Sales coaching session with Steli: Selling chemical development services to large organizations
I recently spoke with the head of business development for a chemical engineering startup focused on helping the pharmaceutical, flavor, and fragrance industries reduce their carbon footprint.
They provide chemical development services, which lead to optimized production processes for chemical compounds of their customers. These are high volume projects, usually starting with a small financial feasibility study. The decision-maker is typically the Head of R&D.
He came to me with great questions about streamlining their sales process, finding mentors, and challenging standard pricing structures. Here’s the results.
How to shorten long sales cycles
The pharmaceutical industry is characterized by slow and deliberate decision making processes. For the chemical engineering startup, a typical scenario looks like this: Once a prospective customer has expressed a general interst in their services, the first task is to identify a suitable chemistry project within the prospect's vast portfolio. This typically requires the involvement of further technical experts, who are additional important stakeholders in the buying process.
The problem: even if the decision maker is on board, this process takes time, often gets too complicated or gets buried in day-to-day business.
Here are three ways to close deals faster.
1. Qualify your prospects early on
You can’t sell a solution if you don’t understand the problem. Your first priority with any prospect is to ask questions that identify their core needs. For example:
- What are your must-haves, should-haves, and nice-to-haves?
- How do you see your business growing over the next few years?
- What do you need from us to become insanely successful?
Qualify your prospect in advance and you’ll reduce the risk of selling your product to the wrong customer.
2. Use the virtual close
The virtual close is a powerful sales strategy in which your customer describes their buying process in detail. This conversation uncovers if there’s real buying intent, creates a roadmap for the sales cycle, and invites your prospect to imagine a future where they’ve become your customer.
Start by saying, “I think we’re a great fit. I’m positive we could offer each other a ton of value and I’m excited to get started. What steps do we need to take to close this deal?”
Then, shut up and listen.
If your prospect says, “I don’t know,” move on. They don’t have genuine buying intent.
But if they engage, ask follow-up questions to uncover more information about their buying process. For example:
- “Great! Then what?”
- “And what happens then?”
- “How does that usually work for you?”
The more time and energy the prospect puts into the virtual close, the more invested they’ll be in your solution. As they become more invested, you’ll gain valuable insights into their buying cycle and can decide whether or not the deal is worth pursuing.
3. Parallelize processes
After the virtual close, you should have a good idea of your prospect’s buying cycle. Most will have multiple steps, like:
- Getting approval from stakeholders
- Communicating with the procurement department
- Addressing security concerns with the IT department
- Arranging contracts with the legal department
- Finalizing the deal with the accounting department
The process takes so much time because most businesses approach these steps sequentially. You can cut weeks or months off a buying cycle by dividing it into fewer steps that run in parallel. Here’s how you can approach this with your prospects:
“It looks like we’re a great fit. I want to get our product in your hands as soon as possible, so let’s streamline the buying cycle. Can you put me in contact with your procurement, IT, and legal department right now? That way, by the time we have stakeholder approval, we’ll just need to run things through accounting. Sound good?”
In most cases, your prospects will be happy to shorten the process.
How to find mentors
Mentors are one of the most powerful and least utilized sales hacks. Save yourself a ton of wasted time and effort by following these tips to find a mentor for your startup.
You need practical mentors, not inspirational role models
When most people look for a mentor, they try and find the best in the business. They pursue the industry leader who is 5+ years ahead of them, figuring they’ll have all the answers. They won’t.
They’re great as inspiration, but this business hasn’t faced the problems you’re facing in at least five years. The strategies they use are not applicable to your early-stage startup.
Instead of looking for someone light years ahead of you, find a mentor who is just a year or two ahead. Their advice will be relevant and applicable because they’ve been where you are recently. It’s 2016—market conditions are changing rapidly, and the Go-to-Market strategy that another company succeeded with in 2001 probably won’t work for your current venture.
When you say, “This is the problem I’m facing,” they’ll say, “Yeah, we ran into that last year. Here’s what we did.”
Having role models is great, but you need more than inspiration. Find a mentor who really understands the problems you’re facing.
How to find and recruit mentors
The best way to find mentors is by building an industry-specific network.
Ask your customers, coworkers, and acquaintances for connections. Say, “I really want to meet people in my industry who are doing amazing things. Do you know anyone I should meet?”
Value should always be a two-way street, especially in a mentorship relationship. When you find someone you want as a mentor, find a way to provide value to them before asking for help.
Should you transition from hourly rates to value-based pricing?
For most large organizations, hourly pricing is the standard. They expect to be able to approach their purchasing department and say, “We need to buy X hours of Y.”
Many startups are trying to challenge that expectation by transitioning from hourly rates to a value-based pricing model. They’re facing a lot of resistance from larger organizations and are starting to ask, “Is this worth it?”
Closing deals is hard enough as it is. If you’re facing that sort of resistance, ask yourself, “Do I really want to complicate the buying process further by forcing a foreign payment structure on my prospects?”
In most cases, the answer will be “no”. Your want to remove friction, not create it.
But if you’re set on value-based pricing, here are three ways to make the transition easier for your prospects:
- Find a way to express your value-based model in terms of hourly investment.
- Make the change less dramatic and more gradual by switching from hourly to daily, and from daily to value.
- Onboard your customers with an hourly rate. Once you’ve demonstrated the value you provide, transition to a value-based pricing model.
If you’re going to change your payment model after establishing a customer base, check out our article on how to change your pricing without losing customers.
Difficult doesn't mean impossible
Challenging the status quo is never easy, but that doesn’t mean it’s impossible.
Find a mentor who can help you streamline your sales process and continually provide more value than you demand. Stick to those principles and you’re on the path to success.
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