Last week an existing customer contacted me for some added information on a solution that would integrate to their accounting system.
Prior to any demo or initial needs assessment I invested 20 minutes (if anyone can do it in less more power to them) explaining the different software configuration options. Explaining how one particular solution would be preferred due to better integration. Explaining other options that were available. Explaining how there were certain limitations that the prospect needed to be aware of, etc, etc.
So long as my information was free – the company had no problems moving forward.
I pre-qualified for money. Gave a $10k upgrade round number estimate. The client knew full well that their final number was north of $10,000.
Here’s where things start to come apart.
The person I spent twenty minutes “pre-qualifying” is the controller and didn’t share any of this with the CFO.
OBSERVATION:When the customer incurs no liability for having you do a free demonstration – they’ll listen to you all day long and nod their head in passive agreement at pretty much anything. And why shouldn’t they – they have no liability or cost to sit and listen to you talk. In the process of listening you’re giving them all sorts of free ideas about things they have not considered.
After the demonstration I obtain the final rough numbers from the software vendor. Here’s where the fun really starts.
My conversation with the CFO to relay price quotes after the demo was one where I primarily listened to the thud of his head hitting the floor.
The Controller apparently had not discussed pricing with the decision maker.
The pricing was way out of his range. Way out of his range. In his mind he was not willing to pay more than $2,000 tops — a number or objection that never came up during our free demonstration.
The Two Huge Problems With How ERP VARS Sell
Which really brings me to two points
- VARS like me are crazy for continuing to perpetuate the myth that meaningful software problems/solutions can be presented in free demos.
- So long as clients have NO skin in the game (free demo) – they don’t prepare (none of the actual end users made time to attend the demo despite our asking for this ahead of time), pay attention or really do much of anything except say “looks good”.
And then we as VARS wonder why these sales don’t close after we spend wasted 10 uncompensated hours.
Customers and prospects have absolutely nothing invested other than sitting through a free two hour consulting session to help them refine their needs.
These customers and prospects place no value on that consultation because, after all, it’s free!
I submit the whole “Free Demo” is a completely outdated model and that clients at some point in the future will need to be led to a paid consulting engagement or they’ll just buy direct from some software publisher. In the not too distant future the only people doing free demos will be guys who are semi-retired and just looking for something to keep them busy.
What’s The Alternative?
The alternative is a paid initial consultation after an initial pre-qualification meeting of limited scope.
Since nearly all prospects want a first “hand shake” meeting to get to know you, offer exactly two free sessions:
Session #1 = Initial preliminary needs analysis of up to 4 hours is complimentary. Beyond that time is rendered as a fee for service. During this time talk about their needs for software and actively search for obvious issues that might make your solution inappropriate. They’re encouraged to have all their decision makers present. If for any reason the consultant/VAR comes back (decision maker or user not present) – those subsequent meetings are all charged.
Session #2 = Initial demo. Most software can easily be disqualified from further discussion based on an initial demonstration of up to two hours.
Beyond the two hours we provide them with the option of purchasing consulting time. This is made clear before they ever start engaging us in our free initial consultation.
Putting Lips In The Game
Harking back to my dating days I used to have one rule to clear out the “just polite” dates who’d string you along forever with no intention of entering any relationship other than one involving a lot of free fancy meals.
If the dates weren’t interested in a good night kiss they never heard from me again.
Nothing was ever a truer measure of whether a “prospective date” had any interest or was just being polite. I guess that would be called “lips in the game”.
This worked 100% of the time. If the other person wasn’t interested we both went our separate ways and nobody wasted any further time.
This same methodology should be applied to the software selection process. Beyond the first two initial free meetings that I’ve described above prospects and customers must be guided to a fee based engagement for any further investigation to work.
Once the subject of fee for service is on the table this will separate the serious prospects from those who are just out for as many free consulting meetings as they can convince VARS to provide for them.