The following is an edited excerpt from the book Must-Win Deals: How To Close Them (And Why We Lose Them) by Steve Thompson.
When I work with selling clients, I often poll the salesforce and ask them for the number one reason they lose deals.
“The price is too high,” is the typical (and expected) answer.
“So when you win deals,” I respond, “it must be because you have the lowest price, right?”
“No. We win because we sell the value!”
There’s something telling about this exchange. In terms of what you control, you win deals because the customer sees the value of your offer — and the size and speed of closure is directly related to how much value they see. In terms of what you control, you lose deals because the customer does not see the value. It’s that simple.
But simple is not the same as easy.
Many of the factors that cause you to lose (or slip) must-win deals are completely beyond your control. A key buying influencer has suddenly left the company, significantly delaying a decision. The customer is acquired by a larger company and all projects and initiatives are put on hold. Last quarter’s financial results were pretty ugly, and budgets are frozen until senior management can sort out what needs to be done. These are events you can’t control, so there is no reason to spend time on them. (They do point up an important caveat, however: always maintain more sales pipeline than quota!)
It is much more productive to focus on things you can control, like the four key challenges you inadvertently present to potential customers — the ones that make it challenging for them to award must-win deals to you:
- Your customer doesn’t understand your value proposition.
- Your customer can’t connect their value goal with your proposal or offer.
- Your customer says your price is too high, and you don’t have a negotiation plan to keep the value in the deal.
- Your existing customer doesn’t know the past value you’ve delivered.
It shouldn’t surprise you that each of these challenges is tied to value. Although it is one of the most abused and poorly understood concepts in business, value is (and always will be) the real currency of B2B selling. So it’s worth restating and anchoring on this simple concept: You win deals because the customer sees the value in doing business with you. When they don’t (or can’t) see that value, it’s usually because you’ve presented one or more of these four challenges. So let’s explore them in a little more detail. After all, when you get them right, you can dramatically increase your odds of winning — and winning big.
Your customer doesn’t understand your value proposition.
Your value proposition should be what makes your customer sit up, take notice of what you are saying, want what you are selling — and want it now. But this can only happen if your customer clearly understands your value proposition, and it is relevant to the outcomes they wish to achieve.
Let’s start by clarifying the type of value proposition we are talking about.
Many salespeople confuse the more general marketing value proposition with the targeted sales version, which is specific to the customer and their situation. A (simplified) marketing value proposition might go like this: “We save customers money.” Its primary purpose is to generate sufficient interest from a prospective customer to get them to check out your company and your offerings. As such, it is rarely enough to generate a sale. (By the way, it is likely a marketing value proposition that your competitors are using in their sales process.)
A sales value proposition more directly addresses the customer’s specific situation and what they want to accomplish. It might state, “We will save you money,” then specify what money, how much, and by when. Your job is to make your value proposition clear, irresistible, and specific to your customer so that they want what you’re selling and want it sooner rather than later.
You could argue that this type of value proposition is the logical output of any sales process, and I wouldn’t disagree with you. But as an output it has no value. Don’t leave it to your customer to deduce your value at the end of the selling cycle. Rather, get out in front with a value proposition that answers the questions your buyer is going to need answers for. Don’t make them work for it!
Your customer can’t connect their value goal with your proposal or offer.
When I work with buying organizations to help them position and close critical deals with key suppliers, part of my job is to review supplier proposals. I almost feel bad getting paid for this work because I already know what almost every supplier proposal will say. They’re all about the suppliers and their products, services, features (sometimes benefits), office locations, growth, recent acquisitions, etc. They’re all innovative, world-leading, and Gartner upper-right quadrant. And I don’t know how this math works, but somehow they all manage to be number one in their field. It’s no wonder customers have a hard time choosing one supplier over another and often end up making the safest and most logical choice: the vendor with the lowest price.
In short, the current state of supplier proposals is truly abysmal. And they stay that way because many sales reps simply cut and paste from previous proposals and templates. (With any luck, they also remember to search/replace the customer name!) The other problem is that these proposals are constructed more like marketing documents than ones meant to close a sale. The more pages — pictures, diagrams, charts, graphs, tables — the better. They then become self-defeating, making it harder for the customer to make an informed decision because nowhere are these mountains of data linked to the outcomes the customer wants to achieve. As a result, customers begin to question why certain elements are in the proposal. Are these vendors “padding” their bid? Do they really understand our business and what we want to accomplish?
The form of a proposal should follow its function and objectives. Its function is to seamlessly and quickly bridge from selling to setting up the right negotiation. Its objectives are to (1) reinforce trust and credibility, (2) make it easy for the customer to choose you (and feel confident they have made the right choice), and (3) manage the uncertainty that surrounds any complex deal in the real world.
Your customer says your price is too high, and you don’t have a negotiation plan to keep the value in the deal.
It should not surprise you when customers tell you that your price is too high, that the competition is cheaper, or that they only have so much budget. (These are all basically the same thing.) Yet most salespeople are not prepared to deal with these predictable objections — especially when made by buyers in must-win deals. Instead, sellers run back to the “mothership” and beg for a bigger discount or try to throw in some services for “free,” moves that both delay the decision and devalue the deal.
In short, they are negotiating the wrong way.
And blinded by eleventh-hour nerves, what most sellers can’t see is how customers read these theatrics. At some point, your buyer will begin to question the value of what you are trying to sell them. You told them your products are world-class, so why are you so quick to give them away? If they were as good as you say, you’d stick to your guns. I’ve seen a deal go off the rails because the customer got so uncomfortable with the seller’s panicked “negotiation” style, they just cancelled the deal. The supplier was negotiating the wrong way and, as a result, the customer’s perceived risk was too high.
What many salespeople also fail to consider is that a deal won primarily on price will affect every future deal with that customer. What you readily give away or concede today will be the starting point of the next negotiation in the next deal. Worse than that, customers talk to each other. People change jobs and companies, and they remember the previous deal they did with you. In this way your negotiation style spreads, helps to establish the true market positioning of your company, and can broadly impact future business.
Remember, your goal when negotiating is to keep the hard-earned value that you created in the deal, resulting in a great deal for both parties.
Your existing customer doesn’t know the past value you’ve delivered.
I know, I know — you’re worried about landing that must-win deal right now, and you’re not thinking about when the value is delivered after the sale. Odds are, in your organization what happens after the sale may not even be your responsibility.
This thinking works — until it doesn’t.
Let’s assume you’re trying to sell a big deal into an existing account, a long-standing customer. If that customer doesn’t understand the past value your firm has delivered, why would they be interested in buying more from you this time (maybe a lot more)? This single issue gets in the way of closing must-win deals more times than I can count. When a customer knows they’ve received some value but aren’t sure what it was, their default assumption will usually be that they paid too much for it, and a tough, price-only negotiation is bound to ensue. This is the “teachable moment” for most sales reps, when their organization’s failure to focus on past value delivered comes into sharp focus. It’s a shame because the easiest sale in the world is to an existing, happy, informed customer.
Your customers already have enough challenges making complex, high-stakes buying decisions, and the last thing they need from you is even more hurdles to clear. So why not give them a straight and clear path when dealing with you: Be sure your value proposition is easy to understand and that your proposal clearly connects your offering to the outcomes they are trying to achieve.
Anticipate price challenges and have a plan to counter with options based on value, not discounts. And finally, be sure they understand the value you have delivered in the past so that they are not focused on finding the next lowest bidder, but on value beyond price in their ongoing relationship with you.
If you haven’t figured it out by now, this book (and the entire Must-Win Deals series) is built around the idea that successful selling — the kind that closes big, strategic deals and leads to ongoing relationships — can only happen in a context of mutual value. That is, value to you and to your customer.
Of course, that means that we’re going to explore in some depth what value means to your company, but what about your customer? How in the world do you go about determining what value means to them?
It starts by appreciating and understanding the context of value within your customer’s “buying journey.”
To keep reading, pick up Must-Win Deals: How To Close Them (And Why We Lose Them) by Steve Thompson.