You gotta love entrepreneurs. All their passion and excitement around the
innovative new products they are building.
And, they love talking about their products with others, detailing every
feature and functionality of their offering.
They are laser-focused on getting others to love their products as much
as they do. But, then they realize,
sales are not coming in. They question
how can that possibly be, given how great our product is? It’s about that time I usually need to tell
them, their customers don’t really care about the product itself (e.g., the
“What”), they care much more about how it can improve their business (e.g., the
“Why”). The sooner you learn to ditch focusing
on the “What” and start focusing on the “Why” to get their attention, the
sooner your sales will start to accelerate.
Defining “Why”
For most customers, the things they truly care about are:
(i) how will this help me drive more revenues; (ii) how will this help me lower
my costs; or (iii) how will this improve my user experience (e.g., where users
can either be their customers or their employees). Sure, there are other things, but these are
the big ones. And, the bigger you can
economically illustrate the impact of your product or service to helping them
achieve one of the above three goals, the more attention they will give it
(e.g., a 10% boost will resonate a lot better than a 1% boost).
Calculating “Why”
If you are pitching a revenue lift to their business, first
you need to research what their current revenues are, and ideate ways on how
your business can help them grow their revenues (where a minimum lift of 5-10% should
get their attention). If you are
pitching a cost savings rationale, you need to estimate how big their current
costs are, and how your product can help them lower those costs by at least
5-10%, where costs savings on their biggest expense line items will get more
attention (e.g., help them maximize their overall margins and cash flow). In both scenarios, you don’t want to price
your product or service any higher than 10-20% of the overall revenue lift, or
the overall cost savings estimated (e.g., a gross gain of 10%, may only net
them 8-9% after they pay your fees).
Again, the bigger the lift, and the more of the lift they keep for
themselves (vs. paying it to you), the better it will be for them.
A Case Study on
“Why?”
When I was at iExplore, building my adventure travel
business, I was trying to close a strategic relationship with National
Geographic, and was pitching their CEO and CFO on the idea. I tried to put on their hats? What would get their attention? With the traditional magazine industry
hurting, I knew they were on the hunt for material new revenue streams with
which to pivot their business (e.g., cable channel). I also knew that the demographics of their
readers, were frequent adventure travelers, buying active and experiential
vacations like the ones iExplore offered.
I told them the collective reach of National Geographic was
around 100MM households across their magazines, websites, cable channels,
etc. If we could get 1% of them to buy a
vacation from National Geographic at iExplore’s average price of $10,000 per
transaction, that would result in a $10BN revenue opportunity, or around 20x
the $500MM in revenues they were generating at the time. Needless to say, I had their attention, and
we closed the deal.
I didn’t lead with the cutting edge features of our website,
or the 5,000 trips we offered in our database or our snazzy marketing
plan. I focused on the economic impact
of what it would mean to their business and the estimated financial return they
could make from their investment in iExplore.
And, I gently let them know other media companies, like their direct
competitors at Discovery Channel, were also interested in working with us. That was simply the icing on the cake,
creating the fear of missing out on a big opportunity to one of their rivals.
Summary
At the end of the day, you are selling
compelling stories, not products. Hopefully, from this post, you have
learned that the key to successful sales is putting on the hat of your
customers. How are you going to
materially improve THEIR business (as they don’t care on how it is going to
help your business)? And, how are you
going to make them look smart to their boss, so they can get the personal win? Stop focusing on the “What” (as they don’t
really care how it works, as long as it works) and start focusing on the “Why”,
and good things will surely follow.
Once you hook them on the “Why”, then you can backfill on
the “What”, after you already have their attention. Because, the “What” alone, may simply put
them to sleep and your revenues on life support.
For future posts, please follow me on Twitter at: @georgedeeb