I had a potential client who reached out to via cold email. This client is a large startup with many employees and over $50 million in funding. I’ve already sold my services to one of their competitors and they paid me well for that gig and it seemed to be an urgent + specific problem for them. So, I looked up the client’s competitors and found these guys and thought I’d reach out.
The CEO asked me a few questions verifying I was local to the area and if we had met before and eventually passed me on to his CPO. This company is in the logistics industry and I provide data mining solutions.
I had already made 2 mistakes with this company:
- I had called the existing CPO the wrong name when I was copy/pasting my cold emails to him. Luckily, I caught this one and sent him an email right after apologizing and correcting the mix-up.
- I had mixed up the dates for booking a call with the CPO. He had requested the next week and I had suggested the dates for the current week because I was looking at my calendar wrong.
Call with the CPO
After booking a call with the CPO, I hopped on the call but completed f****d it up. Here’s how it went down.
We did some light chatter. He asked me about how our company was funded (as we are a much smaller, largely unknown startup) and how our approach to data mining was designed (as he had previous experience in this context from a previous startup and had some doubts).
Along the way, I asked 1-2 questions about commitment and he said quite frankly to me that these are more second date kind of questions. Which I felt was fair, he suggested we talk about a sample data mining job solution as I had already alluded to in my emails earlier with them.
After feeling like I had passed all of these questions, he asked how much the solution would cost him. I told him we usually do a sample data mining job at about 10K data points. He suggested only doing 100, but I told him you don’t get an accurate enough idea from 10K. He said ok. He has a total of 500K data points.
Afterwards, he asked again how much it would cost him and I asked him what his budget was like. He was hesitant but then I told him the way this works is you tell you me your # and I will speak to my team and get back to you.
He then said if the amount is $500, I could have his credit card right now on the call, if it was $1,000 he’s sort of open to it, if it’s $5,000 he’d really have to think about it, and if it was $10,000 that is out of the question.
He emphasized I should not be looking to make money as this was just a sample data mining job for a larger job.
Where I blew the whole call
I heard the numbers but didn’t know what to do. $7K was really the number I was gunning for and our markup was great at that point, but I took him literally when he suggested his range and thought this was OUT of his range … I didn’t know what to do.
I don’t know why, but I just started defending myself saying our costs are very high and that our time is very important and he started countering saying this should just be a sample one, not out to make money. Later he said he wasn’t even sure if the final data was even valuable to them in the first place and I said even to find out if the results you’re looking for are there is a valuable business question for you. The main problem was he wasn’t sure for thousands of dollars we’d even find the results they were looking for (maybe they didn’t exist). There was no guarantee I could give but since I had already done it in the past, I KNEW they would find the results.
My main concern was giving him the sample job for free as it is costly to do but also I don’t want to set the tone for the remainder of the job. In other words, if 10K data points cost $10K, 500K data points most cost $500K, I don’t want to mess up the rates for the remainder of the job.
Then he started saying to me that I should be glad I even took his call, a CPO like him and their lead designer and also started giving me advice that I should have some sample results already available for them just as a tip because this was his fifth startup. He made our team sound like a bunch of young guys in a room (which is true) selling to a much, much bigger company. I had the nerve to say back to him that he should be glad to have experts like us on the other line as we normally even charge for a consultation but waved it because they are local to our area.
He also just flat out asked for some sample data but I said we couldn’t offer it to him (as we would never share confidential client result data).
Eventually, after some pointless bickering back and forth, he basically said look I don’t think this is going to work for us and there’s not a good fit here and we both thanked each other for their time and hung up.
I was so sad because I am very new to sales but know I have a great product which can solve their business need – I have already helped one of their competitors. I was also sad because a $10K sample deal meant that the entire deal to do the job was close to $500K deal or MORE.
After calling someone older than me with experience and telling them what happened during the call, I learned a few things:
- Him saying 10K was out of the question meant they had THOUGHT about it at least and that 10K was probably on the table, 5K was for SURE on the table
- He had given me his RANGE with UPPER BOUND and they were SERIOUS which meant all I had to do f***ing close
- I had got in a classic pissing match towards the end (which is a losing bargain for me because I am definitely a nobody and need his business as this is very niche)
- I should have taken his range and hung up the phone immediately – NEVER spending close to 10-20 minutes justifying myself and my fees – then emailing him back with the quote and even doing the rest (if any negotiation) over email
- I should have shared with him a quick way he could himself test out the data to see if there was value for them (which I had figured out later) before they even did the SAMPLE job for 10K data points
- Ego is a costly thing 🙁 I was so embarrassed as I don’t know how many people on the other end heard the call and this kind of egotistical jerk (which I’m sure I came off as) is not true to who I am
- Positivity is key to sales and having real empathy, be on your customers’ side. Sometimes you might not even be getting bullied, the customer might not just know or be unaware they are lowballing or saying something offensive. Sometimes, there are real ways you can create value for the customer you might not have thought of and make even more money. But most importantly, be positive and don’t justify yourself especially if you’re confident in what you’re selling. Don’t let low balls and knocks at your company’s abilities affect you – focus on the numbers.
- STRANGELY, my mentor pointed out to me that the deal might still be on the table
Light attempt at recovering the deal
Assuming the deal was still on the table, 6 hours later I sent them a quote (with no apology) saying I spoke to my team and it would cost them $9,500 for the sample job … I also included the features that would make up that job. It was a cold sounding email/quote, but I thanked them for their time towards the end.
This call was on Thursday and today is Monday and I’m still in shock and very upset about what happened. I’m so stupid and came off as a real jerk, and it will likely cost me a fair amount of money as a lesson to learn.
Questions for you guys at this point
My questions to you guys out there who are much wiser (and less egotistical) than me:
1) Do you think the deal is still on the table? What is likely to happen now on the other side? How long until I potentially hear back from them? What might their response be? I don’t know if they’ll be able to find someone else to do the job, but it is certainly possible.
2) How can I recover this deal?
3) Even if I do manage to recover this deal, how do I still get paid adequately? What if he leverages my desperate need to recover the deal to mark down the price (even for the sample job) by a lot?
4) I kind of just want to deeply apologize and hope he’ll understand I’m young and new to all this, which I think he already picked up on, but who wants to do business with an ass hole. How can I fix the damage done to my image at this point?
Any help would be greatly appreciated, I want to act while there might still be some hope left. Thank you in advance.
TLDR; How can I recover a deal where I started bickering with the CPO (like an idiot) on the first phone call with them where I was supposed to give them the quote?
First, learn to let all of the small stuff go. Name mixups, typos in emails, etc. No one remembers this in the end, and from my experience, it does not matter.
Second, the turning point in the call sounds like it was here:
“Afterwards, he asked again how much it would cost him and I asked him what his budget was like. He was hesitant but then I told him the way this works is you tell you me your # and I will speak to my team and get back to you.”
One approach to working with new clients is to put together a Statement of Work where you list out projected costs for each item of work. (If it is an estimate, be sure to indicate this and that final costs may change.) I have found that clients are more receptive to quotes, even when higher than anticipated, once they understand the work involved and know what they are paying for. Build your costs into this type of model. I don’t think you should have to “justify” your costs per se, the services cost what they cost and are market driven.
If you are worried about getting paid, it is typical to ask for milestone payments or develp a pay as you go model along the way. When you reach a deliverable, you get paid. Or, in a monthly billing arrangement, you get paid for the work you have done as it is being performed. What you don’t want to do, is take on a project, not get paid until completion, and then end up possibly not getting paid for hundreds of thousands of dollars of work. Settle this up front, and if the client does not pay upon receiving a deliverable or bill, inform them politely, after 30 days or so, that you will have to stop work on the project.
As for recovering the deal … I see no harm in following up, in a very low key manner. But, you don’t want to be perceived as harassing or threatening. If you don’t hear back, your last resort would be to offer a free demo of your services, or a reduced rate on a project.
Also, don’t forget that new business often comes from referrals from existing customers and industry reputation. It is worth your time to build relationships, even if you can’t recoup the costs. A rule of thumb, depending on the industry is 0.5 to 5 hours to develop a new client relationship. If you can’t close the deal or make significant progress during that time, consider politely moving on.
For future customers, can you take existing data and deidentify or anonymize it in order to provide a sample to potential clients? Or even create a “fake” test data set to analyze?
You need to better qualify prospects generally. This means getting them to understand the financial impact to their org if things go well (which you’ve proven you can execute with their competitors). If you can get them to a large #, then $10K seems trivial in comparison.
You can basically never ask too many questions, and people like talking about themselves. To me this feels much more like a qualifying issue than any specific problem.
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