May 30, 2008

Showing the Impact

Does your business have any unresolved challenges? Any needs that aren’t being met? Any problems crying out for a solution. Of course. Every business does.

And will they all be addressed? Probably not. Most of the time we choose to just live with our problems or needs. We don’t intend to do anything about them. Why not? Because the time, money and effort involved just aren’t worth it. There’s not enough of a payback to bother doing anything.

You don’t want your client to decide that it’s “just not worth it” to do anything about the problems or needs your proposal is addressing. Our topic this time is how to

The fundamental difference between informing and persuading is that persuasion must motivate action. If a customer reads our proposal and is motivated to make a decision, it was persuasive. If the customer reads it, nods his or her head, acknowledges that what we’re saying makes sense, and then does nothing—the proposal failed.

We start our proposals and other persuasive messages by focusing on the customer’s needs or problems. If we identify their “pain” correctly, we get their attention. But to get their motivation to act, we must move beyond the pain and focus on their potential “gain”. We must show them that there are important, positive outcomes from dealing with these issues. They want to know: How will the organization benefit if they eliminate the problems or meet the needs we have identified? Where’s the bottom-line impact? Is it worth it?

Outcomes are the impact our services or solutions have on the customer’s organization, and for maximum effectiveness our proposal should address the client’s outcomes immediately after identifying their needs. This is somewhat counterintuitive. You might think that it would be more logical to present the problem and then immediately recommend a solution. Maybe that would be more logical, but it won’t be as persuasive. People want to use the “estimation heuristic”—the technique of looking at various courses of action and choosing the course of action that yields the highest rate of return. But if we don’t show them where the outcomes are, they may not be able to figure it out for themselves. And it the outcomes aren’t big enough, they won’t care about the solution.

Write your outcome statements so that they meet five criteria:

1. Focus on an outcome the customer actually desires

You can sing a song of quality all night long, but if the customer is looking for cost savings or increased market share, your message will fall flat. The outcomes must be client-centered.

2. They must be measurable or quantifiable

“Improved efficiency” is not an outcome, but “reducing system downtime by 20%” is. “Increased profitability” is not quantified; “reducing attrition by 20% among mid-level managers and saving $1,250,000 annually in recruiting fees” can be measured. Marketing fluff—grandiose claims of “state of the art” solutions built on “best of breed” products and similar nonsense—is neither measurable nor quantifiable. It’s just annoying.

3. They must be organizational in nature

Personal or political goals usually don’t’ work in a proposal. They are very hard to quantify and they have too narrow an impact. Just because your key contact will benefit—for example, by achieving a key performance goal—that doesn’t mean the rest of the company will see compelling value. Results and outcomes are relevant if they benefit many people across the organization, not merely one decision maker or one group of employees.

4. They must come as a direct consequence of the impact your services or solutions have on the customer’s business operations

In this regard, you have three possible options:

1. You can improve a process, system, or mechanism that is already in place.

2. You can fix something that isn’t working.

3. You can implement a capability that the customer does not have.

5. They must be proportional to the cost of the solution

The larger the amount you are charging, the bigger the outcomes must be. Most folks aren’t interested in spending a lot of money for a little bit of return.

Defining the outcomes the customer will achieve from taking action is an essential step in delivering a persuasive message. That’s why the Sant Suite of proposal and presentation tools includes components to help you identify and position outcomes effectively. We try to make sure all the important elements are built right in to the system. The outcomes for you and your company are higher win ratios from better proposals produced faster. Are those outcomes you might be seeking?

May 15, 2008

The Only Opinion That Matters

In sales, the only opinion that really matters is the customer’s. We may love our proposal, our boss may think it’s terrific, but if the customer doesn’t find it clear, compelling, and persuasive, it’s a loser.

But there’s another customer opinion which is even more important and more fundamental than their opinion about our proposal. That’s our topic this time.

Nearly 50 years ago, Joe Girard discovered a fundamental truth: every customer he sold had the potential to recommend him to 250 other people. If he could convert each customer into an enthusiastic, raving fan, his business would grow exponentially.

Girard outlined his approach in his book How to Sell Anything to Anybody, calling it his Law of 250. Girard’s insight is so important that I included it as one of the four key ideas that lie at the foundation of modern professional sales.

Fred Reichheld had the same insight. He concluded that the only opinion that matters is the opinion of the customer, and the only question on which their opinion matters is this: “How likely is it that you would recommend this company to a friend or colleague?” Reichheld recommends that you ask your customers to answer this question on a scale of 0 to10, with 0 being “not in this lifetime” to 10 being “absolutely and enthusiastically!” Customers who rate your company in the 0 to 6 range are implicitly detractors—they are either actively negative about you or are so lukewarm as to damn you with faint praise. A score of 7 or 8 is considered neutral. A score of 9 or 10 means the customer is a promoter. Take the percentage of your customers who are “promoters” and subtract the percentage who are “detractors.” This is what Reichheld calls your “Net Promoter Score” or “NPS,” a metric that he claims is a reliable indicator of how well your business is doing. If you have a high NPS, you have a significant and sustainable competitive advantage.

What Girard and Reichheld are both pointing out is that no form of evidence is as convincing to a prospective new customer as the enthusiastic endorsement of an existing customer. In our sales activities and in our proposals, we need to remember the power of customer endorsements and include them at every opportunity. We can use references, testimonial letters, quotes from clients, and case studies to demonstrate that we have customers who are enthusiastic about our products or service. Because these embody the customer’s strong, positive opinion, they are convincing forms of evidence.

David Sroka, CEO of Point of Reference, recommends creating audio recordings of clients being interviewed about their experience of working with us and putting those files on a private Web page. We can then provide our prospects with the URLs to Web pages we want them to see.

To make customer endorsements work, regardless of the format in which they’re presented, we need to make sure that the customer’s experience clearly communicates a compelling value proposition. Prospects are faintly interested to hear that our current customers love working with us. They will be much more impressed if our current customers tell them that our efforts have resulted in bottom-line improvements to key performance indicators.

We’re pleased to report that a recent survey of our customers indicated that the vast majority of them are strong supporters of the Sant Suite solution. In our annual customer survey, we achieved a customer satisfaction rating of 88% from all customers and a rating of 95% from customers who use all four Sant Suite applications. There’s a score even Fred Reichheld would find impressive!

May 7, 2008

Competitive Intelligence

Recently, one of the people who receives this newsletter wrote in to ask, "What would you think of a company that says we don't really have any competitors, because no else does exactly what we do. As a result, they choose to ignore information regarding the closest competitors."

It's an interesting dilemma and it's our topic for this message: how much time to spend studying and analyzing our competitors and when to just let it go.

Is it possible for a company to have NO competitors? Theoretically, it's possible, I suppose, but it's very unlikely. After all, even if you are the proud owner of iron-clad patents in a business so new and innovative that nobody else is in it yet, you still have a significant source of competition from other demands on your customers' time and money.

And I'm not even sure having no competitors is a desirable situation. Having no competitors may sound great, but in reality, it will probably make your sales process more difficult. Why? Because your customer will have no frame of reference and no points of comparison to use in developing an understanding of what the firm is offering.

In the classic "elevator story" structure that Geoffrey Moore presents in "Crossing the Chasm," the final part of that 30-second sound byte defining your entire business model and value proposition is "Unlike our key competitor X, our product/service [key differentiator]." The obvious point: If you can't make some kind of comparative statement, it's hard for the buyer to develop contextual understanding of what you offer and why it has value.

There are some other reasons why ignoring or denying the existence of competitors may not be a wise approach to business.

First of all, even if you know that nobody else is doing exactly what you do, the market may not see you as being that unique. Life is, in William James's phrase, "a booming, buzzing mass of confusion," and we have to do a whole lot of filtering and sorting just to make sense of it. Except for the things that are of most immediate, intimate concern to us (like our own families, our own businesses) we are likely to pigeonhole people and things into convenient slots. That means a customer may lump you into some broad cognitive category--IT consultant, sales trainer, healthcare provider, whatever--even though you do something that's uniquely different and that in your opinion should invalidate that kind of gross categorization.

Another thing to keep in mind is that sales is the epitome of knowledge work. And it's pretty hard to succeed in knowledge work from a position of ignorance.

Finally, we all need to remember that sometimes the biggest "competitor" we face in closing a deal is the option the customer has of doing nothing. There's always competition for the attention and budget of your prospective customers.

Which brings us to the main reason to be aware of your competitors. Having an accurate and up-to-date understanding of your competitors--whatever form they may take-will provide you with insights into ways to differentiate yourself and to craft a compelling value proposition. As we've said before, if you're not selling based on unique value, you may be selling on behalf of your competition.