What your prospective customer is REALLY thinking: How difficult and risky will it be?
At a recent board meeting, a fellow board member said “When people in my telco business came to me with an amazing technology project, my first question was always ‘How difficult is it going to be?’ Their answer was usually ‘John or Jane thinks they can do it’ — which wasn’t very reassuring!”.
We wrote in our 2023 Medium post Understanding entrepreneurial value creation and the “customer’s customer” that prospective customers’ primary metric in evaluating a project is its economic value, both to themselves and to their end-customers. Whilst that is undoubtedly true, they are also consciously or subliminally evaluating how difficult it will be to achieve those returns and whether the project introduces any business risks. These aspects are battling with a prospect’s desire to capitalise on your innovation.
When you put yourself in the shoes of the customer, it is important to remember that they have choices. They could do your project, other projects, or they could elect to do nothing at all. In fact, “doing nothing” is probably your biggest competitor.
If you have prospects saying “yes, but not yet” and clogging up in your “follow up” (aka “nurturing”) pipeline stage, that’s a sure sign that they are thinking about difficulty and risk. This can make it very hard to forecast when a deal will close.
Your job as a founder or sales leader is to figure out how to get your project to the top of the prospective customer’s “to do” list. That means proactively addressing these points.
To be clear: you increase your chances of a project being approved* by increasing the value you deliver and decreasing the difficulty and risk.
* Note that customers don’t think “product purchase”, they think “project for a purpose”.
If you wrote down the formula which defines what the customer is thinking through, it would look like;
Or in words — the chance of getting the project approved is proportional to the expected value… divided by the difficulty factor multiplied by the risk factor. If you assume the average project has a risk of 1 and an effort of 1, the bigger the risk and/or effort gets the lower your chances of being approved becomes. So low difficulty and low risk increase your win chances — which of course makes sense. Unfortunately, you can’t measure risk and difficulty very easily — but that doesn’t stop your prospective customers intuitively feeling these.
The risk factor combines both actual risk and perceived risk. So, the equation can be more accurately expanded to:
Difficulty
Difficulty includes the amount of effort the customer has to put in. It breaks down into the following types of questions which your prospect’s executives will be asking (or mulling over):
· Do we have the resources available, and how much effort is required from our people?
· Which specific people do we need to put on the project from our side, and do they have capacity to work on this?
· Will I get the support I need from the supplier?
· How does the new system connect to our existing IT systems?
· Will we have to change those systems?
· Will we have to change our business processes?
· Do we have to do significant training?
· Are we rolling this out across many parts of our organisation?
· To what extent are we making our customers or suppliers behave differently?
The good news is that there are ways to proactively address these. Here are some of the best ones I’ve seen deployed successfully:
· Creating an in-house implementation team, or partnering with a services firm / reseller, that is experienced in implementing your product. Using a third party to do this can often add credibility, especially if it’s a larger organisation.
· Clearly publishing your support levels, e.g. a 24x7 customer support line which might route to a founder’s mobile in the early days.
· Designing your product to be simple to implement. Pi Labs portfolio company Hyper AR has built tools to onboard retail stores quickly and easily into their magical consumer AR mapping system.
· Building API connections to your target market’s most commonly used systems. Pi Labs company Kamma has connected their property licensing products to Reapit, the most popular estate agency CRM system, making it easy to onboard Reapit users.
· Thoughtfully creating an onboarding programme, either by delivering training yourselves or by a “Train the Trainers” approach where customer personnel become the champion for onboarding their colleagues.
· Developing a communication plan, so the customer can clearly explain the project to their internal users and external parties — you can literally develop the collateral for them — together with a timetable for distributing it in the lead up to, during, and after the implementation.
· Having a staged implementation, where the customer starts getting “quick win” results early to build confidence.
Risk
Risk can be a little harder to address with its actual and perceived components. Risk includes things like;
· Outages: once I’m reliant on this system, how sure can I be that it is going to be there 24x7?
· Security: where is the data going to be, does this increase my chances of being hacked? Can I trust this startup with my precious data?
· Users: who’s going to be working on the project? How skilled are they and will they make mistakes?
· Timescales: can this be delivered on time, especially if there is a “drop dead” date required? For example, how to address a new law or regulation?
· Budget: what are the chances this will keep within or run over budget, and what might cause that to happen?
· Industry specific concerns.
Again, I’ve seen some good approaches, some of which you may want to deploy:
· Developing a project implementation document, showing the prospective customer you have done this before, and all the steps are already carefully mapped out. This is how Accenture sells large complex SAP implementation projects. They share the binders which contain all the steps the project team needs to follow.
· Introduce the people who are going to work on the project to the prospect, so they know the specific named individuals you are assigning and their level of skill and experience.
· Gather all the people from both sides of the project in one room, and run a project workshop with them.
· Developing a technical specification document which contains details on your systems hosting, availability levels, backup policy, where the data is located in line with regulations, and ISO27001, SOC2, CE/CA marks together with any other accreditation required.
· Produce a clear implementation plan. You may even want to give guarantees but be careful as there can be multiple reasons why projects can be delayed some of which are out of your control.
· Sponsorship from the founder, with regular, diarised, customer executive checkpoints — this signals to the prospect that you are personally putting yourself on the line to deliver.
· A staged payment plan — you get paid as the project proceeds and delivers.
· An early request that you would like the project, if approved, to be a public reference — showing your confidence that the project will be a success.
· Showing the prospect you have done this before by using case studies.
· Having the prospect build confidence by speaking to your existing customers about their experiences.
Summary
If you have prospects saying “yes but not yet” and clogging up in your “follow up” pipeline stage, that’s a sure sign that they are thinking about difficulty and risk. The secret here is to get ahead of prospects’ concerns by thoughtfully building out the measures to address these. There’s a lot of work in this — but as you progress step by step, you’ll start to see fewer saying “not yet” — and your ability to forecast when a deal will close will increase. All of this will take you time and effort, but the result will be another more powerful flywheel driving your sales engine.
