Entries Tagged 'Propose Solution' ↓

Easy on the email

huge-email-loadI love email – it’s one of the few tools that you can use at 2:00 in the morning to communicate to your customers.

I’ve noticed over the past few years, however, that the size of emails is rapidly growing.  It wasn’t all too long ago that it was foolish to try to send an email over 1MB in size – now it’s common to get 10MB files launched my way.

Just because your customer is capable of receiving your bloated sales propaganda doesn’t mean that you should tax their system, or their patience.  Learn how to convert images to smaller sizes and transform large documents into smaller PDF files – your prospects will thank you for it.

Top 5 Sales Mistakes

buyers-sellersWe set out to prove that our oft claimed strategy of integrating the buyer into your sales process at the very beginning of the sales cycle provides deep rewards down the line. By integrating buyers in your process early, we argue, you are gaining almost insurmountable advantages over your competition. Here are just two of the main advantages.

  • Buyer buy-in. In other words the buyer will be on the ride with you as you and the respective technical teams build up a technology solution. She’ll have a say at each fork in the road and understand the economic repercussions of each decision. So by definition, your price tag will be acceptable, the buyer knows what it is before you submit it. As long as your technology is at least comparable to your competition – you’ll win the job every time.

  • Your customer’s engineering team will often be on your side, because they are mainly interested in the best technical solution, period. As such, as you and they begin to form that solution, they will act as your agent – convincing the buyer that your combined solution is the best path forward. When your competition’s proposal shows up and no one has even seen it before, you will look like the safe bet.

We surveyed a swath of buyers from major domestic corporations in the fields of telecommunications, advanced materials, manufacturing, aerospace and aviation, mining, and advanced electronics; we stayed away from buyers in the retail world. While a statistician would have no problems poking holes in our method, you can’t argue with the practical results – and that’s all we really care about.

For this post, we’re detailing the question that asked for the top five mistakes that engineers and salesmen make when trying to sell into their respective organizations. The questions were asked in an open format, so that they participants could answer in any manner that they felt best. Here are some of the quotes that we received.

Don’t talk down to buyers.

Don’t ignore the buyer when you get them in the meeting.

Engineering estimates are not the same as quotations.

Don’t try to backdoor the buyer by going through the engineer.

So here they are – the top five buyer’s pet peeves.

5. Trying to weasel in the back door of the company through an engineer.

4. Not offering alternate solutions.

3. Not knowing about either company’s terms and conditions.

2. Underestimating the buyer’s technical knowledge.

1. Not bringing the buyer in the process from the very beginning.

In support of the number one reason, one of the survey questions was:

At what stage in the buying process do you like to be brought in at?

a) During the initial sales call

b) After your engineers have approved the solution

c) While a quote is being developed

d) After delivery of quotation

e) Never

100% of the respondents answered (a) they want to be brought into the sales process in the very beginning.

In reality most buyers are brought in the process at step (d) after delivery of the quotation. If they (buyers) want in at the beginning of the sales cycle and we (sellers) want that too, why is it so rarely done? I guess we’d need another research study to determine that!

Bottom Line: Get the buyer’s involved right from the start and you’ll be buying them a beer after the deal closes!

Sales Strategy, Part III

sales-moneyOK, this is the last post in this little series.  So far we talked about saving your customers life cycle money and making your prospects money and both seemed like weak positions in the current economy.  So what’s left?

Save your customers money today.

Companies are looking at their costs on a monthly, weekly, and even daily basis right now and juggling receivables, payables and cash like never before.  Layoffs and destroyed retirement accounts are on everyone’s mind.

What your customers need is a way to spend a little cash today that results in direct savings next week.  That is how they can save jobs and maybe even their company.

So your sales challenge is to package and market your product/service in such a way that your prospect (1) can afford it, and (2) can use it to immediately save cash.  (for reference, more sales for them does not equate to money savings – remember that).

This is a key idea and a key post for you to re-read so that you are not emptying out your sales funnel by using the wrong sales strategy.

Imagine you sell tooling to a tier one automotive supplier.  Wow, you might as well give up, ‘eh?  Well, what if you could propose them a new material that lasts twice as long as what they currently use and they only need to pay for your direct costs up front, so their cash outlay is actually less than the cheaper material and they have less change-over costs because your material lasts longer.

You cover your direct costs, so you’re keeping people working, and you can work out when and how you get the rest of your premium price.

This is no where near my favorite selling strategy, but I’m seeing it work time and time again for my clients in this crazy market, so give it a try and let us know how you make out.

Sales Strategy, Part II

sales-strategy-make-moneyIn our previous sales strategy post we talked about the difficult sales approach of saving your prospects money in the future if they only spend more money now.

But what about instead of saving them money, you sold a solution that made them more money.  That’s a sure bet right?

Well, it depends.

You need to remember that cash is extremely tight right now and even if you can make your prospect $1,000,000 in October if they just spend $50,000 in March; it is still likely that you will lose that sale.  Your prospect probably doesn’t have the $50k to spend right now.

An example here may be if you sold a software package guaranteeing more and better visitors to a Website, thus generating exponentially more sales – but the development and installation will take several months to complete.

So now I’ve gone through two faulty sales strategies and there is only one left – save your prospects money right now, see the next post.

Basic selling strategy, Part I

heavy-airplaneWhen you try to sell a prospect on something you are typically following one of two sales strategies:

  • You’re trying to save them money, or
  • You’re trying to make them more money.

An example of the first instance is a new lightweight material for the aerospace market.  Everyone knows that saving a pound of weight equals some magic dollar value in life cycle costs for the aircraft.  If your prospect would spend $x today, you’ll save them $3x over the 15 year life of their aircraft.  Sounds great right?

The problem with that approach in today’s economy is the initial $x cost you are proposing is no doubt more than what they are currently paying.  And at this point in time cash is king, queen and jester.

My point is that the sales strategy of trying to get someone to pay more for something right now in order to save them money in the future is a fool’s game when cash is tight, as it is for most companies right now.

That leaves two sales strategies in your sales tool box to keep your sales funnel full – (1) save them money instantly, or (2) make them more money right now – more on these to follow.

Playing hard to get in action

Mad customerIn the previous post, we talked about the basic sales strategy of playing hard to get. This post will look at an example pulled from a real-life sales call.

To set the stage, imagine that you have developed a manner by which to produce a material that no one else can currently manufacture. The competing material fails in service so often that designers are desperate to design it right out of service, but they are forced to use it because it’s all that’s out there.

OK, so you trot into your prospect’s office and lay out some parts that you made from your new material and their jaws instinctively drop to the ground in amazement, they rush out of the room to huddle and come back in much more composed.

You run the rest of the meeting and collect some cost data on their current practices and gather some forecasts for what a successful material could do in their market place. You leave them with the impression that you’ll get a formal quote to them in about a week but that they should be prepared for an expensive number because your processing route is very costly.

After about a week you overnight them a shiny proposal for your material at $500 per pound – knowing that the competition costs them about $125 per pound. You get an immediate call:

Customer: “This price is unacceptable and you need to resubmit.”

You: “I understand your frustration, but as we detailed in our last meeting, our manufacturing route precludes us from competing with the price of your current solution. Perhaps this isn’t a good fit for our material after all.”

Customer: “Please take another look at your numbers and get back to me next week with your best and final offer.”

A week passes…

Customer: “Have you had a chance to rework your numbers?”

You: “I reviewed our quotation with the production team and we really can’t do much. I could probably shave off about $3 per pound if it would help close the deal, but that’s it.”

Customer: “That’s not even close to enough, this deal is dead!”

You: “Very well then, please keep us in mind if you come across any applications that can bear this increased cost.”

A week passes.

A month passes.

Customer: “Uh, yeah, hi, it looks like we might have found a few applications where your high costs can be acceptable.”

You: “Great, let’s talk!”

A note of caution: this is a very delicate sales strategy that can easily backfire if you’re not completely in tune with your customer’s needs and your competitor’s offerings. It isn’t for the faint of heart.

Playing hard to get marketing

Hard to get marketingPlaying hard to get is an accepted, and effective, way to lure a potential mate into a relationship – so why not apply it to your selling strategy.

I first picked up the subject several years ago from an article in the Harvard Business Review, I think they called it “retro marketing”. It essentially means that you lay out what you have and then revert to a take-it or leave-it attitude with your prospect.

I’ve come to rely on this sales approach rather heavily over the years and will lay out a hard example in the next post, but the main ideas follow:

  • being hard to get doesn’t imply that you can be arrogant
  • you need to have the best quality and customer service to pull this sales strategy off
  • you need to be prepared to walk away from any deal you try this on
  • you need to believe that your proposed solution is the best solution for your client
  • you (might) need your boss’s agreement to deploy this strategy
  • you need to understand your competitors offerings before trying this

The main point is to be careful, because once you put this idea out there, it’s tough to claw back to another starting point and alternative strategy.  The idea is to extract what your solution is worth and to keep your prospect’s best interest at heart – that can be a fine line to walk.

The next post will have a real world example of this strategy in action.

Sales quotation sample; Part II

In the base post of this series as well as a related post, we talked about many different aspects of a sales quotation and even put forth a sample quotation.  In this post, we’re going to talk about what leadtimes you should put on your quote.

A quoted leadtime can mean different things to different parties.  Oftentimes, on a quote a salesman will put a leadtime that refers to when the product will ship.  The customer, however, will often view leadtime as when they can expect your widget delivered on their dock.  So be careful to make this distinction clear.

Another typical item to carefully spell out is that your quoted leadtime is after you receive their order (ARO).  So if you quote “3 weeks ARO”, it means that the leadtime is three weeks after they send in their order.

If your product is highly dependant on receiving raw materials, you might want to quote the that the leadtime also is after receipt of materials (ARM).

Finally, if your dealing with an unknown customers and you need paid up front, your leadtime needs to reflect that you won’t ship until after receipt of payment (ARP).

So a complex example would be:
Shipment: 4 weeks ARP, ARM (note that raw materials won’t be ordered until payment is received)

In the above example, you are saying that after you get paid, you will order raw material and ship your product out in 4 weeks from that day.

Please CLICK HERE to download a sample sales quotation to use as a template in your sales efforts.

James Dyson, my hero

Dyson AirbladeOK, I have to admit that James Dyson is one of my all-time heroes.  The guy struggled for years and years to get his cyclone vacuum into people’s houses.  People laughed at him and the big companies ignored him (and subsequently copied him), but he kept on inventing and selling until he became a household name.

I’ve been eagerly searching for one of his new Airblade hand drying units and found one at a local resort this past weekend.  I must have gone into the bathroom four times before my wife asked if everything was ok.  I told her what marvel lay in the latrine and she said “not Dyson again!” – I was on a big Dyson kick for a long time after reading his autobiography – which I HIGHLY recommend.

So how does the awesome new hand dryer lend itself to a sales lesson?  Well at his heart, I sense that James is an engineer that simply wants to solve problems.  Now he went about it and actually solved the problems himself – I’m not suggesting that you have to do that.

But why not look for your customer’s problems that your company might be able to help alleviate and work with your team to at least propose a better solution.  You can bet Hoover laughed at Dyson until they noticed significant market share going his way – what if one hard working Hoover sales engineer would have spotted the need Dyson recognized, do you think Dyson could have survived?

I contacted Dyson’s PR department to ask for permission to use this photo (granted) and to see if I could shoot Mr. Dyson a few questions about his sales philosophy – I was told that they had to prioritize his time and he was too busy; oh well, it didn’t hurt to ask.

BTW, Mr. Dyson, if you ever read this I have a few product ideas for you that I think your cylclone technology would perform brilliantly at and the markets are enormous.

Sales quotation sample; Part I

Sales quote exampleI’ve gotten so much feedback from a previous post on a sales quotation example (in fact it is the most popular post so far in the sales funnel) that I think it warrants going into this in a bit more detail. I thought it might be appropriate to have a series of posts detailing the various parts of a good sales quote. And the quote is often at the beginning of the sales funnel, so it is terribly important to your sales health.

All sales quotes should have the following components:

  • Your contact information
  • Your customer’s contact information
  • Date you sent the quote out
  • Your internal quote number
  • Quote body
  • Leadtime
  • Payment terms
  • Shipping terms
  • Price
  • Your signature and title
  • Reference to your Terms and Conditions

For this post, let’s talk about the “internal quote number” – other quotation items to be found in future posts.

You should have a system in place for numbering all of your quotations. I’ve seen many different ways of doing this, the most popular follow:

  • Base it on your customer’s name. For example if you are quoting XYZ Forming, Inc. for the third time, you might call your quote number “XYZ003”. The benefit of this numbering scheme is that you know at an instance who the company is and how many times you’ve quoted them in the past. The problem is that you need to remember if you called the quote XYZ or XYZFORM. Sure you can set up rules to maybe limit it to three characters, but that causes problems with companies that have the same first three letters – it ends up being a mess and I don’t recommend this.
  • Base it on sequential numbering. So on day one your first quote is 001 and three years from now you’re on quote 434. While there is nothing inherently wrong with this scheme, I like to build a little intelligence in my quote numbering layout.
  • Base it on logical sequential numbering. Here is where I like to live. If a company has very discreet products, say iron and copper sheet quote could be numbered Fe001 and Cu001, respectively. I personally like to number based on the current fiscal year I’m in without regard to product class. So my first quote of 2008 was 8001 and right now I’m on 8178. That way I know at an instant approximately when a quote was released. I have a simple Excel file that I use to keep track of what quote number I’m on.

Please CLICK HERE to download a sample sales quotation for you to use as a template in your sales efforts.

What system do you use?

UPDATE: This is by far one of our most popular post, if you want to learn more, visit our products page and read “Sales Layer 8 – How to accept a purchase order.”

The long, long sales cycle

Long sales cycleOne 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.

What’s a product worth example

What to charge?In “Determining what a product or service is worth“, we eluded to an Excel tool that would automatically calculate what you should charge for your product or service. Of course we also gave the caveat to not blindly use the numbers provided – they are for reference only and the tool’s main goal is to make you think through each layer in your prospect’s company to figure out where you stand.

Well, here’s an example analysis – please leave a comment if you want the actual Excel file behind this post, I’ll shoot it right over your way.

Let’s suppose that you’ve spent several months selling an engineer on your gizmo, and you put together a $25,000 proposal and send it off in the mail to her. Then you sit back and cross your fingers. Your spirits are high because through hard work you know that the engineer values your product at $25,000 and that’s exactly what you charged – so it’s a no-brainer.

But what’s actually happening on the other end with your proposal?

The following table shows how your gizmo is valued by the various stakeholders and their respective pulling weight.

Stakeholder

Perceived value

Relative pull

Engineer

$25,000

15%

Engineering Manager

$20,000

10%

Purchasing Agent

$12,500

20%

CFO

$17,500

40%

CEO

$18,000

15%

Plugging these values into the Perceived Value Equation yields a PV of $17,950. You’re $25,000 proposal suddenly looks 39% overpriced! Chances are that your proposed solution may solve the engineer’s problem, but the rest of the team has a smaller need and your gizmo is overkill. Your sale is in major trouble.

The following screenshot shows what this analysis might look like in the accompanying Excel file (again, leave a comment asking for the file if you want it).

Excel - What’s a product worth