From the CCS® Sales Blog

June 2017

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Sales Tips: Best Practices for Handling Sales Proposals

Sales Tips: Best Practices for Handling Sales Proposals

By John Holland, Chief Content Officer, CustomerCentric Selling®

Sales Proposals

As a sales manager one of my least favorite activities was creating forecasts every month. One of the things that made it difficult was the fact that in my mind most sellers generated proposals too early when developing opportunities. They believed it was a step toward getting orders.

In my experience, a proposal represents activity but not necessarily progress.

    

I’ll share with you some thoughts and best practices for handling sales proposals:

  1. Issuing proposals too early
  2. Purpose and role of proposals in the buying cycle
  3. 10 questions sellers should ask themselves before issuing proposals
  4. Stale proposals
  5. Withdrawal strategy

1. Think before you issue.

There is a problem in issuing proposals too soon. Unlike fine red wines they don’t age well. My thought is that after proposals have been issued, after 45 days the probability of resulting in orders is less likely with each day that passes by.

So why do sellers issue these proposals too soon?

Quote and HopeThe underlying reason sellers propose prematurely is they view proposals as selling vehicles (a “quote and hope” strategy). I couldn’t disagree with this logic more strongly.

Imagine that a decision maker whom the seller has never met receives a copy of this “selling vehicle.” He or she is unlikely to read all the verbiage from cover to cover. Even if they started with the intention of doing so, most would soon lose their resolve as they realized most of the words and content have little relevance for them. At some point they would merely go to the last tab, find the price and think whatever number they saw was too high. This should not come as a shock to anyone because the buyer has no idea of the potential value of the offering being proposed.

2. What is the purpose of a proposal?

I hope you agree it is not to sell. In my opinion a proposal should serve as a decision vehicle. By that I mean it should contain the information needed for the committee to make a buying decision. This information could include pricing, implementation plans, professional services, cost versus benefit, etc. In thinking back to control, however, won’t buyers appreciate learning these details during the sales cycle rather than waiting until the end? For this reason, I suggest a proposal should summarize the discussions between the seller and buyers. Rather than wait until the proposal, information (pricing, implementation, etc.) should be shared along the way. If done properly, there should be no new information in the proposal.

Unless it is a very complicated recommendation, I like to see a maximum of 10-15 pages. If you are compelled to include standard brochures and literature, please put them in a tab after the custom pages that you write. When you think about it, including information that they buyer has already seen should minimize questions and make it easier to ask for the business.

3. 10 questions you should ask yourself BEFORE issuing a proposal:

  1. Has a cost vs. benefit been created that justifies the expenditure you’re asking for?
  2. Is the person you’re giving the proposal to able to fund the initiative?
  3. How many of the people that may be in the buying committee have you spoken with?
  4. Do buyers understand the outcomes they are looking to achieve with your offering?
  5. Do buyers understand the reasons they can’t achieve those outcomeswithout your offering?
  6. Can buyersarticulate specific capabilities within your offering will that address the reasons?
  7. Have the buyers been provided with documented results other companies have achieved with your offering?
  8. Will the proposal be forwarded to any people you haven’t already spoken with?
  9. Do buyers have everything needed to make a buying decision?
  10. Why are you issuing the proposalnow?

Missed TargetsSellers give up a great deal of control once proposals are issued. Given a choice, my preference would be to err on the side of providing a proposal too late rather than too early. 

4. Stale proposals hurt forecasts.

For sellers having several stale proposals in their pipelines, forecasting amounts to pushing dates out each month. They will strongly defend leaving them in the forecast, primarily because if they are taken out it will become clear they don’t have enough activity to make their numbers.

I believe sellers delude themselves. If they add up all the revenue from each opportunity the figure may approach the GDP of a small country. Sellers conclude that if they can sell a relatively modest percentage they will achieve their quotas. 

The problem is that for most stale proposals, buyers have already gone with another vendor and didn’t want to deliver the bad news or the opportunity is going to wind up with “no decision” that will ultimately be bad news for all vendors that issued quotes. 

5. A better way to handle stale proposals using a withdrawal strategy:

  • Rethinking Sales ProposalsI suggest that after 45 days with no contact from prospects, the best course of action is to withdraw proposals rather than just remove them from the pipeline.

  • Consider sending a letter to prospects (please don’t overnight it) by sending a snail mail letter return receipt requested that would cost you about $3.00. It will be more formal than an email and you’ll be certain that the person received your letter.

  • In the letter indicate that you don’t feel you had done a good job of uncovering the prospect’s business issues and potential value and your intent is to withdraw the proposal but you would welcome a chance to have a conversation to see if it makes sense to consider issuing a revised proposal.

From here, it’s binary. The options are: 

  1. You never hear back from the prospect so you should remove the “opportunity” from your pipeline/forecast. Oddly enough this is a positive result. Once dead wood is removed the seller and manager will have a more accurate picture of the health of the pipeline and can take the needed actions.
  1. The buyer contacts you and indicates the company is still interested. This is the desired result and gives the seller a second chance potentially to gain access to other people and to either issue a more compelling proposal or realize there isn’t sufficient value to warrant a buying decision (nor another proposal).

Proposals take time to write and often compromise a seller’s control of an opportunity. One way to minimize these issues is to be sure you are issuing proposals after all of the necessary selling has been done and to be sure an executive could be expected to read the custom content.

One of the core concepts I subscribe to is that bad news early is good news. Realizing a loss after a proposal has languished for months isn’t “early” but I think we can agree it’s a case of better late than never. 

sales training workshop

Sales Tips: A Better Way to Handle Stale Proposals

Sales Tips: A Better Way to Handle Stale Proposals

By John Holland, Chief Content Officer, CustomerCentric Selling®

As a sales manager one of my least favorite activities was creating forecasts every month. One of the things that made it difficult was the fact that in my mind most sellers generated proposals too early when developing opportunities. They believed it was a step toward getting orders.

In my experience, a proposal represents activity but not necessarily progress.

Sales Tips for Handling Stale ProposalsThere is a problem in issuing proposals too soon. Unlike fine red wines they don’t age well. My thought is that after proposals have been issued, after 45 days the probability of resulting in orders is less likely with each day that passes by.

For sellers having several stale proposals in their pipelines, forecasting amounts to pushing dates out each month. They will strongly defend leaving them in the forecast, primarily because if they are taken out it will become clear they don’t have enough activity to make their numbers. 

I believe sellers delude themselves. If they add up all the revenue from each opportunity the figure may approach the GDP of a small country. Sellers conclude that if they can sell a relatively modest percentage they will achieve their quotas.

The problem is that for most stale proposals, buyers have already gone with another vendor and didn’t want to deliver the bad news or the opportunity is going to wind up with “no decision” that will ultimately be bad news for all vendors that issued quotes.

MailA Better Way:

  • I suggest that after 45 days with no contact from prospects, the best course of action is to withdraw proposals rather than just remove them from the pipeline.

  • Consider sending a letter to prospects (please don’t overnight it) by sending a snail mail letter return receipt requested that would cost you about $3.00. It will be more formal than an email and you’ll be certain that the person received your letter.

  • In the letter indicate that you don’t feel you had done a good job of uncovering the prospect’s business issues and potential value and your intent is to withdraw the proposal but you would welcome a chance to have a conversation to see if it makes sense to consider issuing a revised proposal.

From here, it’s binary. The options are:

  1. You never hear back from the prospect so you should remove the “opportunity” from your pipeline/forecast. Oddly enough this is a positive result. Once dead wood is removed the seller and manager will have a more accurate picture of the health of the pipeline and can take the needed actions. 
  1. The buyer contacts you and indicates the company is still interested. This is the desired result and gives the seller a second chance potentially to gain access to other people and to either issue a more compelling proposal or realize there isn’t sufficient value to warrant a buying decision (nor another proposal).

One of the core concepts of CCS® is that bad news early is good news. Realizing a loss after a proposal has languished for months isn’t “early” but I think we can agree it’s a case of better late than never.

sales training workshop

Sales Tips: 2 Costly Mistakes Sellers Make When Squeezed

Sales Tips: 2 Costly Mistakes Sellers Make When Squeezed

By John Holland, Chief Content Officer, CustomerCentric Selling®

“I need your best and final price.”

This question marks the beginning of the pricing squeeze and is often asked after multiple vendors have issued quotes or proposals. Very often it’s asked by a non-Key Player that senior management designates to make this request. Sellers can waste valuable time and leave money on the table if they make the wrong responses. 

Bad Pricing ResponsesTwo (2) examples of BAD and COSTLY responses: 

  • “Where do I need to be?” This is the worst possible response a salesperson can give. It amounts to acknowledging a discount is in order. Beyond that sellers give the impression they have unlimited authority to discount. This response allows buyers to wrest control of negotiations because smart buyers will specify the price they want to pay, not the price they’re willing to pay. Final pricing is strongly influenced by how low the bar is set. I refer to “Where do I need to be?” as the 6 most expensive words salespeople can utter.
     
  • Offer a lower price. This can backfire and the buyer’s end game is usually to leverage lower pricing to pressure the vendor of choice to discount. There may also be instances where the price given becomes the starting point for negotiations if and when decision makers get involved. Once a seller makes a concession it becomes a slippery slope as buyers press for even better deals.

Try This Approach Instead
My suggestion is to respond to requests for best and final pricing as follows:

“Are we the vendor of choice and is price the last obstacle to doing business?” 

  • If the answer is yes, request a meeting with the decision maker and if necessary bring your manager.
  • If the answer is “No, not yet” or “Maybe” then sellers should respond as follows:

It appears your organization has further vendor evaluation to do so at this stage. I hope we’ll ultimately become your vendor of choice. If so, at that time I can bring my manager to meet with (the decision maker) and you to see if we can reach agreement. 

Some salespeople have trouble walking away without offering concessions.

When you think about it, most buyers have “Column A” vendors that are often granted last looks. If you are Column A, buyers will come back to you if you don’t discount. If you’re Column B, C or D it is highly unlikely you’ll get the business and you leave a discounted price on the street that may come back to haunt you in future opportunities.

In today’s business environment everyone is flat out busy. As a seller you can save time and angst if you delay negotiating until you have determined that you are the vendor of choice. Unless you sell true commodities it’s virtually impossible to discount your way into becoming Column A.

Sales Training Workshop

Sales Tips: Don’t Limit Benefits to Just One Perspective

Sales Tips: Don’t Limit Benefits to Just One Perspective