[Video] Pricing and selling as a cross-functional extreme sport

Winning a multi-million dollar deal can require a ton of resources. In this conversation, we take a tour of the extreme sport of pricing and selling when you're working with multiple teams. How can teams identify, communicate, and defend their value across the organization? 

Tracy: Hello, this is Tracy Dent with Adele McLean from Holden Advisors. Thanks for joining me!

Adele: Hey, Tracy. Always a pleasure. 

T: We had so much to talk about last time. We were getting into… This is like “tales of the Backbone workshops,” right? We were getting into the buyer types, how to get the team involved, and that's where we left things off. I think our next area to cover is these complex sales processes. You've got multiple teams on both sides. Can you tell us a little bit about how that's evolving?

A: Yeah. We all know the buying center is growing. It's becoming more complex, you know. Just five years ago, there were five members in the buying center, and now we're up to eleven, and there's some research that say it's growing up to thirteen. So just imagine, like on your customer side, trying to manage thirteen different people and keep them all happy, and ultimately find the decision maker. It's a needle in the haystack kind of thing at the same time. We have teams on our side of the table as we're supplying our customers to organize as well.

A: I like to tell the story of sitting in a symphony before Covid, and all of a sudden it dawned on me. “Does that conductor know how to play every single instrument in the symphony?” And I doubt it. I thought, that's what sellers need to think about. We don't have to be experts. We don't have to have all the answers all the time, but we have to know how to conduct the symphony of our own team, and also on the customer side. Just imagine hurting all these cats. When I think about complexity… I think sellers have to really think about pricing and selling as a team sport, and this has been evolving for a while, and the best sellers get it, and I would just like to see more sellers get it. All kind of centered around this concept of: How do we identify, communicate, and defend value across the organization? I think that's where we need to go.

T: It feels to me, too, especially as you're working across different teams and multiple organizations, it’s so key to keep things simple. Where have you seen people have success with that? 

A: Well, let's talk about where I see it not being successful. I came from hard drive manufacturing, and we had a lot of engineers in the organization, you know. No ding on them. They're wonderful people. But when we talked about value, we had these immense spreadsheets with all this detail of calculating value, or ROI. I actually grew up in accounting, that's my background, and I couldn't even understand them. If we make something so complex that a seller is inundated with data numbers, then we can't explain it.

A: So what we do at Holden Advisors is think about value on the back of a napkin. Dr. Holden says, if you can't write value down on the back of the napkin, then you're missing the mark. So keep it simple for sure. We do that with what we call the FBV. And that's simply feature, benefit and value. Honestly, in workshops we say “If you can identify the feature and jump all the way to value, which means you could put a dollar sign on it (I'm not talking about just saying the words, but the dollar sign), you're successful. So it could be that simple. Identify my feature and then put that dollar sign on it. What does it do for my customer? Not what it does for us, but what it does for our customer. That’s as complex as it needs to be, honestly.

T: Right. Let’s say you're a seller that has historically had all of those complex spreadsheets. How do you cut through that? Where do you even start? 

A: Think first go the spreadsheet away, hopefully. People are cringing at this point, but just forget the spreadsheet and take ten minutes or fifteen minutes over coffee in the morning. And just say: “What is it I do? And what is the impact for my customer?” We like to tell the dirt story in Negotiating with Backbone. And that's a story about a real client of Holden Advisors who was losing market share and losing profit. They deliver crushed stone to construction sites, and the number one supplier in the market was using price. So one very smart seller decided to ask the customer what was going well and what wasn't? And the customer said, “Well, I could really use faster loading.” Well, I would have said, “I could do that, Mr. Customer.” But instead, this this guy said: “Why?”

A: It turns out that there was a lot of cost involved in these trucks and the labor. The truck driver is sitting in line. So as he stood back, and he thought about: “What is it I do? Well, if I can speed up the loading of the trucks, I can deliver to the sites faster. I can avoid penalties for construction projects if they're government for sure. And I could actually help them create more projects per year.”

A: So through the course of conversation, he said, “my feature is five minute guaranteed loading, and my benefit to you is: reduce cost in trucks and labor and additional projects that you can do for the year.” But he had to have the discussion with the customer. So, hypothesize first, and then let's dial those numbers in to what the customer believes is true. Have that step back thinking, not using a complex spreadsheet. 

T: No spreadsheets. The value, once you've figured that out, then how does it work in terms of getting the team involved? How do you coach people on that approach?

A: Well, I think a lot of times sellers get inundated - with that poker player we talked about last time saying “you're a commodity,” and sometimes the product teams, the people who service the accounts, they have to understand what they're doing and the value as well. That creates that offensive position in the value we bring. So the sales support personnel can actually have a different lens on what's happening with the customer. They get different feedback quite frankly from customers than sellers do, because, you know, customers are ready for the sales guy. They're ready for the procurement tactics. But if you're just dealing with a customer on a daily basis, reporting or providing them a supply update, you have a different dialogue with them.

A: I tell sales support people. This is the time to go for your value hunt. What's working? Where are the problem areas? And then, you know, relay that back into your sales organization. Hopefully, the sales team is starting to do their conducting and having these weekly meetings for these come up. But in the sales support group we can really dig out what's valuable to the customer, and we have to be careful not to give away things they haven’t paid for as well. So that's where the whole value piece comes together as a team.

T: Yeah. I would think to as the salesperson, in that conductor space, you're listening for what people feed back to you. Or, what they say in those conversations about value. That would be just one part of the conducting. So, what are the other pieces in that role that you should be looking for? 

A: In the sales support, or the sales role?

T: The sales role. 

A: In the sales role, you're conducting your own team. But the big thing is conducting on the customer side, that buying center. One of the most successful salespeople I've ever worked with, made sure that people on our team were aligned with people in the buying center, even if it meant he didn't have every single relationship. So, who has the best match up? Who could talk to the influencer the best? Who can be involved with the decision maker? Besides, the seller, sometimes an executive needs to be involved, not just the seller. Who can work with the procurement personnel? There's a lot of our clients that use deal teams. I think that's fabulous, because it takes a little the heat off the salesperson when you know the procurement people are beating them up. So, who is going to be involved in team selling versus I have to go this alone. It’s really thinking about how to match up. You know those folks in your company with the buying center members for maximum impact and to build that relationship that can kind of endure tough times. Build that trusted advisor relationship.

T: Yeah. In terms of the deal teams, how would people discern when that's appropriate? Is it like with the history of procurement that it it's the most useful? Where have you seen that at play?

A: Yeah, I think, when there's large multi million dollar deals, I don't think sellers should ever have to go it alone. Whether the deal team rides along for the actual negotiation or not is the question. I used to go all the time with our sellers out into the field, Japan, Europe, and be part of their backbone, you know, not to not to use our word. But we were part of the team together. And we were all a united front. So I think the more complex and the bigger the deal, the bigger the stakes are for both your company and the customer. The more members of the selling team that can be involved with relationships, and even actually the negotiation, the better. Because then people understand the games and what's going on, and everybody can see it the same way.

A: I think that's important. Because in the past, before I understood Backbone, we would say, “That seller can't close the business.” Well, it's because the guy was playing poker with them, Or it was a price buyer, and we really didn't want to do business with the price buyer, because we weren't positioned strategically to be the low cost provider. So the more people involved, you can see the dynamics with the customer better, because then you can call and make your strategy a little bit more bulletproof because you might not want to deal with every single customer as a company.

A: But sellers think they can close everything. They’re the ultimate optimist. Something comes their way, “I’m going to close it.” Maybe sometimes we have to have a little bit of objective viewpoint that, “that's a great opportunity, but they're not interested in our value.” So that that's the other thing about it. The ultimate optimists have to be brought down just a little bit, sometimes.

T: In terms of the sales support, let's get more into that, because you wanted to talk about that last time. Where have you seen people really learn something and bring it to fruition from a support perspective to help the sales team?

A: I can talk personally about it. When I worked in the hard drive space, our wonderfully smart engineers would always talk about: We had the best mean time before failure rate in the industry. Well, first off I had to understand what that meant. Six Sigma lingo. And they just kept saying, Why can't you get a higher price, Adele? Why can't you get a higher price? We have the best mean time before failure rate in the industry. Finally I called a meeting, and I said “Why is that important? You guys are so sure that this should command the premium.” So they explain: If you have a lower failure rate, then you need less servers. Like for banking situations, hard drives go into servers, go into banks.

A: Banks need to be up all the time. So you need less redundancy. I said, “Okay, we can actually do the math on that. If you need one and a half less servers, because our mean time before failure rate is the best in the industry, what does that mean? You don't have to buy as many.” So doing those calculations together, I think, are super important. And then I became confident when I got beat up in the negotiation. I'm like, “Hey, but our mean time before failure rates the best in the industry, and this is what it does for you. It means you have to buy less.” It changes the conversation, honestly.

T: Yeah. You're also making me think, as you get more people involved from different perspectives… Somebody who you may not expect might pick up on something that the sales team is missing.

A: Yeah. Quite frequently when we do Backbone for Sales Support workshops, the support personnel is like “oh my gosh, I give this report all the time. I wonder why those are so valuable.” It’s just a generic report, but what is it that the customer is getting out of it? Or they may give a best practice, or an insight, but should they really? If this is a poker player, is that a piece of the puzzle that needs to come out as valuable to the customer? For the next negotiation to say, “Hey, if you don't want to pay that price, then X, Y, and Z comes off the table.” I have an example as well, before I knew Backbone. We had the best supply / demand planner assigned to a real price buyer. He played poker some, but he really in his market was a price buyer. He wanted to reach a certain price point, and I said, “Well, I can't have Susanna on your account anymore. You can't call her twenty-four seven anymore. I'm just going to have to take that off the table.” You know now that I'm thinking about it, he needed to buy low price, but he did value that piece of our offer,. He agreed to pay a little bit more to have access to her. So it's not always the product, I think that's the point. Like, what else are we doing? Who are the people assigned? What's the value to the company? 

A: And I got one more for you if I can keep going. It was a Negotiating with Backbone workshop, but it just goes to show it's not always about the product. There was a guy sitting in there, forty year veteran. He sold security solutions to big retailers. He was a little bit skeptical as we started the day. As time went on, he raised his hand, and he said, “Hey! Next time they ask me for a price concession, I'm going to tell them I'm no longer available to service their account.” That changed the course of the conversation, because they needed what was in his brain to help develop the solution. So - sellers have been beat down by this procurement mess and calling people commodities. But I don't believe I’m a commodity. I'm sure you don't either, Tracy. Like we as people we can't be a commodity. So let's get creative. What is it we're doing for that customer, and the value it creates across the organization? They buy from us for a reason. What are those reasons?

T: Yeah. And in some cases it seems like more and more of those reasons are the wraparound of services. So even if the actual product is “commodity,” everybody delivers it in a different way, or with different benefits and things like that. 

A: Yeah. Every customer receives it a different way. I think that's where we get caught up in these ROI calculators. It's not a one-size fits all. Every one of our customers have a separate strategy in their market. So if we can understand that, then we can form fit that FBV calculation to their world. In the B2B space, that's so important because it's not like you just set the price and sell off the list price. Even companies who have list price. It's hilarious. They do major discounting. So I'm always like, “What's the point of the list price if you're going to discount?” Every B2B solution has a different value to the customer.

T: Do you find that many negotiations start out about price, and then, as people call the bluff, they switch? Like it just in terms of general volume. It seems like price is a starting point, and then people find a way to navigate?

A: I think it's opposite a little bit. If you take a step back and you think about the early stages of the sales process, no one's talking about price. Except the price buyer! The price buyer is saying, “I don't want to discover or understand anything about what you do. Here’s my RFP.” But everyone else: relationship buyer, value buyer, even the poker player, wants to understand what you can do to improve their business results. So if you're talking value early on in the sales stages, then when you get to the negotiation, you have options on the table, and the negotiation is really not a negotiation. It's just which option do you want?

A: And then that's where we find people become focused on price, generally, because then the procurement person has taken over, or the rest of the organization has been trained to stop talking about value and let's focus on sharpening our pencil. But I think generally people are more open to value early in the sales stages, except for that price buyer. So it should be a pretty big tell. Another one of our workshops which focuses on the early stages of the sales cycle, we talk about how you start to hypothesize that FBV early, and document it with the customer, and make sure the rest of the members of the buying center see it the same way. Then the negotiations, you don't have to get into that procurement cycle. Or if you do, then it's just about “your business wants this option.” This is the option you get for the price you want to pay, and then it becomes an internal negotiation, which is always fun for sellers to watch back and forth. 

T: That's where the Give-Gets design comes in too, right? So that that calls the bluff and has people really have to choose what the priority is. 

A: Yeah, yeah. And I think early on… You know, we hear a lot from sellers about ghosting or no decision. I think the more conversations you can have early on to put the onus on the customer to do the right thing for their business by making this change, the less you get of this whole “no decision,” right? Because if you can prove the value you can, you can do a proof of concept. Maybe you can talk about other customers who implemented something similar. Then it'd be hard to walk away from the solution.

A Budgets, of course, are an issue, and that's a big deal. But you know, you’ve got to think about how to get around that. Sometimes, if you can return much higher return than they're currently getting, a budget discussion becomes easier with the finance team as well. So it's up to us, conducting that side of the customer as well. So think about what our buyers and decision makers need to break through some of their internal decision making as well. I think that's the best sellers do that really well.

T: Yeah, that's good. Well, there's two things that I'm thinking would be good to go into in our next meeting or session. One is how to have these things happen earlier on in the cycle, just as you're sharing about this, I feel like that would be a really good place to go. The other thing is this idea of focusing on “price getting” versus cost cutting. You were getting into that earlier this morning, which could just be a topic on its own. 

A: Just a little teaser. The CEO of a big big company, sells cardboard products, raised his hand in an executive session and said, “Adele, what if we spent even twenty-five percent of the time we spend on cost cutting on price getting?” I said, “Imagine what your team could do.” So maybe we can pick it up from there. 

T: Yeah. Perfect. Thank you for this. Until next time!