Secrets of Power Proposals
Written by Dave Lorenzo on October 10, 2016 / Podcasts / Proposal
This episode of the 60 Second Sales Show is titled “The Secrets of Power Proposals.”
When people are ready to do business, they ask you to put together a proposal to outline how you will work together. This is usually a “take it or leave it” offer. Either the client accepts your terms or he doesn’t.
The document you create does more than memorialize the terms of the deal. It serves as a platform for your relationship.
Listen to this episode of our show to discover the five keys to developing a great proposal that gets the client to say “YES” every time.
Here is the transcript of this week’s show:
Welcome, everyone, to another edition of “The 60 Second Sale” show. I’m your host, Dave Lorenzo, and on the other side of the proverbial glass we have Nancy Popp, our producer. Hello, Nancy.
Hello, David. How are you?
I’m great. How are you today?
I’m doing fantastic.
Terrific. Today we are going to talk about, we’re going to reveal, the secrets of power proposals, and frankly, the reason we are talking about this today is I just went through a proposal process. I had three big proposals that I got out in the last week, two of them two days ago, and I am always tempted to do what everybody else does and get giddy when someone asks me for a proposal.
You know how it goes. You’re with a client or a prospective client and you’re having a discussion and the client says something that just gets you all tingly inside. You feel like you have exactly the solution the client wants, and you can’t wait to tell them about your great solution. You can’t wait to tell them how easy it would be for them to work with you. You can’t wait to get started. You wish you could start with this client today, and you get all excited. The client gets excited because they sense your ability to help them, and you say, “Great. Let me just jot some stuff down, and I’ll be happy to shoot you over a proposal and you can let me know what you think.”
That’s what everyone does, 98% of the world, the sales world, does that. For me, this week I had three proposals that I said that I had to get out, and it would have been so easy for me to just check off the box and say, “Hey, I’m going to send you out a proposal. I’m just going to get you some information and get it out to you, and then I’m going to wait,” and here’s why that is so tempting. When we send out a proposal it makes us feel good. When we send out a proposal we get to check that box off like I said, and then here’s what happens. We have hope, right?
I remember when I first started off selling stuff, way back when I was just a little itty-bitty baby salesperson. I would be thrilled, absolutely thrilled when someone said they wanted a proposal. I would write the proposal up, I would send it out as quickly as possible, and then I would go home and I would count my money, and I would think about how rich I was going to be because everybody who asks for a proposal is going to be a buyer. We have hope. That’s what proposals do. They give us hope.
My friends, that’s not the purpose of a proposal, so I’m going to take you through a scenario. I’m going to take you through the current way you are doing things, and I’m going to take you through the way everybody does them, and then I’ll take you through the power proposal way, and then I’ll diagnose it for you. I’ll break it down.
You go out now and somebody calls you up on the phone and they say, let’s say your name is, all, I don’t know. Let’s say your name is Dave. They call you up on the phone and they say, “Hey, Dave. I heard that you teach salespeople to be more successful. I’ve got 12 salespeople in my company. We do $2 million a year. Each salesperson is responsible for doing $150,000 a year. I’d like them to go from $150,000 a year to $200,000 a year, and our average transaction size is $5000, so we really need you to help them grow by maybe doing 10 new transactions a year. Can you do this, Dave?”
For me, that’s easy. I could do that easily. I could teach someone to close 10 new deals a year, absolutely. I don’t care if you’re selling private jets or if you’re selling legal services or if you’re selling vacuums door-to-door. I can get you to close 10 more deals a year. That’s less than one a month. I can help you do that. Absolutely I can help you do that. That’s what I’m thinking in my mind, so my reaction is to ask a few questions, find out about their process, find out what these 10 deals will be valued at per person, what that would mean to the company overall, what that would mean to the person I have on the phone. I get all that information and then I say, this is the traditional way, I say, “Let me come over and do a presentation to you.” Then I go over and do the presentation.
After the presentation, everybody thinks everything is great. We’re all friends. Everything’s happy, everybody’s happy, then they say, “Why don’t you give us a proposal?” I say, “Sure.” I write up the proposal, one number, send it over, and then I wait, and I wait, and I wait. All the while, the first two or three days that I’m waiting I’m getting rich. I’m thinking to myself, “I could close 20 of these deals. These people love for me. They’re going to do business with me forever.”
Then, like a jury being out, the longer it goes, the worse the verdict is going to be. Three or four days goes by. Five days goes by, I don’t hear anything. A week goes by, maybe two weeks goes by. Do I call them? Do I seem desperate if I call them? Maybe they haven’t made their decision. Maybe the decision-maker is away, he’s in Europe with his family, and I wait, and a lot of times I never hear anything back, and then when I do hear something back it’s, “Oh, we’re sorry. We went in a different direction,” and usually I hear that after I call four weeks later, because you don’t want to seem desperate.
That’s the old way. That’s the old way of doing things. That may be the way that you do things when it comes to your proposal process. I want you to scrap that. We don’t do that anymore. Here’s how we do proposals. A proposal simply confirms a discussion you’ve already had. There’s this game among those of us in sales that we play. It’s like an Easter egg hunt. I guess what number you can pay, and then my goal is to try and get as close to that number as possible, maybe go a little bit over it so that I can make the most money possible, and that game sucks. It sucks for you, the salesperson, and it sucks for the guy on the other side of the table, it sucks for the person who is buying your services, so here’s what we do to proposals.
We talk about the numbers as soon as we can in the process. As soon as it’s appropriate we talk about the numbers. We throw it right out there. “What’s your budget for this?” and then the client will always say, “I don’t really have a budget,” right? How dumb is that? “I don’t really have a budget.” Of course. What I say to people when they say, “I don’t have a budget,” what I say to them is I say, “You got a number in mind that you were thinking of paying. Why don’t you tell me what that number is?”
Then they say, “We really haven’t done this before. I’m not really sure.” Then I tell them, “All right, here’s what we’ll do. You think about that number, then cut it in half and tell me what it is.” Basically I cannot give you a proposal unless I know what you are prepared to spend. Can’t do it. I just can’t do it, because I’m not going to sit down and customize an entire program for you if you don’t have the money to pay me. I’m not going to do it, so here’s how you go about doing a proposal.
You have that whole diagnostic conversation up front. “Tell me about your business. Tell me what you’re looking to accomplish. Tell me how you think I can help you. Tell me what your budget is. Oh, you don’t have a budget? Okay, well, let’s talk about the return on investment from this initiative. Let’s talk about how much money you’re going to make as a result of the product that I’m going to sell you or how much money you’re going to make as a result of the service I’m going to provide for you. Okay, we have a significant return on investment. I get it. That’s great. Now, let’s talk about what my service will cost and then we can look at what the actual return on investment will be.”
Then you have a discussion about what your service will cost, transparent, completely transparent. By the time you finish that conversation, you and the client are in agreement on what the price is going to be, and then you send over a proposal. You never, ever send someone a proposal unless it’s to confirm a conversation that you already had. I’m going to say that again, because it’s so important. You never send a proposal to someone unless it’s to confirm a conversation that has already taken place, so you and the client have to agree on a price before you can send over a proposal.
Now, in every proposal there are five things, there’s five secrets. That’s the title of this episode of “The 60 Second Sale” show. There are five secrets to power proposals, so today I’m going to cover those five secrets with you and it’s going to fundamentally change the way you do business. It’s going to take off all the pressure, because you’ll know when you send over the proposal whether you’ve got a deal or not, and you’ll know when that proposal is going to be signed, and you’ll know when the money is going to hit your bank account. Here are now the five secrets of power proposals.
Secret number one: You never give a proposal to someone who can only say no. Never give a proposal to someone who can only say no. Now, you know who these people are. They’re the people who placed the initial call to you and they blow all kinds of sunshine up your butt and they tell you how great their company is and how much they’re looking forward to doing business with you. Really what they’re doing is they’re gathering information for someone else to make a decision, and these people, you can’t give them proposals because the proposal will sit in their desk for months on end, and they’ll gather information and they’ll gather information and nothing will ever happen
People in human resources are famous for this, by the way, so if you work in a field where someone with a title of Chief Human Resource Officer or Executive Vice President of Human Resources is the person who you normally talk to, that’s a terrible person to talk to. Also, anyone with procurement or supply chain in their business title, Executive Vice President of Procurement or Senior Vice President of Supply Chain Operations. Those people are terrible people to talk to because they gather information and then someone else makes the decision.
What I want you to do when you’re talking to the person who’s on the phone with you, I want you to say, “Here’s our process for doing business with folks. We gather as much information as we can,” this is you, the salesperson or the business owner, “We gather as much information as we can, and then we like to have a frank discussion about the pricing and the return on investment from our services or from our product. Now, Mr. Inquirer, is there anyone else in your company we need to get involved in this decision-making process, because when we have this discussion about pricing, I will need a yes or a no in order to continue to move forward. I cannot, ethically, I cannot have a discussion with folks who can only say no, or I cannot have a discussion with folks who don’t have the ability to say yes to a proposal, so who else in your company, if there’s anyone else, do we need to involve in this process?” Be very direct, be very forceful.
Now I know what you’re thinking. You’re thinking, “Wow, if I say that, the person’s going to hang up the phone.” There is a possibility that the person will say, “Well then I can’t deal with you,” but there’s also the possibility that the person will say, “Okay, great. We’re going to get Mr. Smith involved. He owns the company.”
Now, if the person says, “Well then I can’t deal with you,” that person is doing you a huge favor, because that person had no authority to say yes. They only had the authority to say no. They would have given you false hope. Let them hang up the phone before you ever do a proposal or waste your time throwing numbers out there without ever having an opportunity to get any business.
The first thing you need to make sure of is you need to make sure that you have a decision-maker who is going to discuss this proposal with you, have a decision-maker who is going to review your proposal options, and make sure you’re talking to a decision-maker. You also want to make sure that these people have money, so when you get the decision-maker on the phone you say, “What’s your budget?” He’s going to say, “I don’t have a budget.” Remember? I just went through this whole thing. “I don’t have a budget.” They all say that, right?
You say, “Look. I’ve got to be frank with you. Everybody tells me they don’t have a budget, but you have a number that you’ve planned to spend. If it’s based on return on investment, that’s fine. I can tell you what the return on investment from our services will be, and as long as the return on investment is fair and you agree that it’s fair then we’ll move forward, but I need to know what numbers we are working with here, and I’m not going to just submit a proposal blind. I can do it, because what happens is when I submit proposals blind everyone uses me as a benchmark and then people undercut me, and I’m not going to have that happen, so tell me what you’re prepared to spend or what your measurement of a return on investment for this initiative really is.”
Then the final thing is you need to make sure that they have a problem that you can solve. This is all step one, by the way, so they have a problem that you can solve. Sometimes people will come to me and they’ll say, “Listen, we need to fire our Executive Vice President of Sales. Will you help me recruit a new Executive Vice President of Sales?” and I say, “I can tell you what the qualities of a great EVP of Sales are, but I don’t do recruiting. That’s not my thing. I’ll introduce you to a great recruiter. I’ll help you build a job description, but the recruiter is the one who has to go out and find the person for you.”
That person doesn’t have, the person who is talking to me doesn’t have a problem I can solve, so it’s not worth it for me to sit down and even entertain doing a proposal for them, so step one, make sure that you’re qualified. Make sure that the business is qualified. That means that you’re talking to a person who has the ability to make a decision, the company that you’re talking to has money to spend on your services, the right amount of money, and they have a problem you can solve.
Step two in the secrets of power proposal: You are the last or the only proposal that they’re submitting. You don’t want to be the rabbit. You don’t want to be the one who’s pacing everyone else. You don’t want to be the benchmark that everyone else discounts their pricing off of. You tell people point-blank, “I don’t want to be the person to throw out a number and then have you compare my proposal to everybody else, so if you’re shopping around, I appreciate it. Go shop around. Come to me last, and if you are shopping around and you’re coming to me last, you have to discuss the other proposals with me or we’re not going to do business. That’s just the way I work.”
You see, the thing that’s different here, the thing that’s different here is you are in a partnership with the person you’re talking to, and you’re deciding whether or not you’re going to work together. This is not you out there chasing business. This is you and your potential client saying to one another, “Here are my business terms. What are your business terms? Okay, that’s great. Let’s talk about numbers. If the numbers fit, we’ll work together. If the numbers don’t fit, I appreciate the opportunity. Go hire someone else. Thank you so much for coming by.”
This is a partnership. This isn’t you sucking up to get business, and too many times when we are delivering proposals it’s people sucking up to get business, so you have to be the last or the only person who’s involved in this. Now preferably your services or your product will be so different, so disruptive, that you’re the only person in the market and people can’t compare themselves to you, but in the event that it’s a beauty contest, in the event that there are multiple people coming through here offering proposals, you want to be the last one. All right.
Step three in the secrets of power proposals is that you are confirming a discussion with a written document. Don’t be coy. We said this at the outset. You have a conversation with your client up front and you say, “Okay, if I understand you correctly, you’re looking for a three to five times return on investment, so my services are $50,000. That means that we have to do $200,000 in business as a result of our work together in order for you to get a return on investment that you would be happy with. Is that correct?” “Yes.” “Perfect. I’m going to submit a proposal to you that is for $50,000, and I will promise you that we’ll do $200,000 in return on investment as long as everything goes as planned. If that is agreeable to you, I’ll send you the proposal.”
The person says yes, he’s agreeable to that. You write up the proposal, send it over. Very easy process, because you’ve discussed everything up front. You verbally confirmed everything up front before you’ve ever gotten into this conversation. A proposal is just a document that memorializes that discussion.
Step four in the secrets of power proposals is OTTO: Offer three terrific options. Offer three terrific options. We call it OTTO. The reason you offer three terrific options is because you never want to be a binary choice. You never want the client to say yes or no, so here’s how this works. Option number one is slightly below the number that they’re comfortable paying, just slightly. Option number two is on target with the number they’re comfortable paying, and option number three is a home run. Always offer that third option. In some cases, option number one can be the number they’re comfortable paying, option number two can be slightly above, and option number three can be double or can be a home run.
The reason you offer three options is because you want to give them multiple choices of yes, and we’re going to do a whole podcast on how to structure options, but what I can tell you right now is one of those options has to be spot on the number they’ve agreed to pay. Either it’s their budget number or it’s the number you’ve discussed. Then one of those numbers is something that you’ve discussed that is a preventative measure to keep this problem from ever happening again or it’s a bundle of services or it’s a number of different things that they’ve always wanted to do but never had the guts to put in the budget. You always want a home run option, so you always have one number that’s spot on the budget, you always have another number that’s a home run option.
If there are multiple people in the mix you may want to have a number that’s a little bit below what the budget was. If there are not multiple people in the mix, if you’re the only person or you’re the last person, then one number is the budget, the second number is the budget plus something that would be nice for them to have, and the third number is a number where it’s the number that they had in mind, it’s the service that they had in mind plus something that will prevent this problem from ever occurring again.
You see where I’m going with this. You’re offering people ways to say yes. You’re offering them options, multiple options for saying yes to you instead of just saying, “Here’s the number. Take it or leave it,” because when you say to people, “Take it or leave it,” it’s a psychological error on your part. You’re creating acrimony. They feel like they’re packed into a corner, and you never want to do that. When you give them options, two things happen. They’re buying now. You’re not selling them. They get to make a great choice. They get to show how smart they are by making a fantastic decision.
The other thing that happens when you offer multiple options is they don’t negotiate with you. If you offer them multiple options and they don’t have the budget, instead of them coming back to you and saying, “Well, can you cut the price by 10%?” you say to them, “Well, I have this other option there. That’s the option you should take if you don’t have the amount of money that we originally discussed.” Options create choice. Choice makes the buying decision easier, and it makes the entire experience more pleasurable.
The final secret of power proposals, secret number five, is you have to schedule a discussion and a decision right when you send the proposal, so here’s what I always do. We always talk about the number up front. “Okay, it’s $50,000 you want to spend based on a $200,000 return on investment. I will put this together in writing and I will get it to you within 24 hours. You’ll have it by close of business tomorrow, and when I get you the proposal by close of business tomorrow let’s agree that the day after tomorrow we’re going to have a call. Are you free at 11:00? At 11:00 we’ll have a call and we’ll decide whether or not we’re going to move forward at that time. After that call, you can sign the document and send it over if the answer is yes. If the answer is no then we’ll agree to part company as friends, but we are going to make that decision the day after tomorrow at 11:00. Great? Great.”
Then we have that discussion. It’s either a yes or a no. Then we are done. It’s over. Don’t leave yourself in limbo. I know as salespeople we love that hope. As long as that hope is out there, I can be a millionaire in my mind. Don’t leave yourself in limbo. Schedule a time for a decision. Schedule a deadline. Schedule a time to discuss the proposal and be done with it, and everyone can make that deadline within 24 to 48 hours. I can’t even imagine somebody saying, “Well, we’re going to make the decision in six weeks.”
Well then come to me for a proposal in six weeks. No. You don’t give a proposal to someone who’s not ready to make a decision, right? We discussed that right at the top of the show today, so you can tell them, “You’re going to get a proposal. We’re going to have a discussion. Within 48 hours we’ll wrap it up and decide whether we’re going to work together or not,” and then you can make the payment terms whatever you want to make them. They can pay at a certain date, but you want the proposal signed and back in your office within 48 hours, so those are the five steps, the five secrets, of power proposals.
Number one: Qualify the opportunity. That means make sure that there’s money, the ability of the person on the other end of the proposal process to make a decision, and a problem you can solve. Step number two: You want to be the last or only person, the last or only person, to be offering a proposal, to offer a proposal. Step three: A proposal just confirms a discussion. Don’t be coy. Talk about numbers before you ever send a document. It doesn’t make sense, don’t waste your time writing a proposal. Step four: OTTO. Offer three terrific options. Step five: Schedule a discussion. Give them a deadline for making a decision.
It’s very simple, my friends. This is so simple. We make it too complicated. Go out today. All your proposals, just do it. Get it done this way. You will be amazed at how less complicated your life becomes, how much better you sleep at night, and how quickly you close deals. Start making things complicated. Use these five steps to get your proposals out the door and get the money in the bank. All right?
It’s that time of the show. Last few minutes of the show today we are going to take a question, and by the way, if you want to send us a question, the best way to do it is on social media. You can find me on Facebook, @TheDaveLorenzo. Put the word “the” in front of my name, @TheDaveLorenzo. On Instagram, if you love pictures, I got them for you. You love short videos, I got them for you. Go to Instagram, @thedavelorenzo. In the comments, drop a question. Be happy to answer it for you on the show. On Twitter, hit me up, @TheDaveLorenzo, @TheDaveLorenzo. You see a theme there? Every single one of the social media outlets where you can send me a question is “The Dave Lorenzo.”
Nancy Popp, we have a question today. What is it and where’s it from?
We have a question today from Janice Mullaney. She’s from [inaudible 00:25:39] Massachusetts and she asks, “What do I do when I have to participate in a multiperson proposal process?”
Ah, so it’s a beauty contest. Some businesses, I get it, some businesses do have these beauty contests, so for example if you work with the government they are required, oftentimes, either state, local, or federal government, they’re required to get at least three proposals. If you work in a big company, when I worked for Marriott we had to get three proposals on all major projects, all projects that were over, I think, $10,000 at the time required three different bids, three different proposals, so Janice, thank you for your question. You’re asking if you’ve got to participate in a beauty show, you’ve got to participate in a beauty contest, which is what we call multiple proposal environment, what do you do?
Well, you know from our five secrets you want to be the last person to bid, so what I ask for is I always ask to be last look. I always say, “Listen. I want to give you the best possible deal, so do me a favor and tell me what your lowest bid is, and if I think I can come in with a better return on investment than those people are providing,” notice I’m not saying that I’m going to undercut their proposal, I’m just going to make a better return on investment, so I could be a little bit more, “if I think I can do a better return on investment I will figure out a way to do that. If I can’t provide you with a better return on investment, I will bow out but you’ll save me a lot of time.”
Fifty-fifty shot as to whether they give you that “last look,” whether they give you the opportunity to take a look at all the other proposals and see what you can do for them, so that’s the first thing. You say, “Can I have last look?” If they say no, then you say, “Okay. When it comes to presentations, then, I want to present last and give you my proposal last because I need a yes or a no within 48 hours.”
If they say, “Well, we can’t give you last look and we can’t give you a yes or no within 48 hours,” then you say, “Look. I don’t like throwing darts at a board, and me giving you a proposal would just be throwing darts at a board, so you got to give me more than that,” and then if you’re in a government area or if you’re in an area where just the way they do things is you give three proposals and this is how it’s done, then the least thing you can do, or the least you can do is you say, listen, can I write the guidelines for the proposal for you, so that you’re the person who actually creates the guidelines, and you make them so stringent that only your company can match them.
If none of those things work and you got to send a proposal in the blind, I’m sorry. That’s not a business that I advocate. I would just blow up that model and move on, try and find another market. Any time you’ve got someone pitting you against another company and another company’s solution, that’s never going to wind up good. It’s never going to wind up working out well for you. Any time two people are pitted against one another, one of the two of them ends up being a loser, so those are the three things I think you should do, Janice.
First you go into them, you say, “Can I have last look?” If they say, “No, we are not going to show you the other stuff,” then you say, “All right, I want to present last, but I want to make sure that when I give you my proposal you have 48 hours, yes or no, you give me an answer.” If they say, “No, that’s not going to work,” then I would bow out, but if you have to, what I would say is, “Listen, can I write the proposal specs for you so that I make sure that you’re getting everything you need, and then only your company, only your company can meet those specs, hopefully,” that’s the last opportunity for you there.
If none of those things are available to you, if they say no to all three of them, you’re in a crappy business, Janice. You got to get out, because that’s just absolutely horrible and you’re a good salesperson. There are other places you can go where you can be in a true partnership with your potential client, and that’s what the proposal really highlights. It highlights the strength of your partnership. You’re out there delivering this information to your client because you want to help them become more successful. You want to help them. That’s what you do.
That’s what this process is all about. It’s not a win-lose. It’s a win-win for you and your client. Janice, thank you so much for the question. Nancy Popp, thank you so much for your hard work and your efforts as always, and until next time, folks, I will see you right here at “The 60 Second Sale” show. I hope you make a great living and live a great life.