Predictable Prospecting
Episode 64: Upfront Client Contracts and the Ability to Say No - Jim Brown
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Episode Highlights:
- The meaning behind the SalesTuner brand
- Learning through failure
- Qualification versus disqualification
- Creating an “upfront contract” with your prospects
- How to prepare for a team call
- Getting a client to close: Jim’s number one question to ask a client
- Self-diagnosing problem areas
- Funnel math
Resources: Want more from Jim Brown? Connect with him Linkedin, follow him on Twitter, and check out the SalesTuner podcast! Download the SalesTuner workbook for free by visiting http://www.salestuners.com/roadmap
Episode Transcript
Marylou: Hey everybody, it’s Marylou Tyler! I have today Jim Brown who is the founder, CEO, el presidente of SalesTuners. He’s also a podcast host and he actually interviewed me for his podcast not too long ago. Welcome, Jim, to the podcast!Jim: Marylou, I am thrilled to be here. Thanks for having me. Marylou: You specialize in the entire pipeline. You start with that initial conversation and take people all the way to close. Tell me though what does the name SalesTuners mean? It sounds very interesting. Jim: SalesTuners is just there. It’s just a thing about tuning an old radio down. I’m just tweaking little bits and pieces all throughout the process to get the best outcomes. I’ve helped take two companies from just over $1 million dollars in revenue to more than $10 million or on acquisition. I actually turned around and raised $1 million on my own and ran that company to the ground. I’ve seen both the success and the failure, so that tuning aspect for me is very critical in the process. Marylou: It’s funny that you mentioned that about taking things into the ground. Actually, the impetus or the foundation for Predictable Revenue was because Aaron Ross, who was my co-author on the book, had a company Lead Exchange, I think it was called, and he borrowed $5 million and that ended up a disaster. He really focused on how did that happen, number one, and number two, why did it happen. That was the genesis of Predictable Revenue because there were a lot of lessons learned along the way. A lot of times, failures are our best resources in terms of learning going forward of what to do differently or what not to do or to avoid. I’m sure that served you very well in helping your clients go from where they are now to a revenue that is 10x, it sounds like with some of your clients, which is great. Jim: I’ve had a lot of success with my career but I can’t think of any time where I learned more than through that failure. I tell you Marylou, when I came out of the funk, if you will, because I definitely had a little bit of depression and a funk after that. I started talking to a lot of founders, CEOs, and presidents of companies and all of them told me, “We’re about to go hire a VP of sales or we’re about to do this and that.” But the reality is they are the VP of sales. These founders are the VP of sales until they get some kind of traction going on in their business where they can either truly hire a VP of sales or raise enough money to then hire VP of sales. That’s one of the reasons why I got into the business that I’m in today. Marylou: We’re going to talk today with you about not the entire pipeline but a lot of interest for my folks is because, I didn’t realize this but, over half of the listeners in this podcast do all roles. They have the prospecting piece, they sell and close and they also service accounts. It would be fun today to really focus on, although you can handle the entire pipeline, let’s talk about what happens from the qualification on down to close one. I’m going to ask you, the first question is, especially in this day and age, what are your views on the term qualification versus disqualification? Jim: It’s a great question to start with, but the reality is I think that you qualify or disqualify throughout the process. Even when we’re out prospecting, we have known things that we say, “Okay, this makes a qualified prospect, this would disqualify them.” The whole time, again, once they become a qualified opportunity, I want to find a way for them to be a no because I think it’s faster to get to my no than it is to get to the yes. If I come up with all the reasons why I should be disqualifying them, they’ve got to convince me that they should be a yes. Marylou: That’s a great attitude. I was just talking to another colleague of ours and we were talking about this hope, I call it hope prospecting where we’re taking people into the funnel who are the minnows instead of the whales because we had a good rapport, we had a good conversation. We know in our heart that they’re really not in that upper right quadrant of high revenue potential, high likelihood of closing, but we keep holding onto them because it makes us feel good. I love your idea of saying, “Look, at every stage, at every microstage, at every forward movement metric, we really need to have that litmus test to test is this person, is this company worth my time to take them to close? Are they going to be a high profitable revenue generating client that’s going to stay with us for a good lifetime value or are they going to be a pain in the neck? We’re talking about opportunity to close, clearly not my area of expertise, but what types of things or milestones, or markers, or red flags, how do we go about figuring out whether they’re still worthy of our time from opportunity to close? Jim: One of the things that I do, I do it both with my clients and I do it when I’m actually selling to my prospects that become clients, I set up an upfront contract. In my upfront contract, I have what I call equal business stature. If you take anything away from today’s conversation, if you want one way to separate yourself from every other sales rep on the planet, it’s simply to create equal business stature with your prospect. What do I mean by that? You have every right in the world to tell them no, that they are not a good fit for your company. How many times Marylou have you actually gone and told a prospect, “Hey, I may have to tell you no.” Marylou: I can think of one instance where I was sitting in a conference room in Los Angeles, California, we had a meeting and somewhere during that meeting I realized it was not a good use of my time. It just wasn’t a good fit. I politely closed my notebook, I stood up and I said, “This meeting is over, we’re just not a good fit for each other.” I walked physically out of the room. Jim: Just out of curiosity, did they actually lean in towards you and said, “No, no, no. Wait, come back.” Marylou: I think they were shocked that someone would actually do that. Jim: Imagine though starting every meeting by telling your prospect that you reserve that right. A lot of power can be had with that. Here’s what mine sounds like, it says, “Marylou hey, thanks so much for your time today. At the end of our conversation, one of three things might happen. The first thing that might happen is I might have to tell you no, that you’re not a fit for the services that we have. Are you okay hearing me tell you no?” That literally is the first thing that I say to them. After they say yes, because it’s a conversation, I want them to say, “Well sure, I guess I’m fine hearing you tell me no.” The reality is most of them say, “Why on Earth, Jim, would you tell me no?” As a sales rep, you better have the reasons why you would tell them no. I have five clearly defined ones that are reasons that I tell my prospects. But the second thing is I said, “No. Once we get that out of the way, you may get to the end of this Marylou and you may decide you don’t want my help.” My word choice there is very intentional. I do not allow my prospects to tell me that I’m not a fit because that’s not true. I know whether or not I can solve their problem but they may not want my help and that’s very intentional. The last thing that may happen is we may both say yes and depending upon the stage I am, I say, “Okay, if we both say yes today, here’s what that means and it’s very specific. It could mean we’re now going to agree to a 90-minute meeting. It could mean we’re now going to bring in your boss and we’re going to have a demo. It could mean I’m going to send you a contract and you’re going to sign it. We’ll have a kickoff call on Tuesday.” But by getting out there and saying, “Hey, here’s what yes and yes means today, I can now clearly define our entire meeting and we have set equal business stature the entire way.” Marylou: It’s funny, I’m going back in time. This sounds very Sandler-esque to me and maybe it’s because you used the word upfront contract. I haven’t studied Sandler in a very long time. This equal business stature, is that a term that you have invented or if I were to do a Google Search, would I see it? How do you go about establishing equal business stature? Jim: It’s a great question, very observant of you. I actually put myself through Sandler training 10 years ago. My coach at that point, who was my coach for 10 years, is now my business partner and we actually do teach a lot of the Sandler fundamentals in our business. It’s very much a Sandler thing. How you create that equal business stature is just by letting your prospect know, hey again, you are just as committed to the relationship as they are but that means you have just as many rights in that conversation as they do. Marylou: I hate to back you up in the pipeline but I’ve got to do it. Let’s pretend we’re on our first call and the hand was raised, our email engines or whatever we used to get that first meeting happened. We scheduled a call, and now we’re on our call. Is this something you introduce in every call or do you pick those milestones in the pipeline, those positional locations where you would put this contract into place? Jim: For me, I use it in every single call I do. It may sound different depending upon the stage that I’m in but I’m going to have some sort of that in every single one of them. We’re going to be general today but let’s assume you have an SDR working for you and they set an appointment and you’re an AE. I get the question a lot, “Jim, how do we do that turnover? How do I actually come in and run that call?” I said, “You should have an agenda going into that call but before you reveal your agenda, why don’t you ask them what they want to get out of today’s call?” It simply sounds like, “Hey Marylou, I’ve got a full agenda that I want to get through today, typically how I handle these meetings from our SDRs but before we get started, what were you hoping to get out of today’s conversation?” Depending upon what I hear from the prospect, my entire meeting may change at that point. I realize I didn’t tell them my agenda, I just told them I had one. But based on what they tell me, I may change it completely. Marylou: That’s a great thing to do because I know it’s funny, I was teaching a class recently where I went in, I’m an expert in this so I know exactly what they need to learn, but I actually did a survey prior to the class asking them what their expectations were, what they hope to get out from the class. The responses caused me to do almost a 180 in what I taught. I can totally relate to what you’re saying. We know what the buyer should be doing but that doesn’t mean that it correlates to what they’re expecting to hear. I love the idea of what you said about having prepared a meeting agenda, or a reason for the call, or doing your call planning, but always opening up the conversation with, “What did you have in mind for today just to make sure we’re on the same page?” Jim: Yeah. But again, just because they tell me something doesn’t mean I’m actually going to cover it. I just want to know what it is that they were hoping to get out of the call. Here’s the thing, depending on the size of contract that you are selling and the type of person you’re selling to, you may end up having, three, four, five, six different discovery calls and while you definitely need to understand and take notes throughout the entire process, every time you change people, it’s a brand new discovery call. You need to ask that person, “Hey, before we begin today, I appreciate being introduced to you by Marylou but what were you hoping to get out of today’s conversation?” Again, this is where you’re bringing in everybody’s individual motivations and business intentions because they’re different. Marylou: Exactly. We’re a little bit above opportunity right now with what I’m curious about but the other thing is, in Predictable Revenue, we talked about having a 15-minute are-we-a-fit call. That will just set the agenda for the actual discovery call, if you will. Then, there was this call that would go with one stakeholder. If you are in more of account-based type selling or larger strategic accounts, you might speak with one person and then suggest the call to action would be to get with the team. When you are preparing for the team call, are you suggesting that part of the process is to make these individual calls ahead of the team calls so that you can determine what their wants, needs, desires, challenges are or are you asking when you get on that call itself when you’re on the call with the team, are you going around the room and asking them? What’s the preferred process? Jim: I don’t know about preferred. That one is really going to be determined upon what you’re selling. For instance, I’ve sold seven-figure deals and that’s going to be a completely different thing than when I’m selling five-figure deals. One of the things that I love to do Marylou, is have everyone in the room, each individual person tell me their top three things and the reason why is because I get to hear from each of them but they get to hear from each other. Now all of a sudden, the person who’s from finance versus the person that’s from marketing, and then you get a person from sales, now they start to understand, “Okay, here’s where my roadblock is going to be in getting this deal across the finish line internally.” You start to build those champions and then when you have your follow up conversations, you know which pieces of the fire you want to stoke in order to get that person motivated and moving forward. Marylou: Let’s go back to the bottom of the funnel, getting to close. Obviously, that’s wild, wild, west in my world because there’s so many steps that you ebb and flow through. When you’re actually working with a client in planning about getting to close, how do you go about setting up where these equal business stature type of conversations come into play? Is it based on stage? Is it based on call within the stage? How do you normally help a client plan that out? Jim: Let me give you mine so we can be very specific. Like I said, I’m going to set that equal business stature up at every single stage of the cycle. When I come in and I’m doing my closing presentation, meaning I know the group that I’m in front of, I’m at the end, I’m going to say, “Hey again, I have the right at the end of this meeting based on what I discover that I may have to tell you no or you can hear me tell you no.” When they say, “Jim, why on earth would you tell us no?” I literally say, “Guys look, the only client that I bring on, I’m looking for five pieces of criteria. I’m looking for desire, commitment, intellectual humility, the ability for me to give you a 10:1 return on investment, and decisiveness.” And then I actually say to them, “I don’t know where I might find trouble with those but what do you guys think? Which one of those are we going to have the most challenge with finding in this organization?” It’s amazing. They’ll start talking about it. “You won’t have trouble finding any of those here.” “Oh, really?” But if they tell you, all of sudden, guess what? I can change my agenda again. I can focus on the fact that they are not going to have the desire to do this, or they’re not going to have the commitment. I can really focus in on one of those. But then, once we get towards the end, and I’m getting to my yes and yes, I have laid out, “Here’s what we are deciding today. That decision is I’m sending you an SOW, you’re going to sign it as we’ve talked about today and we’re going to have a kickoff call on Tuesday.” All that stuff is planned out and I’ll say, “Is that the version of yes that you’re willing to say today?” Again, it’s okay if they tell me no but I’ve put it out there because if they say, “No.” I’ll be like, “Okay, hold on. What were you hoping to decide today?” They can tell me that path. Or I say, “Okay. If you’re not going to say that version of no, help me understand why are we here, what were we hoping to do, what’s it going to take that version of yes?” Now I can layout my closed plan with the people who have the ability to say yes as opposed to letting people who only have the ability to tell me no and make that decision. Marylou: This is all sounding really great. What I’m curious about now is if I can ask you to describe for the audience, let’s say I’m listening to this, I’m thinking, “Wow. I know I don’t have these types of checks and balances and conversations and contracts in place in my pipeline.” Can you walk us through a success path meaning here’s where I am today with my pipeline, my lea flow, I’ve got various people in various stages, I’ve got different types of buyers, what is the success path of working with you from where I am today to where I can get if I implement your methodology, your training, your wisdom, in my pipeline? Jim: It’s my belief that people do not buy intellectually, they buy emotionally. The whole time I’m asking any questions, I’m trying to get an understanding of what their current status is costing them. When I say what it’s costing them, that doesn’t necessarily mean money. It could, but it doesn’t necessarily mean money. It could be costing them time, it could be costing the money, or it’s costing them emotional pain or disrupt. In my plan throughout the funnel, I have to understand what is current state, what was the previous state because that’s where the pain lies, that’s where the pain lies, in the previous state, and what’s the gain? One question that I love to ask and I ask this as early as possible Marylou, let’s fast forward a year from now and let’s pretend that you signed the contract and we got to working with each other, we’ve now been working with each other for a year and you’re having wild success, what would have happened? They will tell you the future, they will tell you all these great things and then you follow up and says, “Wow, that’s amazing. What happens if that doesn’t happen?” Now, they start to unpack all the challenges that you’re going to have to get through. Again, regardless of where you are in the funnel, these are some of the questions and objectives you can use to try to pull into your conversation now so that you can say, “Hey, you told me that in order for you to get here by the end of next year, you have to accomplish this, this, and this by q4, q3, q2. Here it is, April of 2017. If you’re going to implement this by the end of q2, we know it’s a 45-day onboarding cycle. You are really going to be signing this contract the next two weeks to have any chance of hitting your numbers for q2. Is that where we are? Because it doesn’t seem like we are.” Marylou: There’s a little bit of math there or funnel math as I call it in this process of yours. It allows us to look at velocity, timeline, lag, and then also milestones. Would that be a fair assessment that you put all those into your magic pot and come up with? The other thing that I’m curious about is are there common problems that you immediately hone in on to see? For me, for example, I’m working with sales organizations that are primarily split roles, not always but I have a business development team or an outreach professional who’s handing off a lead to quota carrying field sales type of direct sales person, the first thing I look at is that hand off, what you talked about before. If I don’t see 90% or higher compliance of what was handed off to what was worked and put into the active pipeline for forecast, I know that’s the first spot for me to look at. Are there some indicators, leading indicators, that you look for or if I’m listening now, that I can kind of self diagnose some of this to figure out where I should be applying more knowledge? Just instructional aid to get to where I want to go for the revenue I’m trying to generate? Jim: One of the things you just mentioned was that handoff and you’re looking for 90%. For me, that’s what I would call a pain indicator. It doesn’t necessarily mean that that’s where their problem is, maybe they have a marketing plan that’s going on creating a high volume of leads but they’re actually not that good and they just can’t convert over to sales. To me, that’s an indicator and I want to dive deeper into that. But for me, it really is at each of those stages of the funnel. One is are they generating enough leads or are they generating enough appointments for an outbound perspective, that’s number one. The answer there is no. It’s because everybody wants to look at the end of the funnel. We didn’t hit our numbers, we didn’t have enough to close one contract etc. But to me Marylou, it’s the bad management and bad managers who focus on the end of the funnel because I can’t control that. You can give me a million-dollar quota and I have zero and a million in front of me, I have no clue how to get to a million. It’s the single steps and behaviors that we do every single day is the only place that management and managers should be focusing their time. At the very beginning, how many calls, how many emails, how many personal outreaches are we doing on a daily basis? That’s going to lead to some amount of first calls. How many first calls are going to demo? How many demos are going to proposals? How many proposals are going to close one? I’m looking at that, as you called the funnel math earlier, I’m looking at that funnel math all the way across the table and trying to understand, “Okay, your goals are here. You’re here. What are the things that are getting in the way of that?” Again, I’m looking for those pain indicators but then I’ll start to unpack them and I’ll get to the emotional reason why. That’s the case. Marylou: The other thing that we’ve now talked about a lot, which I’ve always done because I grew up in this world, is to segment the accounts, not only looking at the funnel math but looking at the characteristics of the accounts that are gliding through the funnel to see if there are segments or tiers of accounts that are performing better than other. An example would be a client of mine has a dream 100 account. They have 100 accounts that they’d love to get into so they’ve divvied up those to their account executives and they work those independently of a lead gen process. There is some lead gen going on but it’s very hyper personalized, it’s not necessarily running through an engine other than they’re in control of how many emails they want to send and to what level they want to personalize it. The next tier out is what we call extending universe which could have been a core or the dream account but for some reason didn’t qualify for that. What we also do is we look to see, contributing to those revenue numbers, what types of accounts are swimming down the pipeline a lot easier and that’s easy to close, high revenue, low risk versus the other types of accounts. Are you seeing more of that segmentation coming into your analysis or are you looking at the funnel purely from the math perspective of revenue at the end and what generated that revenue? Jim: I love what you’re talking about. I wish I was seeing it a lot more with my clients but the reality is I’m not. I think that could be the size of customers that I call on. I typically work with B2B SaaS companies or technology companies less than $10 million a year in revenue. They’re kind of pre-series A even but right after series A, I’m taking them from there. It’s funny, I had someone on my podcast just a few weeks ago and they talked about this concept of a win wire. That’s just what they called it. It’s basically an after action report. After every deal that wins, she’s the president of the company, she would gather all the known information about that win. What was the actual reason why they bought, were we competing against anybody, who is the sales rep that close it, what was the average deal size, all this data and she would use that information at the weekly sales call to say, “Okay, how will we get more of these?” It’s not a case study, they literally just sold the deal but it starts to spark interest in the SDRs and AEs to say, “Oh, I know four people just like that. I can use that information. I can use the tactic that they used to pull this deal across or just the demographics of the buyer to say, “Hey, it sounds like we have someone just like you. Would you like to have a conversation about this?” I thought that was fascinating. I also spent some time at Oracle. Oracle acquired a company that I lead sales for a few years ago and they did something similar but they did it for every deal, win or lose. If we lost a big deal, they would go in and they would basically have an interview with the customer. I don’t know how they did that because I can’t get it done all the time. But they would have an interview with the customer we lost the deal with to truly understand what it was that caused us to lose and caused them to go with one of our competitors. When I study that information, I can just find so many patterns, as you’re talking about, what’s sliding through the funnel a little bit easier, and it allowed me to truly prospect into deals that made a lot more sense and moved faster than I wanted them to. Marylou: I love that idea because being a numbers person, being an engineer, being a process person, if we can analyze and study descriptively what happened whether good or bad—I love the good and bad thing, doing the close won and close lost, love that. We used to do exit interviews basically exiting out of the pipeline even. That’s how detailed we used to get. “Why did you leave us?” That’s a detail that a lot of people aren’t going to do but just doing the value grids or what you call the win wires of close won, close lost, and getting an understanding, and if you can take it even further and interview the people that are involved in these decisions either directly influencing or indirectly influencing, you now get an understanding of the stakeholders. When they ebbed and flowed in the pipeline, you’re building not only a fabulous sales process that’s based on the buyer needs but think of what that does for marketing. The fact that you can feed this Intel back to marketing so they can organize the cadence, the rhythm of their content based on how people buy and also bubble up those objections early in the content so they can answer them and get people ready for the conversations that the sales reps are going to have. It’s so valuable. Jim: It really is and that’s one of the biggest things that has caused me to be successful both in my career as well as in training the reps that I work with. I often say Marylou, the best presentation you will ever give is the one that your prospect never sees. What I mean by that is I know where you’re going. I’m leading you down the entire path but instead of telling you how great I am, how great my product is, how great my services are, all the features, benefits, etc., I’m asking you questions that I know specifically are going to uncover things in you or make you think about things that no other sales rep is causing you to do. Just by me going deep and asking some really legitimately good questions, the prospect sits back and says, “Wow! This person’s really smart. They know what they’re talking about. If they’re asking these questions, their product has got to be just as good as they are.” They’re kind of self selecting into my sales process. The whole time I’m really just presenting but I’m doing it by way of questioning. Marylou: I love that. We’re getting short on time here so I’ll make sure that the listeners of this podcast know how to reach you. What’s a good next step for people as we end this call today to take in what we’ve talked about today and take something away to do as one action point? What would you recommend? First, tell us how to reach you and then tell us what our homework should be for today. Jim: Sure. There’s a couple of different ways to reach me. One is I love to converse casually on Twitter. I’m @jim_brown. If you want to go more professional, you can hit me on LinkedIn. Just search for Jim Brown. I’m probably going to be one of the first few results. Type in SalesTuners if I don’t come up. Marylou, I would say the thing that I would tell everybody is we all have goals, we all have quotas or individual income goals that we want to achieve but it’s a really big number and it’s so far off into the future, we can’t actually see it. Therefore, we don’t know the incremental steps to get from where we are today to that number. I’ve put together a completely free ebook that you can download as a workbook. You’re going to have to actually do some work in it. But it’s going to say, you plug in all the numbers, here’s where I want to be at the end of the year and based on the amount of time that I work, the average contract value that I have, the amount of leads that I get on a monthly basis, the amount of opportunities, it’s going to break all those numbers down for you and tell you what you personally need to do on an individual daily basis to be able to hit that big goal at the end of the year. You can get that at www.salestuners.com/roadmap. Again, I think it’s like a 17-paged book. It’s a workbook. You’ve got to put in some work. But again, www.salestuners.com/roadmap and you get that daily plan for you personally. Marylou: That’s great and I will add that to our notes on the web page once the podcast is active for everyone. If you didn’t get that or if you’re driving, don’t stop and write. I’ll make sure that it’s out there for you. One of the things that starts off a good process is to understand your numbers. We’re all athletes out there even though we’re in the sales world. Think of yourself as an athlete. You’ve got to know your numbers. You have to know what you need to achieve both for your what I used to call the marginally acceptable goal, the goal, and the stretch goal or the whoopi goal as we used to call it. We really want to always strive for the whoopi goal but we don’t want to do the marginally acceptable. We need to what those numbers are so that it allows us to a plan accordingly our schedules for the month, the week, the quarter, whatever we need to do in order to meet our numbers. Thanks so much Jim for your time. I really appreciate you joining the podcast today. Jim: Marylou, thank you. It’s been a great pleasure to be here.