Mike Bosworth is a Co-Founder of WeConcile considered as the world’s first Relationship Rescue and Restoration application.
In this episode, Mike shares effective pricing strategies and sales techniques to hold prices.
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Why you have to check out today’s podcast:
- Learn about the concept of “buying vision” and help your customers recognize the value of your product or service
- Learn how to stand firm against pricing pressure and maintain your desired price
- Discover how to effectively use “polite No’s” to firmly establish pricing boundaries
“Understand the value, i.e. how your buyer would use a particular piece of your product to solve their problem. And if you have that knowledge, it’s really easy to defend the value of your price.”
– Mike Bosworth
Topics Covered:
02:13 – Mike’s pricing approach
03:16 – Understanding why salespeople are losing the conversation when it comes to price
06:40 – What is a ‘buying vision’ and how helpful it is for buyers
07:26 – The need for salespeople to know well their customer’s business
10:20 – How ‘premature elaboration’ gets you at a disadvantage
13:58 – Explaining ‘cost justify’ and ‘price justify’ from the buyers point of view
20:49 – The importance of patience in negotiation and use of “polite No’s” to stand your ground on pricing
24:36 – Book resource of major negotiation stories you can check out
25:42 – Mike’s pricing advice
Key Takeaways:
“The only salespeople who can go out and negotiate their own prices are those ahead of quota.” – Mike Bosworth
“I say to the managers, if your salesperson is under quotas, you have to go out there and provide the backbone and coach the call ahead of time.” – Mike Bosworth
“We want to teach them how to survive that call, but on their own, they’re not going to have the ability to do it.” – Mike Bosworth
People/Resources Mentioned:
- Xerox: https://www.xerox.com/en-us
- Sales Force: https://www.salesforce.com
- David Crabtree: https://www.barnesandnoble.com/w/hold-out-david-n-crabtree/1119321227
Connect with Mike Bosworth:
- Linkedin:https://www.linkedin.com/in/mikebosworth/
- https://www.frugpt.com/project/mike-bosworth-sales-philosopher
Connect with Mark Stiving:
- LinkedIn: https://www.linkedin.com/in/stiving/
- Email: [email protected]
Full Interview Transcript
(Note: This transcript was created with an AI transcription service. Please forgive any transcription or grammatical errors. We probably sounded better in real life.)
Mike Bosworth
Understand the value, i.e. how your buyer would use a particular piece of your product to solve their problem. And if you have that knowledge, it’s really easy to defend the value of your price.
[Intro]
Mark Stiving
Welcome to Impact Pricing, the podcast where we discuss pricing, value, and the trusted relationship between them. I’m Mark Stiving and our guest today is Mike Bosworth. And here are three things you want to know about Mike before we start. He is the founder of Solution Selling. This is like a position of honor. He sold his company in ’99, and has been doing several things since then. He also runs a company called Story Seekers. And as an aside, he’s a co-founder of Weconcile, a relationship rescue and restoration application. Hey, welcome Mike.
Mike Bosworth
I’m happy to be here, Mark. Thanks for the opportunity.
Mark Stiving
Oh, good. So first off, you know we’re going to talk about sales, right? We have no choice but to talk about sales.
Mike Bosworth
It’s the only thing I know how to talk about. Well, not exactly. I’ve learned about relationships too because I’m married to a couple’s therapist.
Mark Stiving
Yeah. Well, aren’t relationships just selling your spouse over and over and over again?
Mike Bosworth
Well, there’s some truth to that because over the years, they’ve computed divorce rates by profession and, you know, cops and doctors have been behind divorce rates, but salespeople have a lower divorce rate. So I’m thinking it’s because they continue to sell their spouse on the fact that this is pretty good.
Mark Stiving
Yeah, it makes sense. I always start out with one question and I’m going to ask the question, even though the question doesn’t fit you perfectly, take a shot at it.
Mike Bosworth
Alright.
Mark Stiving
How did you get into pricing?
Mike Bosworth
Well, I’ve approached pricing from the buyer’s perspective my whole career, and I’ve been trying to teach salespeople to facilitate the buying process, to be a solution-facilitator. And if they do their jobs right, they never have to close. So what I’m trying to teach salespeople is how to defend their price when their buyer squeezes them. The primary pricing place in my solution selling workshops that came up is a lot of frontline salespeople and a lot of managers drop their drawers and needlessly at the end when the buyer squeezes about the price.
Mark Stiving
Well, I couldn’t agree with you anymore. We’re a hundred percent aligned on that. So, several thoughts on salespeople. First off, I think salespeople often don’t believe in their own price. And so just riff on that for a second.
Mark Stiving
Well, I grew up in the information technology industry. 95% of the work I’ve done is helping IT companies sell expensive, perceived as complicated intangible products and services to the enterprise. And it’s so difficult in that industry for salespeople to be competent in helping their buyers visualize using the seller’s product to solve one of their own problems, right? So anyway, but where we would get into pricing issues is these salespeople will go through long sell cycles, 3, 6, 9 months, and then at the end they get beat up on price. The CFO says, Mike, I’m ready to do business. I’ve just got one problem left. And that is, you’re too expensive. And they end up losing that conversation. And so I got to teach them how to leverage that part of the sales cycle and defend and hold their price. But back to your original question, the complexity of the things being sold because learning curves for newly hired salespeople to be nine to 12 to 15 months. And so they really don’t know for the majority of that time what capability they’re actually offering their buyer. And that’s why they use a lot of pre-sales engineering and pre-sales consulting to help them educate their buyers on this intangible, conceptual complex thing that’s going to cost a half a million dollars they’re looking at.
Mark Stiving
Yeah. So, before I jump into wanting to know how you teach them to hold the price, because I absolutely want to know the answer to that question. There’s a couple reasons why it seems to me that salespeople cave on price quickly. so one reason is they’re facing a procurement agent and that procurement person, they buy a hundred things a week where a salesperson sells three a year, right? The procurement person goes to training four times a year. The sales person, if they’re lucky, goes to negotiation training once in their career, maybe twice, right? So it feels like, boy, the sales person’s behind the eight ball from the very beginning.
Mike Bosworth
Absolutely. And if they’re working for a public company, their management has said, yeah, Mark, I know you, that deal you’re working on is supposed to come in in January, but we need it in the fourth quarter. Get out there and see if you can move it in. And all kinds of bad things happen when management puts that kind of pressure on salespeople.
Mark Stiving
Yeah, absolutely. Okay, so the other reason why it feels to me that salespeople are not as successful, and this might lead into the answer to how do you teach them? And that is, I get the feeling salespeople are so focused on our products and our features and how our features are different from our competitors’ features. And what they completely ignore is how does that make money for their customer, right? How does that help their customers run their business better?
Mike Bosworth
And I agree with you completely on that end. And what we really want to do is we want to empower our buyer to see visually in their head that if I had the two things this guy is selling, I could cut my inventory investment in half that we call that a buying vision. And it’s the most difficult thing to teach salespeople how to do, especially when they don’t really fully understand what they’re selling.
Mark Stiving
Yeah. And so when you bring up pre-sales people, let me structure my sales organization in my optimal way. And that might be, I want my pre-sales people to know the product and the features and all that really well. And I don’t care if the sales person doesn’t know it at all. I want the sales person to know the customer’s business.
Mike Bosworth
And you are in a minority of so many chief revenue officers and vice presidents of sales out there. They’re however they’ve been raised. And I think the real enemy in corporate America is product marketing. Because if you go to the product marketing department, they get all their informal power from their superior knowledge of the technology and the product. And then we hire these new salespeople, they go in and who do we hire? Who do we have to teach our new salespeople product marketing? So at the end they can do a hundred feature PowerPoint presentations, but they have no clue how that materials manager at two in the afternoon when a vendor cancels a big order, how he or she would respond to that using our product, the usage. They just, I had a product marketing department of a $3 billion company admit to me, without any shame that, of their department and 20 people, only two of them have ever called on a real customer. 18 of them have never spoken to a customer. So I think the selling problem of ‘throw up’ and ‘show up’ and do a demo or do a PowerPoint presentation are because they have no clue how that particular executive, that particular buyer, when this bad thing happens, would be able to respond to it.
Mark Stiving
Yeah. I think that’s absolutely right. And not knowing the customer, not knowing the buyer, the buyer’s business is just, it’s almost a sin for salespeople.
Mike Bosworth
Yeah. It really is.
Mark Stiving
And so in my vernacular, I call this value, right? I think of value as in the B2B world, as how do I make my customer incremental profit? Right?
Mike Bosworth
In whose opinion?
Mark Stiving
Well, so in priest it’s, it’s by the way, it’s always the customer’s opinion,
Mike Bosworth
Okay? But in a lot of cases you hear these salespeople and they’re giving their opinion or their company’s opinion on how much we can save you or, and da da da da da. And so I like to clarify that.
Mark Stiving
Oh gosh, yeah. Great question. And in fact, the way I think about it often is, a salesperson, there’s no way they know how much value any specific customer’s going to get from their product. Because they don’t know that customer’s situation and everything that’s going on inside the company. And by the way, that customer has no way of knowing how much value they’re going to get from the product because they don’t know. The product and the implementation. Yeah. And so it really takes a conversation between our salespeople and our customers to jointly figure out how much value is here. Is it worth us doing business together or not?
Mike Bosworth
And the problem is, we filled the salesperson’s brain with needless fact information about the product, and we haven’t helped them see and understand, I mean, salespeople don’t really get good until they finally reach a point from their date of hire till their, what I call solution expertise, where all of a sudden now if I go out and meet you , and you’re a CFO of a whatever kind of company, in about two sentences, I know exactly what your problem is, and I know exactly how you’d be able to use my product to fix it. And that’s when they really get good. But then, you know what happens, they pass that peak and now they’re behaviorally out of whack with the buyer because now the buyer gets two words out of his mouth about his problem, and the seller gets, oh, we see this all the time. This is out of whack. Right? Here’s what you need to fix it. And they crash. And we call that premature elaboration. It feels great to the seller, but it doesn’t always meet the needs of the buyer.
Mark Stiving
I want to put this in a very different framework for a second. Okay? I have taught pricing, oh my gosh, for eight straight years, the same course one day. I don’t do it anymore. But every day, and I would know the moment you said three words, what question you’re about to ask.
Mike Bosworth
Exactly. Yeah, exactly.
Mark Stiving
But if you interrupt them and don’t let them ask the question, you completely destroy the class.
Mike Bosworth
And that’s why buyers. Yeah. Neil Rackham studied the Xerox, Sales Force, only the top 20% in 1979. And they get hired, and this is a copier duplicator, not my division. They get better and better and better and better. And at 18 months you could set your watch by it. Each new batch of salespeople, their performance would peak and plummet. And that’s because they got enough solution expertise that now when they see that they had a perfect problem for their product, they get so excited, they commit, they compute the sales commission in their brain. They think about the sailboat, they’re going to buy whatever, and they say, oh, here’s what you need. And they blow it.
Mark Stiving
Yeah. So, another phrase I often use is, nobody trusts your solution until they know you understand their problems.
Mike Bosworth
Absolutely. I completely, I mean, I might say it differently, I might say that we can’t really brainstorm a solution with a prospect until we both fully understand the problem. You’ve got to have a problem to solve. Yeah. A problem the buyer owns to solve.
Mark Stiving
And something that I’ve heard many pricing, many consultants say, but it hasn’t really resonated with me until more recently I’ve started to really internalize this. And that is, selling, or even consulting, anything we do is like being a doctor where you have to do diagnosis before you can prescribe a solution.
Mike Bosworth
There’s a few basic principles in this book, and one of them is to diagnose before you prescribe. Yeah.
Mark Stiving
It’s a no brainer. Okay, so we may have already answered the question, but I want to go back directly to the question. How do you teach salespeople to hold prices?
Mike Bosworth
All right. Well, the first thing I have to help them understand is the difference between cost justify and price justify from the buyer’s point of view. And so, usually buying a car as an example that almost everybody in my audience would understand and say, how many of you purchased a car for yourself? And all hands go up and they say, how many of you knew ahead of time which car you wanted to buy? A friend had one. You read a road test in a car magazine or whatever. So how many of you had your brain a vision of something before you ever went out to buy that car? They’ll raise their hands. And then I say, well, if you decide to go out and actually test drive that car, it’s already cost justified. You looked up the price on the internet, you priced out the options.
You looked at your financing and you knew that if I buy that car, it’s going to be $369 a month. I can afford that. So it’s cost justified. And I said, you don’t even go out to that dealer until in your mind it’s cost justified. How many of you went out and test drove Bentley’s? No hands go up because you know you can’t afford a Bentley. You’re not going to go out unless you think you can afford it, and it’s cost justified for you. So that’s cost justified. And then I say, okay, so how many of you actually went out to a dealer with serious intent to buy that three series BMW, whatever you were looking at? And they all raised their hands. And I said, how many of you wanted to pay for a sticker?
Sticker is, well, that’s the price justified. In other words, they don’t want to pay one penny less than any human being in the history of the world, ever paid for that car. And so I said, how did you convince yourself as a buyer that you were getting the absolute best price for that car? And eventually they’d say, I had to walk up. In other words, they had to say to the salesperson, I guess you don’t want to do a deal today because you know, I’ve worked this thing out and here’s the price I’m willing to pay. And if you’re not willing to go there, sayonara, and they get up and they have to see them leaving the office. And now one of two things happens. Either he goes, wait, wait, wait. Let me go talk to my manager. And he goes into the manager and sees he get another concession, or you leave. He lets you leave. You say, no, I’m done. And you leave.
What would be the odds if after two hours you called that salesperson back because he let you go? In other words, if he lets you go, that price is as good as he can go. Maybe you can get it better from another dealer. But that’s the best they can do. And you have to walk on him and convince him that you’re willing to walk, to make, to convince yourself as a buyer, when he lets me go, I’m now convinced he’s done. He’s gotten as good as he can get. Right? And then I say, well, would he be happy if I called him two hours later and says, hey, I’ve decided to go with you. I’m going to live at that price. Would he be happy to have that phone call? Hell yes he would. So I said, when you’re a salesperson quoting a price, your buyer looks at you like you’re a washcloth.
And I said, how many of you use those nice white, fluffy washcloths in our hotel that we’re staying in for the… And they all raised their hands. And I said, when you’re in the shower yesterday and that washcloth got full of water, what did you do? Bring it up. And I said, on that call, in the buyer’s mind, you are a washcloth. And I said, when you’re in the shower and you start ringing that washcloth, when do you stop wringing? And they say, when it stops dripping. And you’re a washcloth in that buyer’s mind. So you have to have the intestinal fortitude to walk out of that office. You can always re-engage. But if you don’t, if you can’t, well let me call my manager. And they’re going to squeeze you until there’s nothing left. And so when we teach them the psychology from the buyer’s point of view because they’ve been to buying school, these purchasing guys, you think they don’t know how to squeeze the washcloth?
They teach them how to do that. Right? And the salesperson’s desperate for the business, desperate to make us quota desperate to go to President’s Club and they cave in. So, now we have to teach them how to defend that. And what we have found is that if we teach the salespeople and their managers typically have to help them, to prewrite before you go out on that closing call, three polite Nos. So you tell me, hey Mike, and I’m ready to go, but your price is too much. My first polite No is, well, Mark, today is March 13th. You found out on February 18th exactly what the price was. We sat down that day and ran the numbers, and you told me then, you know, you thought the value was really good, you’re getting good value. What happened? That’s a stand, that’s a polite No. That’s resisting the squeeze.
Right? So we teach them to write out and have pre-planned three polite No’s. Most buyers are conditioned by our weak competition. And most buyers know that as soon as a salesperson’s ready to walk out of the office, that’s as good as it’s going to get. We’ve conditioned them on that, but most salespeople don’t have the intestinal fortitude ahead of time to withstand the squeezing, which is why the other Mike Bosworth rule is that the only salespeople who can go out and negotiate their own prices are those ahead of quota. I say to the managers, if your salesperson is under quotas, you have to go out there and provide the backbone and coach the call ahead of time. We want to teach them how to survive that call, but on their own, they’re not going to have the ability to do it.
Mark Stiving
Yeah, that’s a great rule. Because if you’re behind quota, you’re even more anxious about closing the deal.
Mike Bosworth
Or desperate. And there’s nothing more pathetic than a desperate salesperson.
Mark Stiving
Absolutely, nothing at all.
Mike Bosworth
It’s really down there, right?
Mark Stiving
So what you described so many thoughts come to mind as you go through this, but one of the things I often say, and I don’t teach negotiations, right? I just, there’s a few tips in negotiations that I talk about. But one of them is patience wins. So the more patient you can be, the more likely you are to close at a better price, and so patience could be, I’m going to walk away. Patience could be instead of a 10% discount, I’m giving you a 1% discount, and we’re going through this 10 times before we get to 10%.
Mike Bosworth
Yeah. But, then you’ve given away 10%. And my take is if you withstand the three squeezes at the beginning, only a small percentage of the time that they then go to a real negotiation. Because so far there’s no negotiation. When I give you my three polite No’s. I’m just drawing a line.
Mark Stiving
I love that, by the way. Yeah, absolutely. Love it.
Mike Bosworth
And so then, and it’s only happened to me even four or five times. I will give the buyer three polite No’s, and he still says, no, Mike, you’re going to have to do better. So now I can open it up for negotiation. I could say, well, Mark, the only way I could do something for you is if you did something for me in return. And you know what the buyer always asks. Like, what?
Mark Stiving
Like what? Yeah, exactly.
Mike Bosworth
So now I can put what I want out there first, and I can say, well, if there were some way that you could move the phase two portion of this into phase one so we could, you know, put it all in one deal, if that were possible, we could do something for you. And we’ve got the end of the quarter coming up. If there were some way, right now you’re probably looking at doing this first week of January, if there were some way that you could move that decision back into this fiscal year, we could do something for you. And so then the buyer can come back and say either, no, we could never do that, and then you’re going to have to walk out. Or in most cases, they would say to me, Mike Bosworth, those things are possible.
And then, now I can say, if both those things are possible, I’m willing to give you an extra 30 days of consulting handholding during this implementation phase, which you’re going to raise dramatically, your odds of it coming in on time and working. And then can we go forward on that and, done deal. But, see all that’s coachable before the call. We can coach the seller on the three polite No’s and we can coach them on the gets and gives. It’s not ‘gives’ and ‘gets’. We’re going to ask if this is possible, and if this is possible, then we could do something for you. And he has to come back and say, both those things are possible. Now I can say, well, if both those things are possible, it’s conditional, we’re willing to put this on the table.
Mark Stiving
Very nice. So I was about to tell you that I always coach gives and gets and then you go, but it’s not gives and gets, it’s gets and gives.
Mike Bosworth
It’s ‘gets and gives’. It’s much better to get the ‘get’ agreed to before you propose the ‘give’.
Mark Stiving
Yeah. That makes sense. Absolutely. And so where can I learn about three polite No’s? I want 20 possible answers to three polite No’s.
Mike Bosworth
I didn’t understand your question.
Mark Stiving
Yeah. I would love to be able to go read your article or white paper or whatever or book that says, here are 10 examples of three polite No’s,
Mike Bosworth
Well I didn’t quite do it like that back when I wrote this book, but this book has a couple of major negotiation stories where it maps out exactly what I just told you. It’s called the Dave Crabtree Story. And maybe you can even google it and not have to buy the book. But if you look up the Dave Crabtree story in my solution selling book, you’ll be biting your nails to get through that one. It was tough.
Mark Stiving
Nice, because I got to tell you, I love the three polite No’s. I’ve never heard that before. And I think that sounds really powerful.
Mike Bosworth
Yeah. You don’t want to get into an argument, it’s, hey, what happened? We were going along and…
Mark Stiving
Yeah. Nice. Mike, we are running out of time. Boy, I’ve been just enjoying this conversation so much. But let me ask you the final question, and once again, it doesn’t fit you perfectly, but here’s the question. Okay. What is one piece of pricing advice you would give our listeners that you think could have a big impact on their business?
Mike Bosworth
The biggest impact would be to understand the value, i.e. how your buyer would use a particular piece of your product to solve their problem. And if you have that knowledge, it’s really easy to defend the value of your price.
Mark Stiving
Nice. And that’s an answer that I would’ve given too. I love that answer. So thanks, Mike. Thank you so much for your time today. If anybody wants to contact you, how can they do that?
Mike Bosworth
LinkedIn.
Mark Stiving
Okay. We’ll have your URL in the show notes as well. To our listeners, thank you so much for your time today. If you enjoyed this, would you please leave us a rating and a review? We hugely appreciate those. And if you have any questions or comments about this podcast or pricing in general, feel free to email me, [email protected]. Now, go make an impact!
