Why is selling my product or service so hard?
This topic has come up repeatedly with clients over the past few weeks. Many companies, especially start-ups, suffer from longer sales cycles than they plan for or can afford. There are many reasons that can often be bucketed into categories as follows:
- Immature or unproven value proposition
- Immature or unproven vendor
- Lack of references and proof points for the solution
- Lack of customer understanding of the solution's capabilities and impact
- Solutions that are new or paradigm shifting for a marketplace
- Products or services that are poorly packaged and presented.
What is often very frustrating is that on the surface the idea behind your product or services is extremely compelling thus making it easy to get the first meeting but damn near impossible to get a signed contract within a reasonable time frame. The start-up receives positive feedback and encouragement for their product or solution but struggle to convert prospects into customers.
If this describes your business, read on.
A few years ago, I was working with an analytics company. Their value proposition was the ability to capture data and present a new type intermediate performance metrics. Using these metrics, marketing and operations management can increase revenue by impacting the effectiveness of their marketing and promotions. Even though they had developed a small base of brand-name customers and had demonstrated proof-points and customer references, their sales cycle was slow and frustrating. Their problem was that their customers had grown up in their industry. This solution introduced a new way of thinking about managing revenue performance. It also represented a new expense that the customer was not currently incurring.
The analytics company's sales approach was to get CEO-level meetings with a prospect and pitch the benefits. The available benefits to the customer were large so that it was easy to get the executive's interest. The technology implementation was straightforward and logical enough that they got great feedback from their first meeting. Their analytics were offered as a low cost, cloud based, monthly subscription service so a pilot project should have been a small enough cost that it led to a quick commitment. Unfortunately, it didn't. Inevitably, the first meeting led to a referral to a lower-level group of managers to evaluate the details of the pilot. At best, this required a number of additional meetings before signing a small pilot with minimal revenue. At worst, the pilot project eventually got bogged down or lost in the bureaucracy and died. The ratio of pilot revenue to the selling work effort was overwhelming for a start-up; regardless of the promise of future revenue that the pilots would create when they converted to fully operational systems. Without significant additional capital investment, their sales process was unsustainable.
The company's problem was that they did not have their solution packaged so that they could ask for the order after the first meeting. Their first meeting was an introductory meeting, aimed at creating a great deal of executive interest and support for more work to be done. Their first meeting was not structured to get the executive to either say "Yes, I will buy that" or "No, I am not interested".
To fix this problem, we rebuild their sales strategy. In many prospects, the data we needed to run our analytics was available but not used. We continued to use the proven approach to get our first CEO-level meeting but changed our pitch. Once we had the CEO interested in our solution, we asked to do a paid study that involved them sending us the last six month of their data for analysis. We would then return six weeks later to do a presentation to the CEO and their executive team. This presentation was an analysis of their data using our analytics and how those analytics would have improved their revenue performance. In other words, we said that we would tell them, "three things about their business that they didn't know". We priced the study at a nominal price that covered the cost of our study and travel to present at the executive meeting.
Using this one-time paid study approach, we effectively created a "Prospect Qualification Point" early in our sales process. If a CEO wasn't really interested, they wouldn't spend the money, even though it was a nominal price. If they did bite, their level of commitment was higher because they were spending money. As well, we had created a way to remain at the senior decision-making level versus getting pushed down to mid-level managers. If your product is paradigm shifting or culturally new to an organization, these changes must be driven from the top. In these situations, early delegation to lower level management often means the death of the project.
When we returned for the executive presentation, we showed our results. The results inevitably impressed and stimulated great discussion. Our "Ask" from the meeting was an agreement to conduct a second study. This one was priced at roughly ten times the first offer and had high margins. This study proposed conducting a similar process to the previous study except using live, real-time data from a portion of their business for the next six months. During this period, we would work with the prospect's managers to assist them with interpreting and applying the analytics. At the end of the study, the deliverable was another executive presentation to the senior team. The "Ask" also included a commitment from the senior team that if the results of the six-month study hit the improvement threshold agreed to during the first executive presentation, then the company would rollout our subscription service to the entire company.
At this point, our worst case scenario was that the prospect declined to go further. They had covered our costs for the first executive meeting, and we had added cash and margin to the company by doing the second study. In fact, using this process increased our success in closing the deal because executives were seeing results within their company, using their data. They felt reduced risk that the project could fail and increased confidence that not only was our technology useful but that their people were able to consume it.
Since this time, I have applied a similar sales methodology to other start-ups, including my own company, with great success. As a consultant, what I sell is often very specific to each client and as a result, often involves a great deal of up front discussion in order to both scope the engagement and gain the client's confidence in my skills. The problem with this dynamic is that the business development cost to accomplish the above often outweighs the revenue earned from the consulting engagement. As a result, I have "productized" what I do into two offerings: my Executive Coaching service and my Consulting Skills Workshop. Both "products" allow my prospective clients to rapidly make a decision as to whether they buy these services. For example, to sell my Executive Coaching service, I generally spend 20 minutes on the phone as an introductory call and then I send them a document that describes "the product" and further explains what they are buying. We then meet for an hour to see if the chemistry will work and I ask for "the order". By this time, the client has usually investigated my website and read my blogs. This has allowed them to ascertain for themselves if they believe that my experience and knowledge is relevant to their business. If you want to review my "product", the web page version of documents that I send to clients are posted on my website at Executive Coaching and Consulting Skills Workshop
So if your sales are stalling, consider this: Have you structured what you are selling so that the prospect can say "yes" or "no" quickly? If not, try the approach that I developed above. When you are a start-up, the only thing worse than not making the sale, is wasting a lot of time before you get "no" for an answer.