Today, we will continue our discussion about the handful of must-win deals that are the key to hitting our number for any given quarter as well as any given fiscal year. What critical questions deserve our attention if we are to have a high probability of landing these must-win deals? In the previous blog we addressed Is the Opportunity Real. In this blog we’ll explore the question of ‘Are we aiming at the right target?’—meaning are we aiming at the right deal?
A couple of years ago, I consulted on an early stage must-win deal for a client. During the initial coaching call I asked the account team “Roughly, how big do you think this deal is?” Without hesitation, their answer was $3.14M.
“Wow, that’s really specific for something this early in the sales cycle” I told them. “Why are you so sure it’s $3.14M?” Because that’s the quota we need to hit was their answer. “Good luck with that and I hope there’s more than $3.14M of value on the table” was my response.
What’s missing here? Obviously, the team needed to first understand the outcomes the customer wanted to achieve and then build the right deal to achieve those outcomes. Hopefully, that deal would be larger than $3.14M. As it turned out, they had no clear picture of what the customer wanted to achieve – only how big a check they needed the customer to write. In short, they were chasing a booking versus the “right deal.” I see this all too often – and no, they didn’t close that deal.
As discussed in the previous blog, when determining if the opportunity is real, one question we have to consider is ‘What are the outcomes the customer is trying to achieve?’ Then based on those outcomes, our job is to “connect the dots” between the outcomes and the right deal levers that will produce those outcomes – and then educate the customer on the right deal levers.
Think of deal levers as simply the key elements of any deal such as which products (and volumes and prices), which services (amounts and pricing), which commercial terms (payment terms, schedule, close date), which contractual terms (whose contract, contract term, guarantees) and what strategic items (references, co-publish papers) are needed to achieve the outcomes important to both parties.
Look at the simplified diagram below. Assume we are selling cybersecurity software. In this case the customer has stated that a secure infrastructure is their primary outcome. Therefore, the right software and volumes should be important to them. However, they also want to be self-sufficient and able to use the technology with their current staff. Therefore, training should also be important to them. The customer also wants to reduce the risk of implementation as well as operation after the sale. Implementation services, training and support after the sale should be in the deal. Cash flow was important so payment terms are a key part of the deal. Finally, the security team has deadlines to meet for the business. Therefore, the close date (which leads to start date) and implementation services are key to meeting the due dates.
Note how we have clearly mapped their outcomes to the key deal levers we will present in our proposal. This is one of the greatest challenges customers have in awarding a deal. When they receive our proposal, they can’t clearly “connect the dots” between the elements of our offer (deal levers) and the outcomes they want to achieve. That’s when they start to question why certain items are in the deal and begin to wonder if we are “padding” the deal to increase our bookings. Now we’ve got an unhappy and suspicious customer – and most likely a tough negotiation ahead. All of this could have been headed off if only we had determined the right deal and then educated the customer on the key deal levers.
Since a deal has to work for both parties, we also map our outcomes to what we want to see in a deal. In this case we would like to meet or exceed quota, so the software volume is important to us. Customer satisfaction is key to our long-term goals so we wat to see training, implementation services and support after the sale in the deal. Because we want to close before the end of the quarter, the close date is obviously important. Our finance is focused on revenue recognition so the close date and payment terms are key to us. Finally, we also want to position and develop potential follow-on business. Therefore, we will ask the customer to include customer value reviews (CVR) with key decision makers in the deal.
With a little thought and the right conversations with the customer (and internal stakeholders), we will know that we are aiming at the “right target.”
In the next blog we will explore the all-important question of ‘Can We Win?’