Small Fish Big Deals

Tag: digital-marketing

  • The Rational Purchase Question in Enterprise Sales and Customer Success

    The Rational Purchase Question in Enterprise Sales and Customer Success

    There’s a tendency for people to believe they are rational actors, but subconsciously believe others aren’t. This shows up a lot in sales and customer success teams and is worth actively fighting against. It’s easy – and fatal – to believe that a deal will happen for irrational reasons.

    Some deals happen for irrational reasons; your champion loves the idea of working with you and can make decisions on their own. Your customer enjoyed being flown across the country to speak at an event (and the dinner and drinks) and is going to bat to make the renewal happen despite the project underperforming – but you cannot count on this.

    It’s more common for a failing platform backed by a great relationship to churn than a thriving platform with a mediocre relationship. You need the decision to spend money with you to be the right rational decision.

    Rational decisions to spend money at large companies

    The rational reason for a new business deal being signed is that the company is confident that a large return will be had on the investment, and that return is important to them. The rational reason for a renewal happening is that the company is seeing a large return on their investment in an important area, and is confident that it will continue.

    If you are selling to a company of over a few thousand people and expecting a decent contract size, it’s likely that 10+ people will be involved in the decision to start or continue working with your company.

    You should expect your champion to need to convince people in their area of the business all the way up to the Economic Buyer, as well as make sure that IT, procurement, legal, and any adjacent business areas that will be impacted by the project or competing for the resource, employee’s attention or IT real estate are on board.

    Meetings will happen to evaluate the deal between this group of people. Arguments for and against will be heard. Evaluation spreadsheets may be filled out. ROI projections and business cases will be dissected. Your champion will be grilled.

    If the company does its job, only rational purchases will happen.

    Are you a rational purchase?

    Ask your sales and customer success teams whether the customer should rationally decide to purchase you. Then ask them to explain. Any ‘fluffy’ answers around positive sentiment, relationships, marketing, feedback etc should be put to one side. You’re looking for explanations of why it makes rational sense for 10 people in a meeting to decide to spend money with you.

    To go further, ask if 10 people in a meeting on the customer side would answer ‘yes’ to these 3 questions after hearing all sides of the argument:

    1. Is this delivering or expected to deliver a large Return on Investment for the customer?
    2. Is the ROI in an area that is a top 3 priority for the Economic Buyer paying for it?
    3. Are we uniquely able to deliver this value?

    Answering ‘yes’ to all 3 of these questions makes you a rational purchase. Answering ‘no’ makes it irrational to spend money on you. Simple, but not easy.

    A ‘no’ to any of these questions isn’t fatal. It’s a problem to fix. It’s some hard work for your CSM or AE to focus on immediately so that they can confidently return to you at a later date with 3 ‘yeses’. Their job is to make the purchase rational.

    The role of the warm and fuzzy

    Taking a customer out for dinner, positive sync calls, and sending birthday gifts have their place – but they’re not enough for a rational purchase. The issue is that they’re usually easier to make happen than the hard work required to make sure value is being delivered.

    Building great relationships should be valued, but only in the context of a rational purchase.

    Conclusion

    The most successful sales and customer success teams understand that good relationships are necessary but not sufficient. By consistently focusing on delivering measurable ROI in priority areas where you have a unique advantage, you go from nice-to-have to must-have.

    Behind every purchase decision is a group of people who need to justify their choice with data, not dinners. Help your champions build an airtight rational case, backed up by evidence.

    Rational Purchase Framework

    You can use the below framework to evaluate your sales and renewals for rationality:

    1. Significant ROI (Q1)

    “Is this delivering or expected to deliver a large Return on Investment for the customer?”

    • Score 1: No clear ROI calculation exists
    • Score 3: Some ROI evidence but not fully quantified or the customer doesn’t fully believe in the calculations
    • Score 5: Documented ROI with metrics the customer agrees with

    Action items if score is below 3:

    • Schedule value assessment workshop
    • Work with customer to establish baseline metrics and document ROI
    • Create ROI calculator specific to their use case

    2. Priority Focus (Q2)

    “Is the ROI in an area that is a top 3 priority for the Economic Buyer paying for it?”

    • Score 1: Unknown priorities or clearly not in top 3 priorities
    • Score 3: Related to a priority but not directly aligned, or in a priority area for the company but not your EB
    • Score 5: Directly addresses a stated top priority for the company and EB with evidence

    Action items if score is below 3:

    • Research company’s annual report/strategic initiatives to pull out priorities
    • Run discovery with champion about Economic Buyer’s priorities
    • Request meeting with Economic Buyer to understand priorities

    3. Uniquely Capable (Q3)

    “Are we uniquely able to deliver this value?”

    • Score 1: Multiple competitors offer similar solutions. Customer purchasing team believes DIY build would suffice.
    • Score 3: Some differentiation but not clearly articulated or valued by the customer
    • Score 5: Clear, defensible unique advantages that customer acknowledges. We’ve set the Required Capabilities in line with our unique capabilities.

    Action items if score is below 3:

    • Conduct competitive analysis specific to customer’s needs
    • Document unique capabilities relevant to this customer. Help customer set Required Capabilities in line with our unique capabilities
    • Create side-by-side comparison focused on customer priorities and show how our solution uniquely delivers the promised ROI.

    Interpreting Your Results

    12-15 points: Strong rational case. Focus on reinforcing evidence and preparing your champion for internal discussions.

    8-11 points: Work needed. Prioritise improving lowest scores before proceeding.

    Below 8 points: Deal at risk. Consider a reset strategy focused on fundamentally changing your approach or value proposition.

  • Why Most Agency Relationships Fail (And How to Ensure Yours Doesn’t)

    Note: I’ve also shared this on my personal blog (WillRead.co), as I think it’s relevant outside of the SaaS world too

    With use of agencies, consultants and freelancers rising due to the economic climate, the AI wave empowering smaller teams, and Naval prophesying the end of the 9-5 and an explosion of freelance and contract arrangements, here are some useful rules of thumb for agency selection.

    I’ve wasted hundreds of thousands of dollars on agencies that produced negligible results. I’ve spent similar amounts on others and seen 10x return. Founder friends tell the same story. So – how do you give yourself the best chance of success?

    For simplicity, ‘agency’ refers to any person or company you outsource a service or project to. Think SEO, PR, recruitment, design, ads, etc.

    Where it all goes wrong

    Let’s start with the inverse of what we want. The nightmare scenario; you pour significant time and money with an agency and they fall way short. This typically happens for one of only a few reasons:

    1. Lack of Prioritization: You aren’t a top concern, meaning you don’t get their best people, effort, or resources.
    2. Incapability (General): They simply lack the skills or experience to deliver the promised results for anyone.
    3. Incapability (Specific): They might be good, but not at delivering results for a company like yours, in your specific niche or situation.
    4. Misaligned Expectations: A gap exists between what you expect and what they plan to deliver (scope, timelines, outcomes).
    5. Client-Side Issues: Your own processes, communication, or ability to collaborate effectively with external partners are lacking.

    Assuming you have a tight brief, can work well with external parties, and they are capable, we’re going to focus on point 1. These rules should help make sure you’re getting a level of attention, service and prioritisation that will lead to great results.

    Rules for working with agencies

    Only work with agencies that will prioritise you and treat you as a top 3 (ideally top 1) client. This usually happens when:

    1. The amount you’re paying them is a significant portion of their revenue: the simplest way to get their attention
    2. A testimonial from you could meaningfully impact the trajectory of their business: if your shared success could create a step-change in the future of their business, it’s more likely to happen
    3. You can build a close relationship with a senior contact (ideally the owner/CEO/MD) you can speak to at any time, about anything. Ideally you want to be on WhatsApp/Text/’Quick Call’ terms
    4. You can incentivise high performance and disincentivise poor performance: this can be through % of upside arrangements, or can be achieved just by avoiding unnecessarily long contracts
    5. You’ve been able to run a reference call on them, ideally with someone you know and definitely with a company that looks like yours (size/need/situation)

    Agencies that get it

    A shoutout to agencies we’ve had great working relationships with:

    • Thrive Accountants who took us from disorganised mess to confidence in our numbers
    • Seene Digital who have helped us with all things SEO
    • James Ker-Reid of Sales For Startups who helped us transition from me doing all sales to a high performing team
    • Canvas Offices who grew with us and always had creative ideas
    • The Animation Guys who delivered some great explainer videos for us and our CMO loved working with