Making a major purchase is nerve-racking. The risks are high, the costs are high, and the changes to the business are high. And if you make the wrong decision, the results could wreak havoc on your business. As a result, customers try to find ways to mitigate their risks.
In the early 2000’s I sold CRM solutions to mid-to-large size organizations. At the time, CRM was new and most of my clients were working from home-grown solutions. The most common form of customer management system I came across was spreadsheets and Outlook.
Almost every executive I spoke with clearly understood the value of a centralized CRM system, but that didn’t mean they’d buy. The systems were expensive—north of $250,000 in software and services. And there was no guarantee their sales forces would adopt the software. Many organizations were facing serious push back from sales reps refusing to share their contacts with the firm as a form of job protection.
To manage the risks my clients tried to hedge their purchases.
Customers predictably manage risk
Hedging is a predictable step in a major purchase. My clients hedged by demanding a pilot project or a phased deployment. Rather than rolling out the software to 250 sales people, they’d deploy it to five or ten reps.
I hated these hedges, because I found most pilot projects failed. Implementing a major system not only requires a capital investment, it requires a change in procedures and habits. And as soon as the sales people were forced to change, they kicked up a mega-fuss. Usually their bitching was enough to stop the CRM project in its tracks.
The challenge is you can’t avoid the hedge. It is a natural stage buyers go through to mitigate their risks. If you fight their need to hedge, you’ll lose the sale. I found the only way to overcome failed pilot projects was to predict my customers’ need to hedge and manage it before it came up.
Start with a Door Opener
What is the first step in implementing your solution? This is your starting point to create a Door Opener.
In a large software implementation the first step is to conduct a requirements analysis and develop a project plan. This is a detailed gap analysis of the organization’s current systems, where the firm wants to go, and a project plan on how to get there. This step costs about 10% of the total project.
The requirements analysis is usually an afterthought in the sales process. It’s a line item on a proposal, and just something a customer has to do. But I changed that. I focused on the requirements phase, and turned it into a compelling offer called the CRM Blueprint.
Rather than fighting the hedge, I managed it by selling the CRM Blueprint. It was my Door Opener. I painted the big picture of what our CRM system could do for my client’s business, but I also explained that for the project to be successful they needed a strategy. By engaging my customers on a business level we could discuss the challenges they would face in a CRM implementation, and how they could manage their risks by developing a comprehensive plan first.
The CRM Blueprint had three key benefits:
First, it cost $10,000 to $25,000 depending on the size and complexity of the organization. That’s a much easier sale to make than a $250,000 one.
Second, it allowed my customers to try before they committed. The project let them see my team in action while conducting a comprehensive review of their needs.
Third, it gave them a way out. The CRM Blueprint was designed to be software agnostic. Rather than tying the services to our applications, we made it universal. At the end of the CRM Blueprint if the customer decided we weren’t the right vendor for them, they could walk away. They could end the project without any further obligations, and still leverage the analysis with another provider.
Don’t give it away
The Door Opener worked brilliantly. Overnight my sales cycles accelerated. I went from trying to convince my customers why they shouldn’t do a pilot project to giving them something they wanted. And even better, my conversion rate from a CRM Blueprint to a full software deployment was 100%. Every customer that completed a CRM Blueprint bought into the big idea and moved forward with a total solution.
The Door Opener was effective, because it delivered tangible value while mitigating purchase risk. It wasn’t a give-away. It was a service. Customers invested $10,000 to $25,000 in the services, and they committed time and resources to complete it. Getting my customers to make a small financial commitment for the first step of the project paved the way for future purchases. It set a precedent, and helped to establish trust and rapport.
Once you have the first sale, the second and third come much easier.