Is there a difference between selling products and services?

This is a question often asked as people look for ways to refine and perfect the way they go to market.  Answering this question is made more complex by the large range of marketing and sales options that people can draw upon.  However, the fundamentals have not really changed; the proliferation of options has just made it harder to see those fundamentals.

While having multiple marketing and sales options is a key factor complicating the answer so is the use of the terms; product and service and also the now common use of the term solution.  Before you decide how you should approach selling what you offer, you must first decide whether what your offer is really a product, a service or a solution.

In answering the question will also provide input to both the strategy and the tactics to be deployed in pursuit of new customers and for growth of established customers.

Product, service or solution?

Although there is a lot of debate around these terms understanding the differences is generally quite straight forward.

  • A product is tangible so it has a specification that describes its capabilities and limitations.  So when you, for example, buy a; car, photocopier, washing machine or accounting package you can compare your needs to the specifications to inform your decision making process.  For the sales person, the specification provides a framework for exploring the needs of the potential buyer as well as a mechanism for describing how well the product fits the buyer’s requirement.
  • A service is intangible but it has a specification that is flexible with the final scope being determined through agreement between supplier and buyer.  The specification will have limitations either because resources are finite or because the supplier has limitations.  For example; a company selling hosted cloud services may only have the capacity to manage projects involving user communities up to 200 so the scope will include a size component.  Similarly; a commercial window cleaning company may limit itself to two story buildings so will not be trying for business to clean the outside windows of a skyscraper.
  • So, what is a solution?  This is one of those questions where if you ask 10 people you will probably get 11 answers.  A solution will often combine products and services but the core differentiator is that a solution provider takes away the problem and delivers back the desired outcome.

Take for example where a business needs some contract labour that they bring in and manage, then the provision of the labour is a service and some might argue the people providing the labour are in effect a product as they come with a specification in the form of their skill profiles and capabilities.  If however the supplier accepted the responsibility for delivery of the desired outcome, within an agreed timescale and to an agreed budget, then an [outsourced] solution is being provided as not only is the supplier providing the labour they are also managing the project to deliver the required result through the use of that labour.

I characterise this as the customer exporting the problem, thus transferring risk and controlling cost,  and re-importing the solution; the authority and responsibility for delivering the desired outcome rests with the supplier.  If that responsibility is on the customer side of the relationship then they are buying a service.

Summary example for a customer looking for cost effective business travel for frequent point to point carrying of samples/equipment.

Options:

  1. Buy Product = buy cars – maintenance costs variable
  2. Buy Service = rent* or lease cars – maintenance costs controlled, admin costs variable
  3. Buy Solution = use taxis* or outsource fleet management – maintenance and admin costs controlled

* Car rental or taxis would be effective for intermittent usage, lease and fleet for frequent/high utilisation

Presenting these three main categories of proposition is probably more of a challenge for the marketing function than it is for those doing the selling.  Once the sales process has commenced there is one-on-one engagement between seller and buyer and hence differences in propositions can be discussed and explained and questions from the buyer can be answered.  For the marketing function explaining the proposition in a one way communication is much harder and it requires good anticipation as to what problems the customer might have so a real understanding of the market is essential.

So what is different when selling products or services?

My high level answer to this question is that there are, or should be, no real differences.  But, the question deserves an answer:

The key difference in the way people approach selling can be found in the fact that; products are made and then sold whereas services are sold then made.

The product is made in the privacy of the suppliers’ environment whereas the service is ‘made’ in the public gaze of the customers’ environment.  A solution on the other hand is more like a Bake-off challenge; the target is defined and the result subsequently appears for judging.

Products have a finite specification and the capabilities and limitations are known and can be demonstrated before a sale is made.  A service can in effect have an infinite, or least very flexible, specification limited mainly by the available resources and capabilities which makes their demonstration more difficult.  A Service Level Agreement is often created to define the boundaries and expected behaviours for a service.

To sell a product you only have to demonstrate what it is, but with a service you have to demonstrate what might be which is a quite different challenge.  All forms of selling require the establishment of trust; the greater the intangibility the more the selling challenge involves the creation of trust without direct proof.

Good effective selling techniques can be characterised by a few key building blocks and all apply whatever you are selling:

  • Bear in mind that whether you think you are selling a product, service or solution, the customer is in effect buying the same thing; a means to achieve a result.
  • Ask don’t tell. No matter how much you know about the customer’s industry or their individual business to try to tell them the answers without agreeing on the question is just arrogant.
  • Use questions to explore and understand the specific concepts the buyer is wrestling with. Once you know what they need to achieve you can start to talk about the features of what you do in the context of their specific vision and you can begin the process of explaining the potential benefits they might gain from working with you.

If the sales person talks about features before understanding the buyer’s needs they gain no value from you being in the room; they might just as well read a brochure.  To illustrate how ineffective this will be, consider a couple of ‘comical’ terms used to describe this behaviour ‘features dump’ and ‘spray and pray’ – both put the onus on the buyer to ‘get it’ and then buy it but there is a very good chance they won’t do either.

  • Use questions to demonstrate that you understand the types of issue they might have, for instance a simple question “What impact has xxx had on your yyy?” portrays an immediate image of someone who really understands their world and the issues they have to deal with. This will trigger a process of mutual needs definition – using the question posed above you will get one of two answers; “the problems it has given us are …” or; “no that isn’t an issue for us but …”.   Either way you have acquired information that you can use to progress the exploration of their needs and the demonstration that you have the answers.
  • Use questions to educate prospects into what might be e.g. “Have you considered what you will need to do when the new xxx comes in?”. They may not have been aware of the requirement/technology/… or may not have thought how it would apply to them yet so you are helping them through your wider sector knowledge.
  • All selling activity requires the establishment of trust and in the case of a product this is potentially easier as features can be demonstrated whereas in the case of a service the features will only become tangible once delivery has commenced. However whether a product or a service the buyer is still undertaking a leap of faith that the supplier will deliver so will require the same amount of re-assurance from the seller. People selling products often underestimate the need to build trust relying too heavily on features as the main selling tool.

In summary, the key to effective selling is to recognise that you are only facilitating the buyer in their understanding of the problem, the potential means of resolution and your ability to deliver it.  You must treat all sales situations; product, service or solution, as a process of discovery, building trust and a demonstration of your capability to deliver.  Demonstrate your knowledge but don’t show off, and make it clear what it will be like for the customer to work with you if they choose you as their supplier.

One final thought; all product is likely to have an element of service e.g. delivery time, packaging integrity, order completeness, reliability, help-line performance, etc and this enveloping service may be the differentiator between you and the competition – so you need to understand how this may impact on the customer’s choice of supplier.  This service may only be required for a short period of time between order placement and commissioning of the product but don’t under-estimate its value in differentiating you from your competition.

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Are you vertical, horizontal, or something else?

In the book “The Discipline of Market Leaders”, written just over 20 years ago by Michael Treacy and Fred Wiersema where they looked at competitive business strategies, the overarching conclusion was that a business needed to;

Choose your Customers, Narrow your focus and then Dominate your market.

A key reason for doing this is to make best use of your sales and marketing resources.  This requires a focus around a well-defined market or in most cases a logical subset of the wider market.  Deciding how best to do this is a common topic of debate with our customers and the most common dimensions considered are; vertical, horizontal, geographic and e-location.

Vertical refers to a market consisting of businesses in a particular sector where the product or service addresses issues particular to that type of business; insurance brokers, engineers, logistics companies, etc.

Horizontal applies to a market where the product or service satisfies a need that is common across a wide range of businesses regardless of sector.  For example; a software product that produces invoices, calculates vat and automatically produces the vat return would be of interest to any business.

Geographic; this model is common with; taxi companies, decorators, service engineers and in fact any business that needs to travel to get to and service its customers.  This is also a very common model with bricks and mortar retailers who know they need a physical presence in the locations where their customers will want to shop.

e-location; the arrival of the on-line environment has to some extent removed the need for a geographic dimension but the vertical and horizontal dimensions are in many cases even more important.  It is now all too easy for someone to ‘wander by’ your website; just browsing, and in the process they may trigger you to respond but if your on-line presence is too general many enquiries could be a waste of time for you.

These dimensions are important when you are planning how and where to focus your outbound sales and marketing effort but they are also important, as mentioned under “e-location”, to focus the nature and volume of in-bound enquiries that you receive.

Blending various combinations of the four dimensions is also common and this can help to further refine the focus of your efforts and a typical mix will see a geographic component with one of the others.  There are also many other parameters that can be used to further refine a target market including; business size, private rather than publicly quoted and demographics such as age, lifestyle and interests.

Matching your market strategy to your product/service

Defining a business’ marketing strategy as being ‘vertically focused’ has become very popular in recent years.  If you do actually have a vertical offering and you adopt a vertical go-to-market strategy then you and your customers will benefit hugely.  However, I see various companies that have adopted a vertical go-to-market strategy when their product or service actually provides a horizontal proposition.

I recall an example of a company that provided IT support services that considered itself to have a vertical offering for the utilities sector.  It is true that around 40% of revenue did come from contracts with utility companies and this spurred them on to approach other utility companies with the message “we are a supplier to the utility sector”.  As a result they gained an appointment with the CIO of a large electricity company and during the meeting he asked the supplier what they knew about smart metering systems.  The answer was actually very little.

It is said that perception is truth.  The CIO believed that someone claiming to have utilities experience would know about the business issues specific to a utility whereas the supplier only knew about the technical issues of the IT systems.

This example illustrates very well that doing a lot of work in a particular vertical market does not mean you have a vertical offering.

The experience the supplier had with that CIO proved to be invaluable as they re-evaluated their offering and realised they had a horizontal proposition.  Their knowledge and expertise was focused on the IT issues around processing very large volumes of batch data; they had developed experience in tuning systems to optimise performance.  Their market focus thus became any company needing to process large volumes of data; utilities, insurance companies, membership organisations and many others.

Points to consider when deciding on your go-to-market strategy

  • If your products or services directly address specific business issues of companies in a vertical sector then you have a vertical offering.  If your offering solves issues of; infrastructure, processes, systems or methods that are common in many different types of businesses, what you have is a horizontal offering.

Once you have a clear view of your proposition measured against the two dimensions of vertical and horizontal you can now overlay other parameters such as location or company size to further refine the definition of your preferred target market.

The above will feed into creating appropriate sales and marketing messages specifically aimed at your target market.  The messages can be accurately framed to appeal to the needs of your target customers and specific individuals with relevant responsibilities; financial director, production manager, HR manager, quality manager, etc.

  • Next to consider is how your proposition addresses the question “why you?”  Unless you have something truly unique your prospective customers will be able to buy it somewhere else so why would they choose you?  Although propositions are rarely unique the way a company delivers it may be and hence the ‘how’ will provide fertile ground for creating your unique proposition.

Incidentally, not many prospects will actually ask “why you” but naturally they will be thinking it so you need to ensure your sales and marketing messages proactively answer this question.

  • The previous points  help you to build a profile of the industries, business sectors and specific companies that are most likely to be interested in what you provide which in turn enables you to better focus your sales and marketing efforts.  However; what you have so far is a well formed but possibly ill informed picture as you have formulated your opinions primarily from internal reference points.

Before you can consider this part of the job as finished you need to take account of what your potential customers might think.  Unless you do this there is a risk you will be telling your prospects what you want them to hear rather than what they need to know.

To ensure you have a complete picture you need to gather external inputs from customers past and present plus a range of external stakeholders such as; your suppliers, relevant trade bodies and publications, government legislation, general media commentary and if justified specific market research.

  • The final task is the process of deciding which routes to market you will use and how they will blend together to form a complete go-to-market solution.  The previous steps will provide valuable inputs to the decisions that need to be made on the routes to market and how the mix should work to satisfy your needs for new business generation.  During the conversation with past and present customers you should ask how they actually found you and their preferences in terms of marketing environments they prefer to use when looking for products or services such as yours.

None of this is especially difficult but it can be time consuming which can be frustrating when all you want to do is get out there and make some more sales.  However, you will find this structured approach will pay you back handsomely as the key result is to make your sales, selling and marketing effort more focused which in turn will give better return in terms of conversion ratios leading to more orders won and therefore more revenue to bank.

 

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courtesy of Microsoft Clipart

Bidding to Win

What has to be in place?

Formal bidding processes can appear very challenging and are often a source of belief that the incumbent always wins but in fact although complex such bidding process are typically scrupulously fair to all concerned.

So regardless of whether you respond to formal bid requests or create your own opportunities the first thing needed to get you on the radar is a compelling proposition that addresses two common questions a prospect would ask; “why would I buy that“ and “why would I buy it from you”. Even if they don’t ask out loud these questions will be in their minds. As part of the proposition you also need to elucidate the value you deliver and consider the price you would charge.

Next you need to consider how you will identify your ideal market, how you will take your proposition to market and which routes you will use.

The final piece in the jigsaw is the sales engagement process; the stages and steps you need to follow to mirror the buying processes of prospects in your chosen market.

Ensuring these four elements; proposition, market selection, routes to market and engagement process, are contiguous and fully integrated will increase the proportion of well qualified opportunities that you are dealing with.

As a result you will increase your win rate without increasing the bidding effort and gain increased revenue whilst enjoying a better RoI on your sales and marketing investment. What’s not to like?

Compelling proposition

So, what is a compelling proposition, in fact; what is a proposition? Is it your product or service or something extra? It is something extra. The product or service only defines what you make or do, it may also define the problem the customer will solve by using your product or service. For example you could consider installing a low energy lighting system that would give; better quality light, lower energy bills and reduced maintenance costs. This is what the product does for the customer, but is it attainable for them?

Maybe, the customer cannot afford the capital outlay to buy and install the new lights so is unable to enjoy the benefits. At this point the supplier could introduce the idea of the customer acquiring the new lights by way of finance or operating lease; the supplier’s proposition is now to use a financial instrument enabling customers to enjoy the benefits of the low energy lights without the need to spend or raise capital.

If the only objection the potential customer had was affordability, then the supplier’s ability to provide various financial options makes their proposition compelling by removing the only objection to proceeding with the transaction.

Selling tip; before making a final offer, always ensure you understand all of the prospects objections. If you don’t then the prospect will probably say; yes but – yes I like the different financial approach but I don’t like …

Most readers will have heard the term Unique Selling Point or Proposition (USP) and it is often argued that nothing is truly unique or if it is it doesn’t stay that way for long. While this may be true when it comes to product or service features the factors that contribute to the proposition provide fertile ground for the creation of uniqueness. If the finance option offered by the low energy lighting company is underwritten by the manufacturer of the lights it is likely that the finance rate will be very low enabling the supplier to offer lower financial terms than its competitors.

USPs are typically a combination of relatively small elements which taken together make the proposition compelling and this is what enables the supplier to keep the prospect interested whilst also countering competitive threat.

Pricing Policy

Arriving at a price that will be competitive and attractive to potential customers is a key part of proposition definition process but pricing policy is so important I felt it deserved a section on its own. There are three main approaches to arriving at a price; cost plus, competitor/market matching and value based pricing. Of these, value based pricing provides the most likely positive outcome for the supplier as the customer will be able to see ‘what is in it for them’.

Briefly the three approaches work like this:

  • Cost plus; it costs £10 per unit to make your product, £5 per unit to take it to market and cover business expenses and you want to make 25% profit so your selling price needs to be £20.
  • Competitor/market based pricing; you look at what others are charging for similar products or services in your market and you position your price according to where you think you fit between the cheapest and most expensive alternatives, but where it is still viable for you.
  • Value based; your price is determined by charging up to the amount the customer will gain by buying and using your product or service.

Strictly speaking you will gain most benefit from value based but you will need to review the other approaches as a sanity check. Using the cost plus example you know you need to sell at £15 to break even and if you judge your value based price to be less than £15 you will need to review what you are doing to find ways to reduce your costs or increase the value you can deliver.

Similarly, if you arrive at a price that makes you a profit and delivers value to the customer but it is higher than an apparently equivalent competitor price you will likely fail when the customer asks the “why would I buy it from you” question. You need to ensure you are comparing like for like with the competitor’s offering; if your offer includes ‘added value’ items that are not visible to the customer your offer will look expensive. You will also need to ensure the competitors’ current price is genuine rather than a special offer.

Having sense checked your selling price against cost and competition you make the value you can deliver, for the price you will charge, a key part of the presentation of your proposition.

Identifying the market

This activity flows naturally from the process of defining your proposition and why it might be compelling. If, for example, the companies that will really benefit from what you do are in a particular business sector and are above a certain size then simplistically your market is those companies that meet these criteria. Just having two parameters; business sector and size, may produce a very long list of potential customers so you will probably need to add a few more parameters to bring the long list down to a manageable size.

The parameters you use to define and identify your target market should relate directly to your proposition. Returning to the example of the low energy lights, if an important part of your USP is the financing options that you offer then companies who prefer not to use capital are more likely to be interested. While it may not be straightforward to determine a company’s financing preferences from the outside it is something that can be achieved during the first prospecting meeting.

I said it “may not be straightforward to determine a company’s financing preferences from the outside”, not straightforward but not impossible. It is often said that buyers are more empowered than ever by the ready availability of information on the web but so are suppliers. A quick scan of the company accounts of your target prospects will provide clues as to their preference when financing different types of purchase.

Selling tip; having defined the key elements of your USP ensure your sales discovery process explores these elements at the earliest possible opportunity. If those elements are not present for a particular prospect you will have to modify your sales approach or perhaps qualify the opportunity out if you think you stand little chance of winning.

Routes to market

There are now at least 10 routes to market to choose from courtesy of; networking, social media, digital marketing (out/in-bound), all of the traditional marketing mechanisms and direct and indirect sales options. While there are a few business sectors where one dominant option is the obvious one to use, for most businesses the solution will be a blend of several approaches.

The above routes are largely driven by the supplier, but other routes such as; partners, re-sellers, referrals and recommendations may be a better source of leads in some business sectors. In addition, for companies who have large corporate or public sector customers, the route to market will probably involve becoming ‘approved’ under the terms and conditions the customer applies to selecting suppliers.

To get the best RoI for the investment in sales and marketing it is crucial that the mix of marketing and sales options is optimised to match the supplier’s proposition and the needs and demands of their chosen market.

As with any investment, the assumptions that led to your chosen sales and marketing strategy need to be challenged on a regular basis to ensure what you are doing is still providing the results you need while delivering a good RoI.

Marketing tip; don’t assume that everything that is new will be good and everything old will be bad.

The sales engagement process

Whatever approach is used to generate interest and bring about that first contact with potential customers the crucial part of the process starts when someone from the supplier speaks with someone from the potential customer. This is the beginning of the sales engagement process that will build towards the creation of a customer and the identification of opportunities to bid for work with that customer.

For the sales person to enjoy maximum success, converting as many opportunities as possible, the following needs to be in place:

  • An opportunity identification or, better still, creation process using question based analysis to establish the prospect’s; position, wants, needs and budget. This analysis will provide guidance on the best way to proceed and may lead to an early decision to no bid the opportunity avoiding wasted time and effort.
  • An understanding of the decision making process and everyone who will be involved in making the decision. The sales person should ensure they engage with each decision maker understand what matters to each of them. Now, the rest of the bidding activity can be structured and tuned to satisfy the needs and interests of all those who will be involved in the final decision.
  • A bidding process that marshals all of the internal resources that will be required to produce a solution that satisfies the customer’s selection and decision making criteria. For some companies this may be done through a dedicated bidding, proposal writing or pre-sales function but in many cases managing the bid falls to the sales person for the account. However this is handled in your company it is very important that ‘bidding’ for new work is recognised by all as a critical success factor for the whole business and people need to give this activity proper focus and attention. It is not ‘another bit of admin!
  • Presenting the solution to the customer can be done in a variety of ways with proposals still being a common approach. Most proposals are written documents but they don’t have to be and we often use workshops as a mechanism to present our proposed solution to the customer. The customer is empowered to shape the final solution by engaging in discussion and questioning with the end result being a solution that the customer has helped to create.Even if the customer insists on a written proposal you should always endeavour to ‘present’ the proposal rather than just putting it in the post or attaching it to an e-mail. The purpose is to enable you to highlight the key beneficial points of your proposed solution.
  • You also need to have in place anything else that is relevant to the business sector you serve and the solutions you provide. Hence, where appropriate, you will need to provide; trials, pilots, demonstrations, site visits, satisfied customer references, etc.One word of caution; just because you and others in your business sector have always provided, for example, trials don’t assume it is still a useful engagement technique. I suggest you regularly review and challenge the processes and practices you employ in all areas of your go-to-market approach as customer needs change and the optimum way to win more business is to ensure your approach makes it easy for the customer buy not just easy for you to sell.

A final thought; two very important factors in effective sales engagement are sequence and timing. The order in which you undertake the various activities, the timing between individual steps and the overall timing of the bidding cycle will have an impact on your success rate. For example; presenting your proposed solution should be done as close as possible to the point when the customer has said they will be ready to make a decision. If the typical cycle in your business sector is six months involving four or five meetings with the customer then you should not be presenting a proposal after the first meeting.

courtesy of Microsoft Clipart

Incumbent always wins

– or do they?

This is a commonly held belief, especially in B2B sales, and in some cases there may be justification.  However, if you view each new potential opportunity from the perspective that the incumbent is going to win you will behave like a loser in waiting and, guess what; you will probably lose.  Optimists and pessimists tend to have one thing in common; they are both right most of the time – anticipating failure increases the odds that this will be the outcome.

Far from incumbents getting an easy ride, from my own observations, I think customers may actually be more flighty today but, in many cases, suppliers often fail to recognise the signs.  Both incumbent suppliers and hopeful new suppliers may be behaving in such a way that increases their chances of losing as a result of subtle signals they send to the customer.

If suppliers assume, while prospecting for new customers or bidding for new work, that the customer will favour the incumbent it conditions behaviour towards a loser’s frame of mind which in turn increases the chances of actually losing.  There is nothing more likely to lead to a lost sale than a lack of self-belief from the supplier’s sales people.  This is compounded if management fail to put their full weight behind bidding for an opportunity resulting in the effort put into the proposal lacking commitment; the prospect will spot this very easily.  If the opportunity met the qualification criteria management should back it and if it didn’t qualify out. This is a binary decision; either pull it or support it fully!

On the other hand an incumbent that takes the customer for granted is simply moving themselves closer to the exit door.  A common engagement model involves customers being moved from the new business team to the account management team once the relationship has been established and the first piece of business has been secured.  While it is good to move to managing an account with a ‘customer service’ mentality what is not good is to move from a hunter to a farmer or, worse still, a browser/gatherer mentality.  An important fact never to lose sight of is that the incumbent’s farmer will be competing with the hopeful new supplier’s hunter which may not be a fair fight.

The key questions that I address here are; why might a customer consider changing suppliers, why might a customer be reluctant to change suppliers, what can incumbents do to keep their customers and what can hopeful new suppliers do to win the customer over?  This assumes the customer still wants to buy that type of product or use that type of service so having a supplier is of strategic or tactical importance to the business.

Why might a customer consider changing supplier?

There will be a variety of reasons but they basically boil down to the customer becoming less satisfied by what the existing supplier is doing.  This can be an expression of an absolute position or it may be a relative position compared to what competitors may now be offering.  It is also the case that public bodies are driven by procedure to put work out to tender at certain time intervals and some large corporates have similar habits.

For the incumbent it is very important that the relationship management approach never slips into a casual, maintenance frame of mind.  Existing customer relationships must be managed proactively including regular formal account reviews that look at the performance of the relationship as well as the products and services being supplied.

It is the responsibility of the supplier to explore and probe to look for areas where the customer’s expectations might have changed and therefore where there are opportunities to do things differently.  Failure to do this, enabling small changes to be made along the way, will often result in the customer suddenly declaring that they are no longer satisfied; the feeling that may have been growing over time could by now be entrenched.  This is bad for the supplier as the customer will have built up the impression that the supplier did not care enough to find out how the customer was feeling.

Cases where customers like the product but no longer like the supplier are a common trigger for change.  If a disaffected customer decides to look for a new supplier the incumbent will have to work hard to keep the customer as overcoming a loss of faith or trust is a tough ask.

Why might customers be reluctant to change suppliers?

There are many reasons but they tend to fall into two main groupings:

  • Fear of change based on the disruption it might cause and the risk that things might be worse. A common and perfectly reasonable concern to have and the same feelings probably existed when the customer entered into the relationship with the incumbent. As in all sales situations a key activity for the supplier (incumbent and potential new) is to recognise the fear, uncertainty and doubt that naturally exists as a part of decision making and work to address it as a part of convincing the customer that they can be trusted.
  • Loyalty; if the customer feels the supplier has done a lot of good work in the past they may feel the incumbent deserves another chance to fix the things that are no longer working. From a customer perspective this is a sensible approach as they have also invested time and effort in the relationship so it makes sense that the first action is to try to repair rather than replace the relationship.

What can incumbents do to keep customers?

There is an interesting engagement philosophy that might be worth considering called ‘partnership sourcing’.  During the early 1990s a company called Partnership Sourcing Ltd (PSL) was set up by the joint action of the DTI, CBI and a number of large corporates which if I recall correctly included BA.  The basic principle was to foster an environment that would lead to the creation of mutually beneficial trading relationships between customer and supplier.  This was a reaction to the ‘master-slave’ approach that was common at the time and especially where the supplier was a minnow compared to the customer whale.

An excellent example of a PSL type approach can be found in Just-in-Time relationships where although the customer and the supplier are separate businesses they function as one unit with a common aim.  A key PSL principle is ‘no blame’; if something goes wrong the customer and supplier sit down on the same side of the table to address the problem.  Terms such as “the customer is always right” and “it’s my way or the highway” do not exist in PSL thinking.

PSL led to the creation of BS 11000 Collaborative Business Relationships, continuing the principles of customer and supplier working together to a mutually beneficial outcome; just as important now as they were 25 years ago.  Customers and suppliers should regularly sit down together in a no blame environment to discuss the relationship openly, sharing issues and concerns.

In trust-based relationships the supplier should be invited to attend part of the customer’s periodic business review to be informed what the customer needs to achieve in the next period enabling the supplier to plan whatever changes are required to continue to meet service levels.

If the supplier can convince the customer to include their budget when putting projects out to tender, effectively saying “we need this and our business case says we can spend £x; can you deliver what we need for the budget and if not how much can you deliver?”, this avoids the supplier guessing what the budget might be, thus offering solutions to match a perceived budget rather than a business specification.

Suppliers should manage customer relationship pro-actively through positive account management.  If the only time the supplier contacts the customer is to; renew a contract, sell them something new or ask a favour such as acting as a reference, the customer may justifiably begin to feel taken for granted.  Similarly, if the only time a customer contacts the supplier is to chase an order or complain about something the feeling will progressively turn negative.

It is very important that the supplier’s account manager has the responsibility to manage the relationship above and beyond the basic task of supplying products and services.  Account review meetings should be held between the parties at regular intervals and whilst part of the agenda will focus on product or service performance the bulk should focus on the performance of the relationship. Mutual discussion of future plans permits development of joint plans thus enabling both parties to prepare.  In the spirit of partnership sourcing conversations should be frank and fair.

The account manager should also be equipped to share war stories about other customers and projects; this is commonly done by new business sales people but all too often as soon as the customer becomes established no one from the supplier bothers to update them.  I have seen many situations where a customer buys from a competitor because they didn’t know the existing supplier made such a product or provided such a service.

What can a hopeful new supplier do to replace an incumbent?

Perhaps the first thing to say is that this is a very common scenario.  Established business will have relationships with various suppliers for a wide range of things; accounting services, office cleaning, photocopiers, IT, vending machines, building security and the list goes on.  So, in a majority of cases hopeful new suppliers will be working to replace an incumbent.  The two main scenarios where this might not be the case are; with start-up or young companies and where the product or service is genuinely new.  Recent examples of new might be cloud computing five years ago and more recently big data.

So, the starting point for thinking about this is to recognise that most new business effectively involves the hopeful supplier taking business away from an incumbent.  It is also worth recognising that some or all of the following factors will be present:

  • The customer may genuinely be happy with the relationship, products and services they get from the incumbent
  • The customer may think they’re happy but they do not know what better alternatives exist
  • The customer may say they are happy as a defence mechanism against being sold to – a classic rebuttal to fend off a sales call
  • The customer may not realise they have or will have a particular issue or that it is creating a problem or they may know they have a problem but not that a solution exists

It is important for potential new suppliers to have a sales engagement process that approaches all potential prospects with an open mind.  Don’t assume anything about the current position; use a process of structured questions to explore the current situation, problems they may wish to address, problems they may not have thought of, their desire to solve the problems and willingness to pay for a solution.  This process of discovery will of course include exploration of existing suppliers enabling the hopeful supplier to differentiate between situations when an incumbent is truly embedded or when the customer will be open to considering a change.  This needs to be achieved early in the sales engagement process otherwise selling effort may be wasted.

 

Kiplings 6 honest serving men

Questions

Exceptional sales people ask questions; everyone else answers them.

If your working life involves you in any type of sales or selling activities then the effective use of questions is not only an essential skill it is also a critical success factor. Anyone who does not possess such skill is at a disadvantage to sales people from your competitors who do.

Seeing questioning as just a selling skill is a mistake as questions and questioning are invaluable tools that enable and facilitate effective communication in all walks of life. Common examples in business include; recruitment, coaching, appraisals, management and quality auditing, in fact; anywhere that there is a need to explore what another person knows or is thinking. Questions also have other valuable communication applications as I will explain a little later.

While the importance of questions, especially within the context of sales, has been explored by many, my recent experience with front line sales people, their managers and sales training professionals suggests that the real significance of questions in communication has by and large been lost. People may have read a book or attended a course where questioning is one of the topics but then it is simply added to the other tools in the box when it should be the primary communication tool when selling.

Much is said about different types of questions; the two main categories being closed and open. Simplistically, closed questions elicit a basic yes/no answer, whereas open questions require the other party to provide some detail. One common way of recognising open questions is that they all start with; who, what, where, when, why and how.

I keep six honest serving men
They taught me all I knew
There names are What, and Where and When;Kiplings 6 honest serving men
and Why and How and Who.

I send them over land and sea,
I send them east and west;
But after they have worked for me,
I give them all a rest.

I let them rest from nine till five,
For I am busy then,
As well as breakfast, lunch, and tea,
For they are hungry men.

from The Elephant’s Child; Just So Stories by Rudyard Kipling 1902.

Some commentators give the impression that closed questions are bad; they are not but they need to be used sparingly and in the right place within the overall communication. Also, there are a number of different types of closed question for example; the assumptive “would I be right to assume (or think) that …” and the alternative “would you prefer A or B?” The result is always the same you basically get a yes or no answer which is very useful in some circumstances.

So, it seems quite straight forward; closed = yes/no and open = an answer rich in useful information.
Easy tiger; not so simple.

Considerations

The starting point is to treat questions and questioning as a standard part of the way you communicate. The moment you start thinking about questions and questioning as a technique or worse still a ‘trick’ you have lost the most powerful thing that good questioning can do for you; gain trust.

Questioning ‘techniques’ in sales often focus on trying to lead the prospect to a place where the seller wants them to be. In such a scenario, salespeople use questions to box the prospect into a place where they can present their proposition (demonstrate their product) and their perspective of the benefits and value they think they can deliver. It makes me cringe when I hear a questioning thread along the lines of “How beneficial would it be if you could … ?” The question is invariably structured to elicit a positive response “Well that would be really useful” and is then followed with something like “Well by using our … you can do that.

While the above simple example uses an open question such scenarios are destined to result in a closed outcome as the prospect will in most cases have been led to place they did not want to be. Might this be a common cause of people become unavailable when you call to follow up on a meeting or proposal that you sent after the meeting?

Rather than using questions to take the prospect to where the seller wants them to be, might it be more productive to help the prospect understand where they need to be and once the parties have a common and mutual understanding of where that is the seller can commence the process of presenting their solution to the agreed need?

So what makes for a really great question?

Some time back I sold my IT businesses to a US company and I stayed with them for 5 years reporting to the CEO in a range of roles all of which included me having sales and marketing responsibility for various bits of the world. From time to time I would get an unexpected call from the CEO who would start with a question “Hi Phil; what’s happening?” Now that really is a great question and in just two words it opens up the widest possible field of play. Of course, what you say when asked a question like this is whatever is uppermost in your mind which is also probably whatever is troubling you most so, with the purity and accuracy of a laser, the question got the boss to what really needed his attention.

Such direct questions work between people who know each other well, particularly when it’s the boss doing the asking but such directness is not appropriate in most cases between seller and prospect. Also, if you are speaking to a new prospect “what’s happening” is too general so you cannot predict what sort of response you might get. So, best not used early in the relationship but as it develops the approach might become relevant. In my experience customers often appreciate a relationship with a supplier where trust and mutual respect permits them to challenge each other.

There are ways to ask questions similar to “what’s happening” in the early stages of a sales prospecting cycle; but how might it help the conversation if you provided a context? This could be something like “I see from the trade press that recruitment is a real issue in your industry; how is that impacting on your business?” or “I saw on your website/annual report/newsletter that …, what impact is that having on your plan to open the new office?” Other sources of contextual material could be legislation or the economic environment.

Another contextual dimension involves giving due consideration to the background and interests of the person you are speaking to. The questions you would ask an FD, the chief engineer or the marketing director will be quite different. For example; the FD will be interested in RoI, the engineer will be more interested in specification and performance and the marketing director may want to know about the likely impact on say brand image; but each could also have their own perspective on the same topic, depending on how it impacts them.

When you have met the prospect or customer on a number of occasions you will have more knowledge about what is actually happening in the business so the context questions can move to “What is the current situation with your …?” or “Since we finished the project how have the … improved?” better still “I was thinking about [something in their business]; how useful would be to you to reduce that/speed it up, etc.?” The term is overused but this is an example of how a supplier can become a ‘trusted advisor’ to a customer; the scope is limited to relevant business matters but none the less the opportunity is there and that puts the seller in a strong position compared to new suppliers who try to muscle in.

Many sales people feel uncomfortable with the idea of advising the customer on their business or challenging them on something they have said they want to do. How can a sales person be an expert on a customers’ business? You are not an expert on their business; you are an expert on yours and how it can help businesses like your customer’s to achieve its goals. Recognising this distinction and working on this basis will help to shape your questions.

Similarly, when asking challenging questions the sales person is not challenging what the customer wants to achieve but how they are thinking of going about achieving it.

19 tips on using questions effectively

  • The first rule of asking questions; ask, shut up, listen, assimilate and only then respond – to what you have actually heard not with what you have pre-prepared.
  • Having asked, listen and wait for the answer. If the other person is taking their time responding don’t break the silence be patient and wait for the answer. If they pause while thinking or formulating their answer, don’t interrupt, be patient and wait for the complete answer. Silences can seem interminable with a few seconds feeling like an eternity – practise being patient and it will serve you well. Having listened and assured yourself that they have finished but you feel there could me more information to come ask a supplementary question such as “What else would be useful for you to have?
  • Remember questioning is not a technique or trick; it is a powerful communication tool.
  • Closed questions are just as useful as open ones when used correctly, e.g. to confirm understanding.
  • Questions can be used to progress any type of conversation and they are an antidote to the traditional selling technique of bombarding the prospect with features hoping they will submit. Questions enable the supplier to establish what the prospect needs not what the supplier wants to sell.
  • Ask questions to elicit answers that will matter to the prospect as well as to you. By doing this you are creating an interactive and progressive conversation not a one-way diatribe.
  • Use questions to explore all the possibilities not limit them.
  • Not all questions are born equal; while there may be a few killer questions that really make the other person think, most are quite basic with the simple purpose of progressing the conversation towards the preferred outcome.
  • While the primary purpose of questions is to; elicit information, check understanding, gain agreement, etc., there is an oft ignored benefit to the person asking; a well-crafted question speaks volumes about the person asking it. In a question such as “How valuable would it be to you if … happened?”, the subject matter alerts the person being asked to the fact that you understand their business issues and what might matter to them; asking the question tells them something about you.
  • Good questions make people think – ever found yourself half way through answering a question only to start to question what you are saying? People often have prepared positions on common subjects and a provocative or challenging question is a useful way to get the other person to question what they really think
  • Questions can be an effective way to steer a conversation; not to a false location but to where it really should be. Questions are also good for ‘shaping’ a need by refining the possibilities and therefore creating greater focus eventually leading to mutual agreement.
  • Don’t try to prod, prompt or interrogate; the purpose of questions is to create a conversation that flows naturally towards a logical conclusion.
  • Questions are a useful way of testing what someone has said “Would I be right that you want …?” This is a good use of a closed question and if the answer is “No” it will typically lead the person to expand and thus provide what is effectively an open answer to a closed question.
  • If you’re asked to repeat a question, consider asking it differently – might they be unclear about it rather than they didn’t hear it?
  • If people resist answering, consider re-asking later in the conversation rather than immediately after the first attempt. The approach should be one of patient, polite, persistence but always be aware of signs that the other person really may not want to answer on a particular point.
  • If you sense, or know from something already said by others, that an answer is incomplete ask a subsidiary question such as “What else would you like to see as part of the solution?
  • Asking similar questions of different people in the same organization will deepen your knowledge as you are not limited to the opinions of one person.
  • You may find yourself in the position that you know something but you need it confirmed by the decision maker who you are now meeting. So, a valid use of questions is to ask the decision maker about what you already know where the purpose is to ensure the information in the answer is ‘officially’ on the table.
  • Questioning should be planned and structured but not prescriptive:
    • If you are new to sales by all means write out some questions before a meeting but as soon as possible drop this habit as pre-prepared questions sound like a script.
    • A script interferes with the free flow of conversation as each question, after the opener, should be triggered by the previous response and you cannot know what this will be before the meeting has commenced.
    • Rather than questions your preparation should be to list down the topics you want to cover, the logical running order and above all the outcome you are aiming for. Just like planning a journey; you know the start point and the planned destination but not the beneficial diversions that may be encountered en-route?
    • Take notes, politely, then if something comes up outside the sequence or list of topics you were expecting you can choose to deal with it at the time or leave it until the end.

The effective use of questions helps both parties to think progressively moving them together to a common understanding. Getting people to think, not about their situation but about the possibilities, opens their minds which can lead to them accepting new and creative solutions. The role of the sales person should in part be about helping the prospect to visualise how, with the help of the supplier, to bridge the gap between where they are now, and where they need/want their business to be.

The power and danger of words

All forms of communication require the use of words and while the well thought through use of individual or sequences of words can create a powerful impact, words can also be dangerous. A book was published in 1938 called The Tyranny of Words that looked at the dangerous side. There have been many books and other publications that look at the positive side.

Examples of well-known people who understood the power of words are Winston Churchill, Martin Luther King and John F. Kennedy. Hitler is often quoted as also being a great user of words but is mainly associated with the use of words to support evil intent.

There is so much that could be said about words that my focus here is on words used in the context of business communication and in particular selling.

A research perspective

A limited piece of research undertaken in the 1960s concluded that prospects evaluating what a sales person is saying will assign 55% to the observed body language, 38% to the tone of the voice and only 7% to the words used. I have always had an issue with this as it simply does not tally with the way I behave when I am the prospect. I wonder, for example, how people cope when talking on the telephone; do they draw a conclusion from just 45% (they cannot see the body language) or is the 55% re-allocated to the other two areas and if so in what proportions?

If these figures are correct it could be argued that you don’t need to bother with the words at all. Just moving around miming should work!

But seriously and giving the original research the benefit of the doubt, it was after all limited in scope and reach, it could be said that communication techniques have adapted to suit the modern world and include many formats other than the sales person standing or sitting in front of the prospect spouting. I do not recommend that the sales person ‘spouts’ at all rather that questions are used to develop, guide and steer communication. So, this brings us full circle to the role of power and danger words in the context of sales engagement.

Words in business communications

Questions provide a powerful communication tool used in all areas of business activity and of course questions are a collection of words as are the answers. In addition to the individual words and the sequence in which they are presented, other factors such as volume, pace and tone form a key part of the total message and when face-to-face body language also plays a key part in the overall impact of the message being conveyed.

So, I agree with the research that body language (when face-to-face), tone and the words used combine to create the message but without the words the remaining silence isn’t going to get you very far.

Most people are comfortable asking open questions in their personal lives, in fact they come quite naturally to most of us; which parent hasn’t been driven mad by an unstoppable stream of “why” or “why not” questions?


But different folk have different views;key questions
I know a person small—
She keeps ten million serving-men,
Who get no rest at all!

She sends’em abroad on her own affairs,
From the second she opens her eyes—
One million Hows, two million Wheres,
And seven million Whys!

from The Elephant’s Child; Just So Stories by Rudyard Kipling 1902.

However, when it comes to the work environment many people are uncomfortable asking open questions as they feel they are perhaps cheeky, rude, abrupt or impertinent. When you look deeper into this, it isn’t the fact of asking a question as such rather the primary words used in open questions; who, why, etc., that seem impertinent. I cannot emphasise enough the importance of overcoming this concern allowing yourself to use the power of open questions and the words that define them.

It is common that people will use various devices to ‘soften’ the impact of the power words without appreciating that this can also dull their impact. While talking to an experienced sales manager recently he told me about a sales person who was uncomfortable about asking open questions so always started with something like do you mind – “Do you mind if I ask; what is your budget for the project?” Do you mind imparts an impression of nervousness, doubt, uncertainty that combines to weaken the overall impact of the key part of the question about the budget. It is also the case that there are two questions here; do you mind – CLOSED and then what is the budget – OPEN. This confuses the other person and gives them the opportunity to obfuscate when answering.

So, while there are power and danger words it is also about how those words are used.

Power words

A key group of power words are those used to create open questions; who, what, where, when, why and how.

Other power words are those that portray; certainty, commitment, agreement, etc. Words that help the other person to trust you and believe in your sincerity; you say what you will do and you do what you said you would. This is especially important when engaging with new potential customers as having not worked with you before they will need to feel they can rely upon you not to let them down.

A few specific examples of other power words and phrases are:

  • I don’t know. It is definite, there is no attempt to pretend and it cannot be misconstrued. This is even better when coupled with; but I can find out, or I know someone who does (exemplified by the AA), or we will put in the time to find out for you.
  • Thank you. Coupled with something like; that is really helpful and it will enable me to … The other person feels good that you have appreciated what they have done and it is a part of the process of “token exchange” whereby relationships are built from a whole lot of small tokens; things done for each other.
  • Yes. When you can do something, or you agree with them, say so. You can strengthen the yes by confirming what you are agreeing to; yes, we will deliver before the weekend. This is referred to as “yes, and”.
  • Because. If you are agreeing to do something that might be unusual or may typically be seen as undesirable to do, you build confidence in your answer by deepening it; We can provide cover on Saturday mornings because the technical team are always in the office undertaking weekly maintenance.

I think by now you have got the point. Spend some time thinking about the words you use and how you use them and ensure you are making best use of the opportunity you have when speaking to prospects, customers, suppliers, your boss or a direct report. Ensure you leave them with the impression you wanted them to have.

Double edged words and phrases

  • Who is the decision maker? It is perfectly reasonable that a potential supplier should want to know the answer but asking this is fraught with danger. What if the person you are speaking to has effectively purported to be in authority but is not actually the DM? This will embarrass them and is unlikely to lead to a good outcome for the person asking. So, instead, ask; who else will be involved in the decision or using another approach ask about the decision making process thus taking the focus away from the person you are speaking to.
  • Benefit or value. Both very important and we all need to know what benefit and value we will enjoy as a result of an action such as making a purchase. However, these words are so overused these days their true value and impact is often lost.
    The main problem here is when the person sitting in the seller’s seat says; this is the benefit or value to be gained they mainly use a generic position rather than a specific one. For example; the benefit is this will save you money. This is based on the assumption, or hope, that saving money is all that matters to everyone on every occasion and this is absolutely not the case. Benefits and value are relative to the individual and by assuming you know what will benefit them risks damaging your credibility.Agreement as to what is beneficial or of value must be established collaboratively between the parties and this is achieved through the use of well-structured questions built around power words.
  • Imagine. Helping someone to visualise what it might look like if they go along with what you are proposing is a good thing but the word imagine is over used in sales and is associated with tricks and techniques rather than good solid communication.

Danger words and phrases

  • I think so. So, you are not certain or perhaps you don’t know but don’t want to say so. Always be affirmative leaving the other person in no doubt as to what you mean and what you will do.
  • Maybe or possibly. Even if you expand on why it might not be so, you have created doubt and uncertainty that will damage the impact on your main message.
  • Yes but. Again you have introduced doubt.
  • The implied but. This is primarily a matter of tone of voice or a pause that is too long or is in the wrong place. In a face-to-face situation, watching the other person’s facial reaction will help you spot if you have inserted an implied but and you need to tackle this straight away otherwise doubt will linger in their minds.
  • No problem, OK, cool, or other automatic responses. This is fine when someone serving in a restaurant agrees to bring you extra bread but it is too general for use in a serious conversation where both parties need to fully understand what is going to happen next.
  • Does that make sense? So, you think the other person is too thick to understand? Much better to say “How would that work for you?”
  • Phrases like; let’s run it up the flag pole to see how it flutters or blue sky thinking or thinking outside the box should be avoided. They are basically quite meaningless and can leave the other person with the impression that you don’t actually have anything substantive to say.

The final group of danger words and phrases are associated with the use of language relevant to your product, business or the selling process. Some examples of things to avoid would be:

  • Internal language that you use to talk about your products and services. In most cases this will be meaningless to someone outside your company. Use plain language that is commonly understood, such as there are a number of features on the new X25 model that increase the intervals between routine maintenance calls and also reduce the time taken by the engineers, and avoid jargon and acronyms; they do not need to know that MTBF has increased due to new wiffly waffly widgets!
  • The language of business. If you put two financial people together they may use terms such as; ROCE, discounted cash flow, transfer pricing and they will both know the meaning. However, when a sales person uses such terms there is a real danger they will damage credibility unless they really understand the full meaning of the terms and can engage in a deep conversation with the FD. The one term that is used widely enough that it is usually safe is RoI.
  • The selling process. As sales people we think in terms of; decision makers, competitive strategy, dealing with objections, negotiation, closing the deal and the budget. While these are perfectly acceptable and useful when discussing a particular customer with your sales manager the terms are inappropriate for a conversation with that customer.
  • Ego. Don’t use words just to show how clever you are as it will probably have the opposite effect. Danger words and phrases in this context could include; strategic, commercial landscape, and gaining buy-in. Boastful terms such as; best in class, market leader and number one all carry the danger of damaging credibility unless you can back it up with evidence.

It is always better to use simple plain language that describes things that can be easily understood and substantiated.

timing is everything; on back foot or ahead of the game?

Objection Management

The dictionary defines an objection as “An expression or feeling of disapproval or opposition; a reason for disagreeing” or “The action of challenging or disagreeing with something.”  These definitions are linked to words such as; protest, complaint, grievance, doubt, moan, grumble, grouse and quibble.  No wonder people fear a prospect raising an objection; it is all negative and probably means trouble.

Objection handling is a frequent topic for discussion amongst sales professionals and is invariably covered in books, articles, blogs and courses focused on sales & selling skills and techniques.

Whereas objection handling is undoubtedly a relevant skill for sales professionals to possess, we think the time has come to ‘upgrade’; to be fully effective sales people need to become skilled in Objection Management.

The essence of Objection Management is the timely discussion and resolution of matters which if left, could become objections.

The key differences between handling and managing objections are:timing is everything; on back foot or ahead of the game?

  • Handling is primarily a reactive approach; managing is pro-active and can therefore be planned more effectively.
  • Handling is mainly concentrated at the end of a prospecting cycle; managing commences early in the engagement cycle and continues throughout.
  • Managing objections is a process of progressive issue resolution undertaken jointly between potential customer and hopeful supplier; as a result it can be conducted in an atmosphere of co-operation and thus is more likely to lead to a mutually beneficial outcome than can be achieved through combat.

The consequence of employing the handling approach close to the decision point is it often; puts the sales person on the back foot, leads to unplanned concession being given, and can create conflict that may damage the relationship which in serious cases can mean the loss of an order that should be yours.  As a closing meeting will typically follow a number of meetings, a quotation or proposal, a presentation, the taking up of references, etc., it is now difficult for the sales person to react to an objection without potentially contradicting their proposed solution..  There is nothing more likely to destroy trust (which will be fragile anyway as they do not really know you) than; suddenly offering a discount or adding something extra for the same money or suddenly being able to deliver much faster than your quoted timescale.
“You can’t fatten the pig on market day.”
The essence of a good relationship is mutual respect and no surprises!!!  The closing meeting is too late to add things to your offer, or make concessions, without damaging credibility or, as John Howard put it:

“You can’t fatten the pig on market day.”     

The consequence of managing the controlled resolution of issues, that could otherwise become objections, is that it is done at logical points throughout the evolving relationship thus allowing time for calm reflection rather than knee jerk reaction.  This approach increases the chances of winning more business, reduces the risk of having to offer unplanned concessions, and enables both parties to spot early whether a relationship is going to work to mutual benefit.  Later in this article we have used some common objections as examples to illustrate the managed approach.

Understanding objections

This is a large topic and for the purposes of this article I will focus on two main groups of objections; visible and hidden.

Common examples of visible objections in B2B sales are mainly around:

  • Money, contractual T&Cs, delivery, timing, inability to take-on the solution including staff shortages or not having the time to train them
  • Perceived issues with the functionality of the product or solution compared to their requirement, to a competitor’s offering, or to doing it themselves
  • The need to discuss it with someone outside the company (NED, consultant or major shareholder for example) or someone inside the company that you have not yet met or spoken to

Each company will have sensitivities specific to their industry or business sector so the above is just a taster to get you thinking about your own list.

Hidden objections are typically based on; complacency, fear of change, personal and professional risk aversion (impact on status, position, bonus, etc.), knowing that they promised someone else they would give them the work, knowing that they do not have the authority to make the purchase, lack of trust in your company, or maybe even a negative reaction to the sales person or other supplier staff they have met.

Note the key difference; visible objections are focused on, or at least appear to be, tangible/practical matters whereas the hidden objections are more emotional in their origin. I say visible objections appear to be focused on practical matters as it is common that tangible objections are used when the real issue is emotionally based; if someone fears change they won’t want to admit it so it is much easier to disguise it with; you’re too expensive or I don’t like the colour.

Managing objections

A key skill when handling objections is anticipation. An example of anticipation would be; if 8 out of 10 prospects object to your payment terms you know this will probably come up so you can prepare your rebuttal arguments to deal with it. Anticipation is even more valuable when pursuing a managing strategy where it is linked to another technique; pre-emption. Anticipation plus pre emption is the foundation of a strategy to manage the resolution of issues before they become objections.

Pre-emption involves the sales person raising the topic, they think could turn into an objection if not dealt with, and handling it in a controlled manner and at a time that fits into their prospect engagement strategy and before it becomes a point of conflict. This meets one of the key criteria for managing the objections; pro-activity rather than reaction.

A framework for managing objections:

  • The first stage is for the whole sales and marketing team to brainstorm possible objections and devise a long-list including all the reasons and excuses already used by prospects.
    • Tip one: If you undertake win-loss reviews you should have some firm data on exactly why people said no to you and if they said yes to you why they said no to your competitors.
    • Tip two: Most businesses have tried and tested rebuttals and refreshing these from time to time, in line with actual customer feedback, will strengthen your sales arguments.
    • Tip three: Make sure your list includes anything on the critical path for your delivery of the contract.
  • Next, you must ensure you fully understand the objection, for example; if an objection is that you are more expensive than a specific competitor you need to understand exactly what they do for the money. If your solution is bundled; everything for the one price, but your competitor charges extra for delivery, commissioning and only provides a 30 day warranty when yours is for 12 months your price may be higher than theirs but your total cost may be the same or even lower. A common trigger for an objection is a prospect mistakenly believing they are making a like for like comparison.
  • Now you can organise and prioritise the objections and this will probably result in some dropping off the list as they are one-offs or at least uncommon.
  • For each objection brainstorm rebuttals, old and new, and identify the most appropriate timing/stage in the engagement cycle to raise the topic.
  • Fully embed the understanding of the objections and the use of rebuttals by running internal training workshops built around role-playing common prospect scenarios at all stages of your engagement cycle.

Now you fully understand the objections and you have a set of well considered rebuttals that you have practiced you are ready to start managing rather than waiting to react.

This approach not only supports an incremental improvement in successful objection resolution, but adopting a management mind set will also produce an increase in positive outcomes leading to a step change improvement in performance. So let’s look at this in practice.

Managing objections in action

This really is very simple as all that is required is for the sales person to introduce the various topics, defined by the list of relevant objections, in a controlled way at logical points throughout the prospecting cycle rather than waiting to react to something the prospect raises while you are in the final stages of trying to close the deal.

The concept is simple, but can ‘feel’ difficult as sales people are often uncomfortable with the concept of raising a potential objection, thinking “isn’t there a danger we will put the idea in their heads?” Better you put it in their head and deal with it in a controlled manner than they think about it when you are not there and draw their own conclusions. You are then left to deal with a belief that may have become entrenched and even reinforced by one of your competitors.

What helps to simplify this for the sales person is the understanding that the process is one of questioning and not making statements. You won’t be saying something rhetorical like “is price an issue for you” you will be asking questions to explore, for example; their budget position, preferred approach to financing this type of purchase and the financial decision making process.

Average sales people answer questions; exceptional ones ask questions.

An example:

The key to creating a situation where issues are managed and therefore avoiding the creation of objections that will need to be handled is to explore the prospect’s views, opinions and preferences on the matters that typically become objections at every stage of the engagement cycle. Using questioning techniques this is a process of discovery; helping you to build a picture of what you need to do, or not do, to make your offer attractive and acceptable to the prospect.

Money is one of the most feared objections so let’s start with that to create a model for managing objections. This is also explored, from a ‘handling’ perspective, in How do you handle questions like this?

As outlined earlier the managed approach would see you open up the topic by asking something like; “What is your expectation in terms of the cost for this project?”, “How do you normally fund this type of project?” and “How and when will the actual budget for the project be determined?” These are just examples of the many questions you could ask.

Might they resist answering – yes they might. So how would you convince them of the benefit of discussing money early and openly with you? Basically if suppliers do not know how much a customer is willing to pay they will guess and build a solution to match what they perceive to be the budget. This is bad for the potential customer as it is likely to lead to a compromised solution built around the perceived budget rather than the required functionality.

Much better for both parties if the approach is based on “We need to solve this problem and we want to spend £x. What can you do for us?” If the prospect does not ask this type of question, and most won’t, the ‘managed’ approach is for the sales person to raise the issue “You are asking for a solution to … and there are several ways we can do this at various price points. Can you provide a guide as to how much you expect to spend on this so that we can match our offer to your budget?

No matter how well planned your managed approach might be the prospect could, at any point, say something like “you are too expensive”. This could be a simple tactic to push you back but if the conversations have been progressing well it is more likely that you have failed to prove the value of what you are proposing. Too expensive is a relative term so your thought process should lead you to ask “compared to what?” Compared to; the value they perceive in your offer, what they paid last time, their pre-determined budget or something a competitor has said?

Before you rebut find out exactly what is behind what they are saying.

If the “you are too expensive” comment turns out to be in comparison to; what they paid last time or what a competitor is quoting now, you should deploy the “yes but” technique. Yes but; are you comparing like for like? For example; “You are more expensive than your competitor” – “I agree their quoted price MAY BE lower than ours but we do not charge separately for; training, delivery, installation, …” So they are not comparing like for like considering just the price not the total cost of making the purchase. The emphasis on MAY BE is because you do not know what the competitor is quoting and the prospect may be being economical with the facts.

Through the above process you have enabled an early discussion covering specifications, money, timing and probably a number of other important factors. Working with the prospect in collaboration you have defined what your solution should look like and therefore your proposal will reflect exactly what the prospect is expecting to see – NO SURPRISES!

Further examples using the same technique:

Delivery; if you know they are going to want delivery by 30th August and you need seven months to create and deliver the solution say so early on. “I understand you need this implemented by 30th August so we will need to order the equipment during the first week of February; will you be able to give us your firm commitment to go ahead by the end of January?” You are triggering an early discussion about something that could become a problem if left.

Staffing; I recall when we first met that you said training staff in July and August would be difficult as most will be on holiday at some point. “Would you be willing to let us train the staff in May and June?” Again, this is just about opening up a dialogue so that a potential objection can be dealt with before it happens.

Decision making; don’t get caught at the last minute by “We need to consult the non-executives, our accountants, the main shareholder, etc.” Ask in the early meetings “What is the process for making decisions on this type of purchase?” and “Who, in addition to you, will be involved in the decision?” Then “If agreeable to you I would like to meet the other decision makers; could you send an e-mail to introduce me to them?”

Hidden objections

Decision making is a good topic to also address some potential hidden objections such as the fact that your contact may not have the authority to make the decision hence; “Who, in addition to you, will be involved in the decision”.

Exploring matters that the prospect might be personally sensitive about needs careful handling and ideally you include this throughout the engagement process as per the example above about decision making authority. Consider questions such as; “I appreciate that we are asking you to move away from a supplier you have worked with for over five years so what would you like us to do to demonstrate that we can deliver a better outcome for you without risking your customer satisfaction levels?” You build these questions around what you know; they have had the same supplier for a long time, customer service levels are something your contact is measured on and you have heard from others that customer complaints are going up – your question demonstrates you are aware of and sensitive to the issues that matter to your prospect.

In conclusion

If you have pursued the managed approach properly you have achieved two main advantages; you have effectively dealt with all significant issues that could have become objections and you know exactly what needs to go in your proposal as it will be a documentation of what the prospect has already agreed to – remember NO SURPRISES!

How Much?

How do you handle questions like this?

How Much?There are four key factors to consider when responding to this basic question, no matter how it is phrased; when, what, who and why. When (in the buying cycle) is the question being asked, exactly what (price, cost or something else) is being asked, who (their role in the decision making process) is asking and why are they asking.

When – if you sell a simple product and the transaction is typically concluded in a single meeting or call then it is reasonable that the money question is raised and you need to address it then or commit to provide an answer soon after the meeting. However, if what you sell is more complex involving; a number of meetings with different people, requirements investigation, production of a specification, presentations and proposals then answering something like “how much” in one of the early meetings is not realistic and should be avoided.

Tip one – “How much?” is a classic tactic used by someone who is looking for an early opportunity to terminate a sales prospecting conversation – don’t rise to the bait; politely park the question to be dealt with later.

Tip two – Your sales process should include specific stages when it is appropriate to handle the money question and you should use this to manage the interaction with the prospect.

Tip three – don’t feel you have to wait to be asked about money; when the time is right you raise it.

What exactly is being asked? “How much” is a catch-all phrase that could include; what is the price, what is the cost, what is the monthly rental or lease fee, or something else. It is important that you know exactly what you are being asked before you answer otherwise you could create a misunderstanding that could in turn lead to you being eliminated as a potential supplier before you have the opportunity to fully explain what you have to offer.

Note to self. “How much …?” If the answer you give is your price, you’ve immediately transformed the conversation into a pricing discussion missing the opportunity to talk about cost and more importantly value and benefits. Price is only one component of the cost.

One other important factor to consider is whether the prospect is asking the right question. For example; if they are considering a purchase of low energy industrial lighting the price is one important factor but as it will be recouped several times over during the life of the installation, as a result of the savings in energy costs, knowing exactly what will be saved is even more important than knowing the price

Note to self. Decision making should consider the total cost of acquisition (all the elements required to become the owner), total cost of ownership (all the elements required to use what has been purchased e.g. fuel for a car) and risk; the risk of going with a new supplier, the risk of staying with the existing supplier and the risk of starting/continuing to do it themselves.   A brave supplier will raise the risk arguments so they are debated in the open; if you do not you are leaving the prospect to give themselves sleepless nights on their own and unchallenged.

Tip one – use your own questions to ensure you know exactly what is being asked of you before attempting an answer.

Tip two – if you feel you are being asked the wrong or an incomplete question say so. Don’t be afraid to gently challenge with something like “Of course we can let you know the fully fitted price once we have done the lighting survey and we will provide a breakdown of how much you will save through lower energy usage as well”. You have achieved several things here; you have delayed answering the question until you are ready, you have brought in the topic of energy saving that they may not fully appreciate and you have planted a seed with “fully fitted price” which will leave them wondering whether your competitor may charge extra for fitting. Always nice to plant a small landmine for your competitors.

Who is asking? If you are sitting with the sole decision maker then they are the right person to be having the conversation about money. You still need to judge whether they are asking the right question at the right time but they are the appropriate person to be asking you the question so you need to deal with it.

If you are selling a complex proposition where the buying process will involve multiple steps, a decision making process consisting of several stages and a decision making unit (DMU) consisting of several people from different disciplines, then who is asking the question becomes very important. Within the DMU you may find; budget holders, decision makers, influencers, users and others and each could be seeking different information when they ask “how much?” Consider the low energy lighting example; the engineering director will be interested to know whether there will be an installation and on-going cost implication for his maintenance function while the FD will be more focused on the overall RoI so will look at energy savings as well as installation and maintenance costs. The FD will also be interested in funding options as he will have reasons to consider both capital and expense options.

Tip one – your sales approach should include a process to profile all members of the DMU to help your sales people identify what is most likely to interest and motivate each person in the DMU. Having the relevant information to present to each person will increase your credibility and their appreciation for the role you might play in solving their current business issue.

Tip two – if, for example, you are sitting with the FD you can explore what financial information they will want and in what format and also how they will finance the purchase. If you feel they have not considered something important such as maintenance costs, politely suggest they should consider this – “would it also be useful for us to provide a comparison between current and future maintenance costs?

Tip three – although all members of the DMU are important there will typically be one or two who have the power and authority to sway the decision – make sure you know them and that you have done everything you can to satisfy their needs and wants.

Why are they asking? The obvious answer is that they want to know! But why do they want to know? There are many answers to the question and understanding this is a key aspect of competitive strategy and objection management. The important thing is to ensure you know exactly why they are asking before you provide the answer and combining this with the understanding gained from exploring when, what and who will put you in a powerful position to give the prospect exactly what they need and gain you an order for new business.

Tip one – during the early stages of your sales engagement process explore the prospect’s decision making approach to gain an understanding of how money will feature in the decision. This will enable you to pre-empt potential objections about price or cost by ensuring what you are offering delivers value and a demonstrable return not just a bill.

Tip two – whatever the question, always explore why (reasoning, hidden agenda, …) before answering it.

Additional thoughts

Ask yourself and the prospect if they have considered “The cost of doing nothing?”, as doing nothing is the most common outcome to a sales negotiation in some business sectors you should explore whether the prospect has given due consideration to the cost of doing nothing. Doing this at an early stage will help to avoid protracted negotiations that ultimately go nowhere and it can also provide you with the information on imperatives, timescales, etc., to help you guide the situation towards a successful conclusion.

We help you save …” is a powerful conversation piece because it focuses on improvement (customer satisfaction, productivity, lower expenses, higher quality, etc.) and savings are forever not just at the point of purchase. The discussion changes from what they have to spend to what return they can get from the expenditure.

We help you make more money” is even more powerful as most organisations are hungry to increase revenue and profits. If, for example, your solution reduces waste or speeds up production this will help your customer make more money.

Warning – if your answer to “How much …?” triggers the retort; “that’s more than XYZ company” it is a sure sign you have failed to establish the value argument. Take this opportunity to grasp the nettle and re-visit the value arguments for your solution. As you re-emphasise your value arguments ask the prospect how this compares to the competitor’s offering – make sure they are comparing like for like.

Previously published on LinkedIn Pulse