At a glance
- The success of winning a deal massively depends on whether there is a compelling event
- A compelling event forces your customer to act to avoid a negative consequence or trigger a positive one
- Identify compelling events in the sales cycles by asking the target problem and implication questions
You know the situation. Your customer sends you positive buying signals, your solution fits the described problem perfectly, you send an offer, and then … nothing. You follow up with your contact, but nothing happens. You don’t lose to a competitor, you don’t lose to anyone, but your customer just won’t make up their mind. It seems as if you have a thirsty horse in front of you, but it refuses to drink. What is the reason? The answer is: a “Compelling Event” is missing.
What is a Compelling Event?
A Compelling Event (CE) is a specific business event that has a catalyzing effect. A CE forces a customer to act in order to either trigger a positive effect or prevent a negative consequence. The presence of a Compelling Event can extremely accelerate sales processes, whereas the absence of one significantly reduces the success of closing a deal.
It is important that a noticeable effect occurs in case your customer does not act. Also, it is important that a stakeholder at the business level feels the impact. Ideally, there is a defined point in time by which your customer is forced to act.
A Compelling Event that everyone knows is the necessary tire change on a car from summer to winter tires, for example. You can postpone the change of tires for some time, but ultimately when the first snow falls, you have to act. Otherwise, driving becomes extremely dangerous and insurance companies are no longer liable in case of damage.
What are examples of Compelling Events in the factory environment?
But what does this actually have to do with factory digitization? Digitization is driven by innovation; it’s simply about getting better and better. Factories are working, and the manufacturing industry has gone from record to record in recent years.
It is precisely this mindset that leads to solutions often not progressing beyond the proof-of-concept or pilot phase. McKinsey, one of the world’s leading strategy consultancies, has coined its own term for this situation: “pilot purgatory.” Only 30% of pilot projects are later rolled out. One of the reasons is a lack of return-on-investment of solutions during a later roll-out.
In terms of the sales process, this means that customers often don’t buy solutions in the first place. Therefore, it is important to identify a Compelling Event at your customer´s factory or business early on. Examples of such events are:
- New business year: there is a clear date on which a new system is to be introduced
- Legislation: new laws, often related to compliance, that require the purchase of a new system (for example, the pharmaceutical industry had to add a data matrix code on every package for full traceability starting in 2019)
- Year-end budget: there is outstanding budget that needs to be invested so that it is not cut next year
- Acute problem: there is a current problem that is causing pain and needs to be fixed as soon as possible
- Change in ownership or management structure: new management gives clear direction to increase efficiency and reduce cost structures (for example a buyout by financial investors)
Acute problems are usually the least obvious Compelling Events, although they are very often similar between customers. Examples of these Compelling Events in the factory environment are:
- On-time delivery issues that lead to customer dissatisfaction
- Frequent customer complaints due to quality issues
- Loss of orders due to high costs / slow delivery compared to competitors
- Low or negative profit margin due to high production costs
- No investment opportunities due to a lot of tied up capital in form of high inventory levels
- High effort in meeting compliance requirements (e.g. transmission of quality data or batch information) due to faulty systems or manual processes
- Low customer satisfaction due to faulty or incomplete information transmitted to the customer (e.g. delivery date)
Again, it is important that inaction triggers a negative effect. For example, if your customer has high administrative overhead due to frequent schedule changes, but still meets delivery dates and does not have great cost pressure, there may not be enough pressure to digitize his administrative processes. He might do it anyway to have a competitive advantage; but he may also put it off for many, many months until he realizes that the pressure from competitors increases.
How do I find out if there is a Compelling Event?
Compelling events can be identified by asking clever questions during the sales process. SPIN Selling, a sales method invented by Neil Rackham, is ideally suited for this purpose. In SPIN Selling, targeted questions are used to try and draw the customer’s attention to a problem and its implications. The questions used to identify the impact are especially core here. Problems without business impact are usually not worth solving for the customer. For more details, read this blog post about SPIN Selling.
What if there is no Compelling Event?
If there really is no Compelling Event, you can try to create one artificially. For example, you can offer special discounts until a certain point in time (e.g. end of the quarter, special discount promotion) or you can suggest artificial scarcity in the implementation of the solution (“Our developers are pretty booked, we need a decision by X to get the solution implemented in the next quarter”). As a rule, however, sales people should decide exactly where they can best deploy their resources. Sometimes it’s more conducive to step away from the deal, pursue another opportunity, and contact the customer again a few months later.
Compelling events are a strong accelerator of sales processes and without compelling events you often cut your teeth on customers, decisions are simply not made. Do you know such situations? Then consider whether a Compelling Event is missing and make sure to identify one in your next conversations. Good luck!