Entries Tagged 'Develop Solution' ↓
April 14th, 2009 — Develop Solution, Examples
This example is a real-life one lifted from my own experience. We had an idea that recycling expensive metal used in the investment casting of aerospace parts would be a useful service to offer. Metal prices were at record high levels, and these guys used hideously expensive metals like rhenium and silver, to name two. Used parts were just stockpiling up everywhere because no one knew what to do with them. This type of project would have the potential to fill up the bottom of my sales funnel – the best part.
I called on the major aerospace players and asked them if this was a problem. YES. That was music to my ears. I decided to pick just one company to focus on initially to prove out the concept and the technology. We sketched out our solutions and got basic cost data put together for each process. The various solutions ended up being vastly different in cost structure.
One solution was very cheap and could be rapidly implemented – but the purity of the resulting metal was less than prime and it would have to be diluted with pure virgin metal to be used again. The alternate solution was very capital intensive and would take a year to implement, but the produced metal could be used as is – in fact it was purer than the incoming material.
I called on my contact at the company; his title was Technical Consultant, which at this company was the very top of the pecking order for the technical ladder, so he was the right person to be talking to. I asked him if it would be possible to put together a team from his side that could help evaluate our solution from both a technical and business point of view. He replied that he was the correct technical contact and he would put me in touch with the responsible buyer.
We had an initial teleconference where our team laid out the two solutions and talked about the pros and cons of both methods. At this point both paths made economic sense for them, but Option A was clearly less expensive if they could use the less pure metal. I suggested a trial run of Option A, since we already had that equipment on site.
A $50,000 purchase order was cut less than a week later.
Do you think the PO would have been so easy to get without the correct buyer in the loop? Note that I anticipated that this would be a possibility and had previously worked out the costs to arrive at the price.
As the work commenced, it was apparent that we needed to involve another of their vendors into the loop. They would be responsible for the initial melting of our recycled material into a usable alloy. Well, this group is now starting to get difficult to manage. Conference calls now had an average of seven outside people on the line in addition to our four or five. But this is the price to be paid for this type of collaboration. It got so involved that I ended up purchasing a Web hosting service to better facilitate the discussions via video – I even bought each of the major players a video camera and microphone to use. Talk about good will!
To cut down on the length of the story, the initial solution didn’t provide good enough quality for them to use, so we needed to further investigate the second option. Things get sticky here because your getting major quotes for capital equipment over $1 million and you really don’t want to tell your prospect what things cost or they will beat you down to unsurvivable margins. I was upfront and only told them what price we would need to charge to make it an attractive business to us.
They fought very hard to get more cost data, and sometimes you have no choice but to surrender. But in this instance, I had the upper hand. They had so much time invested with me that their switching costs to going with a competitor would be too expensive and time consuming. I ended up giving some detail about depreciation terms and usage estimates, but equipment pricing was never disclosed. See the article “Negotiating With the Bean Counters” for details about how to handle these situations.
The sale was actually pretty easy at this point. I went into a multimillion dollar and multi-year business opportunity with a one-page, zero-surprise quotation and won the business over others who submitted “proposals as thick as phone books”. If you’re curious about timing, from my initial contact to the $50,000 order was one month. It took another ten months to secure the multi year deal – no one ever said that complex sales happen quickly!
It should be noted here that since we initially thought of the idea, there was no competition up front. After getting into a bit and working with the team, I suggested to my customer that they begin to work up a competing quote.
Why would I invite competition?
Well, for starters, I knew that for orders of this magnitude, at least two competitive bids are almost always needed. If we waited until the end to realize this, it could delay the order process by months. Secondly, maybe the competition had a better plan that we did. I doubted it, but one never knows. And if they did have a better idea, perhaps we could share in it. Either way, I had the customer’s best interest at heart and it showed.
There are many more interesting intricate details that happened along the way with this project, but the soul of the relevant matters to this article have been laid out.
July 22nd, 2008 — Account Maintenance, Develop Solution, Summary
We all know the ABC’s of sales right (Always Be Closing)? I think that sales philosophy is BS (Bull $#!%). A car dealer closes a sale when you take a car off his lot – a professional salesperson simply lets their sales cycle lead to a natural end, whether it’s a sale or not. I’m very passionate about this subject.
As we’ve talked before, your prospects should be well aware of the sales process steps that you’re going to walk them through right from the onset of the courtship. So if you reach the end of these steps, an order will be the natural outcome, you don’t have to pressure them into “What will it take for me to get you in this car today?”
Before you say anything, of course I realize that this is an oversimplification and you often have to nudge clients into moving, but the theory is sound.
Another thing I hate about ABC is the word close itself. When you get your order, it should be an opening to more business with them, not a closing of some type.
A key to treating customers in this manner is that your sales funnel is full enough so that you’re not panicking at the end of your quarter and instinctively try to push your prospect faster than you should.
So do yourself a favor and take the notion of closing out of your mind. Walk your clients through your sales process and show them all the points along the path where they have an opportunity to detour. If they are still on the ride at the end, an order follows and you start the dance all over again.
June 10th, 2008 — Develop Solution, Examples, Propose Solution, Summary
One of my favorite sales podcasts is the SalesRoundup Podcast, the hosts, Mike and Joe, are funny and are actually selling – i.e. not trainers, and it shows in what they say.
That being said, I have had a slight bone to pick with them for quite some time. I LinkedUp with Joe over a year ago and we exchanged a few emails talking about sales cycles. I explained that a sales cycle in my industry (advanced materials) can be as long as five years. Well the next Podcast I hear them taking a few shots at an unnamed person (me!!) and making fun of me a bit. I was jogging when I was listening to it and it really fired me up for about a day – I even shot them an email about it. So this post is to clear the air and explain my very complex sales cycle.
Among other things, I help develop and sell advanced metals to the aerospace industry. From the time of a first call with, say an engine OEM, to a production sale it can indeed take over five years. Would you feel comfortable flying across the country on an unproven material? There is so much testing and evaluation that you can switch jobs before you make the big sale.
So what is my solution? I obviously can’t wait for five years to make a sale. The solution is twofold. First, you better have more than one material at various levels in your sales funnel, or you better make the majority of your pay via a salary for the first few years as opposed to commission.
The second solution, and what I choose to do is to find more forgiving and risk taking markets to sell to before your main aerospace customer blesses it. Let me show a quick example to keep this post from getting too long.
Let’s say that your company has a new material called Xmetal. It is strong, lightweight and will never corrode. GE and Rolls-Royce are both very interested and in the initial stages of testing. Revenue from them buying your test material is maybe $150,000 per year, and your company is probably losing money at it.
Who else can use this awesome material? How about the motor sports industry? They will die for a lighter metal that can shave a few pounds out of their chassis – there’s another $200,000 per year. The medical industry has a need for a super-corrosive resistant metal for certain surgical tools. That equates to $500,000 per year at a healthy margin.
You see where this is going? You might have to support your big breakthrough with supplemental sales in the early years so that you don’t starve while waiting for the big payday.
Oh, so it’s five years later and your material is finally approved and you got your first repeatable production order – for $7MM.
I trust that my honor has been restored, in my own mind at least.
To show that there are no hard feelings and that I still love these guys, I asked Joe to comment on this strategy and here’s what he had to say.
Heck you should be put on a pedestal for taking on a product line with an average sales cycle of five years. – And I thought nine to twelve months was long. First let me comment on your strategy. Whenever you have a cycle that transcends fiscal years (and could up to five) you really should develop a laddered approach to the business timing. In your example, you close the $7M deal in year five. Hopefully you started a second and perhaps third cycle four and three years ago respectably. This way you will have built a nice pipeline of “large” deals and a predictable success rate.
I particularly like the creativity of approaching adjacent markets to supplement your revenue in the short-term. As you so nicely pointed out you do need to generate a steady stream of revenue! Although not your prime source, adjacent markets could be what your company needs to sustain operations during the “startup” period.
One final point I would like to underscore. In your post you alluded to the fact that many sales professionals will not make it the five years needed to realize success. Having said that, I would pursuit large deals with a team of sales people to mitigate the risk of turnover systemically affecting the outcome.
As far as the honor goes, anyone who successfully takes on a product line with a multiple year sales cycle is tops in my book. Five years! Man I still think you are crazy! LOL
Make sure to check these guys out – it’s about 40 minutes a week of free sales training.
February 15th, 2008 — Develop Solution
There comes a time when you hang up the phone or leave a sales call and you have to go to your technical team and tell them what you signed up for. After being called crazy and subsequently promising that you won’t do it again and that you’ll have someone from engineering come with you on the next call – you and your team come to the realization that you need to solve this problem and the fun begins.
The arena of problem solving and group interactions is way beyond the scope of this article, or the series for that matter. But what we can offer here are tips on high-level things you should be doing to help ensure that whatever solution you find and propose is chosen as the winner by your prospect.
The journey from getting a prospect to be interested in your solution to having them cut a purchase order against your proposal can be a trying experience to say the least. Just the thought of typing up a jumbo proposal with all the gory details can take months of preparation. If all that work is for naught, you lost not only that business, but all the opportunities that you could have been working on instead. Economists call these opportunity costs.
We preach the creation of a “zero-surprise proposalTM” for complex sales. This means that by the time your prospect gets the proposal in the mail, she already knows what it says – and she certainly doesn’t have to flip to the back page to find the price.
The trick to creating this zero-surprise proposal is to involve your prospect in the solution development stage. Getting her input has two major benefits. First, you’ll be able to ensure that your solution satisfies the technical and business issues that she’s mostly concerned with. She will know and understand the economic issues of implementing any suggestions that she provides you with. And secondly, if she provided input into the solution, she now has ownership and all the pride and attachment that come with that. This is a bond that your competition will almost never have – and never be able to break.
So the problem to be solved is when and where to bring your prospect into the solution design stage of the proposal to help make sure that your business case matches up with your client’s business case needs. They should ideally meet at a single point of agreement and information should flow between the two organizations as these business cases are developed. In fact, in the end, the two business cases should look as if you cheated off of each other.
Melding Engineering and Business Brains
How you handle integrating your prospect into your solution brainstorming sessions can be quite a delicate situation. Is she technically competent and ignorant of business issues or is she a buyer with no technical knowledge? The way to handle it, is to create a team of participants from the prospect’s organization so that every aspect of the decision is represented and enough buy-in is fostered to make your ultimate proposal rise to the top of the heap.
The need to possibly coerce a team of volunteers to continuously evaluate your proposal is why we stress to start as high in the organization chart as you possibly can when prospecting out your target (see “Getting the Initial Sales Appointment” for tips on doing just that). Let’s say that you started up a relationship with the CEO of a medium size business and you were trying to sell your modeling consulting service to them. He’ll tell you to talk to Sally in engineering because “she deals with that stuff”. Thank him for that lead and ask if there is anyone on the business side that you should also be talking to. “Our controller Sam takes care of all that business”. There you have it, you need to tie in Sally and Sam, and you can bet that they both will play ball with you – because the CEO said so.
You now have the necessary players identified and committed to at least review your proposal along the way and offer their incremental insights.
It’s like you have an insider pulling for you.
The next step is deciding how and when you want to roll them into your process. Too early and you give them too much control and information about the solution. Bring them in too late and you run the risk of them telling you that you need to scrap everything and start over in a different direction.
Present your two or three proposed paths and ask them which they prefer and why. Would they change anything? Do they understand the different economics at play between the two options? Would they be available for conferences as the ideas are further defined? Do they see any technical, financial, or political constraints that would be a barrier for either of the proposed solutions? And so forth.
Be careful not to patronize them here. Let me be clear that you are not integrating them into your team simply to get a soft advantage when the award stage comes to pass. You are using them to help design a solution that will best serve their needs. This is having high intent and their best interest at heart. If you are using them to play games on the surface just to get a feel good advantage, they will see through it and your plan will backfire. No one knows the issues better than them, so they are a great resource to help solve those issues.
NOTE: A word of caution here regarding intellectual property (IP). A downside to bringing in the prospect during the solution design stage is that they can possibly claim that they helped you design the product or process and fight you for the IP. Typically, you want to work on the proposal on your own dime to make it a little more clear who owns what. But when they provide input, it can get messy. I’m not allowed to give legal advice here other than to say that if you think that one of your solutions is a novel method that could be patented or you want to keep a trade secret, consult with an attorney before bringing your prospects into the loop.