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:
- Is this delivering or expected to deliver a large Return on Investment for the customer?
- Is the ROI in an area that is a top 3 priority for the Economic Buyer paying for it?
- 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.
Small Fish Big Deals 