The most important question you should ask in 2013

Many organizations get caught up in a “sell at all cost” mentality. Desperate to close a deal, they chase every suspect whether the opportunity is real or not. The result is a pipeline clogged with phantom opportunities that suck your resources and go nowhere.

You can appreciate how dire the problem is when you realize that most opportunities end up with no action rather than a win or loss. By the time you figure out the deal is dead, you have expanded considerable resources that could have been used to work better-qualified prospects. As one successful VP of Sales said to me: “I don’t mind losing a deal, but I want to lose quickly!”

Always Be Qualifying

How do you avoid this situation? It goes back to the basics of qualifying the prospect. The “Always Be Closing” mantra is out; “Always Be Qualifying” is the new paradigm for success. 

I have never been a fan of the BANT approach (Budget, Authority, Need, Time). I think it is too generic and I believe the budget question is out of place in most situations until the value of the solution has been proven. 

With that said, I think the ONE question that can help you qualify the opportunity is the timing question. But how you ask the question and how you react to the answer will vary based on the type of solution you sell.

If your solution is in a well-known (post-chasm) category:

For a mature solution category, you definitely want to look for a decision timeframe. If a timeframe has been defined, it means a buying process has been initiated by the buyer. Even if the budget is not yet allocated, the need and the authority are likely well-defined, which should make the sale easier to navigate. If the timing has not been defined, you should continue nurturing the prospect through marketing activities, but you probably don’t want to expand valuable sales resources.

If your solution is in a new (pre-chasm) category:

For a new solution category, you are probably not going to see a defined purchase timeframe. This is going to be a seller-initiated process, which is by far more challenging.

Since the issue is not yet on the agenda, you would have to go high enough in the organization to force a change of priorities. Once you get there, you’d have to prove there is a real need that your solution can satisfy. 

Figuring out the need and getting access to authority require a considerable investment, so you would need to allocate your resources wisely. That’s where the timing question comes to play. It can help you prioritize which prospects may justify the investment. 

The tricky part: how do you define timing for a new solution category?

In most cases, you will not find a predefined timeline for the purchase of a new solution category. Instead, you need to identify a compelling event that would serve as a catalyst for the buyer to take action (e.g., moving to a virtualized environment, launching a new product, expanding to a new territory). Once you identified the compelling event, you need to find out when this event will take place.

One way or the other, the timing question is THE key to qualification.

That’s why regardless of what you sell, the most important question you can ask in order to qualify your prospects is the timing question—whether it’s the decision timeframe for a mature solution or the timing of the compelling event for a new solution.

Happy qualifying!

How Earnix Doubled Its Sales on the Heels of the Financial Crisis

Let’s start with the numbers. Since the financial crisis hit in 2008, Earnix has doubled its sales, doubled the number of customers, and turned profitable.

That’s impressive for any company. It’s even more impressive when you consider that Earnix sells to the world’s largest financial services companies, some of the same companies that have just been battered during the latest financial meltdown.

I asked Earnix CEO David Schapiro to share with us some of the reasons the company has been able to pull off this impressive feat.

Key to success #1: Focus on value to the customer

“From the very beginning of the company we have been intently focused on delivering value to our customers. I realize this is the goal of every company. The unique thing about the Earnix solution is that the value is proven in the very first customer engagement. You can actually see the money coming in to the customer’s bottom line.

We sell our solutions as a subscription, which forces us to continually deliver value. As a matter of fact, we even prove the success before the customer ever pays the subscription. There is no gray area, either it works or it doesn’t.

Our renewal rate is exceptionally high. Customers that have been working with the software have continued to renew their subscriptions even during the most intense period of the financial meltdown.

When the crisis hit, it forced us to be even more focused on customer success. Our people come from the financial services market, so it’s easy for them to align with the goals of the customer. The first thing I did was to get on a plane and go visit our customers. I wanted to hear firsthand what they had to say, and I wanted to make sure we were doing whatever it took to help them out. The good news for Earnix was that what our customers needed the most was a quick way to boost profitability, which is exactly what our solution was able to offer them.”

Key to success #2: Focus on core competencies

“Until 2007-2008 pricing optimization for insurers and banks was evangelistic sales to early adopters, primarily in Europe. Today it has become a mainstream solution in many places. We see it in the number of RFPs that land in our inboxes. We also see it in the number of customers that are willing to be vocal references and the number of partners that are looking to embed Earnix in their enterprise-class solution.

But you have to pay your dues in the financial services marketplace. You are not going to be taken seriously if you haven’t been around for 4-5 years . In the years preceding the crisis, we stayed focused on our core competencies, delivering pricing and customer value optimization solutions to the world’s largest insurance companies and banks. This worked out very well for us, unlike some of our competitors which spread themselves thin and did not survive the crisis.

With the onset of the crisis, some of the ways in which insurers and banks traditionally used to generate profits in the financial markets were no longer available to them. In turn, they were forced to focus on optimizing the value realized from their customer operations, which is exactly what we were able to offer them. Since we remained focused on these core competencies, we were ready with the solutions they needed and poised to capitalize on this growing demand.”

Reverse Engineer Your Product Development

A few months ago I wrote about reverse marketing. After talking to a client about recent issues with a new product launch, I came to think that a reverse process could work for product development as well.

If you ask software developers why their product fails to gain market acceptance, you are likely to hear that the culprit lies with either with the customers, the sales force, or both.

Customers are largely at fault for being lazy and incompetent: “How don’t they see that if they just pulled down this menu, clicked on Options, Advanced, More, and then checked this box they would be able to do exactly what they were looking for?!” Really, how don’t they?!

If faulting the customer is somewhat politically incorrect, placing the blame with sales is the common fallback position. “They just don’t know how to sell the product. They don’t show new prospects how to use all the options. They sell the product short.”

It’s not a question of blame. As long as we don’t change our product development process, we will continue to come up with products that customers can’t figure out and sales cannot sell.

Here is how a reverse engineered product development process would look like:

Step 1: decide on product positioning

Most products start as a solution looking for a problem. It would be much easier to sell the product if we could start with the problem. Who is the product for? What problem will it solve? How will it be used? How is it different from existing solutions?

Step 2: develop the sales presentation

Once we have answers to these questions, we can start testing the reaction of prospective buyers. Do they perceive the problem like we do? Is it important enough for them to take action? Does the proposed solution fit into their business process? Are the benefits clear? Will they be willing to pay for it?

One way to get answers to these questions is by putting together a sales presentation and running it by potential buyers. You can either do it yourself or by hiring a marketing research company to do it for you, and you would need to run it by 15-20 prospects to start seeing some patterns emerge.

Step 3: develop demo scenarios

Assuming the reaction to our sales presentation is positive, we can now move forward to the next step in the product development process. Now that we validated what our buyers are looking for, we can define the scenarios that describe how they will actually use our product to derive the promised benefits.

These scenarios serve a dual purpose. In addition to supporting the sales effort, they also serve as use-cases, which can help us define the functionality of the product.

Our positioning statement, sales presentation, and demo scenarios will serve as the guidelines for the entire product team from here on. With these three items in hand, we are ready to sell the product. All we need now is develop it…

Step 4: develop the product

We have two options here. The more formal process would be to write detailed product requirements and hand them to the development team. This formal approach reduces the risk of misinterpretation; at the same time, it diminishes the role of product developers and limits their creativity and sense of ownership.

Many developers would prefer the freedom to work on the product without detailed product requirements. Based on the product positioning, sales presentation, and demo scenarios, they should be able to come up with a product that delivers on the benefits users are looking for.

Whichever way we do it, the key is to make sure that once product development starts, it stays true to our demo scenarios, sales presentation, and product positioning. To ensure it stays the course, we need to conduct frequent (weekly!) reviews of product development against the above three items, and immediately correct anything that doesn’t match.

I have yet to see a company that follows this process. Most companies I know do it the other way around. Done right, I believe this reverse product development process can help companies make products that deliver more benefits to their customers and are easier to sell. What do you think?

Service: the Free Prize Inside

There is a good article in Harvard’s Working Knowledge, describing how companies such as Progressive Insurance, Commerce Bank, and Intuit use customer service as a competitive differentiator. These companies made service the “free prize inside” their product. I like it!