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The Crucible…

I received a phone call other day from a software sales rep with whom I’ve had the pleasure of working in the past.  He’s sharp, motivated (coin-operated), smart, and very driven.  He described to me where he was in the sales cycle.  Interestingly, a new wrinkle in the Crucible: management! 

From management’s perspective, they had already given a little more than 15% of discount and the sales opportunity was still in the first crucible.  First crucible: when you believe that you are negotiating with the decision maker who will get the deal done – or so you’ve been told.  Second Crucible (we are seeing more and more of this): after you have negotiated once, your pricing (or the deal overall) again goes through additional scrutiny by another group, CEO, Board, etc.  (More on the second crucible at another time.) 

So, if management has provided 15% and the client is still asking, what to do?  The rep needed help.  The sales manager is new to sales and has never closed a deal – true.  The sales manager’s managers are not in much better shape other than to say, “no more discount, go close it, and do so before the end of the quarter”.

So, what to do?  Both parties were frustrated and I suspect the potential-client was as well frustrated. 

Leadership/management: help the rep navigate the crucible.  The crucible more than any other part of the sales cycle requires strategy.  Leadership, generally, has more experience here than anyone in the company.  Throwing up a discount and exclaiming “go close the deal” is not what I think of when strategy comes to mind.  Listen to what is going on, who is involved, decision makers, has information been triangulated, etc.?  I’m not certain why such a large discount at the beginning was offered.  What did you/the rep/company get in return?  What I heard from the rep was that the potential-client was sold on the company solution. 

Sales rep: remain in control and use the company resources (leadership).  In the same way leadership may need to coach the rep – the rep may need to coach leadership.  The rep needs to clearly explain where he is in the process.  What he expects to happen based upon fact, not feeling, and then follow-through.  In this case the rep knew that the person with whom he was discussing price wasn’t the final decision maker.  The client contact was the business decision maker (BDM) and had not yet made the recommendation for the rep’s solution to a higher (approving and authorizing) body.  The opportunity here was that the rep had already passed along a more than 15% discount approved by leadership.  The client was asking for another point and leadership was saying no, go close the deal.  This is another opportunity for the rep to position himself with the BDM in a way that will keep him at the table, in the process, and driving the negotiation to close. 

The rep at this point needs to work with the BDM, and her organization to meet any additional business requirements.  It’s difficult to determine why the BDM was yet looking for another 1%; but with strong certainty, you can bet that the BDM’s leadership is going to come back and ask for more discounts at a later time.  The rep needs to be ready for this and needs to work with the BDM so that that the rep is positioned to meet and work with the BDM’s leadership to understand what it is they need and if it requires additional gives, and what the buyer plans to give in the process.  Up to this point in the sales process, there has been no even exchange from the client for the additional discount provided by the seller – this is a problem and setups up a bad precedent. 

The rep, while being pushed by leadership to close and probably himself is thinking, close!, needs to be thinking down the road to when it will actually close.  At a later point, we will talk more about the closing process, but for many organizations this can take weeks or months.  If the discussion has not yet been had with the BDM, legal, and purchasing on this process, it needs to happen.  At some point, we will also discuss compelling events – those things (events) that drive the prospective client to close – that is why they need to close.

In this case, the rep got the message.  Take control of the process, put himself in a position of power with the BDM and prospective client, having the BDM take the current offer forward with the next step being a discussion/negotiation, if not close, with the rep. 

I’ll report back with more when the rep reports back.

Negotiation

A great account executive understands how to negotiate with a customer in order to have a customer purchase his/her offering and do so in a way that meets his/her company goals. Negotiation skills require a process and are a subset of sales skills. There is a belief that at some point that the selling stops and the negotiation begins. A good account executive does his/her best to not have this be the case. If the account executive works with key decision makers to address their needs in advance of negotiation, one can gain agreement early on and diminish what can be a difficult process where his/her company can give up product features, services, terms, and margin. In the Complex Sale, negotiations can be considered part of a second crucible. This point has been implemented recently by many customers as a way to ensure compliance with audit requirements, force another set of eyes on the sale to see if the acquisition is really required, is the deal clean, are there other competitors, etc. The account executive must revisit many discussions to again align product features with the stake holder needs. He/She must also gain agreement in an effort to diminish or eliminate the need for an additional or protracted negotiation or approval cycle. A good account executive will have managed the elements of the negotiation at every point in the sales cycle, checking in with the person he/she is working to understand who else in the customer’s organization may be involved at some point. Many times over the years I’ve introduced contracts to the customer’s legal team very early on in the sales cycle. I’ve worked these issues in tandem with the sales process. This strategy can work very well for you and it can work against your competitors. Your company at this point can begin to drive many more requirements of the sale. You deepen your relationships within customer and you diminish or remove the need for a protracted negotiation of the sale terms and conditions.

Sales Methodology – Complex Sale

While some could debate that The Complex Sale (http://www.complexsale.com), by Rick Page, also covered in his book, Hope Is Not A Strategy (Publisher: Nautilus Press, 2002) is similar to those listed above, it approaches the process more from an account executive perspective. My sense is that the Complex Sale sets realistic expectations of what an account executive will do or not. It doesn’t require an account executive to fill out lengthy reports that many often do only to content management – once complete documentation created rarely sees the light of day. The Complex Sale key steps are:

1) Discover and confirm

  
a) On which product or solution area is the account executive going to focus

  
b) Which market/customer is going to be most receptive

2) Qualify

  a) Organization Chart

  b) Power Sponsor(s)

  c) Budget

  d) Requirements

  e) Develop Strategy

3) Solution

  a) Value Proposition

  b) Align and Validate

    i) Shark chart – just as it sounds, it is the decision “food chain”

  c) Benefits Agreement with Power Sponsor

    i) This is a step where the account executive gains agreement from customer that if customer uses his/her company’s offering they will achieve specific and measurable business advantages. This is an important differentiation, it is important to note that it is not the account executive claiming that his/her company will solve business problems or create certain advantages but rather the customer agreeing that if they (customer) use the offering they will achieve the benefit. This distinction can be important when looking at issues or problems that could occur after purchase. Simply, who owns the problem? While I realize this can sound cold and callous, it is actually a great business opportunity and the best account executives know how to use these customer needs to everyone’s benefit. At Apple and Microsoft the best account executives sold not just product but a suite of services from pre-installation consulting through multi-year service agreements that ensured the highest levels of business success for the customer. Of course the other benefit is that these account executives had fewer inbound customer complaints about issues they were having with the offering the account executive had “sold” these customers. At the end of the day, its better to walk away from a sale (yes, actually lose a sale!) than sell a product or service with less than what the customer needs, certainly when the customer is expecting more than what they are buying.

4) Proposal

  a) Define Team Roles

  b) Validate Proposal Draft

5) Negotiate and Close

  a) The Crucible

  The crucible, described in Page’s book is the point at which multiple decision makers come together often with competing agendas and ultimately decide whether or not to make a purchase, not to purchase, or put off the sale for some reason. It is a time that if they decide to purchase when features become less of an issue and price, terms, and conditions become more prominent. Decisions can also be put off because the account executive has not aligned business needs with an urgent deadline or involved the right power sponsors.

  There were times when we had closure on an opportunity by the power sponsors and business decision makers then discovered there was yet more selling to be done to another set of decision makers. This, the second crucible was something that was uncovered and defined while at Apple and discovered and noted by Blake Batley, a Principal with The Complex Sale. The account executives at Apple noticed that the further they got into the 2000’s that the end the sale became more complex and protracted than in prior years because budgets were tighter, additional pressures on compliance, and general challenges of selling a “non-WinTel” product such as Apple. Essentially account executives were going through an additional order/contract approval. In some cases this process would kill a deal even after we gained full agreement from new power sponsors and key decision makers. We found that the account executive had to dig deeper in anticipation of the second crucible. Once the Apple account executive got in front of (anticipated) this issue they were much more effective in closing opportunities and meeting the expectations of their customers and those of Apple corporate.

  b) Set the Strategy

    i) This is a meeting, hallway discussion, or email, that can result in a document that defines what needs to be accomplished and how the team will approach it.

  c) Decision Timeline

6) Deploy Solution

  a) Success Story

    i) This is often considered an onerous task that some account executives find a waste of time. However, those who have read and used them find them very valuable. Early on at Microsoft a VP of US Sales created a contest and then a program to publish the success stories and sales wins. It always seemed to be viewed as a hassle by many. I found it a better a strategy at Apple was to have someone from marketing work with account executives in order to get these wins published. We created a weekly newsletter and published these on page one. These wins, I always hope, became a point of pride for the account executives.

  b) Reference Account

    i) There are never enough of these; however every account executive should be working with his/her accounts to make them referenceable. Whether formal or informal, a customer who is willing to make positive comments about your company’s offering is worth its weight in gold.

  c) Start Again

    i) The issue of hunter or farmer always comes up in every sales organization. Many see the hunter account executive as someone who finds new opportunities then moves on and farmers take over where hunters left off. This hand off can be disrupting to the account. I believe that all account executives should be hunters. If an account needs ongoing support, then it should be supplied as part of the solution or at an additional price. The account executive (hunter) is in the account to find, develop, and win new business.

Farmers are consultants, project managers, or in some cases inside sales organizations. Farming also needs to be hunting within an existing customer. My sense is that everyone working (inside) with a customer should be actively looking for new opportunities. A Microsoft VP of sales talked about the Microsoft Consulting Services organization in this way, “What a great situation, we have very smart business and technically savvy consultants inside of our customer’s organizations and the customer is paying for them.” These people are the farmers. I’ve been asked, “Why would technical people working for a vendor help find new opportunities for the sales team?” Incentives need to be put in place for all technical staff to help continue to grow the business for their company if for no other reason than they will continue to have a job. The positive posture is that the technical person can become involved in more challenging situations that will help them grow and perform more cutting edge, technically challenging tasks.

Hunters are also “sales animals” – I love this term. The head of world wide sales for Apple was passionate about this term and felt that we should only have sales animals on sales teams, I agree. They should love what they do – love getting up in the morning facing new, fun, and challenging opportunities to help new and existing customers, and make money. I’m a sales animal, I love meeting with customers and helping them solve business problems. The “sales animal” mentality is about passion. Whether you are selling or dancing on Broadway, be passionate about what you do.

Sales Methodology – Smart Selling and Solution Selling (BOSS)

These methodologies are similar in that Larry Sugarman, author of the Smart Selling methodology (http://isellsmart.com/) and Michael T. Bosworth author of the book Solution Selling, Creating Buyers in Difficult Selling Markets (Publisher: Irwin Professional Publishing, 1995) each have histories with Xerox. They share many of the same ideas, their approach and style are different, however each is a very good and useful system.

Smart Selling and BOSS share a focus on sales opportunities that do not yet exist. The account executive should fully understand his/her customer and market in a way that he/she can proactively make suggestions to business decision makers about the capabilities of his/her company’s offerings. This process is a high-level sales strategy requiring the account executive to be creative and proactive in his/her approach. One of the many benefits of this approach is that it can often be void of competitors. The lack of presence of competitors is created because the opportunity was not uncovered by the customer but the account executive.

Sales Methodology – Khalsa

Let’s Get Real or Let’s Not Play, (Publisher: Franklin Covey Company, 1999). Khalsa does an outstanding job of talking about how to approach sales from the perspective of helping your customer. He is also very clear in stating that if you are selling a non-differentiated product or service, one that is viewed as a commodity, get out of that business. His belief is that if the only value-add you can offer is price and delivery you’re selling the wrong product. This in the PC sales world is like HP trying to compete with Dell. IBM was smart enough to get out of that business; as for HP who knows what lies in their future. At Apple, I quickly discovered that if we competed against Dell (our primary competitor) on the issue of price and delivery we were going to lose. Therefore, we had to change what and how we were selling. That is, we needed to align our strategies and tactics to the missions and needs of key decision makers, not just IT or purchasing. The account executives at Apple were versatile and passionate about their product. They understood in a very detailed way how their customers used Apple products and achieved results. They sold to that need and helped their customers see in full color the end result before the sale was closed.

Sales Methodology – Power Base Selling

In a complex organization (multiple levels, multiple business units, and multiple objectives) and one that is often filled with competing organizations and politics, Holden is a great methodology. The Holden methodology gives the account executive a set of tools to pick a part an organization so that the account team/account executive can find key players, influencers, and those with whom they need to work. It helps the account executive align persons and tactics in a way to deliver key messages in a directed fashion to decision makers/influencers resolving various agendas present throughout an organization. Ultimately this process aligns disparate decision makers and influencers to agree that the account executive’s offering is one that their company needs.

Sales Methodology – SPIN

Neil Rackham’s Spin Selling (Publisher: McGraw-Hill, 1988) is the next step toward a more complex sales methodology. SPIN: Situation, Problem, Implication, Need- payoff. He provides a process backdrop and gives the account executive language he/she can use to interact with the customer in a question and answer/discovery format. This approach focuses on getting the account executive to think and work at aligning his/her company’s offering to that of the customer’s needs. Rackham focuses on having the account executive listen carefully to customer needs. He helps the account executive deliver a questioning format that will bring out key issues so the account executive can begin to work on and ultimately provide a sales solution. The sequel to Spin Selling is Major Account Sales Strategy (Publisher: McGraw-Hill Companies, 1989); here Rackham takes us through what I consider to be a very scientific approach to selling. I’ve found this interesting while most (account executives) find this book overwhelming – it’s a lot of theory.

Sales Methodology – Dale Carnegie

A basic sales process; a rote learning system focuses on a creating a relationship with customers and alignment to the account executive’s product or service. The foundation of Carnegie is one that should be reviewed by every account executive. Its basics are useful in every personal interaction. The Carnegie methodology is offered around the world as part of their Sales Advantage course. Along with the class, a great read is Carnegie’s legendary book How to Win Friends and Influence People (Publisher: Simon & Schuster, 1998). If you enjoy Carnegie and are interested a similar book, a wonderful publication is The Success System That Never Fails by W. Clement Stone (Publisher: Prentice-Hall, 1962) is focused on winning. Stone came from a simple background to being a multi-millionaire and philanthropist. Stone parallels much of what Carnegie covers and you get a great sense of sales in America in the 1950’s 60’s.

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