How to Manage Uncertainty (So It Doesn’t Manage You)
The following is adapted from The Compelling Proposal by Steve Thompson
As the seller, it’s up to you to help your customer feel comfortable with the level of risk they’re taking on. Your proposal serves as a bridge between creating value (selling) and capturing value (negotiating) in a great deal, and managing uncertainty helps your customer cross it.
As you move from creating value to capturing value, you won’t always have perfect information. That’s because, as you may have noticed, the real world does not always follow a clean and logical path. Because you are dealing with actual people, the real world is fraught with uncertainty and conflicting priorities that lead to risk — for both you and the customer. For example:
- Who are all the customer’s buying influencers?
- What are the outcomes important to the customer and each key buying influencer?
- What alternative are you really competing against?
- What is important to you in a deal?
- What is the actual “budget” and approval process?
- What do you do when the customer presents conflicting priorities such as “lowest unit cost” but also “no volume commitment”? Or they want the “total solution” but have a “limited budget”?
Maybe you’re not clear about the alternative you’re competing against. If it’s a competitor, perhaps you don’t know how they will behave or the strategy they will adopt. Are you sure you’ve met with all the key buying influencers on the customer’s side, and do you really know all the outcomes important to them? Are all these influencers aligned on the same outcomes important to the business? Are you internally aligned on what is important to your business in a deal?
As you can see, the uncertainties can quickly pile up! Almost certain, on the other hand, are the negative implications if you lose the deal (your alternative)! Is this starting to sound like the real world of B2B sales?
If so, wait — there’s more!
Let’s add in the uncertainty of whether the budget is firm and secure and whether all the customer’s buying steps are fully known. Now add the conflicting priorities the customer says are important. They want the lowest unit cost but are not prepared to commit to any minimum volumes. (That will be tough to sell internally.) Or the customer is thrilled with the outcomes you can provide with your total solution, but they only have so much budget. (There’s no way you can accomplish both and stay in business for long.)
Now you’re really starting to look — and feel — like the real world.
So here’s the question you must answer: With all this uncertainty and risk, why would you present just one option to your customer in a proposal? Given the dire consequences of losing the deal, do you really think one option will carry the day? The degree to which you are not one hundred percent certain your one option will prevail is the degree to which you are hoping it will, and we all know that “hope is not a strategy.”
Thankfully, there’s a better way!
Multiple Acceptable Options
Giving the customer options is a central component of the compelling proposal — and a key tool for managing uncertainty and risk. However, this is not one of those times when you can just “throw it against the wall to see if it sticks.” How you construct and present your multiple acceptable options is very important.
Each option should be equally acceptable to you. The options don’t have to be the same dollar value or size, but each should advance your company’s business strategy as well as your sales strategy for this customer. And while every sales rep would love to do a multimillion-dollar deal with a new customer, most customers would rather “dip their toe in the water,” starting off with a smaller deal that minimizes their risk. Wouldn’t you be happy with a smaller deal that allows you to get your foot in the door and prove that you can provide value — one that opens that door to a much larger follow-on deal?
The title of each option should read as an outcome or value proposition that is meaningful to the customer. It should clearly explain what the option will deliver. Replace labels like good, better, and best with detailed, informative labels that clearly communicate the differentiation among the options. It is important to present each option as acceptable to you, and the customer should feel free to pick the one that is right for them with no sense of one option being “better” than another.
It is a best practice to present the options side-by-side so that the customer can easily compare them. It is also best to stick to only the key deal levers. Avoid using your terminology or acronyms — you want the options to be perfectly clear to the customer.
Options can be constructed around a variety of business criteria. One of the simplest is scope of work, where you present different deal sizes based on the volume and nature of the work you’re proposing. Another way to construct options is around different business arrangements, such as “pay as you go,” volume-tiered pricing, or a long-term, strategic contract. You can also build options around different levels of risk. No matter how you develop them, options must be relevant to this customer for this opportunity at this point in time. There is no “canned” template of options that will work every time.
Additionally, do not present these options as the only ones available to the customer. In most cases the final negotiated deal is a combination of two or more of the options, so you should present your options as simply three that you have developed based on what you believe may be important to the customer. Let them know that you are more than happy to consider other options they may come up with and that you will entertain changing any option to best meet their needs. This sends the clear message that you are flexible and that, beyond simply growing their options from one to three, you are inviting them to participate in the process of building an option that is good for both parties.
Timing Is Critical
Finally, multiple acceptable options are most effective when they are presented as early as possible in the sales cycle. Once you have a reasonable idea of the outcomes important to the customer, the outlines of a great deal, and the alternative you are competing against, it is an ideal time to help the customer focus on the potential ways you could move the deal forward. When you allow the customer to participate in choosing the best way forward, you are in effect enabling them to buy (rather than just pay for) your solution.
The deal they help construct is now “their deal” — one they will be highly motivated to close! This goes a long way toward shortening sales cycles.
For more advice on winning sales proposals, you can find The Compelling Proposal on Amazon.
Steve Thompson is Managing Partner at Value LifecycleTM, which helps companies position, negotiate, and close critical business deals. In the past 20 years, he has worked on over $15 billion in B2B deals in over 120 different industries. He previously worked in senior operations, sales, and executive management at Westinghouse, Black & Decker, and DuPont. Steve also served as a nuclear submarine officer in the US Navy.