Sales Management Digest

How to Transform Abstract Problems into Concrete Dollars
Heather Baldwin
Every sales opportunity can be stated in dollars. Problems cost money; improvements result in money gained. The question is: how much money is at stake? Without a dollar figure attached to a client issue, your solution remains a cost to the client rather than an opportunity to achieve significant savings or revenue gains. Yet too often, reps miss the red flags clients throw up when they mention a financial measurable and, in missing the flag, they fail to dig down into the relevant numbers.

"The sooner you can talk about abstract notions in the concrete terms of money, the sooner you can address the issues in a tangible way," point out Mahan Khalsa and Randy Illig in Let's Get Real or Let's Not Play: Transforming the Buyer/Seller Relationship. Khalsa, founder of the Sales Performance Group of FranklinCovey, and Illig, a key leader of the group, say that when you hear a client mention something that can be measured and that is directly related to the issues your solution is supposed to resolve, you need to start asking questions that put a dollar figure on that issue. Examples of financial measurables can include a lament over deteriorating margins, problems with quality, decreasing efficiency, declining sales, lengthening time to market, and so on. When you hear a client mention anything like these, Khalsa and Illig say you need to ask the Five Golden Questions to convert the statement into money. The questions are:
  1. How do you measure it?
  2. What is it now?
  3. What would you like it to be?
  4. What is the value of the difference?
  5. What is the value over time (typically two to three years)?
The first question is generally used for measurables that are quantified differently from company to company, such as quality or customer satisfaction. When these are raised, you'd start with, "How do you measure quality?" When you're dealing with hard issues like sales, costs, margins, profits, and so on, it makes sense to skip the first question and start with the second, "What is it now?" For instance, when eroding margins are mentioned, your first question would be, "What are your current margins?" There's no need to ask how they measure it.

The last question is a confirming question from the sales rep. You are not asking the client to do simple arithmetic; instead, you are stating the monetary benefit over a "reasonable management horizon" rather than by an arbitrary period such as a month or quarter, say the authors. For instance, if your client wants to shave $500,000 a year off inventory costs, you'd say, "So over a two to three-year period you'd be looking at a $1 million to $1.5 million reduction in inventory costs?"

Keep in mind that you're not going for down-to-the-penny accuracy with the Five Golden Questions. You're looking for order of magnitude: Is the problem hundreds of thousands of dollars? Millions? Tens of millions? Spending too much time hunched over a calculator working exact numbers makes the problem your problem rather than the client's. Instead, rough out the numbers with the client. The authors call it "back-of-the-envelope math" and suggest you hone your skills at it. Ask for rough guesses, ballpark figures, and estimates. For instance: "What do you spend on rejections each year – roughly?" When the client replies with, "Around $25 to $30 million," that's all you need to ask, "So, if you cut that in half, you would save around $12.5 to $15 million a year?" And then go on to question five: "So over two to three years, you are looking at somewhere between $25 million to $45 million wrapped up in this quality issue?"

Learn to tune into mentions of financial measurables that relate to what you are trying to solve for the client, and then flesh out those numbers. "Most issues are issues because they have financial repercussions," say Khalsa and Illig. "Nobody benefits when you leave the hard and real consequences of your clients' issues a mystery."
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