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Navigating the Conversation

Advanced Skills for the Expansion Seller

Okay, so you’ve mastered the fundamental skills you need to communicate your customer expansion story for maximum impact. You’ve learned how to use you-phrasing to make your customer the hero of the story. You’ve learned how to use visual storytelling to improve engagement and retention in both face-to-face and remote selling situations. And you’ve learned how to document results and present them to customers in a way that reinforces their Status Quo Bias.

But what about the rest of the conversation? What else do you need to know to make sure you’re wringing every possible piece of value from each step in the framework?

Let’s revisit the steps of the Why Stay, Why Pay More, and Why Evolve messages and examine additional ways to make your message more powerful.

NAVIGATING THE WHY STAY CONVERSATION

The Why Stay conversation is all about status quo reinforcement. It’s not the place to introduce disruption, new ideas, or any startling information. At the same time, you want to avoid sounding defensive or frightened when discussing the risks and costs of change. That’s why it’s important to begin the conversation in your customer’s world—with their goals and outcomes thus far—and keep the risk discussion measured and practical.

•   Step 1: Document results. As you learned in previous chapters, your first step is to quantify the tenure and impact of your relationship. Do this by first revisiting the goals you and your customer established during the sales process. If you used the Triple Metric described in Chapter 11 to set these goals, you’ll already have the framework in place and can simply report against that framework.

Don’t beat yourself up in this step if you haven’t checked every box here. What you want to demonstrate in this step is not necessarily that you’ve helped your customer achieve all the objectives they set out to achieve. That’s an unrealistic expectation. What you do want to show, however, is progress—that is, the contrast between where they began and where they are today. Demonstrate, using the delivery techniques you learned in Chapter 11, how they are on track to meet their objectives and highlight the positive outcomes they’ve seen thus far. Be sure to tie these outcomes back to the Corporate, Business Unit, and Project level goals you and your customer have already agreed on.

•   Step 2. Review the prior decision process. Your next step is to revisit the original decision your customer made to work with you. You’ll need to detail the following:

   What did the process entail?

   Who were the people involved, and who made the final decision?

   What criteria did they use to make their selection?

   Which competitors or alternatives did they consider and exclude, and why?

   And finally—the big question—why did they ultimately choose you?

Now it’s entirely possible the contacts you’re dealing with on the renewal aren’t the original decision makers and won’t have any insight into the purchase history. That makes this discussion even more important, because that’s information you might have that they don’t. If you don’t have that information either, you might be able to get it internally, through your customer success organization, your CRM database, or the seller who originally won the account. If the customer has been with you for a long time, remind him or her of that: “You’ve been a customer for eight years, and during those eight years you’ve had numerous opportunities to make a change. But each time, you looked at the options and came up with the same answer: sticking with us.”

Work with what you have. And if all else fails, you can also try asking the customer. One of our clients didn’t document any information about its customers’ decision process, and because the client fielded a junior sales team with high turnover, it was impossible to find it. So someone from the sales team would simply say, “I wasn’t here two years ago when you chose us. Can you tell me why you did? I know it wasn’t because we were the low-cost provider, so what was it?” Not only did the customers answer the question; they often renewed their business on the spot because they reminded themselves of the value they’d been receiving!

•   Step 3. Mention the risk of change. In this step, you are going to reinforce their Anticipated Regret and Blame by mentioning the risk of change. That means surfacing the business consequences of a bad decision—paying particular attention to risks that connect back to the goals you identified up front. This contrasts with the progress you’ve already documented for your customers and clearly puts their already-realized value on the line:

   What’s the impact on the business of going through another transition?

   What makes this a particularly bad time to make a change?

   What could go awry in the customers’ world as a result of a failed change?

There are two important considerations here: First, you want to mention the risk—not hammer it home. It’s easy to go overboard when warning your customers of the dire consequences of switching now, but if you lay on the fear, uncertainty, and doubt too heavily, you can come across as manipulative and unintentionally alienate your customer. Touch on the risk in a factual, empathetic way. Don’t exaggerate! Your customer’s Status Quo Bias will do that part for you.

Second—and this is going to feel uncomfortable—when we tell you to “mention” the risk, we mean “talk about it.” Out loud.

Invariably, when we introduce this component in a workshop or presentation, someone will challenge us: “Are you seriously suggesting I mention changing providers to my customer? Why plant that seed? Why create a problem that doesn’t exist?”

Our response is twofold. Our research showed that explicit mention, as shown above, was in the winning framework. It’s inescapable. So the science supports this approach. Besides, do you really think that customers would never think of talking to a competitor until they get the idea from you? Of course your customers will talk to your competitors, whether you suggest it or not. Even if they aren’t talking to competitors directly, they are seeing competitors’ marketing materials, a sponsorship booth at a trade show, or that unsolicited LinkedIn message. And the risk of mentioning a switch that your customer hadn’t thought about is minuscule compared with the risk of not mentioning and sacrificing the power of risk aversion.

•   Step 4. Highlight the cost of change. The next step speaks directly to the Status Quo Bias antecedent Perceived Cost of Change. Your customer already believes the status quo is free and switching carries a financial cost. But there are other nonmonetary costs to consider, such as lost time or loss of focus on current priorities. Choosing a new vendor isn’t fast, and it isn’t easy—it requires a lot of time and a lot of people.

You might be in a situation where a competitor has offered a big discount to win your customer’s business. Your job is to show the customer that any perceived savings will likely get swallowed up by the cost of change:

   What’s the cost of having to redesign processes?

   How many people will need to be retrained, and how much per person?

Psychologist Daniel Kahneman won the Nobel Prize for his research on prospect theory, which focused on the role of risk and loss in decision making. In his experiments, Kahneman proved that people place at least two times as much value on avoiding a loss as they do on obtaining a gain. When you show your customers the risk and cost of change, you’re deliberately focusing on the potential loss that they’ll suffer if they move away from their status quo (you). So during your conversation, make sure to concentrate your questions on what your prospects stand to lose should they not renew with you (Figure 12.1). Prospect theory says you’ll get a better response if you lead with the loss and then add the gain.

Figure 12.1 While people see some value in moving toward a gain, they see about twice as much value in moving away from a loss.

   How much time will it take to support users?

   What’s the cost of reduced productivity, even if it’s only temporary?

•   Step 5. Detail competitive advances. The last step in your Why Stay conversation is the step where you get to talk about your stuff, the gain to contrast with the potential loss. At last! Only . . . not so fast. As you saw in earlier chapters, this step aligns with the Status Quo Bias of Selection Difficulty, in which a lack of contrast between competing alternatives negates any perception of value on the customer’s part.

Think about what this means. If your customers don’t see any difference between your solution and the competition, their natural inclination is to stick with the status quo—you. So as excited as you might be about your new, unique, differentiated features, the renewal conversation is the exact wrong time to bring them up. Sellers attempting to shoehorn all the latest and greatest features and benefits into this part of the message unwittingly open the door to competitors, as the customers start wondering if they need to also see other options.

In this step, you want to only detail the advances you’ve made that keep you competitive in the market. Keep your list short—don’t inundate your customers with a lengthy list of features and benefits. Stick with the capabilities that are most closely aligned with your customers’ original goals. And remember, in a Why Stay conversation your competitive advances do not need to be differentiated. They don’t need to be the best. They don’t even need to be better. They just need to prove that you’re advancing your solution just like everyone else, so there’s really no reason to change. Your customers’ original choice was correct, and it’s keeping pace with their stated objectives.

NAVIGATING THE WHY PAY MORE CONVERSATION

As you read in Chapter 4, most organizations consider price increases “important” or “critical” to their growth—yet more than half are not confident in the way they message these increases. And since communicating a price increase falls to sales 60 percent of the time, having the skills to manage what most consider the most uncomfortable part of the conversation should be just as important as the increase itself.

Fortunately, you’ve already mastered most of this conversation with the Why Stay framework. The final step is to add the Why Pay More component by anchoring your customer on a higher price and then offering a loyalty discount.

Once you understand price anchoring, you’ll notice it everywhere, for purchases large and small. A home seller might tell you, “The house down the street sold for 20 percent over asking price.” Or when you see a $9, $7, and $6 glass of wine on a menu, the $9 glass serves as the anchor to make the $7 glass look more reasonable. It also leads you to think the $6 glass is inferior.

The odd thing about anchoring is that it works even when you know you are being anchored! Your brain can’t help but take that mental shortcut when confronted with a decision involving uncertainty, so it’s going to latch onto that reference point whether you want it to or not. And the mental shortcut is even simpler than you’d imagine. The brain anchors to the first number it hears—even if that number is utterly irrelevant to the topic at hand.

Sellers are often afraid of starting with an unreasonably high anchor—a place we’ve dubbed the “Bozo Zone” because it’s so high it makes customers laugh—so sellers often set the initial price too low. That plays right into the hands of the customers. The distance between that unreasonably high price—where you would get laughed out of the room—and an unreasonably low price—where even your customers know no vendor would do business with them—is called the “Range of Reason.”

In any price increase conversation, you want to start with the highest reasonable, credible offer within the Range of Reason. At first, it will feel too high. That’s why reasonable and credible are so important. You’re setting a high anchor that you can reasonably defend to your customer—even before that loyalty discount.

When you communicate a reasonably high target, you positively influence your customer’s perception of renewing with you, and attaining the price increase you need. Research has shown there’s a strong correlation between the first offer and the final price, and this effect holds true across cultures.

Here’s an example of how this works in a Why Pay More conversation.

Assume you have an existing customer due for renewal and you need to introduce a minimum 2 percent price increase. When you introduce your price increase, there’s a range of starting points you could use.

You could just ask for the 2 percent. But what do you think your customer’s reaction would be? Your customer would want to negotiate, as a customer should, and you’d be lucky to end with the same price as you started.

So you use anchoring and your customer’s Range of Reason to set a high target.

You have an additional challenge. You don’t know the top end of your customer’s Range of Reason. But you can be fairly sure your customer’s top end is probably higher than you might be willing to try for. The top end might be 5 percent, but you might feel confident the customer would be willing to pay 3 percent.

You could ask for a 3 percent increase and be prepared to give a 1 percent discount, and neither you nor the customer will feel good about it. Again, though, you’d leave yourself little negotiating room to land at your desired target.

But if you set a high anchor with justification—competitive advances that will help your customer continue to meet his or her stated objectives—you can stretch your customer’s Range of Reason to as high as 6 percent (Figure 12.2). Then provide a loyalty discount, which takes the price increase down to 4 percent.

Now you’ve obtained the price increase that’s higher than your minimum and at the same time helped your customer feel better about getting a good discount.

Figure 12.2 Setting a high anchor and combining it with a justified discount will get you more than your minimum price increase while still satisfying your customer.

And anchoring high doesn’t always mean price alone. You could also anchor your customer on the length of the contract, the number of users, or anything else where you want to start higher than where you ultimately land.

NAVIGATING THE WHY EVOLVE CONVERSATION

While getting your customers to keep buying the same thing from you is important, retaining customers alone won’t get you to your growth goals, even if customers happily accept your price increases. You need your customer to buy more from you—to purchase additional products or transition to higher-value solutions. In short, you need to evolve your relationship with your customers while still keeping the competition at bay.

The Why Evolve conversation is your opportunity to reset your customer’s status quo on a higher plane. You’re increasing customer share of wallet, deepening product penetration, enhancing contract value—you name it. And with each successful Why Evolve conversation, you’re cementing the status quo, demonstrating results, and setting yourself up for further expansion conversations. Done right, there’s continued value creation on both sides of the partnership.

But the Why Evolve conversation can also be tricky. You’re asking customers to invest in a new solution—in other words, to make a change—when you’re the incumbent. That means you have to balance your customers’ need for change against your need to reinforce the status quo. They’re already buying from you, and you want to keep it that way. So you want them to do something different . . . but only within the universe of your solutions. You need to show them that the cost of staying the same is too great to bear while at the same time keeping them from straying too far.

Your Why Evolve message is strongest when it reinforces the emotional elements of your customer relationship—the existing partnership and the collective progress you’ve made toward the customer’s goals. The winning message from Chapter 7 spoke to the customer’s head and heart. It communicated greater contrast, heightened the customer’s sense of urgency, was found to be more convincing, and increased the likelihood the customer would purchase the new solution. Without this emotional foundation, you reduce the success of the rest of the conversation.

•   Step 1. Document Results. You’ll begin the Why Evolve conversation the same way you begin a Why Stay or Why Pay More conversation: by documenting the customer’s results. Again, what you’re looking to do here is to find a way to quantify the tenure and impact of your relationship. But then, instead of reinforcing the cost and risk of change, you’re going to introduce the need to make a measured, considered evolution—with you as the trusted partner.

•   Step 2. Highlight evolving pressures. The key to highlighting evolving pressures is combining those elements of the status quo that you want to reinforce with the seeds of change. Equally important, the evolving pressures you highlight need to feel logical, natural, and expected—things that inevitably occur in the course of doing business.

You don’t want to disrupt your customers at this stage, nor do you want to change their current thinking. You’re acting as a good, honest partner, acknowledging the pressures they’re starting to feel, that they likely want to address but haven’t yet had the opportunity to. Such pressures might include things like new regulatory requirements, shifting consumer preferences, or industry trends.

In this section, it’s important to show pressures that have evolved from the ones they partnered with you to address instead of introducing radically new pressures they’ve never heard of or dealt with before. If it is too revolutionary, you’ll open the floodgates to the competition.

An effective way to introduce an evolving pressure is to set it up by introducing a piece of data or a perspective that highlights some tension between their status quo and their stated goals. For example, “There are some major demographic shifts happening in the consumer landscape. In fact, new research shows that just three groups of consumers will generate half of global urban consumer consumption growth from now through 2030.” These shouldn’t be the same insights you used in your acquisition conversations. What you want to do here is show how these external factors are changing and putting increased pressure on their business. And whatever you do, make sure these are pressures your new solution can help your customers solve! You don’t want to raise a problem you don’t have an answer for. That’s a recipe for your customers to seek competing alternatives.

•   Step 3. Share “hard truths.” The “hard truths” form the “so what?” element of the evolving pressures you just shared. This is where you share what will happen as a consequence of the evolving pressures—why the customer should care. In this step, you’re playing the role of a coach, a tough teacher, or a mentor who has the customer’s best interest at heart but must tell the truth to make things better.

Emotional words are important. So you need to tell the hard truths, but do so using words and a tone that show you care and have a vested interest.

•   Step 4. Emphasize risk of no change. The next step in the conversation is to link the cost and risk of not changing as the negative consequences of not heeding the hard truths. Be specific so the consequences of no action are clear. You’re looking to touch multiple areas here—operational performance, business processes, financial performance—so you can tie into the aversion of the customers to Anticipated Regret and Blame. At the same time, don’t be afraid to lean into the risks if the customers make a complete change to the competition. Ideally, you’re going to be able to show that all the value you’ve built together over the course of the relationship could be torn away and they’d have to try to rebuild it from scratch with someone else.

Incidentally, if you’re not having these types of candid conversations with your customers today, you need to start. You should be embedded and comfortable enough to be talking frankly with their teams—and for them to be sharing concerns honestly with you. This trust is the linchpin for the Why Evolve story, and it’s the best way to frame risk in a way that benefits you, the incumbent. In fact, waiting too long to have these difficult conversations will give the competition an unnecessary opening. You’d hate for your customers to bring you a new perspective from the competition, asking why you hadn’t addressed it given your privileged position as trusted partner.

•   Step 5. Describe upside opportunity. The last step of the Why Evolve message framework is where you frame the new, future state you’re envisioning. It’s where you contrast the risk of no change with the upside opportunity of changing. Once again, you’ll find value in the contrast.

In this step, you’re pivoting from risk to empowerment. One of the most powerful ways to do this is by using the you-phrasing language you read about in the last chapter to transfer ownership of the solution to your customer. In this case, ownership includes all the internal and external benefits resulting from making the change you’re recommending. Instead of using a success story about another customer who made the change, you’re making this customer the hero by painting a vision of them making the decision and successfully using the solution.

Then close with what they need to do to get that value.