Salespeople often overlook the most significant consideration for a customer or prospect to say “Yes” to their proposal – The Risk and Cost of Change.
Empower your sales teams to strategically discuss the risk of change early in the sales cycle. This proactive approach will enable them to gauge the viability of a deal sooner, positioning them for higher revenue and a stronger competitive edge.
The risk and cost of change can often be several multiples of any cost-savings or efficiencies a salesperson can present to a prospect or customer.
Here are two examples where not having the risk conversation changed the outcome of a sale:
- 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 consider the severance 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 of at least 3 million dollars if the transition did not go well, 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.
These examples serve as a cautionary tale, highlighting the potential losses that can result from neglecting risk factors. They underscore the importance of engaging in the risk conversation early in the sales process to avoid such pitfalls.
Here are a few questions that can get the risk and cost of change conversation going:
- Can you describe how you evaluate 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 making a decision?
- Can you describe your most pressing concerns with changing the current state, both short-term and long-term?
- Would returning to the current state be possible if you make a change and it does not go well? 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 the impact of change earlier in the sales cycle can open up several avenues of communication with your prospect or customer, leading to a more productive sales and buying cycle.
It’s crucial to remember that if your contacts can’t or won’t discuss the risk and cost of change, you’re not dealing with a winnable opportunity. This responsibility underscores the need for proactive risk discussions in every sales conversation.
As I approve of a youth that has something of the old man in him, so I am no less pleased with an old man that has something of the youth. He that follows this rule may be old in body, but can never be so in mind. – Marcus Tullius Cicero