Dealing With the Dreaded “No-Decision”

Nearly everyone in sales and marketing is familiar with the moment in the sales cycle when a deal stalls out due to customer inertia — otherwise known as the dreaded “no decision.”

In fact this phenomenon is so common that it is a main focus of the CSO Insights research report, “Proper Prioritization: Optimizing Revenue in 2013.” In the report, CSO Insights managing partners Jim Dickie and Barry Trailer relay a number of interesting findings related to “no decision.” For purposes of the study, only forecasted deals — not pipeline deals — were taken into account. The first finding is that sales teams close only about 46 percent of their forecasted deals. Among deals that were lost, 26 percent were attributed to “no decision.”

Clearly, something is wrong in the world of selling when deals are not lost to competitors but to the customer’s decision to not make a purchase. While this seems bleak, I would actually argue that the “no decision” described In the CSO Insights study is a step up from the passive “no decision” where the customer doesn’t choose to not move forward, but instead never makes a decision.  In the words of Rush, “If you choose not to decide, you still have made a choice.”  This often occurs when the customer cannot financially justify the solution and just keeps asking for more information.

Even so, losing 26 percent of deals to “no decision” is nothing to celebrate. However, as the CSO Insights report mentions, when you know you’re losing deals to customer inertia, you can formulate a plan to mitigate that impact on you. One of the solutions is better segmentation and data analysis to determine which among your prospects are most likely to lead to closed deals, and simply prioritize those opportunities over all others.

In the end, losing a deal is frustrating. But the reason you lost the sale is informative and can be used to build a framework for future success.  Even more important though is learning to walk away from deals that will get stuck in the passive “no decision” cycle.

What’s the biggest reason you lose forecasted deals? Is “no decision” a major problem for your company? How do you get past a “no-decision” scenario?  Share your thoughts in the comments section.

Finding Your Sweet Spot (Competing on Differentiation)

A good business strategy helps you differentiate yourself in the market. When I work with clients on strategy, I help them figure out their sweet spot. A sweet spot is the intersection of two things:

1)     What your customer SHOULD want.

2)     What you’re uniquely qualified to provide.

Why do I use the word should in the first point? Simple: because customers may not know what they want.  Here’s why this is important. Whether you’re asking current or prospective customers what they want, you’ll hear about price. “I’d like the same thing you’re providing, but cheaper,” or, “I currently buy this product, but I’d buy it from you if you could offer it cheaper.”

Some companies hear these answers from customers and immediately jump into what they consider a “strategy” to meet these needs. In reality, this approach (which I call “me, too” product development) merely puts you on a path toward commoditization, which is a race to the bottom.

Why is that? Say a “me, too” product takes a year to produce and go-to-market. The result is you introduce your product just a little bit behind the curve, at a quality that’s probably not as good as your competitor (because they’ve been working to improve and innovate while you’ve spent 12 months trying to get to status quo), at a price point that’s probably not compelling enough to turn anyone’s head.

Customers don’t know what’s possible. They probably don’t understand what you’re capable of developing. Henry Ford really brought this point home when he said, “If I had asked people what they wanted, they would have said faster horses.”  Instead of leveraging your talent to meet targets that your customers think they need, think about what they should be considering. That will allow you to offer what you’re uniquely qualified to provide, which will lead to differentiation rather than commoditization.

Developing an objective view of what your customers should want requires an informed perspective on their underlying needs – what are the business issues they struggle with and what is it worth to solve them? A simple but often overlooked truth of business-to-business marketing is that if you can make your customer more profitable, they can pay you more.

Are you confident in your ability to differentiate and avoid commoditization? Do you know enough to describe your customers’ underlying needs, or are you stuck in reacting to their requests? Share your thoughts in the comments section. 

Read This before You Talk about ROI

How frequently do you use the term “ROI” in front of customers and potential buyers?

I frequently hear sales and marketing professionals talk about “ROI” inaccurately. In a casual conversation, people might still give you the benefit of the doubt and have faith that you know your stuff. However, if you’re making a formal presentation or having a serious conversation with a prospect who’s well versed in financial terminology, any misuse of the term could obviously leave a disastrous impression about you and your company.

For example, I hear both sellers and marketers say things like this all the time:

“Your ROI is $100,000.”

Why this is incorrect: If you’ve ever expressed ROI in terms of dollars, you’ve likely confused ROI with net present value (NPV). NPV answers the question, “What is the cash benefit minus the expenses required to achieve the benefit worth in today’s dollars?” ROI is not a dollar amount — it’s a percentage. Specifically, it’s a percentage that represents what your net gain will be on any investment.

ROI = Gain of Investment – Cost of Investment / Cost of Investment

In other words, if your benefit is $100 but you spend $50 to achieve that benefit, your ROI is 100%.

NPV is still an important consideration because the term takes into account the value of a dollar over time. Obviously a dollar today is worth less than a dollar five years from now. Let’s say you invest $100,000, with an expected return of $120,000 within the next two months. That investment would be worth more to you than an investment of the same amount of money, with an expected return of $120,000 five years from now. The reason is that $120,000 is worth more two months from now than it will be five years from now.

Speaking of periods of time, I’ve also heard sellers and marketers say things like this:

“You’ll get a six-month ROI with our solution.”

Why this is incorrect: If you’ve ever expressed ROI in terms of a period of time, you’ve likely confused ROI with payback period. Again, ROI is always a percentage — never a period of time.  If I invest $100,000 in a project, the payback is the length of time it takes for the cumulative benefits to become greater than the cumulative investment.  Payback period is always measured in time (typically months).

During my first job out of college as an engineer, I became an economic evaluator. That meant part of my job was to evaluate capital investments and decide whether they represented a good investment for the company (including evaluating the payback period, NPV, and ROI). So that was where I learned a lot about financial analysis and how to talk about numbers with CFOs.

The magic of these financial metrics is that together they give you a great picture of the impact of an investment. Essentially, you can measure ROI on anything. The formula is simply to subtract the cost of your investment from the gain of your investment, and divide it by the cost of your investment. That’s how we’re able to build ROI calculators for so many different scenarios for our clients.

People confuse financial terms all the time, so if you’ve gotten this one wrong in the past, don’t feel bad. Just don’t let it jeopardize your ability to close a deal.

What’s your understanding of the term “ROI,” and how frequently does it crop up in your discussions with prospects and clients? Share your thoughts in the comments section. 

Maximizing the ROI on Your Road Warriors

Field sales teams are very expensive. When a salesperson has to travel outside the office to see a customer — possibly on extended trips to another city, state, or country — the price tag of a sales call can easily add up to hundreds if not thousands of dollars. Here are some ways sales organizations have responded to this reality.

1)     Create (or grow) an inside sales team. As this HBR blog post points out, companies like IBM, SAP, and Astra Zeneca have all invested heavily in growing their inside sales teams. When you consider cost per sale, this makes sense — inside reps make contact with prospects and customers via phone call or video conferencing and thus eliminating travel expenses altogether.

2)     Ramp up marketing assets and optimize online selling channels. Customers today research and buy products online  — this is true even for complex and highly expensive B2B solutions. That means customers are engaging with salespeople at a different point in the sales process; much of what field sales teams used to accomplish (knocking on doors and delivering presentations) have been replaced by online content that can be watched or read online. In other cases, companies are taking cues from customers and waiting to deploy field sales reps until customers indicate that they’re ready for a face-to-face meeting.

3)     Find ways to make field sales highly productive. One way, as we mentioned, is to create an inside sales team to augment the more expensive tactics practiced by field sales. Another way, however, is to adopt tools that directly benefit field sales. InfoGrow is a great example. Their CRM Call Planner tool allows reps to “cluster” their meetings by location, on a map within Dynamics CRM, to maximize the return of their time spent on the road (including turn-by-turn directions to prevent getting lost, and street and satellite views to find parking quickly — if you’ve ever had navigation or parking troubles on the way to a client meeting, you know these are two major productivity losses). If a meeting falls through or the rep has more time than planned, he or she can also use the tool to quickly find other opportunities to cold call nearby.

It’s important for all companies to quantify and measure their productivity levels. (In fact, we’ve helped a few clients create tools to do just that.) Sometimes we assume our sales and marketing teams are productive without any real evidence to back it up. Other times, we know a problem exists because we’re not getting the results we want — we just don’t know exactly where the problem lies. The great thing about tracking ROI is that you become empowered to take the right steps to put you on the path to success.

Do you have a field sales team? How are you measuring productivity? Share your thoughts in the comments section. 

Selling to the CFO: 7 Tips to Inspire Confidence in Your Solution

One of the greatest advantages in selling is the ability to understand how the CFO, (a typical approver) thinks. That’s particularly true if you’re selling a technology solution. Why? Tech sales generally represent large investments, and the job of any CFO is to make sure that any major expenditure will yield measurable results and a good ROI.

As the steward of money within the company, the CFO wants to make smart investments. Your job as a seller is to provide proof of value. Although you might be extremely personable, like-able, and engaging, it’s important to realize that the typical personality of a CFO is not built to make decisions based on whether or not he or she likes you. Treating them to nice dinners or a round of golf at an expensive resort might be pleasant and enjoyable, but ultimately those activities are not going to help close a deal if the CFO doesn’t see a sound business case for investing in your offering.

Financial officers will always be looking for hard facts and evidence that the company should free up funds to purchase your solution. That means your proof of value has to be unbiased, polished, and persuasive. Here’s how to increase your chances of persuading a CFO to give you the green light.

1) Quantify the benefits of your solution. CFOs want to see value in terms of currency (dollars and cents in the US). What ROI can you offer?

2) Show why your solution is a good use of funds. Make sure that you customize your presentation to the company — show why your solution is relevant for this particular company, at this particular moment in time. Don’t use a generic story to sell your solution.

3) Prove your solution’s value. Show the CFO where else you’ve delivered value. Include proof points, case study examples, and other references. This will increase their level of confidence in your solution.

4) Show professionalism in your work. Your presentation cannot appear as though it was put together the night before in a hotel room. No matter how genius the idea, a back-of-the-envelope proposal will get passed over every time. Spelling errors and typos can fatally undermine your credibility. And, needless to say, any mathematical error will make your entire analysis invalid. Double check your work and enlist the aid of other professionals (copyeditors, designers, technical experts, etc.) to put your best foot forward. Or, better yet, use a tool that has already been tested to be accurate.

5) Show your work. If the CFO is remotely interested in your solution, he or she will want to drill into the analysis to make sure they understand how the numbers were calculated. Your business case needs to be rooted in logic. Avoid fuzzy math.

6) Incorporate an unbiased perspective. Reference benchmark studies, analyst reports, statistics, or any other third-party data to help convince the CFO that your solution is a worthy investment.

7) Balance positives with negatives. Not every solution is a perfect fit for a company. Your aim is not to provide a perfect picture; your job is to provide an accurate and realistic perspective. Be up front about the potential downsides or drawbacks to investing in your solution. If the CFO thinks you’re hiding something, you will definitely lose credibility.

Follow these principles when selling to a CFO, and you’ll increase your chances of convincing them that your solution is worth saying yes to.

What are your biggest challenges when selling to CFOs? Share your thoughts in the comments section.