I once asked a question that cost me a $125,000 sale.
This is actually a true story, but not the takeaway I hope you get from this blog post.
Like most enterprise deals this had been an exercise in patience. After 3 months we were finally able to check all the sales qualification boxes:
- Do they admit they have a problem? Yes
- Is the pain intense enough that it can’t be ignored (are they in the crisis zone)? Yes
- Do they want to do something about the problem now? Yes
- Are you speaking with someone that can make a decision? Yes
- Are they willing to invest what we charge? Yes
- Do they laugh at your jokes? Yes
The only thing left was a signature so I set the close probability to 95%. Why? Because in 8 years, I’ve never lost a deal at the contract stage.
Three days later this is the voicemail my prospect left:
“Hey Josh, this is Adam with XYZ. I’ve got some bad news for you, brother. We’re not going to move forward with you guys. I feel terrible about this. Give me a call if you want the details.” – a breakup voicemail that every sales person dreads hearing, especially after 3 months of dating.
So, what happened?
As a “mere formality” my prospect informed me that his boss, “Mike” wanted to chat with our team prior to signing the contract. So we jumped on a conference call with Mike and four people from his team. There were no surprises; Everyone clicked.
Just as we were about to wrap up, Mike asked a question that I still replay in my mind 3 years later.
“Josh, just one thing. In your proposal I need you to include your hourly rate.”
If you do creative services work, the problem with providing an hourly rate is threefold:
- The buyer can see that your margins are high.
- The buyer is basing value on your time rather than the results you’re helping them achieve.
- It turns you into a commodity and therefore the deal becomes a race to the bottom with your competitor.
For the reasons above we liked to hide our hourly rate.
Here’s how I responded:
“Mike, can you help me understand why you’re asking?”
And here’s Mike:
“You don’t know why I want to know your hourly rate? Are you serious?! Of course we want to know your hourly rate! How could you ask such an obvious question?”
My intention was to deepen my understanding of Mike’s ask so I could hopefully thread the needle, but Mike was taken back by my apparent challenge in front of his team. I probably sounded like an angry teen questioning his parent’s intelligence.
And just like that, the deal was killed.
I want a do over!
If I could have a do over, here’s the play I would run that may have resulted in a happier ending:
Mike: “Josh, just one thing. In your proposal, I need your hourly rate.”
(Soften voice, use curious tone.)
Me: “Not a problem, Mike. That’s certainly a reasonable ask. “
Isolate the objection
Me: “Other than our hourly rate, is there anything else you need from us?”
Me: “Mike, typically when clients request our hourly rate they want to better understand the number of resources involved, the buckets of work they are doing and the cost of each bucket of work. Is that what you’re after?”
Mike: “Yes, that would be fine.”
Me: “Ok, let me know if you’re open to this. Hopefully you are because I love making tables in Microsoft Word. (Attempt to diffuse pressure with humor. If you get a laugh you can usually get to a win-win).
Although we don’t disclose hourly rates, how about we include a table in the proposal with 3 pieces of data for you. One – we’ll show you the buckets of work for your project such as writing, editing and programming. Two we’ll include the types of resources involved in each bucket of work such as graphic artists, engineers and project managers. And three we’ll show you the percentage of time each resource is spending in each bucket. That way you can see the cost as it relates to resources and buckets of work.
Me: “How does that sound?”
Mike: “That will be just fine, Josh.” (Hey, it’s my do over so I can make Mike say whatever I want!)
People buy how you sell
How you ask questions can make all the difference in whether or not your prospect opens up to you, or becomes defensive.
In literal terms, asking, “Why?” makes sense if the purpose of the ask isn’t clear. However, if the buyer perceives the purpose of asking the question is obvious, asking why can have negative implications. It can feel as if you’re questioning the boss’s authority or trying to avoid the question.
The “show us your hourly rate” objection came up again with another Fortune 500 account. And yes, I ran the “do over” play above and won the account.
Well, sorta. But I’ll save that story for another day.