The Sales Handicapper

Five Most Important Sales Questions - Budget

I've received quite a bit of feedback on the Five Most Important Sales Questions post.  Most have been requests to address each question separately and in more detail.  I'll take them one at a time, so here it goes.

1. Are you budgeted to purchase this year?

Of all the questions, this is the most important (and most obvious).  Regardless of how favorable the responses are to the other four questions, without this question being asked and answered with strong affirmation, nothing else matters.  NOTE: (If they aren't budgeted and you are trying to convince them to re-allocate funds to your solution, then refer to Time, Tools and Talent post.  Today, we are dealing with the situation where your prospect indicates interest and wants you to invest your time and money in selling them.)

The budget question doesn't have to be the first one asked, however.  In fact, in most cases it shouldn't be asked until the question of where "they" are and where "we" are in their budget process have been addressed.  Asking the budget question too early will undermine your credibility.  Plus, when asking the "where" questions, you may discover the true answer to the budget question without having to ask it directly.  But, make no mistake, you have to ask it BEFORE you agree to spend any more of your time or your company's resources in the sales process.

Being budgeted is NOT the same as being in the budget or being proposed for the budget.  What you are trying to determine is if they have both the responsibility and authority to spend the money now and if it is already allocated.  Quite often, we can get caught up in the strong desire of our buyer who has the responsibility for successful "application" of funds, but not the authority to "allocate" them.  Understanding the difference behind the distinction can make a big difference in the quality of your sales pipeline.

There are literally thousands of websites that address the budget (read: price) "objection", but very few that actually address the harder question of whether the person you're talking to can actually spend money so here are a few ways you might ask the budget question:

• Are funds currently allocated for this project/purchase?  (If so, you need to find out under what conditions the funding could be taken away)
• When do you need this up and running?
• Are there any other projects/business goals dependent on this happening now?
• Do you share this budget with anyone else?
• What happens if you don't spend the money this year?

I'm sure there other ways to ask the question directly in order to receive a direct and unequivocal answer.  Don't get too cute and don't forget that once you ask the question, shut up! This is one question where the absence of a strong affirmative response is a negative one.

I love you Fox News, but...

...you're killing me!  I know the economy is still bad and that unemployment is still high.  I know that housing sales and mortgage rates are at an all-time low and mortgage defaults are at an all-time high.  I know that banks aren't lending unless you have the credit rating of a Saudi prince and that credit card companies are going to start charging a premium for using their card on odd numbered days.  I know the Democrats are the root of all evil (unless you're a Democrat and then it's George Bush).  I know that healthcare reform will kill us and that raising taxes won't leave us enough money to bury the dead. I know that the only thing being "stimulized" is the growth in the federal government and that our country's debt is a number bigger than Stephen Hocking can calculate.  I know that Glenn Beck is right and the USA is the only remaining house on the hill.  I know that you are the most watched news channel in our solar system and that MSNBC is less than moon dust. I get it, OK?   Can you please stop the shouting? 

I watch you every night, but I'm finding myself changing the channel after the fifth time I've heard the same point.  I have to live and "work" in this country, but if I keep tuning in I'll be so depressed that the only thing I'll be able to work is my welfare debit card.  It makes it really tough to sell when you guys deliver more drama in a single 30 second story than a whole season of Hell's Kitchen.  Heck, I was already checking my homeowners insurance from the lead-in on Hurricane Daniel before I realized I don't own a home in BERMUDA!

Tone it down a bit please.  Lighten up.  It's OK to report the news and even to share your opinion.  But if you want hard working, law abiding, God fearing salespeople to keep watching, you gotta make a deposit in the love bank every now and then.  It may be the only asset we have before long.  (See, now you've got me doing it!)

The Dangerous Disconnect

No, I'm not talking about what happens when you drunk dial your wife at 2am.  What I'm talking about will have even more dire consequences.  This disconnect can cost you more than your life; it can cost you your job.  The disconnect I'm referring to happens when you cross a mid-level "innovator" buyer with their own "late follower" company.

How many times have you been able to excite and even sell your prospect (innovator) only to find out later that their company is a "late follower".  At best, the sale stalls.  At worst, it dies.  How do you make sure there is no disconnect between your prospect and their company?  Try these questions early in the selling process:

1. Tell me about the last innovation "you" were able to approve at this company? - If there isn't one or if its was minor, you really have to speak with someone higher up or walk.
2. Who, besides you, thinks this can happen?- You're listening for senior level sponsorship.
3. What are your top 2 goals for the year? - You're listening for either a strong revenue increase or expense reduction (or both).  Emphasis on "strong".  If their goals are not significant, then most likely neither will be managements' tolerance for risk.
4. What would keep this from happening? - Your listening for candor in the response.  If your prospect can't give you any definitive reasons then they just don't know what they are because they've never tried anything new.  There are always reasons why something won't get done.  This person is just disconnected from the mother ship.

These questions (along with the ones now popping into your head) presumes you've done your homework and have a fairly strong read on the company's cultural profile.  If the answers you hear don't indicate a strong connection in your favor, then nothing else you've shared relative to value will matter. Make sure there is no disconnect between your buyer and their employer before forecasting that next big sale or the next disconnect you hear may come from your company cell phone.

Are you a Linchpin?

It has been a long spell since my last post.  I have taken on a new opportunity and frankly, was conflicted about continuing this blog until I read Seth Godin's latest book "Linchpin - Are You Indispensable?"  It is a MUST read for anyone who really WANTS to improve their life.  Seth's speaks of art and gift giving and, much like Tim Sanders in his book "Love is the Killer App", the more you give the more you'll get, but only if you give without the expectation of getting.  It was Seth's not-so-gentle reminder that inspired me to continue sharing the gifts which have been shared with me.

Linchpin has transformed not only the way I will evaluate and lead others, but it has permanently altered how I view myself.  He has provided fresh maps for how we can become the UVP in our own companies, if we are willing to try and fail.  Everything around you is changing at rates never before imagined.  There is no better time to let the artist in you come out and give all you can to whatever occupies your time and energy.  95% of the world is waiting for the other 5% to lead them.  They always have and always will.  The only choice you have is which group to be in.

No budget? Really? You sure?

A common refrain by prospects in today's market is; "I'm really interested in what you're selling, but we just don't have any budget left this year.  Let's talk again in 2011."   This is commonly followed by, "wow boss, they are really interested in buying and I'm sure they'll buy in January. So, I don't want to count them as lost for right now".

No budget?  Really?  You sure?  Something tells me that budget is not nearly the objection we make it out to be.  One very powerful question to qualify this objection is; 

"If I could defer billing until 2011, will you sign today?".  My guess is that 98% of the prospects would reply with; 

"Well, I can't do that because I don't know what my 2011 budget will be."  In which case your response should be;

"I was just thinking that since you are so interested now,  but your 2010 budget is shot, that if we removed the '10 budget issues you would be sure we are in your 2011 budget."  (Then shut up!) The next one who speak loses.

 

Frankly, it really doesn't matter what they say next because whatever it is, you know exactly where you stand.  If they buy, you now have another problem; getting management to agree to terms (however in tough times and with a credit worthy prospect this may not be as tough a sale as you think).

 

If they say "no", then you know that budget wasn't really the issue and you can continue the selling process.  Remember, pain finds budget and pain drives urgency (see Pain, the only thing worth qualifying for in times like these).  If budget keeps coming up, you most likely have not found or created any real pain.  Keep searching and if you can't find any, then make it YOUR choice to end the sales process, not THEIRS!

The Three Stages of a Truth

Everyone sells something at one time or another.  Be they products, services, ideas, secrets, guilt or innocence, we all sell something sometime in our lives.  At the core of EVERY sale is one common element; you are convincing someone to believe in your version of the truth.  Arthur Shopenhauer, 19th century philosopher coined "the three stages to a truth"; Ridicule, Objection, and then Apparently Obvious.  The key to reaching the Apparently Obvious stage (making the sale), is knowing AND accepting where you are starting from.

Webster defines "ridicule" as "to deride, make fun of".  In other words, your version of the truth is dismissed with the consideration King Henry VIII dismissed wives.  This is the longest lasting stage and can take the form of a short email from the prospect saying "no interest at this time, but we'll keep you in mind", or "that's really handled by someone else in our organization, but thanks for calling".  In other words, you have no chance with THAT person.  If you can't go through them, then you have no other choice but to go around or above them until you find someone who has a vested interest in the truth you're trying to share.  Once you've found that person (or worn down the one who keeps dismissing you) you've now entered the most important stage; Objection.

In order to thoughtfully object to your version of the truth, your prospect has to listen to you and have an alternate version.  When you get to this stage be careful of your pace.  Your prospect has already indicated a willingness to consider your truth, but if you try and rush the process, you may push them back to the Ridicule stage and lose them forever.  If they want to move fast, then move at their pace, but do not confuse courtesy with commitment or enrollment! (See Don't Confuse Courtesy with Commitment for more on this topic).  If your pace and your process are well executed, then the next stage should come naturally and not as an epiphany.

Apparently Obvious is the position your prospect takes within their own company after they have bought into your version of the truth (they bought your product).  They will use all of the promises and collateral you've provided to convince others of your version of the truth.  Now, all you need to do is make sure to keep the promises you made and your truth will become Apparently Obvious to everyone else.

The three stages of a truth should be viewed as basic sales doctrine. If you understand and apply it you will stack the odds in your favor.  Agree?  Disagree?  Something in between?  Let me here from you.

Don't Confuse Courtesy with Commitment

If you're even half way good at selling, most of your initial sales meetings go pretty well.  The prospect smiles a lot and laughs at your jokes.  They engage in the normal dialogue around problem-solution.  They may even tell you openly they like what you're saying and are very interested.  Then why in heaven's name are they not returning your emails and phone messages to set up a second meeting?  You've told everyone, especially your boss, that you even talked about your kids and mutual interests.  You had a great meeting!  Unfortunately, you fell for one of the oldest cons in selling; the polite brush-off.

You confused courtesy with commitment.  Most likely, if you're truly honest, you allowed their courtesy to take the place of their hard commitments to you around the basic elements of effective selling:

• Did they clearly articulate "why" they are interested in moving forward...now?
• Did you really "hear" hard evidence of the severity of their pain?
• Did you gain concrete "agreement" as to the next steps and did you tell them you'd be sending a follow-up email confirming the agreement?
• Did you try to secure a specific date for the next meeting with an agenda already "agreed" to?
• Did you find out if budget was available? (see Five Most Important Sales Questions further down the page)

In today's environment many salespeople feel the need to soften their approach for fear they will alienate the few qualified leads they still have.  That could not be any more wrong!  In times like these, when leads are few, you have to qualify even harder for your prospects' true interests.  Why?  Because right now time is your biggest enemy, not your competitor.  If you waste time pining away for a prospect who was just being courteous because they couldn't bring themselves to tell you that the budget authority they told you they had actualy belongs to someone else; then you will not spend what precious time you do have on the more deserving prospects who are not only committed and responsible for "finding" a solution, but also have the "authority" to buy it!

Now is not the time to be timid.  In fact, be more aggressive; but make sure you're even more prepared than usual going into that first meeting. (We'll talk more about pre-call planning in a future post)  Who knows - if you spend more time in pre-call planning to find out what is really causing your prospect's pain, you may just find out they can be both courteous and committed.

Want to run a specific situation by the Saleshandicapper?  Just click on the Email Me link in the upper left corner.  I commit to get back to you quickly.

Best Story Wins - especially in today's market

A mentor of mine, Chuck Reaves, a godly man and one of the best speakers and sales trainers in the business summed up successful sales in three words, "best story wins".  He also knows the most powerful question in sales, but you'll have to ask him what that is.

Delivering the best story in today's market requires a level of creativity not seen (or practiced) in many years.  Creativity results when business knowledge intersects with product knowledge.  The more you have of both, the more creative your solutions will be and the more successful your sales efforts.  When combined with identifying pain, creativity will find both budget and a quicker decision.

Gone are the days when you can take a prospect's time to tell you "about their business".  Unless they are a very private company there is plenty of information available on the internet to become intimately aware of their challenges and opportunities.  To quote Chuck once more, "if the information is public, you are expected to know it when you walk in the door". 

When budgets are tight and careers are hanging in the balance, decision makers can come up with hundreds of reasons not to buy right now and sleep perfectly well at night.  Creativity finds pain and pain finds and spends budget today.  When you take the time to really learn your product and to really learn your prospect's business, you will be amazed at how creative you can be and stack the odds in your favor for making the sale.

Your Pipeline is your Lifeline

"Show me a salesperson who says they don't need a big pipeline because they have a high closing ratio and I'll show you a future customer service rep."

While size does matter, the quality of the pipeline is equally as important.  There are many factors that go into developing a qualified prospect and by extension a solid pipeline.  The one thing that doesn't change is the basic truth that the more qualified prospects you have in your pipeline, the less pressure there is on YOU for any one prospect to close.  Why is this important?  Let's take a look at our friend below.

 
If you sell for a living, you have quota.  It doesn't matter if you sell computers, time shares, drugs or diamonds, someone has assigned you a required dollar amount to sell within a specified period of time.  Our friend above has a quota and he has a problem. 

His block of quota is putting way too much pressure on the few qualified prospects he has.  Because he has so few identified "suspects" in his universe from which to build his pipeline, he worries incessantly about the few prospects he does have.  Worse yet, with so few prospects he has WAY too much time on his hands.  Rather than focusing more if his time on developing "new" prospects be begins to pick away at the prospects he does have.  He has many ways to do this including, but not limited to:

• Sending 3 emails a day asking if "there is anything else you need from me in order to make your decision".
• Calling 3 times a day saying "my phone has been acting up so I was just calling to see if you had tried to leave a message".
• Texting every time you are on the phone with another prospect to make sure that they know that if they call, you will "break away" to take "their" call.

This chipping away becomes a self-fulfiling prophecy.  I don't have enough prospects to hit my quota unless I close 100%!  So, what few I do have I pick at like Chris Farley in Tommy Boy.  I chip away at the ones I have like a fresh scab - never giving the wound time enough to heal. So, it never heals and ultimately dies of infection.   Because I don't have any fresh bodies to replace the dead, I miss my quota and.... 

The point of this story is that it is amazing what happens when you focus not on the destination, but the trip instead.  Believe it or not, your sale is not the top priority of your prospect.  Sometimes we just have to let nature take its course and let things play out.  When you focus on navigating the highway rather than worrying about what the weather is going to be like at your final destination, you don't miss the wonderful opportunities for sight seeing along the way.

Focus on building your pipeline and you can be as cool as our friend below:

Metrics? We no need no stinking metrics, do we?

As a salesperson, I hated metrics; unless they were in my favor.  As a manager, I can't live without them; well, the important ones anyway.  And therein lies the rub.

To me, there are really only 5 metrics you need to track to effectively manage a sales team without micromanaging:

1. Number of 1st meetings - tells how many new opportunities should be entering the prospect funnel (based on your typical conversion rate of 1st meetings to qualified prospects)
2. Six month rolling pipeline - tells me how many of the first meetings are converting to valid sales opportunities
3. Average Selling Price (ASP) - tells how well the salesperson is optimizing their sales opportunities
4. Closing Ratio - tells quite a lot about the salespersons closing and forecasting skills
5. Total Sales - at the end of the day, this is the number ALL salespeople are ultimately measured against.

Certainly, there are other metrics that come into play during the sales process, especially if you truly practice value selling.  Additionally, you can also use the Sales Handicapper (soon to be on this site) from yours truly to gain a more realistic view of the match between your products/services and your prospect's needs and culture.

In today's highly virtual world, however, when "management by walking around" is not as practical as in olden days, you have to come to grips with one very real truism; you can't manage work ethic!   That is why none of the metrics above measures "activity" other than the first meeting.   If first meetings are being reported and the results don't show up in the pipeline report then you have a salesperson who is either not reporting, lying about the numbers or can't sell.  In either case, you can gain a strong indication of their progress within the first 90 days!

Non reporting is easy to fix. Usually a simple reminder that the individual can either report accurately or have daily meetings with you is sufficient to encourage the proper behavior. Lying about their activity or lack of sales ability is a different matter.  Each situation needs to be handled differently and won't be addressed in this column.  Suffice it to say, if your time is tight and your task is large, then limiting your metrics to the ones above should give you all the information you need to tip the odds in your favor of hitting your quota .