Services

Sales is hard. That’s one of the immutable facts of business life.

But what if a B2B business could make its sales easier? And, if not actually easy, at least less hard.

But first, some definitions.

Sales is the process of taking a customer from State A) indifference, to State B) the customer decides to buy.

The Sales Contracting Process (SCP) is the process of taking the customer from State B) customer decides to buy, to State C) customer has signed the contract (irrespective of whether signing takes the form of clicking, Docusign, or wet ink).

The important word here, at least for SCP, is process. Sales-Contracting is a process and, like any process, it’s got to have an overall objective. The overall objective of any sales-contracting process is Good Contracts Closed Quickly (GCCQ).

In other words, the end point is a signed contract which:

• contains all the elements and protections you need (= good for the seller), 

• which contains all the elements and protections that the customer is looking for (= good for the buyer), 

• which is signed in the minimum of elapsed time - absolute time, as well as person/hours consumed (= quickly, which won’t happen unless also = good for the buyer), and 

• which generates the minimum of friction.

Why does this matter? Because a poor Sales-Contracting Process means:

• reduced sales in the relevant period,

• increased costs,

• increased time to cash, 

• increased friction and burn of customer goodwill,

• increased chance that your buyer will get lured away by a competitor, or just change its mind,

• increased chance that your good sales people will move to a company where it’s easier to close deals and get their commission.

There’s a couple of additional factors at play here.

The first is risk aversion. Daniel Kahneman won a Noble prize for his work in behavioural economics, an important part of which is risk aversion. To put it simply, people give twice as much weight to the downside risk of moving from the status quo as they do to gaining an upside from the same move. Anything which makes it hard to contract plays into risk aversion and needs to be avoided.

The second is the fact, reported by Gartner, that over 50% of B2B buyer evaluations result in no decision. In other words, a decision not to buy.

All of which adds up to meaning that making it really easy for the buyer to buy – a key part of which is an optimised Sales-Contracting Process - is key for successful sales.

A short digression: Kahneman’s work was based mainly on individuals making quick decisions. B2B decisions are usually not quick, and are usually taken by groups, not individuals. For the best discussion of how risk aversion plays out in a B2B context, listen to Blair Enns here.

In an ideal world, your standard sales contract goes through on a nod. “Sure” says the customer, “it all looks great to me, where do I sign?”. There are some B2B contracts for which all their contracts are like that (this guide is not aimed at those), but for most B2B companies the world operates differently. 

For those B2B companies it’s helpful to think of SCP in terms of three bands of activity.

No Touch: There is no contract negotiation. Once the customer has decided to buy, there is no human intervention, she just signs (signing here being wet ink, digital ink, clicking – whatever works).

Lo Touch: there is human intervention. The customer wants clause 3.b tweaked. She wants more clarity around service levels. She wants to pay monthly, not annually. There is some human intervention, so it’s not No Touch, but it’s minor stuff.

Hi Touch: is what it sounds like. There is human intervention, and it’s not minor tweaks like Lo Touch, it’s a negotiation.

Most companies will have a mixture of all three bands, but some will have only one or two. 

That’s what I mean when I talk about making it easier to sign the contract. If you’ve changed your SCP so that a customer that would have been Hi Touch has become Lo Touch, you have made it easier for your business to get to a signed contract. 

And if you’ve changed your SCP so that a customer that would have been Lo Touch has become No Touch then, again, you have made it easier for your business to get to a signed contract. 

Which means:

• sales revenue increase in the relevant period,

• less cost, 

• cash arrives quicker, 

• less customer friction,

• less chance of losing the customer, either to a competitor or to risk aversion or indecision.

And your sales staff spend more time on high value contracts. Which, for the business, means happier Sales staff and less Sales staff churn.

There are 3 main levers for improving SCP.

Lever 1.  How much paper you show.

Lever 2.  Addressing the customer’s contract concerns ahead of time.

Lever 3.  What your contracts say, and what they look like.

For more info on these, see below.

The less paper you put in front of the customer, the less discussions you are likely to have about the contract. The more you confront the customer with something that looks like a contact, the more likely they are to feel obliged to read it themselves or, worse, to give it to their lawyers to review.

In an ideal world, your terms and conditions will be online and the customer will just click on “I Agree” like we all do on Amazon.

The next best option is to have a paper order form (which gets signed), but the bulk of the legal terms are referred to by url. Some customers will feel obliged to click on the urls and read the T&Cs, but a lot won’t.

The final option is to send the customer the whole contract. The next two levers are particularly relevant to this option.

If you’ve got a standard product which you want to sell over and over again, then you will have standard buyers that will have the same concerns about the deal.

If you address these concerns ahead of time, they are less likely to cause holdups when it comes to signing the contract. There are loads of different ways to address this. It can be FAQs, it can be dedicated pieces, it can be video – for example, a video on why your information security is so good, and how you test it regularly.

Being upfront about these issues doesn’t mean that the buyer’s lawyers (if they get involved) will agree but, done well and with the right levels of forward planning, you’ve minimised the number of points that your buyer’s lawyers have to get involved in.

Even with a paper contract which you know the buyer’s lawyers are going to read through and review, you should be aiming to create the smallest amount of resistance whilst still securing the protections that your business needs. There’s a number of factors that you can adjust to get the least resistance.

Does the contract look approachable? This is basically a question of graphic design at its most basic form. Good looking documents (yes, even contracts) get better receptions than ones that look difficult to read.

Does it have a market-standard structure? You want the contract to go through with the minimum of aggravation. Make it easier for the other side by avoiding unusual structures.

Are the clauses clearly labelled? Experienced lawyers read by pattern recognition. They are often not really reading, they are scanning for anomalies. Make it easy for them by separating points out and labelling them clearly.

Avoid FU clauses. Your customers are not idiots: make sure your contract don’t treat them like idiots. Some of the worst offenders here are SaaS contracts. When software contracts first appeared on the market, the lawyers involved were paranoid about the risks. Eek! they said, we are selling a product with bugs, and a bug is a defect. We are going to get sued to kingdom come. As a result, the first software contracts were extremely protective of software vendors and left buyers with no effective recourse. SaaS contracts are the descendants of software contracts, and quite a few of them contain these old FU clauses. They are not justified in the modern world, and they just cause annoyance. Avoid.

Test with a (virtual) intelligent 10-year-old. If the wording can’t be easily understood by an intelligent 10-year-old, it’s too complicated. Any fool can make things complicated, but it’s not something that buyers appreciate.