Don’t Overcome Prospect Objections, Prevent Them

Every sales rep dreads hearing prospect objections. From “Your price is too high,” to “Call me again in three months when I get my budget back,” it can sometimes seem like all prospects and prospects want to do is find reasons not to buy from you.

This is a frustrating situation for reps, especially when they feel — as the best do — that their product or solution could actually help the prospect and improve his or her business. So what’s the disconnect? If your offering can actually make life easier for this prospect, why is she spending so much time finding reasons to reject it?

I believe this dynamic happens when salespeople jump to a demo of their solution at the wrong time in the sales cycle. Most sales reps want to start the sales process by showing a demo and talking about product features. From there, they try to convince the prospect that their solution is the best.

In my view, salespeople need to start instead by identifying a problem the prospect has, and then defining how that problem is impacting their business including how much it is costing their company. Conceptually, this is a very simple thing to do. First, define what the problem is. Then, quantify how much the problem is costing the prospect. For example, the problem could be lost cross-sell opportunities, which could  represent $100,000 a month in lost opportunity. In other words, you’re making a business case to justify the prospect’s investment in your solution (which, obviously, will help the prospect solve the problem and increase their sales by $100,000 a month).

Why is it important to center the sales conversation on the business case instead of your solution’s features? Because a focus on features distracts prospects from their problems and pain points. When you start with the demo and features, you’ll get responses like, “Can we make this button blue instead of red?” This isn’t the kind of question that’s going to advance the sale, because there’s no focus on value. The value is not whether the button should be blue or red; the value is how your product can solve a real business problem for your prospect and result in real economic impact.

When prospects watch a demo, they’re on the lookout for why your product or solution won’t work. Even if your product could actually help them, they’re not ready to hear that yet. That’s because you haven’t walked them through the problem or pain point, which means they have no emotional nor financial attachment to solving that problem. However, if you start by identifying the problem and quantifying it, you’ve set yourself up to say, “What if we could solve that and save you half a million dollars? Is this worth spending more time to discuss?” If you’ve taken the time to lay this groundwork before showing the demo, they’ll have a different reaction when they see the demo. They’ll be thinking, “How can this solution help alleviate my pain?” rather than, “Why should I not purchase this solution?” It is a transformation in the mindset of the prospect.

Once the prospect is invested emotionally and economically, then you’re essentially preempting objections. When we work with clients to create ROI calculators, we frequently talk about the importance of getting the prospect to “own the numbers.” Put another way, the prospect has to understand how much the problem is costing his or her business. This is why an ROI calculator is an invaluable tool when it comes to building a strong business case. By the time you’re discussing how much your solution will cost, you’re in no danger of getting stuck in a debate about whether your particular features or benefits are “worth” a certain amount. Instead, the conversation is about how much the investment in your solution will offset the prospect’s problem.

In short, the best way to overcome prospect objections is to prevent them in the first place.

Have you ever used a business case to prevent prospect objections? How well did it work? Share your thoughts in the comments section. 

Do Sales Reps Need to Be Financial Experts?

I contend that your sales reps need to be financial experts about as much as your CFO needs to be a master of working a room.  Recently I read a great post on Inc.com, “Selling in the Post-Internet Age” about how the Internet has fundamentally changed the buying and selling process.

As the author points out, customers today are better informed, and the buyer education process has been turned upside down. Customers are doing research on you and your solutions before you get a chance to talk with them. And you’re not necessarily in control of the information that’s out there for them to discover on their own.

Customers are also overwhelmed by choices. When buyers do engage with you, they want a different level of help, and the job of a salesperson has become a lot more complex. It’s no longer enough to simply deliver information. Buyers want you to help them understand how your product or solution fits their unique needs and will deliver results.

I strongly believe — and many successful salespeople will agree, that there are no shortcuts when it comes to helping customers identify the magnitude of their problems. As the post states, “Today, selling to businesses requires business acumen and in-depth industry experience, so that the seller can take responsibility for key functions inside a customer’s account. Selling often requires the ability to build an ironclad case for ROI.”

This last point is a great one. In fact, one of my recent blog posts was about how building a strong case for ROI can help reps gain credibility with prospects. But one point I’d like to make is that reps by no means need an MBA in finance to make that ironclad case.

A financial expert could build a financial analysis from scratch. They would take into account the benefits, how to calculate those benefits, an understanding of the customer’s financial statements, and other details like cost-of-capital to build a cost justification analysis.

spreadsheetHowever, it would likely take a financial expert around 40 – 80 hours to build this kind of analysis from scratch. That hardly seems to be worth the time, especially when it would need to be done again for each opportunity. A better approach would be to embrace an ROI calculator that can be used over and over again with prospects in your target segment. With simple navigation and ease of use, an ROI calculator built upon a software platform can easily uncover the costs of buyers’ problems. These sales enablement tools seamlessly calculate the key financial metrics (e.g., ROI, NPV, IRR and payback period) that buyers are interested in when evaluating whether or not to invest in your solution.

The key takeaway for sales leaders is to make sure your reps are focused on understanding your customer’s business first, and then provide them the tools to help with the financial analysis. In other words, don’t try to make them financial experts. If you do, they’re likely to make mistakes, which will probably hurt their chances of making the sale.

Another way to think about this is to consider what sales reps are good at. You probably wouldn’t dream of asking your CFO to act as an account executive. Why? You’d likely wind up with a really great spreadsheet and no sale.

Sales reps are typically good at building rapport, understanding business problems, negotiating, etc. Given the proper sales tools, they can strengthen their repertoire by establishing customer dialog around business value. I believe that is how sales organizations will succeed in the post-Internet age.

What are you doing to arm your sales reps to win in the post-Internet age? Post your comments below.

3 Tools to Communicate Value at Different Stages of the Sales Cycle

Depending on where the prospect is in the buying process (or your sales cycle), there are different tools (or calculators) to help you with your value-based selling approach.

business people with chartsIn the earliest stages of the sales cycle, you want to establish the prospect’s pain and how much that problem is costing them. This will help set you up for a conversation about how much your offering can help. A value calculator helps you show how much money the prospect is leaving on the table each month, or how much they’re spending that’s unnecessary. This helps you establish the “value” of solving the problem. (Here’s a good example of a value calculator.)

The main reason you want to use the value calculator early in the process is that it helps you avoid a price discussion until you’ve clearly defined what the prospect’s problem is and how your offering can add value. This is why a value calculator can be a great lead-generation tool for marketing. If you add it to your website or make it a landing page in an email campaign, prospects can use it in a self-serve way to estimate how much the problem is actually costing them and how much they might be able to reduce costs or increase sales. Again, this tool doesn’t address pricing or how much you might be charging them.

As you get later into the sales process, there are two types of tools you can use to communicate value. One tool is great for when you’re in a competitive situation and you’re trying to differentiate: a TCO (Total Cost of Ownership) calculator. This tool can help you make a case for why you’ll be better able than the competition to create value for the prospect.

The other type of tool to use later in the sales process is an ROI tool, which helps you make a case that the prospect should invest in your offering (as opposed to why you provide better value than the competition as in a TCO calculator). An ROI tool provides the prospect with the financial justification for your solution. In other words, it will show how much they’ll save, the payback period (aka, the break-even point from investing in your offering), and cost-to-delay-per-month (how much they’re losing each month by not investing in your offering). These metrics really help when the CEO or CFO gets involved and wants to see a cost justification for investing in your offering.

The type of tool you use depends on what information you want to reveal, and when. Unless your pricing is publicly available, you would rarely make an ROI tool available until the sales cycle is well underway. Here’s why. You could scare the prospect off early by indicating how much your offering might cost them, let’s say one million dollars for discussion purposes, because they won’t stick around long enough to hear about how your offering can save them ten million dollars.

It’s important to note that the ROI calculator is not used to set your price but to justify your price. (There are tools to help you with price-setting, like PROS, LeveragePoint, Vendavo, or Zilliant.) Most selling processes will tell you to resist talking about price until you’ve gotten the prospect to realize, “Yes, this is a big problem and it’s costing us X amount of money.” This is where a value calculator is a great tool to help establish the cost of the problem.  Be careful trying to use an ROI tool to establish your pricing because if a prospect believes you’re going through an assessment simply to set the maximum price possible, then they might give you artificially low numbers in an effort to minimize the amount they might spend on your offering. This can create distrust on both sides, which is never a good way to start a business relationship.

When used at the right place in the sales cycle, all three of these tools, the value calculator, TCO calculator and ROI calculator, can establish a strong business relationship with your prospect.

At what stages of the sales cycle do you discuss value? Share your thoughts in the comments section. 

Help Your Sales Reps Build Credibility with Prospects (Why the ROI Calculator is Not Quite Dead)

When I read this recent blog post, “Death of a Sales Tool: The ROI Calculator,” by Drew Zarges, one of the first things that came to mind was a brief scene from Monty Python and the Holy Grail.

The character Concorde (played by Eric Idle), trusted assistant to Lancelot (played by John Cleese), has just been shot in the chest with an arrow bearing a message that seems to have been written by a damsel in need of rescue. Vowing to respond to this cry of distress, Lancelot declares, “Brave, brave Concorde! You shall not have died in vain!” To which Concorde raises his head and replies, “Uh, I’m-I’m not quite dead, sir.”

I’m in the ROI calculator business, so I obviously disagree with the premise that the ROI calculator is dead as a sales tool. On the other hand, Zarges makes some valid and valuable points. Most ROI tools suffer from a few fundamental flaws and therefore undermine the credibility of the tool (and the provider company), as well as any sales rep that uses it.

I do believe, however, that a properly built and deployed ROI tool can increase not only the sales rep’s credibility, but also improve close ratios and result in bigger deals. Here are my responses to three of Zarges’ observations about ROI tools.

Point 1: “Your reps never learn how to calculate the value themselves.”

First, sales reps need many skills, but I’m not convinced that strong financial-analysis skill is paramount to sales success. The sales process is complicated enough understanding all of the roles and influencers and managing the relationships, without also needing to be a financial expert as well.  Second, when properly built, an ROI tool shows the underlying calculations for each business value benefit articulated in the business case. This allows both the sales rep and the prospect to understand how the value is calculated without necessarily being able to build the calculations on their own.

I wrote a blog post about why spreadsheets fall short as selling tools, and I believe Zarges is referring to those kinds of homegrown spreadsheets. Black-box tools where reps or prospects enter a few numbers and a financial justification magically appears damage the credibility of the tool as well as the providing company.

Point 2: “The calculator only solves for the ideal problem.”

Again, this may be true of many calculators and most homegrown calculators, but a properly developed calculator uses a set of default assumptions only as a starting point. The tool should then allow the rep and/or the customer to modify all of the numbers. Any hidden calculations or hidden assumptions undermine the credibility of the analysis. Ultimately, you want the customer not just to buy into the numbers — you want the customer to own the numbers. They must believe the full results of the analysis and all of the underlying inputs and assumptions, and they must be ready to defend the results if challenged by anyone internally. Any hidden or fixed number undermines their ability to defend the analysis results. Most tools today are filled with hidden and fixed assumptions and don’t allow for modifications based on unique user situations.

Point 3: “The calculator is solution agnostic.”

This can sometimes be true of an ROI tool, but not of a Total Cost of Ownership (TCO) tool. And this is true of an ROI tool only if your offering has no differentiated value for your customer. If your offering has no differentiated value, then you have a bigger set of issues to deal with than the sales tool you’re using. In a competitive situation when trying to show why your offering delivers more value over the competitor’s offering, a TCO tool is sometimes a better choice.

In the end, however, the customer will likely have to build an ROI-based business case to get the funding approval for the project. The funding-approval business case (sometimes called capital authorization or project authorization) is never based on a comparison against a competitive offering — it is always based on how the project will impact the financials currently projected. Thus, even if you need a TCO tool during the sales process to show more value than a competitor, you’ll probably also need an ROI tool to show the customer how deploying your solution will have a beneficial impact for them financially.

Credibility in sales is everything. Customers want to purchase from people they trust and who can deliver solutions to unique problems. If the sales tools you provide your sales reps undermine their credibility, then you’re better off not using the tools. But I’ve seen many cases where a well-designed ROI calculator absolutely helped sales reps move the deal forward and win the sale.

Back to The Holy Grail, in the end, Concorde, who is “just fine,” is being left behind by Lancelot as he goes off to save the supposed damsel in distress, and replies as Lancelot ‘rides’ off, “I’ll-um, I’ll just stay here, shall I, sir?”  In the end, value calculators and ROI tools will still be here to back up the sales team when they need them.

To see an example of an ROI Calculator that can help you build credibility, visit http://www.stratavant.com/roi_calculator.html.