Almost every B2B business is confronted by the “live by the large deals and die by the large deals” issue. This is not unexpected as the 80/20 rule applies to most human endeavors. In this case, 80% of revenue comes from 20% of customers (or some imbalance resembling that). If we don’t get the top 20% of our customers right, it is virtually impossible to hit our numbers by trying to make it all up on the relatively small deals of the remaining 80%.
In this blog I want explore the challenges that customers have to deciding to award a big deal to you. Obviously, large deals are lost for a variety of reasons such as key decision makers leaving the company or changing jobs, changes to the business such as acquisitions that put everything on “hold”, or poor quarterly results that freeze budgets and projects. All of these are out or our control—and that’s why every sales organization needs a sales pipeline that is some multiple of quota because there are things out of our control.
Instead, I want to focus on four key things that are in our control and that can dramatically improve our odds of winning big deals. These are the mistakes I’ve seen made over and over by suppliers when I’m working with buying clients on negotiating large deals with those suppliers.
Customer Does Not Perceive Our Past Value Delivered (PVD):
There is not an infinite number of potential large customers, so odds are you are trying to close a big deal with an existing customer. This is always true for the “land and expand” selling motion. When you’re trying to “expand” to a large deal, it’s with an existing customer. When customers do not understand or perceive the value they have received from us in the past, one of two things happen.
First, if the customer does not believe they got much, if any, value from you for previous purchases, they will not be inclined to buy more. That’s a tough hurdle to overcome.
Second, if they believe they did get value but it is not really clear to them what that value was, they will usually default to the position that they probably paid too much. Get ready for a tough “price only” negotiation if they do decide to move forward with you!
For the New Opportunity, the Customer Does Not Understand Our Value Proposition:
The critical output of selling, especially when the deal is big, is a compelling Value Proposition. This is one that makes the customer sit up and take notice of what you are selling. When well crafted, they feel compelled to close a deal with you and close it as quickly as possible.
However, when our Value Proposition is not clear and compelling, customers start to question whether this is a deal they want to move forward with—with anyone. Or in a competitive situation, we don’t look that much different than the competition (everyone has a reasonably good marketing department) so the safest move is to award it to the lowest price supplier. Again, the deal is getting smaller and less economically attractive.
Customers Can’t “Connect the Dots” Between the Items in Our Proposal and the Value They Want to Achieve:
Even if we’ve cleared the hurdles of Past Value Delivered and a compelling Value Proposition, there are other traps we need to avoid if we want to close that big deal. This challenge has to do with our proposal—and in particular what we are proposing.
When customers review the items in our proposal (products, services, volumes, discounts, support, etc.) and can’t clearly connect the dots between that item and the value we proposed, they start to ask why is that in the proposal? What does that have to do with the outcomes we want to achieve? Are you simply trying to increase the size of the deal so you can earn more commission?
Suddenly, all of our hard work can be put at risk as well as our credibility. A crucial step in selling and negotiating is to ensure the customer understands why everything in our proposal is there and how it relates to the outcomes they want to achieve.
“Your Price is Too High…” and We Don’t Have a Negotiation Plan to Keep the Value in the Deal:
Odds are if you are selling a big deal, it is to a larger B2B customer that has a “buying process”. This process will invariably include their Procurement Department. With almost 100% certainty we can expect to be told by one or more individuals that our price is too high. After all, how many times have we been told the price is too low?
And yet, all too often we are not prepared to respond effectively. In other words, we don’t have a negotiation plan. If we were simply to cave and give the customer a bigger discount or throw in some services for free, do you believe we have made them happy? Actually the answer is if they are happy it is very fleeting. By conceding on items like price and getting nothing in return, we are devaluing our offering (not to mention making the deal smaller, too). We are letting value literally slip through our fingers and out of the deal.
And in the process, we are causing customers to question if they are buying the right solution from the right organization. They will ask themselves how can you be #1 in the world with the very best solution and yet you are giving a lot of it away?
Winning big deals is a function of increasing your odds of success. Manage these four challenges to the customer effectively and I guarantee you’ll see dramatically improved results.