not asked for, b) under what circumstances they might need it and c) whether the value is significant enough for them to feel compelled to change their RFP or RFQ.

If you can see an opportunity then you must approach the customer before you do any more work on your response.

Persuading your customer to change the RFP or RFQ first is vital

Remember that all RFP or RFQ documents are designed to do one of two things:

• To get the lowest possible overall cost if it is a commodity purchase or
• To get the preferred bidder(s) through to the next stage if it’s a complex purchase

At this point, the customer has no idea that there is value that they need in your UDC. If there was they’d have it in their RFP or RFQ. So you cannot be a preferred bidder.

This means that in the box-ticking, point scoring exercise that follows the responses to the RFQ or RFP your significantly valuable UDC actually has:

• No box to sit in – other than the “additional information or benefits” section where it will only be evaluated in the unlikely event that all other elements are equal
• No points value – as the customer has not recognised the value or significance

If you simply build your UDC into your response without first selling it to your customer, it will probably have no impact at all.

Beginning to change the RFP or RFQ

Once the RFP or RFQ has been issued, some organisations – especially government bodies, have a policy of not talking to responders.

Unless you can arrange a meeting with all the key players; you cannot begin to make the changes you need. So don’t be put off by the policies.

This is one of those situations when you have to call high in the organisation; that is the only place where there will be enough power to force those meetings to happen.

When you make these phone calls you need to use the significant value that you have potentially uncovered in order to secure the meeting. That is all you are aiming for at this point – a meeting to discuss additional significant value to your customer.

The chances are that the initial meeting, and certainly any subsequent meetings, will be attended by the people who drafted the RFP or RFQ. So, it is crucial that the meeting is 100% positive; that you position yourself clearly as an honest broker who has discovered a way to create additional value for the customer.

Your strategy for changing the RFP or RFQ

If you can persuade the RFP or RFQ team to begin to explore the additional value you need to decide what your overall strategy is:

• Re-engineer the RFP or RFQ so that you have significant advantage and can take the whole deal
• Divide the purchase so that your offering is separated from the main purchase and budget

Declining to respond to an RFP or RFQ

It may be that:

• Your evaluation of the RFP or RFQ shows no significant advantage or
• The customer doesn’t agree with your assessment or
• You cannot arrange the meetings that you need

In all of these cases, there is simply no point in investing time, money and resources in creating a response. You need to decline gracefully with a reply that keeps the door open and positions some additional benefits (even if you can’t see that they need them at the moment). Something along the lines of:

‘Thank you for your request to propose a solution (or quote). Having evaluated your document, we have concluded that you are not currently looking for a solution that includes:

• UDC benefit statement 1
• UDC benefit statement 2
• UDC benefit statement 3 …

Therefore we have decide not to propose a solution (or quote) this time, but would like to remain in contact with you as your requirements change.”

The bluebird RFP or RFQ – last thoughts

The next time an unexpected RFP or RFQ presents itself, give this process a try. While I can’t guarantee that following this process will work every time, I know, from experience, that it does work more times than simply responding with no attempt to talk to the customer.

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The danger of using auto-responders

A large (though not the only) aspect of Sales 2.0 is using technology to reduce the time salespeople spend on admin.

Yesterday, I clicked on an interesting link in an email from a company that develops sales and marketing 2.0 software and spent some time browsing their site.

Today I received an email from them.

I’m very impressed that they tracked me from the email through my activity and click-path and worked out that I have done enough to warrant an email.

But read the email:

When I registered on their site I put “Self-employed” in the ‘Company:’ field on their form.

Do I believe that the salesperson has researched me and can “see several vital process in which [they] can help qualify more leads for [my] sales team”?

The problem with using auto-response email as part of any web 2.0 process is that you can’t predict every combination of variables that will need to be responded to.

By all means automate the drafting of the email; but make sure an attentive person sanity-checks it before it is sent.

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A series of sales performance improvement posts

Over the past nine-months I’ve written some posts about reasons why sales people underperform and what they can do about it.

It’s been suggested that they would be good linked together as a series.

So, you can read the first one here and follow the chain

Or you can pick from this list:

1. Not seeing that you are under-performing
2. Not seeking help
3. Not committing to change
4. Being unfocused
5. Not having a sales activity plan
6. Not driving your pipeline
7. Lacking fluency

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Be patient. Don’t rush to close.

Sales people are taught to close as early as they can. They are also pressurised by management (especially in quoted companies) to hit quarterly figures as well as an annual target.

Prospects know that.

That’s why they’ll delay an order if they see you pushing to close it. Or it’s near your quarter or year-end. They know that a little stalling can yield a big discount.

Try to resist the pressure to close fast or now.

You’ll close at higher values if you can ignore the stalling.

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Sales cycles and buying processes

They never align perfectly.

No matter what selling process you subscribe to your customers are buying not selling.

So manage the buying process. Find out how your customers make decisions. Facilitate that process. Coach them through it.

Use your selling process only to manage your pipeline.

Sales, selling, buying cycle, buying process, sales cycle, sales process, sales pipeline

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First meeting focus

You’ve got the first meeting with the prospect. You’re sat in reception and they come to get you. Or you are shown to their office. What do you say in the first-minutes of the conversation?

“Great location. Do you live far away?”

“What was that trophy for?”

“Bet all these stairs keep you fit”

“Let me just start up PowerPoint”

“Before I start here’s our brochure”

No. Really, no. No small talk on the first meeting. And equally bad is letting the prospect lead with small talk and deciding when to get on to business.

The first meeting is all about establishing your credentials. The prospect has agreed to meet with you to explore whatever it was you discussed on the phone.

So get down to it as soon as possible.

“George, really good to meet you. We talked on the ‘phone about … Tell me what you …”

That way you will be seen as focused. On business and on them.

You can do the small talk at the end of the meeting, or as you are walking out.

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Don’t ask the B-question! Ooh! You did!

A few years ago I accompanied a salesman on a call as his coach. The meeting with the prospect was going really well until he asked the B-question.

“No, I don’t have a budget for that.”

“That’s a shame”, he said as we queued for a post-call coffee “we could have really saved them some money there.”

Every sales training course, methodology and guru emphasises the need not to waste time selling to unqualified prospects.

Then they spout BANT: Budget, Authority, Need, Timescale

But the B in BANT is only relevant if you are selling a product or service that the customer knows he needs to buy and has defined the cost of himself.

Electricity? In the budget. Printing? In the budget. Replacement turret lathe? In the budget. Accountant’s fees? In the budget.

What if you are not selling such a product or service? Where the need or pain is latent?

The customer doesn’t know he needs it. She doesn’t know the cost. They have no idea what value it will deliver.

Therefore they can’t possibly have a budget for it.

How do you qualify then? Try AVANT™

• Access. Can they access the funds needed? If they can’t access the money now, can they later on? Not necessarily that individual but the organisation?
• Value. Do they understand the value? If you can generate a 250% RoI in year-one or end their IP dispute, you can bet they’ll see the value.
• Authority. The person you are talking to may not be able to sign-off what needs to be signed-off; but can they get you in front of people who can? If not can you get there anyway?
• Need. Not the same as value. Is there a compelling reason why now? Is that reason strong enough to align all the forces in the buying process?
• Timescale. Once they have acknowledged the value, can you develop a timescale for action?

Sure, it means taking time with a – by the BANT criteria – unqualified prospect to generate an understanding of the value you bring. But it does mean you don’t miss opportunities that you could pursue.

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Shorten your sales cycle by managing the buying process

If you find that your sales cycles are longer than usual for your marketplace you may need to look at how you manage what the customer has to do in order to place the order.

While sales people understand that a customer’s pain has an implication that needs to be solved, they also need to understand that the decision to purchase and implementing their solution involves managing a number of factors that also need solving.

Those factors are typically: inertia, status quo and internal politics, rules, policies and history. For the sale to happen they all have to be aligned.

Most sales people will try to find a coach to guide them through this alignment process; usually it’s whoever shows first interest in the solution. Occasionally, the selling team will align themselves with whoever is best positioned to help them.

Either way, this approach doesn’t take into account one key factor.

This prospect may never – or only rarely – have bought a solution like yours before. But you have sold it (hopefully) many times. Which means that you should know more about how it is bought than they do.

What you need to do is to find a mentor – someone who can open the doors, smooth the way and facilitate actions – while you, in turn act as their coach.

So while they are managing the internal relationships and handling the rules and policies, you need to be using your experience to help them identify the points of inertia, the reasons to resist change and the blockages that need overcoming.

The earlier in the process you can get your prospect to address the internal issues that will need to be navigated, the sooner you can deal with them and the shorter your sales-cycle will be.

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What to do about under performing (7) Lacking fluency

This is number 7 in the series – you can read the first article here

Top sellers have developed the fluency they need to sell.

They know:

• Which questions to ask to uncover needs and pains
• What implications follow each pain or need
• What assumptions people may make and how to challenge them
• How their offering can solve or mitigate the implication
• What the financial benefits might look like
• What the non-financial benefits might be
• Where the value lies for the customer

They have learned to chain them altogether into a flow so that they have fluency in every selling situation and every selling conversation.

Learn about your market, customer needs product or service capabilities, value, competitors and anything else you can think of and work out how to chain them fluently to customer value.

<< (#6) Not driving your pipeline

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