Sales Tips: Understand Payback Before Product
By John Holland, Chief Content Officer, CustomerCentric Selling®
Before launching CustomerCentric Selling® in 2002, we developed 13 core concepts that serve as tenets for our sales approach. The first:
No goal, no prospect.
By that we mean that during sales calls buying cycles do not begin unless or until buyers share goals, problems or needs they are willing to spend money to achieve or address. I believe salespeople make far better calls when buyers share desired business outcomes. Ultimately, it is one of the first steps in buyers recognizing areas of potential benefits and value.
Fast forward 15 years and consider all the “buying activity” that is ongoing as people educate themselves by making frequent visits to websites, for whitepapers, podcasts, webinars, etc. By applying our first core concept, unless they have identified business objectives, buying cycles have not begun. My thought is that in such cases these activities should more accurately be called “product evaluations.” Notable by its absence are attempts to establish potential value or payback to justify and fund expenditures.
Product research without understanding payback means that buyers can be wasting a significant amount of time.
Ironically in an ideal world for buyers and sellers, wouldn’t it make sense to do a preliminary estimate of potential benefit vs. cost BEFORE expending the time, effort and resources to evaluate multiple vendors and their offerings?
If you felt it was time to look for a new car it would make little sense to randomly visit dealerships. Research by Neil Rackham indicates there are 3 Phases people (and committees) go through during buying cycles:
In Phase 1, your needs and the cost of offerings are the highest priorities. If you were thinking about a home, this would be the time for creating a budget and then (with that budget in mind) deciding on a location, type of house, number of bedrooms, bathrooms, etc. Phase 1 ends when you have an approximate cost and you know your needs (the configuration of the house or condo you’d like to buy).
Phase 2 is all about the match for your needs as you overlay them over each house that you look at. As you look, your requirements are fluid. You may choose to give up having a 2-car garage because you find a house with a river view that only has a 1-garage bay. After looking at several houses, you brainstorm with your significant other which is the best fit for your needs/budget.
Once you’ve selected the offering (house) you are most interested in, you’re in Phase 3 and the first priority is risk (have the house inspected, re-do the math, etc.). If risk is overcome, price is the last hurdle as you decide what price you’ll offer and try to negotiate the best possible deal.
People that self-educate actually jump into Phase 2 to determine features usually without the benefit of:
- Understanding the potential value of the offering (business outcomes that can be improved)
- Having budget allocated
- Having a subject matter expert diagnose their needs
Pre-Y2K sellers and vendors had the upper hand about product information when dealing with buyers. The pendulum has swung predictably too far in trying to lock out or limit a seller’s involvement. It may be time to realize many horrible buying experiences were with Business to Consumer (B2C) salespeople.
For example, a car salesperson will likely never see you again whether you buy or not. Many will say or do whatever they can to pressure you into buying. They know that if you leave their dealership, their chances of making a sales plummet.
Competent B2B sellers now more than ever understand the implications of unhappy customers. It might be better for everyone involved if competent sellers (vendors have some work to do there) walked buyers through Phase 1 to establish requirements and estimate potential value. It would allow an intelligent decision as to whether or not to evaluate offerings.
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