Monday, July 26th, 2010
Closing and Proposal are both 4-letter words. Why set yourself up to lose?
It’s midnight and you’re in your home office laboring over a PowerPoint presentation that’s supposed to be delivered to the prospect at 11:00 AM – eleven hours from now. You’ve pasted a photo of their home office into page one and maybe a sampling of their major brand logos. It’s attractive.
The next five pages haven’t been populated yet but the headings are Problem, Benefit, Solution, Close and Implementation Plan. That’s what they taught you in sales school. Once you’ve completed this you’ll probably work on anticipating objections and ways to overcome them. They taught you that too.
If this sounds familiar, a word of advice. When you enter the building at 10:45 AM you’ll see a number of fire extinguishers strategically placed in the hallway. Grab one. Take it into the office with you. You may well need it.
I’m sure that you’re a good guy and know your product line cold, the applications cold and your competition cold. But please, please don’t put yourself in this position. Why set yourself up to lose? Lead Dogs don’t do this!
The Lead Dog isn’t walking in to see a prospect and doesn’t have a proposal neatly tucked under his arm and closing is the furthest thing from his mind. In fact, closing isn’t even in his vocabulary. He is walking in to see a senior executive who is rapidly becoming a Client, which denotes a relationship based on trust. He has done a lot of work to move the relationship to this level and his goal today is to “Reach Agreement.”
What did he do to get here and how does his head work? What discipline does he practice? Let’s look inside.
First of all, he does not perceive selling to be an art form or even the classic “transfer of enthusiasm.” It’s more complicated than that. It is a science. It is a very disciplined process. If he has a Marketing department that’s on it’s toes or if he sells to a vertical industry segment, he has a good idea as to where to start. If not, he finds another way. The steps are:
- Positioning. This is the statement of a potential business problem within the prospect organization. We did this in “Elephant Hunting.” The prospect didn’t take advantage of leverage in purchasing and we offered that. There are an abundance of on-line resources that can give you comparative business statistics and save you a lot of time. Robert Morris Associates is a great one, but expensive. www.bizstats.com is OK, and FREE, and gives you balance sheet data by industry segment but they don’t break it down by revenue size. It’s a good place to start and our Lead Dog uses it.
For purposes of illustration, let’s assume that our Lead Dog sells to computer manufacturers. He goes to www.bizstats.com and clicks on manufacturers and then clicks on computers and peripherals. He looks at assets and then receivables. He finds that the average customer in the segment has 20.05% of their assets in the receivables line item. His prospect has 28.05% of assets tied up in receivables. Their annual revenues are $150 million. Therefore, they have about $8 million too much tied up in receivables. If their weighted average cost of capital is 7%, they probably have an $840,000 problem. The general rule is that the prospect should be willing to spend 50% of this to solve the problem. That’s a $420,000 opportunity. Maybe. Your focus is still to demonstrate a positive impact on profit performance and your commitment to being a zero cost partner.
The only two rules for the Positioning step are: You must clearly state a business results improvement opportunity and you must present it top down.
- Confirming. We did this in “Elephant Hunting” simply by asking “What are your thoughts?” Your objective is to determine where the pain is and get the go ahead to pursue ways to alleviate it “at zero cost.”
- Data Gathering. With the right introductions you are on your way to becoming an “insider.” We strongly recommend that you flowchart the work system involved at this juncture and gather this information from the “insiders” closest to the work being performed. For a really quick and on-point primer on flowcharting see “Flow Charts – Understanding & Communicating How a Process Works” at http://www.mindtools.com/pages/article/newTMC_97.htm. Once you’ve completed this step and confirmed it’s accuracy with your insiders take another look at it. The majority of work system problems are really information problems. Look at “each” step in the work system and ask the following questions: What information triggers this step? Where does it come from? How is it communicated? Is it timely? Is it accurate? etc.
- Testing Feasibility. Brainstorm potential solutions with your trusted group of insiders. Formulate likelihood of success, risk factors, costs & returns. Rate and rank the top three. A few good questions to ask of each are: Why do it at all? Why do it this way? Why do it now? All from the client’s viewpoint. Price is not an acceptable response to any of the three. ROI is.
- Reaching Agreement. Again, no proposal here. With a couple of the most influential insiders that you’ve worked with in tow, go back to the top guy and communicate your findings along with the recommended solution and options. The rule here is ”Top Down.”
- Implementation. Present and execute the improvement plan. Measure promised results and re-tool if necessary.
- Positioning. Go back to the top guy and show the results achieved. Prove it. Now open the door to the next “where the pain is” and start again. You’re an insider now. You don’t propose anymore.
We look forward to your comments.
Ray, Todd & Peter
p.s. Take a look at I Was Wrong About Proposals
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August 6th, 2010 at 12:34 pm
[...] the testing feasibility step in our earlier article titled Closing & Proposal are 4-Letter Words. In this step we recommended that you look at the potential solutions to the business problem being [...]