Transcription
[Music] Good morning everybody and welcome to this episode of 30 minutes to President's Club. My name is Arman Faroke and I'm here with my co-host Nick Sagielski. And folks, today we have a multipletime head of sales Meredith Chandler. If you are struggling to quantify pain, this is one of the best episodes we have ever done on that. Nick, why should people listen?
One of the biggest areas that I've struggled with as a seller is quantifying the problem that the prospect has and helping quantify the opportunity if they end up buying from me. And Meredith gives us two things. One, she teaches us the line of questioning to be able to quantify and some of the different things you can look for in quantifying, but she also talks about the emotional element of quantifying and how to reduce the sales pressure that prospects often feel when we are trying to quantify. So, if you're looking to get better at quantifying, this one is a 10 out of 10. And a 3 2 1 10 out of 10.
All right, Meredith, welcome to the show. You might know that we start every single episode with your top three actionable takeaways. So, let's get yours.
Yes. Takeaway number one, a what we heard slide recap. So, this is typically for call number two. At this time, you're usually multi-threaded, and it's really not enough, especially in mid-market or enterprise deals, to just verbally recap. We want to show a very polished white glove customer service treatment. And so at the top of the call once you've put your slide together with three to four points, you can say, "I know we have some fresh faces on this call. So to get everyone up to speed and ensure we're all on the same page, I want to take just the first two to three minutes and level set what I've learned about your business so far. So this way we get everyone on the same page. You go through the three or four specifics that you learned from your previous conversation and then you can ask the newcomers what about that resonates? What did we miss? You can get extra buyin from the people you've already spoken to and it's a great way to open up the conversation. Now, it has to be unique and detailed. It is not enough to just say something generic. I learned that you want to increase your ACV or I learned you want to decrease sales cycle. News flash, everybody wants that, right? Every sales org wants that. So, you have to get really granular and you can say something like, "I learned that you're looking to increase ACV from 10K to 15K by end of quarter by selling your new product line on 80% of your deals." Or, I learned that your sales cycle needs to decrease by 20 days for mid-market since we expanded and segmented the team.
Great. What's number two?
Number two is that only quantifying is really going to unlock your budget. So, it's not enough to do a discovery, however deep it is. We really need to put a dollar amount behind that pain. And that's what separates the good reps from the great reps. It's actually psychologically proven that people are two times more likely to buy something in order to avoid a loss than to acquire potential gains. And so really great reps know how to tap into this and use it to their sales advantage. So if you think about let's say insurance for example, right? Nobody buys insurance thinking that oh I need insurance so I can get really good care at some point. No, you buy insurance in case something terrible happens. You have it. Most of the time you don't even use it. But it's a similar line of thinking with tech. So let's say I'm selling digital sales room at aligned and somebody comes to me and says I want to decrease the sales cycle or I want to increase ACB. Again everybody tells me that so why is this important to you? It's important to me because deals are slipping. That happens all the time. But what happens when they slip? When they slip, we miss quota. Yikes. Missing quota. How much did you miss quota by? We missed quota by 200k last quarter as a team. Now we're getting to a number and an actual dollar amount behind the pain. Right? Okay. 200k last quarter as a team. That's one quarter. If this continues while your team continues to ramp, what's that going to be over a year? That's going to be a million dollar miss. Okay. Whoa. Now we've got a very large quantifiable problem. you've got a million dollar problem that stemmed from we just want to increase ACB and decrease sales cycle because if we don't it's going to actually affect our fundraising.
Very nice. Round us out Meredith. What's number three?
Number three is a confident price delivery. So regardless of what you're selling, how you're selling the vertical, the setup, you just want to say our price is very simple. So, if you're in SAS, maybe it's a per seat and a onetime fee, right? Hey, Nick, what's your pricing? Pricing is very simple. It's $50 per seat and it's a onetime 10K implementation to get you up and running. Do not say things like our list price is $50 a seat because that's going to imply a discount. Do not say our price is $50 a seat, but I'll see what I can do because that also implies a discount. And don't say, "Our price is $50 a seat, but it's our end of quarter, so let me see if I can shave some off." Because that guarantees a discount. If you think about going to a Ferrari dealership, right? They're going to say, "Here's a $250,000 car, which I know is expensive, so let me see if I can get approval for 250K." No, they're not going to say that. They're going to say, "This is our $250,000 car, and we take cash, check, or financing. What'll it be?" So, you want a confident price delivery. You want to deliver it. You want to be quiet. I think back to my time at Yelp where they had us physically press the mute button so that we could not negotiate against ourselves. The easiest way I've gotten discounts out of sellers when buying software is they give me the price and I just sit there and I'm like, "And you can always wait five 4 3 2 1." and they're like, "But could probably work with you." And so, let's pretend that I don't do that, Meredith. That's the right thing to do.
I would love to play out a couple of like scenarios here. So, scenario one, you give me the price. I'm like, "Holy that's expensive." What do you do?
What did you have in mind? You start asking questions, right? So, ideally, you want to acknowledge what they're saying. $50 is a lot. Sure. Compared to what? or if you've done your job quantifying $50 compared to the million dollar of quota that you're missing over the year. And you also mentioned if you don't hit it, you're not going to get your fundraising. So $50 is a lot compared to what to going out of business or what are we comparing it to here? The Ferrari dealership example is a really good one, which is you don't turn around and ask for a discount. It's what did you think a Ferrari was going to cost? like you probably knew directionally what a Ferrari was going to cost. You probably looked at other alternatives and a lot of times people are just going to be asking for a discount for the sake of asking for a discount.
That too. Yes. And as sales people, I respect it. And so we want to get to the root cause of why are they asking for that discount? Is it really just because it's a true budget constraint? A lot of times I find, and Armand you might find this too, that most often than not, it's more so about the terms. So it's not necessarily the $50 a month. It's okay, we are a startup environment. We don't have that money right now. If my sellers do a great job, we're going to have that in the bank in 3 months, 6 months time. It's really your annual contract. So can we go with quarterly payments instead? So, we really want to unravel where the objection is coming from. So, again, we do that through our discovery and through our quantifying at the top of the call.
Another common response that I've heard from buyers when they're trying to negotiate on price is they'll use these terms like, "What's your best price?" So, or could you give me your best price? How do you respond in that situation?
You can kind of make a joke and laugh about it and say, "You're looking at it." And then again, you deliver the price and you shut up. So, if Nick, you're going to say, "What's your best price?" I might say, "This is our best price." And then again, have them negotiate for me. I'm not going to negotiate against myself. The most that I'll do is ask a question. What do you mean by best price? And again, let them talk.
Yeah, that's really good. I mean, going back to the tonality piece and the confident price delivery. If your response is let that is our best price and you seem shaky, you're going to get freaking steamrolled. Another approach that I've seen on this one is something that I learned from Todd Capone where he literally he teaches them how to get a discount where he says, "Hey, this pricing is based off of a one-year term, but if you were willing to commit to a 2-year term, we can typically reduce the license cost." Or our business values predictability, and so if you're able to commit to a certain signature date, we're able to work with you from a terms perspective because we can predict when that cash is going to come in. So I guess is there a path that you'd like to go down or explore? And what you do is when you teach them the lanes that you're okay going down, you teach them how to get a discount within what is acceptable to your business. That can be another way to help them get a better price on terms that you still feel good about.
I think you brought up a good point too, right, which is just ask them what you have in mind because you need to see what they come up with, right? And so they might say, "I saw your competitor is $30 a seat. Who are you looking at?" I'm looking at a a very budget friendly competitor that only does half of what you do, right? The reason they're only $30 and we're 50 is because you mentioned back to Discovery that you're looking for XYZ and our solution is going to help you whereas they are not. Do you see how we could help you bridge that million-doll gap? So again, you want to just ask them questions. Where did you get that number from? what's going on in your world.
So, let's talk about that situation. If I'm like, okay, I was looking at a competitor and they told me that they were willing to charge $30,000 and you quoted me 50k, right? How do I go about finding the middle ground between what I'm charging and what they're charging if they admit that I'm the more valuable solution? Because my guess is they're still not going to pay full price.
Yes. So again, it goes back to just understanding who are they looking at and why. What's the perceived value in that vendor versus yourselves. So in an ideal world, you're not getting into these nitty-gritty negotiations unless you're the vendor of choice, right? So you can say, "I'm happy to talk pricing with you, but I first want to make sure that we're the vendor that you want to partner with because I'm going to go to bat and give you something you're excited about." Am I saying I'm going to get you the $30 per seat or $30,000 per seat? Not necessarily, because we're not comparing apples to apples here. We're really comparing apples to oranges. But if you're saying that if we can get you to a price that you're excited about, you'll move forward, then that's going to change our discussion. So, where are you in your evaluation and where does our solution fall in that stock rank? So, first you get vendor of choice and they're like, "Okay, I want to work with you all over at Aligned and you're still going up against the discount solution and there's still a 20k gap. Where do you actually land?"
Yes. So, let's say just like you said, they say, "I want to move forward with Aligned. You're 50K, they're 30K." Say, "Okay, we've been very upfront with pricing this whole time. What is it that's making you think that we should be priced at $30,000?" So again, you want to make them negotiate against themselves and they might say, "I saw your competitor does it." Great. Based on what I know about you, you're looking for X, Y, Z. And the competitor doesn't do that. And so that's where that gap is, right? So again, when I buy a Ferrari, I expect a certain level of service. I don't go into the Ferrari dealership and ask for a Honda price. You kind of get what you pay for, right? So let's maybe if this is your budget, let's look at other options. How important is the onboarding white glove service? How important is the dedicated CSM? Let's look at the entirety of your team. Do we really want everybody on the same roll out? Talk to me about where this budget is coming from, or is it really just because you saw it through a competitor? What's going on, folks?
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So, let's go back to one of your earlier actionable takeaways, which was around the idea of quantifying. And the reason that I want to go there is you were telling us on the pre-show that so much of your leverage in a negotiation is predicated on your ability to quantify the pain. And so, in the top three takeaways, you were giving examples for selling a line. So, selling to sales leaders who want to do this stuff. But I want to get into a non-sales example. And so you've sold like commission compensation tracking software at a couple different companies where I think you were selling to like operations and finance and I guess it's not as obvious to me how you would quantify that stuff. I'm wondering if you could speak to what you would quantify and then how you would actually do that with a buyer.
Yes. So you can quantify on their time first and foremost. So regardless of the position if it's sales or not. Okay. Let's take like you said the commission space ops person. How much time does it take you to calculate somebody's commissions? It takes me 3 hours per rep per quarter. Great. How many reps do you have? I have 10 reps. So, it's taking you 30 hours per quarter to just calculate someone's commission. That's a full work week. I can pull some salaries offline, but we'll put a rough dollar amount here. Not only that, but then the opportunity cost of what else would you rather be doing with your time instead of calculating commissions because I'm sure this is just a drop in the bucket in your role. So, that's one one way. Also, commissions, there's a ton of errors, right? So, how many times are you finding errors in the commissions payouts? How big was the last error? We overpaid somebody 10 grand. Okay. How often do you think that happens? That might happen twice a year. Okay. Then there's 20 grand. So, you're finding more money there. And and not only that, but once there's errors in the comp plans, reps don't trust the system. How often do you think reps are doing these calculations on their own on the side? They're probably spending one or two hours in a spreadsheet. I pulled the OTE off your website on what you're paying these reps. So, across 10 reps, again, that's $20,000 per quarter that you're wasting. So between your time, the errors, the distrust from the AEES, and let's say one of these AES gets one of those errors, they're likely going to leave. Their annual quota is 1.5. So now you have almost a 1 6 $ 1.7 million problem. My solution's only 30K. Do you want to pay now or later?
Talk to me about like how does this play out in a sales interaction? Is it literally like that and you're doing like pen and paper ROI calculator? How are you actually like packaging this up live with your prospect?
The best reps will go down this line of questioning live. And so your tone is also really important, right? So you need to come across confidently and you don't want to start the line of interrogation, right? So my general rule of thumb is every two to three questions, you want to overnowledge what they're telling you, right? So let's say ops person just told me that they overpaid somebody by 10k. Instead of continuing down that line, I'll say, "Wow, 10K, that's a lot of money. Oh my gosh, I can't imagine overpaying somebody 10K." And that breaks it up so it's not just, "Would you overpay them? How much was it?" The best rule of thumb is two to three questions, reaffirm what you've heard, and then that gives you permission to keep going because it breaks it up and it's much more natural that way. You also seem like an unempathetic if they tell you about the fact that they missed quota by a quarter million dollars and you just move right to the next question. Like they don't actually feel heard or seen at all and they can tell that you're on this self-serving line of questioning if you drill too quickly.
Armand, you were going to ask something.
I was actually going to double down on it which is on the point that you just made which is a lot of it is just framing the why correctly. If you frame the why as I need this to so you can chuck it in front of your CFO and I can get paid. They're going to be like okay I feel like I'm in a leading sales trap versus if you do this after someone's like I really care about solving this problem and you feel like you're on the same side and look here's how we can actually quantify like how much this problem is not just costing you but everyone else they will be far more willing to go through this calculation when it's in their best interest not just in your best interest.
Absolutely. And so if you feel like it's getting too questiony, you can always just call that out, right? You can say, "Hey, the reason I'm asking is because I want to make sure that we have a viable solution that's actually going to help you and be cost-effective, right?" And I call this out all the time. I actually use this talk track. I say the reason I ask is if you're looking for X and we offer Y, I'm going to tell you and be respectful of your time. So you could use that, too.
Meredith, I have a question on once you've quantified this in discovery at the beginning of the show, you brought us through a takeaway, which is when you're presenting to new people, you start with here's what we heard and you're probably talking about the initial problems that you heard and I think you mentioned some numbers there. How do you take these numbers and present them in the meeting when you actually get to power? My guess is you don't just show up and you're like, boom, here's the number, pay for it. How do you actually work your way to share these numbers up higher?
You can use the same slide from call 2, three, four. Again, the idea is you're level setting with every newcomer. You're getting more granular, right? So, we need to increase ACV by this dollar amount. And this is why it's important because we don't want to lose your goal to the fundraising timeline, etc. And so, yes, you are building on that. And then ideally at the end when you're at the seauite you have a full baked business case multiple ROI points and multiple data points because when you get to the seauite you can't just say I'm going to increase your ACV and decrease your sales cycle. No seuite they need to tie out the pennies. If you're going to ask them for 10K they need to be assured that they're going to make 5x 10x that in revenue.
What do you think the biggest mistake folks that are new to presenting business cases make when they're putting together?
They don't get granular enough. They are stuck on discovery, but they don't get the quantifiable details behind it.
I have to imagine, Meredith, I know you do some like sales coaching with folks and I have to imagine you have reps where you tell them this and you see them go, "Oh I've got 14 deals in my pipeline and I don't have granular metrics on any of this." So, if I'm a rep listening to this right now and I'm like, "I actually don't have this for a lot of my deals." How would you coach them to go back to their buyer and go get this stuff?
Yes. So we could use a lot of that upfront language that Arman pointed out of regardless of where you are in the sales cycle, maybe you still have your champion. You could say, I know eventually that you're gonna ask this money from the seauite, the CFO, the director of finance, and usually they ask me for a pretty built out business case. I want to help arm you with that. and I started putting it together, but I realized we don't have all the details we need for this to be a sure thing from them. Can we set aside 15 20 minutes where we can do work this together so that you're fully armed to go have that conversation?
That reminds me of something that Charles Mullbower told me on this show. He's one of our best discovery guests. And he's like, "A lot of times you'll get off a call with a prospect and you'll be like, shoot, like I didn't ask these two things and I know I needed to get them on the call." And a lot of sales people are like, I guess I'm so And when he recommends this, he's just call them after or email them and be like, hey, Meredith, we got off our call and I felt so silly because I didn't ask you about this thing over here. Do you have a second to talk about it? And it's not like it's a oneandone. It's not like it's a wrestling match where if you get pinned in the match, you can't get another opportunity. Like, you can have that doover, but you just have to reach out and ask. And if you almost throw yourself under the bus with that humbling disclaimer of h I felt a little bit silly. I didn't ask you this thing, it actually humanizes you so much and most buyers will give you more at bats. And then to your point earlier of like the hey, here's the reason that I'm asking for this stuff in the first place. I know, at least for me, part of the reason that I felt really hesitant to quantify in the past is like I worried that the buyer was like, "Oh, this is them just trying to trap me so that they can sell me." when the reality is if you like frame this as to why it's in their best interest, give the why behind this, it actually reduces a lot of the sales pressure that they would be feeling as you go through that quantifying conversation.
I would love for somebody to help me write my business cases. When I purchase new tools, when I purchase anything for the business, I myself am baking out a business case for my CEO. Yeah. And I welcome the help. If somebody were to say, "Nick, I want to spend 1015 minutes and help you bake this out." I would very much welcome it.
So, you're about a quarter into a new VP role right now, and you have a CEO who probably has some pretty big aspirations for you. I'm curious, when you want to buy something new and make an investment, what are some of the questions that you're getting from your CEO? And how can sellers help serve you to make your job of buying easier?
The things he asks are, "How are we trying to solve for this today? How have we tried? Why isn't what we're doing going to work anymore? And what is the expected upside of going this route?" And what can sellers do to make it easier for you to answer those questions?
I first outlined the problem in a quantifiable way, right? So, I said, "Here's the current state. Here's the issue it's causing. here is the affected dollar amount associated with that problem. Now, here's the proposed solution and based on these metrics and these numbers, this is what the solution proposes they'll be able to do for us. So, again, goes back to the uncovering of discovery and quantifiable questions to get you to bridge that gap of here's the solution and here's how we're going to solve for that.
Arand, what did this look like when you were trying to buy things at PA? When you had to go to your CFO or go to your CEO, was it similar?
So, whenever we would buy things, there were a couple of situations I think. One, you need to understand before you even start to quantify what's the clout of the person internally that's asking to buy something. So, Matt and I got to the point where I was just like, yo, like every team needs this tool. like I can go through the rigomearroll and build out the business case and all this stuff, but I'm going to tell you it's going to come down to these two tools. I'm going to negotiate the best deal. It's probably going to land around here. Can I get your go-ahad? And we had that level of trust. We hired a new marketing leader that was reporting into me temporarily and he wanted to spend 50k on like content syndication and one I didn't have the cloud of a marketing leader and then content syndication wasn't something it's not something that like the trendy tech companies are doing. the startups aren't doing. And our marketing person tried to go in and basically just explain that and be like, "Oh, this is part of our marketing plan. It's going to support our launch." I was like, "I don't care if it's going to support our launch. If it cost 50 grand, you need to put some numbers behind. This is what it costs to do content syndication. This is what it's going to drive in terms of expected leads. This is how that compares to other similar types of spend. And even if it's more expensive, here's how we make it up in brand from what we get in content syndication. And then when you put that in front of our CEO is great. But honestly, I didn't even let that one get by because I knew that it was an area where our CEO was hesitant to spend on marketing. He knew he didn't have the expertise and I knew we would have to be watertight on it. So number one, think about the types of people who are going and actually like banging the table for you. Think of if they have the clout internally to just get a deal done. And then two, think of like the risk area that you're selling into. If it's something that seems pretty obvious to buy versus something that's like a little bit less foreign to the team, especially if you're selling like new tech, people will expect more justification.
Meredith, I've got one last question for you, which is in your initial example, you talked about quantifying the pain that aligned could solve. So, we already went through one example with commission software and where your takeaway left off is you said, for example, we're missing quota by this much. And let's assume that by missing quota by this much, it leaves us with a $200,000 gap, for example. And that $200,000 gap might be 10 deals 20K a pop. Now, my guess is you don't say a line is going to get all of those deals closed for you. Instead, how do you figure out what percentage of that revenue impact aligned can realistically help solve?
Yes. So, you want to always take a very conservative approach because you don't want to overpromise because then customers are going to say, "You promised me XYZ and it didn't turn out and then you're going to have churn, right?" Which is terrible. Armand, you nailed it in that the reason that we ask these quantifying questions is to then bring it full circle and offer something like, okay, if we could just bring you a tenth of that missed revenue, would that be worth it? Or if you want to keep it open-ended, okay, how much of that gap would be worth it if a line could solve for you? So, you kind of nailed it by continuing to go down the rabbit hole of, okay, we've got that $1 million in quota gap. What's your ACV? ACV is 20K. Okay, you got 10 reps. Wow. Okay, so if each rep can just close one more deal per quarter, that's your gap. How many deals do your reps manage per quarter? Around 30. Okay. So, if Aligned can help your reps close just one of the 30 deals, Mhm. would that be worth it to you? 1 to 30 is very conservative, right? And the solution should be able to help you with that. A lot of times people try to over complicate how they quantify the problem. And sometimes you don't have to quantify the entire problem. You have to quantify enough to make it obvious that you're going to pay the solution back. So, for example, in that case, you sort of put it in front of him. You're like, "Look, we got to close one more of these deals and like I've shown you all the ways. You think you can find one deal? If you can't find one deal, I don't want you to buy this because that means you don't know what you're doing, right?" And so you can make it really easy for folks to simplify it because often times if you try to build up this like massive ROI case, it can come off as BS. If it's so obvious, you sort of just have to paint that it's that obvious to people.
Exactly. Meredith, the clock is ticking. So we have to move to the final question, which is we've talked about a lot of really good habits sales folks should be adopting. Now we got to ask you about a bad habit. So the last question is, what is one bad habit that you think every seller needs to break because it hurts them more than it helps?
Every seller needs to break the bad habit of negotiating against yourself. Talked about it at the top of the call, but if you need to press the mute button to get yourself to just deliver pricing and then shut up, do that.
Meredith, thank you for joining us. Everybody stick around for a 60-second recap coming up soon.
All right, Nick, time for a 2 by two recap from this episode with Meredith Chandler. What do you have for your tube?
Number one is before you go down your line of questioning to quantify, you need to show them the why of why you are quantifying in the first place. And that why needs to be in their best interest. You might say something like, "Hey, usually at this point when you're feeling pretty good about this, in my experience, most folks have to go present some sort of case to the seauite or to the finance department. And I know those folks usually have some questions around like metrics, numbers, impact. I guess I'm wondering if it might be helpful for us to have a really quick discussion around quantifying some of this so that it you're actually armed with some of this stuff when you go back to the team. Would you be open to that? Most folks will say yes. And now you have permission to take them down that line of questioning to quantify.
Number two is when you are quantifying every two to three questions you need to stop drilling and following your line and just show some empathy. If somebody tells you that they missed their quota by a4 million dollars, you can't just roll into the next question, you're going to look like an unempathetic ass. You've got to empathize and say, "Damn, that sucks. I'm really sorry to hear that." And make them feel like you're on the same side as them. Otherwise, you just look like a self-serving seller.
Number three, there were four ways that Meredith quantified time. So a lot of times sellers will only quantify the time that person spends and that's the first variable. But then the second variable is what's the opportunity cost of that time. In other words, what else could they have spent that time on? The third thing is all of that time spent calculating commissions for example leads to errors. What's the cost of the errors? And then the fourth piece is once you start making errors, other people start to have their time wasted. Sales people start looking at their commission statements over and over. So what's the cost of their time too? So make time not just that person's thing but the entire company's thing.
And then lastly, number four, you don't always have to quantify the entire business case. Sometimes you just need to ask the question, how much of the revenue gap would you have to close in order to justify for this purchase? And if it's as simple as you got to close one more deal, then it's just getting them to believe that you can help them close one more deal.
All right, Nick, how can people help us out here?
So, Armand, a couple months ago, you put together a really awesome edition of our newsletter around how to build a nonBBS business case, and I have leaned on that again and again to not only help quantify, but actually to help guide the conversations that I have with my prospects. We put a link in the show notes for folks who want to go get that business case. It's free. Hopefully, it helps you close one more deal, which the ROI on that is infinite because it's free. Go check it out. Thanks for listening. We'll see you next week on the show.