Establishing Value on Big Deals
Being a sales voyeur again
I was sitting in a staff meeting with a client in which – the President and Sales VP’s were discussing negotiating, discounting and holding the line on price.
One sales manager said, “If we can prove technical superiority, then I can discount less. But if I can’t prove product superiority you can’t expect me to hold the line on price!”
One of the other managers, in contrast, brought up a deal at Major Media Co. that one of the salespeople had just closed at $1.2M with little discount.
The story behind the story
I ran into the rep who closed the Major Media Co. deal and congratulated him. I asked him about the deal. He said, “It came in at a great price, but I was concerned it wouldn’t close because I there wasn’t really a technical or business problem. We replaced an incumbent solution that worked. The business wasn’t really impacted by the change. It was just that Major Media Co. had three new executives who wanted to make their mark and they decided to move away from the incumbent solution.”
Politics trumps product
The sales manager who was focused on demonstrating product superiority is apparently not aware that what powerful people want trumps technology.
Value = what powerful people personally want.
Since this manager has a basic misconception about the basis of value:
- He’s having speed and feed conversations with IT people.
- He’ll never have enough S.E.’s
- He’ll always have long sales cycles.
- He will need to discount frequently.
- He’s also training every member of his team to do the same.
Separating the signal from the noise
Prior to Copernicus’s insight, people thought the Earth was the center of the universe.
In technology sales, it is natural to think technology is the center of the universe. Even the rep who closed the deal thought the absence of technical trouble meant there was no value.
If we operate with a fundamental misconception, outcomes are hard to fathom and the universe seems capricious.
In enterprise selling, the center of the universe is what powerful people personally want.
What you think justifies the deal is irrelevant.
What justifies the deal is whatever is emotionally important to the most senior buyer.