It's not unusual for me to spend 10 - 20 hours/week coaching reps on recent or upcoming sales situations. Every day, I hear one or all of these.
"I did the demo, they loved it and saw great value in several features, but couldn't get the $200/month budget approved."
"During discovery, I learned that they're trying to double MRR by the end of the year, but questioned whether it would be worth the $3K/month investment."
"The managers and end users were totally bought in and saw that inefficiencies would be eliminated and would reduce costs in the process, but they can't get buy-in from the board."
Sound familiar?
There are many things at play here, but I'm only going to address three things simplistically and they are all related to money.
- Value
- Price
- Terms
...and so as not to play favorites or potentially expose a weakness in anyone else, I'm going to talk about my world.
So, first, I typically get hired because somebody wants to sell more. If that's not it, the conversation isn't very long. Second, they typically read something about me or somebody steered them in my direction. (BTW, if you're not mostly inbound, get used to starving.) Finally, we're gonna discuss the three money issues above in the order that they're listed. Period. I'll uncover problems. I'll uncover decision criteria. I'll uncover self-limiting beliefs and pre-conceived notions and all the other stuff that you do, but the three money issues will be woven into our conversation in that order.
Value
These are actually responses from past clients.
"My wife is due next month and she's thinking about not going back to work after her maternity leave is over. I need to replace her $60,000 salary. The value is $60K for at least a year and could be $300K if she doesn't go back to work for 5 years."
"Last year we generated $1,5M in proposals and had revenue of $900K. Me: "Yeah. So?" We want the other $600K. Value is $600K."
"Rep is on probation and needs to earn $20K to get off probation and keep his job. I tell him that I don't think a $20K upside warrants the investment in me. He tells me that he really wants to keep his job because he really believes that he could earn a Million dollars before he's 30 (3 years) if he gets good at it. Short term value is $20K. Long term (3 years) is $1M."
You need to know your probable solution and offer and look for a 10-20X multiple of that in value.
Price
I don't have a price list, but most people know that I charge $12-$50K for a 3-6 month engagement. So, thinking back to our value examples:
- $60K is only 5X $12K, but $300K is 25X. A no brainer if it can be done in 3 months, but...?
- $600K is 50X $12K and even at $50K, they would have gotten a 12X return.
- In the last example, $20K ROI of $12K isn't great, but $1M on $50K makes a huge difference.
I wrap up my value/price conversation with this question.
So, you're after a $600K upside. I figure that it'll probably take 3-6 months to get you capable of doing that and will probably cost you $12-$50K. Is that the kind of return that you typically look for?
If they are hesitant, I'm probably gonna end the conversation quickly. If they're happy, I'll typically say something like, "OK, let's continue our conversation. What's your next question.?"
Terms
Notice, that at this point, they don't know anything about terms. Monthly payments, credit cards, pay for performance plans have not been discussed. All they know is big picture upside and a price range.
Terms come into play when the prospect agrees that:
- I understand their problem
- I have the expertise to help
- They want my help
So, I ask, "So, the $12K. How do you do that. Write a check? Use a credit card? Talk to your banker?"
They ask, "Can I pay monthly?" I ask, "What are you thinking? Half now and the balance next month?"
Most people do that.
On the flip side, I recently had someone try to negotiate the $12K and a payment plan that exceeded the term of the engagement. I replied with this post and "Don't answer. Ponder that. If we're talking in 3 months, answer then."
Occasionally, somebody comes highly referred and I offer a pay for performance plan that ranges from 10% to 50% of growth.
BUT, terms don't happen until both parties have established and agreed to the value, the price and the ROI and have said, let's find a way to get this done.
I hope this helps. If you have a question, you can contact me here.