Salespeople often overlook the most significant consideration for a customer or prospect to say “Yes” to their proposal – The Risk and Cost of Change.
If your sales teams can manage the courage to talk about the risk of change earlier in the sales cycle, they’ll sniff out how real a deal is sooner. And, in many situations, position themselves for higher revenue and an improved competitive position.
Risk and cost of change can often be several multiples of any cost-saving or efficiencies a salesperson can present to a prospect or customer.
Here are two examples where not having the risk conversation changed a sales outcome:
- An IT outsourcing firm was pitching to replace a financial firm’s existing technical support staff. The outsourcing firm presented a 20% cost savings over the current staff expense, which amounted to about a million dollars. However, the outsourcing firm neglected to take into account the severance that would be involved with replacing the current staff, and the risk the company would undertake if the current team chose to leave before the transition happened. The financial firm had assessed the risk at nearly 3 million dollars, so they squashed the deal.
- A logistics provider was bidding on consolidating a grocery chain’s warehouse network, and they focused on reducing overall cost through technology, an improved labor strategy and introducing lean manufacturing methodologies. Overall the logistics provider achieved a few million dollars in savings. The logistics provider had neglected to explore the grocer’s most significant concerns – the potential risk of change to its stores and vendors, which the grocer estimated at 10 million dollars. A competitor won the deal as they focused less on operational efficiencies, and more on managing the transition risk.
The two examples above illustrate that often, risk factors are ignored by salespeople because they don’t take the time to engage in the risk conversation earlier in the sales process.
Here are a few questions that can get the risk and cost of change conversation going:
- Can you describe how you are evaluating the risk of change as you consider changing your current situation?
- How far along are you in building the internal case for change, and what level of detail do you anticipate needing before a decision can be made?
- Can you describe your most pressing concerns with changing the current state, both short-term and long-term?
- If you make a change and it does not go well, would returning to the current state be possible? If not, what options have you considered in that eventuality?
- Are there other past initiatives with a similar risk that did not go well? What countermeasures were applied?
- Change always involves risk. Is there a level of revenue growth, cost savings, or productivity improvements our proposal would need to provide for you to consider a change a worthwhile risk?
Discussing change earlier in the sales cycle can open up several avenues of communication with your prospect or customer that can lead to a more productive sales and buying cycle.
Most importantly, if your contacts can’t discuss or are not aware of the risk and cost of change, you don’t have a deal that you can win.