Think about a typical conversation with a two year old:

Tina: “Daddy, can I have some candy?”
Daddy: “not now”
Tina: “Daddy, can I have a cookie?”
Daddy: “Its two hours until dinner, not now”
Tina: “PLEASE!”
Daddy: “I said no”
Tina: “Can I have an apple?”
Daddy: “Oh, alright. Fine – have an apple.”

While some may read this conversation and determine that I am a pushover, I want you to read into the persistence of the two year old. Not once, did Tina think that she wouldn’t eventually get something to eat – she just needed to figure out the right words, the right win-win solution so that she could get what she wanted. And – she did!

She didn’t give up once she heard the first “no”. She thought about it, and changed her pitch until she ultimately got what she wanted. Now – perhaps it wasn’t 100% what she wanted in the beginning, but in the end, she got a snack.

Is my daughter a born salesperson? Perhaps… but I think this is the nature of every two year old. Somewhere along the way, many of forget this lesson of persistance.

In your own pitches, you shouldn’t be taking no for an answer. That doesn’t mean you should hound your prospects like a two year old, but you should make sure that you are getting the no, because there is absolutely no way to get a yes. In the conversation above, my daughter wanted a snack, but figured out that I wasn’t against a snack per-se, I was against junk-food. By determining what I was OK with, she was able to get what she wanted too. She found the win-win.

Ask the right questions, think about the problem from their side, and understand that a “no” isn’t always a “no” – its just “no – in the way you’ve presented it”

Recently, I negotiated and closed an account on behalf of one of my clients.  The deal had the potential to be very large, yet the ultimate deal came through at a significantly lower cost than I originally proposed.

The main reason for this was that they had a price in their head.. this price was revealed to them by the CEO of the company.  He didn’t do it in a bad way.  They asked him a direct question as to what the software typically costs – and he answered it honestly.  The problem is, the solution we ultimately proposed was significantly larger in scope than any other customer had experienced and this customer was going to need a lot more resources than other customers had ever needed.   But, they had a price now in their head, and the negotiations were very difficult to move them off of that number.  I was able to negotiate what I feel was fair terms for what they are getting and we are providing – but what we would have preferred was a much broader scoped contract.

One of the main reasons in large enterprise solutions is the fact that you want the customer focused on the solution rather than how much it costs.  If you can deliver the right solution, then you can always work on the price later on.

When you focus the customer on working with you to find the correct solution from your product, then you will have his/her mindset where you want it to be – where you need it to be.  For example, lets say that you sell enterprise software and that you charge per seat for your software plus set-up, maintenance, and custom consulting.    When you start talking about how they can use your software within their organization, probably what you’d REALLY like to see is wide adoption of your software across the organization.  Wide adoption should lead to a more satisfactory usage of the product, better results, and a happier customer – and set you up for additional add-on sales and services.   Its important that your customer be thinking about that same idea – and sign on for that.  Because if they buy into the idea that wide adoption will give them a better result too – then they will be more committed – more likely to promote the usage of the product.  But, if they focus on the fact that its $X per seat, they may start doing calculations in their head and divert the discussion from wide adoption because they are thinking about the actual cost – not the solution you provide.  They will be doing actual calculations instead of focusing on the correct solution.

When you eventually get to talking about price, at that point, if they have bought into the idea of the solution you provide, then you can always negotiate lower per seat licenses, a phased in roll-out across the organization, or throwing in seats for free in exchange for press or other non-cash items.    But – since the customer at this point has bought into the solution, they will be focused on that in the same way you are.

So…HOW to get out of the price discussion when its brought up too early in this case?

When you are asked about price, you should raise exactly the points above.  You want the customer to have a great experience with your product, you want the customer to use the heck out of your product, and you are probably willing to make concessions for those items.  So… be honest and reveal THAT instead of revealing the price.  I would say it something like this, “The price of this product is based on a number of things including number of seats, custom integration, and support requirements.  But, mostly its based on the total solution.  I’ve done very small deployments and very large deployments, and what I want to find with you is what is the right solution for your company.  Once we know what the right solution is, we can work together on a price which is a win-win.  I guarantee you that if we both think my solution is a fit for you, then we won’t let price be the barrier to deployment.  I can certainly get creative on discsounts, payment schedules, and other items to make sure that we both win here.  So first, lets determine what you really need from us.”

Of course, depending on your solution or product, you may need to change the above.

If the customer proceeds to question you on price, you have an opportunity to ask a question that you want to know.  “Are there any particular budget constraints or particular initiatives that I should be aware of?”  Its unlikely that they will answer that, but if they do… you now know what you are dealing with.

If they still continue on asking about price, you can provide a LARGE range to the customer so they know that you are serious about finding a solution and price that works for them.  So for example, you might say, “I’ve done deployments of $10,000 all the way to $2 million.  I’ve split payments across fiscal years.  I’ve done subscription-based pricing, and capital expenditure pricing.  You name a way to find the right solution, and I’ve probably at least entertained it.  Its about finding the right solution for you.”

If they still continue on price, then you need to ask yourself if they will ever be focused on you – or if they are trying to find a way to say NO.  Perhaps they are already about to sign with someone else, but just need a competitive bid.  If they are singularly focused on price, then you need to understand that something else is at play and flush it out – or you need to ask yourself if you can ever be successful in their eyes – and if its a customer you even want.

With all this talk about tax breaks and tax credits going on, I want it on record that I want to pay MORE taxes in 2009 than I did in 2008.

I don’t want to pay more taxes because I’m super patriotic (although I am).  I’m want to do it for one reason… because I want to make a sick amount of money.  One of my first posts at QuotaCrush was on this topic:  Why I’m happy about my Tax Bill I’m not going to comment on relative tax rates or what constitutes rich or not.  I’m not commenting on what should get a tax credit or not.  What I’m saying is that as a salesperson, if you are paying a high tax bill, it is probably because you sold a lot of stuff and got rewarded for it.

Therefore, as salespeople, and as entrepreneurs, lets all try to pay a lot of taxes in 2009 – meaning lets all strive to make a lot of money and bring our companies a lot of revenue so THEY can pay a lot of taxes too!

This morning I went to buy a cup of coffee.  This coffee shop charged $1.95 for a cup of coffee – after tax it was $2.11 per cup.  I watched as the line built up and built up while the cashiers made change for each person that tried to buy a simple cup of coffee.  I even saw people walking away because the line was getting too long.  I wondered why this shop didn’t change the price just to make the act of buying a cup of coffee that much easier.  There is a LOT of margin in a $2 cup of coffee – and by simply lowing the price (even a penny) they could have made buying the coffee that much easier and I would argue, made more money in the long run.

One of my clients was suffering a very similar problem recently.  The way they were selling the product, was not aligned with how the companies could buy the software.  They were attempting to charge a “per-use” or rather a “per-user” fee, when in fact, the only money the departments had to spend was capital improvement budgets – meaning pay once a year and that’s it.  So, we are trying a new pricing scheme which is a single price per year for all-you-can-eat.  We will see whether or not it works in the coming weeks.

Sales isn’t easy – and when you make it hard to buy, you make it that much harder.  The coffee shop needed to have pennies available, needed to make change, and ultimately made the buying experience an awful one for the sake of a few pennies.  Had they changed the price of the coffee so that I paid then $2 even including tax, then I would have been in and out of that shop in a few seconds and they would have been onto the next person in line.  No-one would have needed to worry about coins.  And… I’m actually wondering whether I will even go back to this shop based on my experience.  Is that what was intended?  I think not.

For complex projects, its even more important.  I wrote about this in my 1985 post.  In 2009, we have so many ways to make the sales process easier, we need to take advantage of this to make our lives easier as salespeople.

As an entrepreneur, you need to understand how your customers buy, and how they can more easily consume what you sell.  If you make this process transparent and easy, and then give them a simple way to buy, you will see sales increase.  Remember when Radio Shack used to ask for 15 pieces of information such as phone number just to buy batteries?  Well, I went to Radio Shack this weekend, and simply swiped a card and walked back out.  They’ve figured out that easier to buy = easier to sell.

If you are having trouble getting people to buy… have you thought about whether the WAY you charge is just to difficult to buy?  Do your companies allocate budget in the way you ask for money?  Do you only accept credit cards, but the company can only provide PO’s – or the other way around? Is subscription billing a difficult way for your customers to buy – and they would prefer once a year?  Or perhaps once a year means they need a capital budget – but subscription fees are low enough that your decision makers have automatic signing authority?  You need to probe and get the answers to these questions because the easier your product is to buy – the easier it will be to sell.

Its been too long since I’ve blogged.  Lots of good things going on with QuotaCrush, plus the holidays have kept me away, but I have several topics on which I want to write about and I am goign to be more diligent with sitting down to write. 

In the mean-time, an interesting question has come up recently with two different clients about what should be the basis for commission on which I thought I would write a mini-post.  Should you pay based on the amount of profit that the sales produces – or should you pay based on the amount of revenue that the project produces.

In general, I always advocate that the goals of the compensation plan must match the goals of the company.  When these two objectives are in alignment, then the salesteam can be very productive, and everyone wins.  When these items are mis-matched, frustrations on both parts are likely to happen.

So, the question that you need to ask youself in order to answer this main question is:  What is your objective for sales this year?  Is it revenue or is it profit?  While this seems like a silly question, in fact is isn’t.  Companies, particularly the start-ups that I work with, often have a need to generate marketshare and anchor clients.  Companies may be willing to take certain clients at any cost just to have them as a client – and often certain products are loss leaders needed to get companies started before they get the more expensive products.

Once you know what you as a company want to achieve, then you can set your goal appropriately.  When you set it incorrectly, your salesteam gets frustrated and de-motivated.  For example, in one of my sales jobs, I was in the process of landing P&G as a client.  P&G, for most companies, is such an amazing anchor account, that most would do whatever they could to get a deal with them.  Ultimately, this is what my management was telling me to do.  In fact, they had me present a proposal that included a gaggle of free services.  I was able to land the account, but got nearly no commission on the deal because my compensation was based on profit – not on revenue – and once you factored in the free services that we had to offer, the profit was squeezed out of the deal.  I managed a sell few follow on deals which did generate me some commissions – one a rather large deal – so wound up OK, but the bottom line was a disgrunted salesperson for quite a while because I was doing an awful lot of work for no commission.  Had the company really thought about what they were asking me to do, they could have re-worked the compensation so that I was whole on this deal because they wanted it so badly.

With both clients that I talked to about this recently, my advice was to pay on the revenue that was generated rather than profit, because both clients were in desparate need of marketshare in their regions.  My theory was that if they had the salesperson focused primarily on profit, yet the goals of the company were to gain a client base and some marketshare that the goals were mismatched.  The company position might be that they would be willing to take a client at any price above a loss (and perhaps even some special situations at a loss), yet a salesperson would see that deal as an unworthy effort. 

I asked the question, “What will you think if a salesperson walks away from a deal because there isn’t enough profit for them to make any commissions?”  If the answer is any angst over the salesperson’s decision, then they should be paying on revenue – because its obvious they want sales that even produce a small amount of profit.  If the answer is that they would be happy with the salesperson’s decision, then they can commission on profit alone.  That will ensure that the salesperson only goes after deals that generate a significant amount of profit.