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 is about that time I usually need to tell them, their customers do not 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.
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 3 goals, the more attention they will give it (e.g., a 10 percent boost will resonate a lot better than a 1 percent boost).
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-to-10 percent 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-to-10 percent, 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 do not want to price your product or service any higher than 10-to-20 percent of the overall revenue lift, or the overall cost savings estimated (e.g., a gross gain of 10 percent, may only net them 8-to-9 percent 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 percent 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 20 times the $500MM in revenues they were generating at the time. Needless to say, I had their attention, and we closed the deal.
I did not 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. 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.
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 do not care on how it is going to help your business)? 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 do not really care how it works, as long as it works) and start focusing on the “why;” 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. The “what” alone may simply put them to sleep and your revenues on life support.
Image credit: CC by Ksayer1