Who Wants To Go First?

In this Month's "Ask John" I was posed the folowing question by Bethany:

I work for a small software company here in the Americas. For the past five years, we have focused on the lower end of the Small-Medium Business (SMB) market and have been very successful with our one product. We have now made an acquisition, revamped our sales team and moved upmarket with our target audience. Because of this, we are now involved in many competitive situations with larger companies and are having to give a lot more presentations and demonstrations.

My question is: When a client asks you to make a sales presentation (as one of four possible vendors) – is there any advantage in going first, last or in the middle?

Thanks for the question. Certainly many sales professionals have debated this question over the years. My personal preference has always been that you should
either be first or last, but never in the middle. There is some basic psychological research around the primacy and recency effects – the classic example is reciting a list of ten items to a person. They are far more likely to remember the first and last items when asked, than any of the ones in the middle. This applies to sales as well.

Classic sales theory is that if you go first you get an opportunity to redefine the battlefield, set some competitive traps and generally set the high bar for everyone who follows. The other part of the theory is that by going last you have an opportunity to sense how others have performed, possibly adjust based on insider (coaching) information, and leave the final impression in the review committees mind.

Many well-known companies promote the “go-last” strategy. One of the most famous examples was Siebel Systems when selling their SFA application – they always wanted to go last; to the point that their salespeople would find any excuse to reschedule their presentation to go last. It was a standing joke in the industry that Siebal salesreps had to attend their grandmother’s funerals so many times each year that it was a wonder they ever got any work done.

Fortunately there has been a small amount of scientific survey work undertaken to investigate the first-middle-last quandary. Judy Wagner and Noreen Klein published a paper titled “Who Wants To Go First? Order Effects Within A Series of Competitive Sales Presentations” in the Journal of Personal Sales and Selling. (A link is here – the article is free if you access it through a US library). The summary of their research is this.

Sellers who present in the middle are least likely to gain any boost from that position.

A market-leader does almost equally well going first or last. When market leaders go first, the primacy effect afford more credence to the information people hear first from sellers they already perceive to be the best.

A “me-too” up-and-coming company does much better presenting LAST. They benefit from the recency effect – meaning that the information people hear last makes the biggest impression – especially if the time between final presentation and decision is short. They gain almost no benefit from going first.

So – the science, and John, says that in your situation you should always go last.

Good selling (but try to be more creative than killing your relatives off every year!)

The Original Elevator Pitch

I'm partial to telling SE's to "give the elevator pitch the shaft" and its essentially been rendered useless except as a training exercise.

Yet, reading an article last week reminded me about the original elevator pitch. Here's the story.

It is 1853, and Elisha Otis was trying to figure out a way for him to demonstrate his remarkable solution to what was one of the major engineering problems of the day. Very simply - it was designing a SAFE elevator. Many buildings had elevators, which were incredibly complex rope-and-pulley powered systems, which were prone to failure .. and as a result .. the elevator cage would go hurtling downwards, resulying in death and destruction.

Elisha figured out a solution (which I won't explain) - and a way to demonstrate it. He rented out some space on teh main floor of New York's kargest exhibit hall and announced to everyone at the convention that they would see a remarkable demonsration the next afternnon. He set up his elevator and had his assistant hoist it 45 feet off the ground to the top of the platform. Grabbing an axe, he cut the support rope. The crowd gasped, the elevator lurched .. and nothing else happened. Elisha Otis had developed a safety brake! Saying "All safe, gentlemen, all safe" he then descended.

Elisha Otis went on to found Otis Elevator, but more importantly he developed the very first, (and a successful one at that) elevator pitch.

How impactful are your pitches?

 

The Third Edition Is A Go!

OK. It was complete March Madness for the blog and my writing.

The good news is that the Third Edition of Mastering Technical Sales is now starting production. We're still mapping out the full details, but it looks like we'll be adding five or six new chapters, ripping out a couple, and giving a complete revamp of most of the middle section around presentatiosn and demos. Exciting stuff! If there are particular topics you'd like to see covered please let us know.

Combined with a totally ridiculous travel schedule (which included Singapore and Thailand) the newsletter got behind schedule. It's now going to come out on Tuesday 9th April instead of April 2nd.

Final note: Interesting note from Simon Reynolds in Forbes Online titled "Is Complexity Ruining Your Business?" It looks at the issue from a corporate point of view, yet the four points he makes in a very brief article can apply to you both on a personal and a professional branding level. Worth a 60 second read.



 

Winning The RFP Game

How to Increase Your Win Rate and Decrease Your Costs

 

The standard small to mid-range technology company expends over 15% of all customer facing pre-sales time in responding to RFPs. Most of these companies do not have a centralized bid response team, so the workload falls upon the field sales engineers to balance RFP work against what they view as “real and worthwhile” sales activity.

 

A two-year study conducted by a larger software company within one of its areas concluded that they spent €2m per year in direct time and materials to capture €9m in revenue. However, the opportunity cost of the time was €18m (meaning potential sales made if that time had been spent selling instead of responding), leading to a net loss of €11m.

Simple mathematics shows that there are only two ways to improve your RFP win rate. Firstly, by responding to fewer, more qualified, RFPs; and secondly, by increasing the quality of your responses. So how, when leads are rare, when customer relationships are precious and when revenue is everything, do you inject some discipline into the RFP response process yet still maintain the morale of the field sales engineering team?

Respond to Fewer RFP Documents.

Just because you receive an RFP doesn’t mean that you have to respond to it. You could be column fodder or the request may be outside your sweet spot.

1.       Fire your worst customers. Almost every company has customers who send them multiple RFPs every year, yet you derive zero revenue from them. A previous employer of mine had a ‘strategic’ customer who sent us 11 RFPs in a 26-month period – and we won exactly zero. Time for a tough conversation with that customer instead.

2.       Score the RFP. Figure out a way to assign a score to each incoming RFP, corresponding to how likely you are to win it. A sample scorecard can be found here. This isn’t a win percentage, but it gives you a way to compare RFPs and prioritize, and also to correlate your score against eventual outcome.

3.       Set the bar higher. Set up an RFP intake process and ask the account team (sales and presales) to justify why there should be a response. Do not make this complex and bureaucratic – it needs to be just enough to put some skin in the game. I am sure you could look at 25% of the RFPs you completed last year and throw them out because you knew you wouldn’t win. Presales leaders around the world routinely quote me estimates of those 25-33% guaranteed “no-win” responses. I’m not making it up! 

4.       Use the Sales Process. Any sales process is the best friend of the Sales Engineering community as it injects discipline into the opportunity. Agree with your SFA/CRM guru at what point in the cycle an opportunity needs to be at, before you respond to it. Hint: it needs to at least be at the Qualified stage. 

5.       Put in a System. Any system! One company instituted a “three strikes” process to restrict the unlimited resource checkbook attitude of sales. Each manager was allowed three RFP losses in a year. A win reset the count to zero. After three strikes, the account team had to present a full justification up to the Regional VP to obtain the OK to proceed.

Improve the Quality

Once you have decided to respond, take a good look at your finished product. Pass a couple of RFPs to someone in Marketing and Technical Writing and ask for their honest feedback. Then think carefully about roles, responsibilities and execution. You will notice that I do not recommend purchasing an automated RFP response tool – they can save a lot of duplication, but require considerable upfront effort and ongoing maintenance to make them viable.

1.       So exactly who is responsible? My belief is that the account manager is ultimately responsible for the RFP, as she owns the customer relationship. There may be a centralized response team if you are an Oracle or SAP, or the work may fall upon local field sales engineers, or there may a local project manager running the response. Yet ultimately, the salesperson owns the final product and delivery.

2.       Paint the boilerplate. Customers do read the boilerplate about company history, corporate support, headcount, financials etc. Take care over it and have it professionally written, formatted and updated every quarter. Boilerplate should still actively sell your solution and your company.

3.       Build a ‘rigged’ RFP. I am constantly amazed by the number of technology vendors who do not have a pre-written RFP stacked with highly favorable questions they can provide to a customer when asked. Unless you have ever written an RFP yourself, you have no idea how tedious and mind numbing it can be to collect requirements and write the document. Offering someone a short cut, even if they only take a few questions, can help out both sides. Just make sure the questions are reasonable and defendable. Twenty years ago, customers would accept pre-written RFPs, now they just accept a few suggestions. It’s much harder to “write” or “wire” an RFP – but be prepared just in case.

4.       Think about alternate responses. Sometimes you will receive an RFP asking for a solution outside of your sweet spot, yet with a little tweaking and vision, you can suggest an alternative way to accomplish the end goal. Tell the customer that, and write up/document your alternate response. At worst, you will lose anyway; at best, you will disrupt the process and cause them to rethink their strategy. I’ve seen the technical and business agenda reset on multiple occasions using this approach.

5.       The executive summary and the delivery. The executive summary is your shortcut to the recommender and/or decision makers within the customer. Treat that one page the same way you would a meeting with that individual. This is 100%, undeniably the responsibility of the account manager. Even better, ask for a meeting to deliver the RFP and present its highlights as to why your company is uniquely qualified to win the business.

Measure the Results

After expending all this effort and incurring the costs, you should track and measure the results. Over 50% of technology companies surveyed while researching the Mastering Technical Sales book indicated they didn’t track any of this information. So how do you know if you’re any good? More importantly, how do you know if you’re getting better?

1.       Define the win-rate.  Make an early decision on defining your win rate. Some RFPs are cancelled before a contract is awarded, others are postponed etc. Use a simple rule: Win Rate = Number of RFPs awarded / Number of RFP responses. No special cases, exceptions or asterisks.  

2.       Why did we lose (or win)? You will lose some RFPs – it happens. Learn from the experience and ask the customer why you lost so that you can improve the next time. Don’t accept weak and vague answers such as “too expensive” or “not enough functionality”. Drill down into the details – although be warned it is tough for most sales teams to explore a perceived failure.

3.       Publish a league table. Based upon your own business model, publish a league table every month showing wins, losses, responses , costs and revenue by individual rep, sales manager or product line – whichever way makes sense for you. The important fact is publicizing what is working and what is not. 

4.       Track your costs.  Track both the direct and indirect costs for every response. Direct costs are time and materials for the RFP. Include any time spent by marketing, support or engineering in answering questions on your behalf. Indirect costs are the opportunity costs lost by completing the RFP. For example, if you are an SE supporting two reps with a combined quota of $6m, your time is worth $24,000 of quota achievement a day (6,000,000/250).

Summary

Make the RFP response a part of your sales process and apply Solution Selling to it, just as you would any other sales interaction. Throw out your bad customers and your “no-win” RFPs and do not be suckered into “we have to respond just for the sake of the account relationship”. Put into place a RFP intake mechanism if you don’t already have one, and then measure and report on key metrics. Never let RFP stand for Really Fast Paperwork.

The Built-In Advantage Of The Sales Engineer

I was listening to a recent Dan Pink lecture as part of the Authors@Wharton series. He said three things that just struck a chord.

1. The first was that 1 in 9 US workers are in Sales.
2. The second was that for all workers, on average they spend 41% of their time in a “sales-like” mode (defined as convincing or persuading people to give up something they value for what you can offer).
3. The third was that the profession of sales has a stigma attached to it – see the nearby word cloud.

OK – so #3 is no big surprise, but the first two were. I’m not sure I know what I thought the numbers would be, only that these stats are larger than I expected.

So what does that have to do with being a Sales Engineer? Well – no question that we are in sales and it is our responsibility to assist the salespeople in “making the sale”. It’s a question of how we go about it. The great thing about being an SE is that you have immediate trust and credibility – at least relative to your sales partner. All else being equal, if you and the rep walk into a room, who is the customer more likely to believe? Exactly! You!!

That trust comes at a steep price in that you can never afford to lie or mislead a customer, or even give the perception of doing so. What is interesting is that very often the questions that may trip you up are not technical in nature (the “do you support iOS 6.1?” type) but are business related.  The trust test is with a question like “will this really work in my environment?” or “will this really save me all the money he says it will?” or the infamous “can you get this up and running in 6 weeks?”.

Your customer will believe you (at least the first time) – so be careful what you say and how you say it. I joke that you know you are an SE when everyone in the room turns to look at you after the rep finishes speaking - but take the test of trust seriously.

The Wizard Of The Whiteboard 1

If you are a regular reader of the blog, or my newsletter, you know I am a big fan of Visual Selling and of closing the laptop during a sales call. So far, I’ve had over 6,000 Sales Engineers go through my whiteboard training and I often start with a quick go-up-to-the-board and draw-out-pros-and-cons exercise. One of the top items we discuss is that of credibility.

Why is using a WB related to credibility? It’s because it’s YOUR WHITEBOARD (actually it’s a jointly owned WB if you do it right – but that’s another story). Think about it. The idea goes from your brain straight to your pen and onto the board. It’s not a PowerPoint that some marketing dweeb has created that you are reusing. The degree of personalization and therefore credibility is immense. Just the fact that you can draw out the solution rather than depend on PPT gives you the aura of being a subject matter expert. Since Credibility is one vital factor in building Trust and becoming the Trusted Advisor SalesEngineer, it is an important skill to learn.

Having bad handwriting, no apparent artistic ability, no idea how to get started, or even claiming that you cannot possibly explain something so complicated as your solution on a little sheet of paper (or even an iPad screen) are NOT excuses to put down the pen and give up. My elementary school teacher would be stunned that I make a living teaching people how to draw. I could probably justify my claim that I had the worst handwriting and the least art talent in my class – yet for over 25 years in the presales business, I have readily picked up a pen and drawn “stuff”! When I joined Oracle, as a $80m company, you were required to sketch out the Oracle database architecture on a blackboard or via transparencies. If you couldn’t draw the infrastructure and illustrate it – you couldn’t do your job.

So how do you start? Remember that the best whiteboard of all is one that you plan beforehand, rather than create ad-hoc. You’d never give a demo or a presentation without running through it first, would you? Pick just a couple of PPT slides, a question you are always asked, or even a concept your audience struggles with – and create a 5-8 minute board. Focus more on imagery and icons and less on words – words kill whiteboard time. Have some fun.

(Then sign your company up for one of my classes!)

Better .. And PreSales ...

I can guarantee that whenever I run one of my Business Discovery For Sales Engineers workshops and examine the results of a "why should people buy your stuff?" exercise .. I will see the word BETTER a half-dozen times. The trouble is that hearing "better" doesn't really help you conduct better discovery!

Some examples:

1. A Business Intelligence / Analytics company promising "better decisions"
2. A Backup/Recovery company promising "better backup times"
3. A Security Company promising "better compliance"

Google will give you over 2.8 bllion hits for "better". These range from the Better Business Bureau to Better Homes and Gardens to A Better Recipe for almost anything. Who defines better?

The three basic reasons (The Three Wise Men) why people buy is to increase revenue, reduce costs and mitigate risk. So when you say your product / service / solution makes something better - it tells me nothing (as I wouldn't expect it to make them worse!!). How am I going to be able to make "better decisions" and what will that yield me in revenue/cost or risk. Maybe I can change my product mix in a store on a weekly basis instead of a month - and capture three extra weeks of selling a hot item. Maybe I run a promotion and can tell within a day that the only people using it are my existing customers (so I'm losing money) and that I'm not gaining any news ones - so I stop the discount.

Better doesn't cut it. Any time you read the word better in one of your slides or some marketing collateral - ask yourself specifically how something is made better, and what the client gains as a result. Otherwise you have a soft and fuzzy benefit with no clear ROI. It's incredibly hard to get controllers to spend money based on those criteria. Remember the grandiously named "Care's First Law Of Business Discovery" which states that "Every business issue ultimately can be reduced to a number. That number is either too small and needs to be made larger, or its too large and needs to be reduced." The art of being a great SE is to find out what that number is, which way it needs to go, who cares about it, and how much its worth.

That's a much better way to look at better!