SALES

How to Avoid Dead-End Deals

Don't spend much time (or money) on potential "customers" until you know they're serious about buying.
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The most frustrating experience in selling is when you spend lots of time helping a customer clarify a problem and define a solution--only to have the customer decide, in the end, that what you're selling isn't important enough for them to actually write a check.

These dead-end deals can kill your business.  The time you spend working on them is time that could have been spent developing a real opportunity.  Provide enough of this "free consulting" and you can consult yourself right out of business!

Fortunately, there's a simple way to avoid these false leads: Don't define a solution, write a proposal or even provide detailed pricing information until after the customer has committed budget dollars to fixing the problem.

That's contrary to what most people think selling is all about. Conventional wisdom says that selling consists of:

  • Uncovering problems and needs
  • Defining a solution that satisfies those needs
  • Persuading the customer to purchase the solution

Supposedly, if you've done a good job at all three steps, the customer will allocate the budget money to purchase your solution.

Unfortunately, that sales model is a recipe for a string of dead-end prospects, according to Mark Sellers, author of the bestselling book The Funnel Principle.  The reason is simple: no customer is serious about fixing a problem until they've committed money to fix it.

He recommends thinking of the beginning of sales process as primarily a series of financial decisions rather than solution decisions.  The solution stuff comes after the customer has already decided to buy ... something.

Here's how the process ought to work:

  • First, you get the customer to recognize there is a problem.  This is only logical since a customer is not going to buy a solution unless they perceive that they have a problem that needs solving.
  • Second, you help the customer define economic consequences of the problem. After all, the customer can't possibly make an intelligent decision on whether the problem is worthy of attention until they have an idea of how much the problem is costing them.
  • Finally, you ask the the customer commit some funding to fix the problem, based upon the financial impact of the problem.  In other words, if the customer is losing $10 million a year or could increase yearly sales by $10 million, they should be willing to commit, let's say, at least $100,000.

At this point, the customer may not know the exact amount to commit, but they should be willing to put down, in writing, a number that represents the intent to spend in order to fix the problem.  If the customer can't or won't do this, the deal is probably a dead end.

In other words, it's only when you're certain the customer is serious that you should spend your own time (and money) defining a solution, writing a proposal, meeting with multiple stakeholders, and so forth.

You will, of course, be asked to provide some sort of ballpark figure about what it would take to solve the problem you and the customer have identified.  That's fine. But your main focus during the initial sales effort must be on the economic impact of the problem rather than the price of a solution.

By the way, if your prospective customers say they want a proposal in order to get the funding, chances are they're not really serious. In this case, they're usually just building a wish list--and their window shopping will end up costing you time and money.

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IMAGE: IthacaBarbie/Flickr
Last updated: Aug 10, 2012

GEOFFREY JAMES | Columnist

Geoffrey James, a contributing editor for Inc.com, is an author, speaker, and award-winning blogger. Originally a system architect, brand manager, and industry analyst inside two Fortune 100 companies, he's interviewed over a thousand successful executives, managers, entrepreneurs, and gurus to discover how business really works. His most recent book is Business Without the Bullsh*t: 49 Secrets and Shortcuts You Need to Know. If you enjoyed this post, sign up for the free weekly Sales Source newsletter.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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