Selling Shovels

I recently read a response to an article I wrote. In the response the person mentioned they hated being called a 'prospect'. I can understand this. I used to feel the same way myself. The word prospect is normally used internally to distinguish between a existing customer and an organisation/person you are hoping to become a customer. So with this thought in mind I then was curious to exactly what words would make that person feel a little more comfortable. Would business partner be something more appropriate?

In my mind; the word customer or prospect refers to a transactional sale (or potential sale) whereby the problem at hand and associated risk remains with the buyer (there is no risk shared). Take for example the interaction between Joe at Shovels Inc and Ben the gold explorer (was tempted to use prospector here). Ben requires a shovel to dig for gold (there are alternatives but this makes the most sense financially to Ben for now). The sale takes place and Ben heads off. At this point he has a shovel but has no gold.

At no point here is Joe a business partner. There is no shared risk. Joe (aside from providing a great product) has no vested interest in the success of Ben's gold digging. In order for Joe to become or recognised as a business partner with Ben, both parties must acknowledge that Joe has a vested interest in Ben's success. If I look at a transactional buy/sale in the IT security world; I question how many of these deals make it from customer/prospect to business partnership in the eyes of the seller and what can we do to change the mindset.

Before we get to some simple ideas let's acknowledge that your shiny new security tool sold as a subscription does not constitute on its own a business partnership. As it is, the tool is just that; a tool (not unlike the shovel above).

What then is the vested portion of interest in your tool that forms a recognition of a business partnership?

A renewal: In the SAAS world and industry average I have been told is ball park 12% churn on Annual recurring revenue. If a customer doesn't renew then the risk is on the vendor. So there is an interest in the vendor doing everything it can to have the customer happy and renewing, however there is not a mutual benefit to the customer (yes for the nitpickers there are small nuances here that could be argued like work flow costs or political capital).

A referral: Once again this is a largely one sided interest in favour of the vendor. The vendor has an interest in making sure they are getting future value but there is little exchange in value to the buyer.

A value add: In the example above; Joe could provide Ben a map to the very best gold however there is an argument to be had if this is part of the product/sale. From a sellers vested perspective this could perhaps help ensure the success of Ben (perhaps buying more shovels). I believe this one is a 50/50. Perhaps if the map and value was passed on exclusively to Ben it would make more sense.

A commercial model: Share in the upfront cost share in the upside profit - outcome based sales. There is plenty of these models around and some have had success. The book 'How to Become a Rainmaker' by Jeffrey Fox has some good points to aspire to this goal. This one has the most promise and demonstrates the closest to business partnership. When one wins we both win. It also has huge implications for product development as well. A model that is commercially driven on outcomes in security is difficult to construct though I am interested on comments below that can show how this is being done.

The VC model: Buyer takes stake into the sellers company and seller provides closer product development and upfront discounts to the Buyer. In this model both parties have a vested interest in each others success in theory. This model is becoming increasingly popular with bank and consultancy firm's VC arms.

Regardless of the model or path from shovel sales to outcome driven partnerships (where both parties have a vested interest), in these recent blogs my post is directed to the sales person and what they should /can bring to the table.

An alternative view is that as a salesperson you will inevitably end up in several sales roles over the course of your career. During this time you may shift technologies or areas of focus but making it clear to other party that the chips you are putting onto the vested interest table are your own personal reputation and that you wish to do business with them well into the future, is a powerful way to demonstrate that you value the outcome and success of this process above the sale. This mindset will govern how you approach deals, gives you an empathetic mindset and will ultimately have you remembered as a someone that the end user wishes to do business with in the future. There is a connection on a deeper level then just the transaction at hand.

In small markets that exist in the various countries in APAC; relationships count. Trust is built over time and value is often proven on the battlefield when the proverbial hits the fan. My advice to my younger self is don't rush the buyer. Focus hard on what their desired outcome is (hint it won't be your tool). You may not be able to control the commercial model of your company however you can control the choices you make along the journey and ensure that you are viewed as a valued seller.

NB: If you are feeling rushed to 'meet your number this quarter', rather then push your buyer, focus on building a better pipeline.