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In this episode, we take a deep dive into how to use the consultative sales process to identify solutions to problems impacting your customer's business. 

We cover:

  • How to profile your customer
  • How to identify business and process problems
  • How to gain buy-in for problem resolution
  • How to avoid common deal killers
  • How to create and propose solutions

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Show notes

This is the smart buildings Academy podcast with Phil Zito Episode 223. Hey folks, Phil Zito here and welcome to Episode 223 of the smart buildings Academy podcast. And in this episode we are going to be discussing consultative sales for building automation. Now, what I want to really drive home before we even get started with this episode is that consultative sales, in my opinion is going to be really becoming a focal point as we move into 2021 and beyond. And the reason why is currently with the whole Coronavirus thing going on, it looks increasingly likely that we are going to see limited re occupancy of buildings. And with limited re occupancy as well as with states and local municipalities having budget shortfalls and being in the red because their tax base decreased, we're going to see a lower investment in new capital projects than what we're used to. Now, that being said, we all know the whole maybe we all don't know. But one of the concepts of construction selling is the concept of margin stacking. So as a building automation contractor has their margins, then the mechanical takes that quote, maybe add some margin on top of that, then the general takes that quote, maybe add some margin on top of that. And before you know it, you can get to a much higher margin level. Now when you're dealing with owner direct work, which is one of the main outcomes of a consultative sale, then you are able to have that lower margin percentage, which enables your total cost of your projects to be lower, which enables you to better make use of a customer's operational or limited capital budget. So I want to make sure I pinpoint that out. We don't normally associate retrofit work and owner direct work with lower margin. But it's something I think we may need to consider as we move into this kind of new normal. I hate that saying but there's no other way to describe it. Because as we look at owners having reduced budgets both in the municipalities, as well as in the private sector, so public sector and private sector, we see reductions in budgets. Because of that, we're going to have to get creative in how we price things. Now, that's not to say that people won't still do projects, if you're servicing the industrial sector, or the tech sector, they very well may still do projects, I know industrial has had a massive uptick, especially in warehousing. And I know data center work has been expanding greatly as well, due to everyone being on the internet. That being said, our traditional bet bread and butter of K through 12, higher ed, commercial real estate, those are, in my appearance, opinion as well as some of the executives at large companies that I've talked to it's their opinion as well that that's going to dry up, and we're going to have to focus more on retrofit work. So how do we do that? Well, we do that through a consultative sales process. Now, this process requires you too have, I would say a reasonably deep understanding of building automation hva. See, and in general, a little bit of it, if you don't have that knowledge, then you're going to struggle to do a consultative sale because in a traditional sale, you're going to have everything laid out for you. Usually it's a plan, inspect, sometimes maybe it's a design build, but you're still largely going to have the consulting engineer driving adherence to whatever the customer outcome is. Now in a consultative sales environment, you're going to be finding potential use cases for your customer, you're going to be justifying the outcomes of implementing whatever strategy you have for that use case. And then you are going to help the customer both sell that internally as well as execute that project. Now you're not going to be doing the executing obviously, but you're going to facilitate the executing. So the consultative selling selling process is first we have to identify the problem that is at the site. Next we have to define the problem then we have to define success and key performance indicators associated with That problem and it's resolution. And then we have to propose a solution. So we're going to go through each one of these in a fair bit of detail. Now, first thing you have to do before you ever start a consultative sales process is you need to really profile your customer, you need to start to build out essentially, a map of your customer or your account, you need to understand who the decision maker is, who influence ours who's blockers, all those kind of key sales concepts. If you've ever been through a strategic selling course, you've learned about if you haven't, I'd encourage you, Mark jewel, with selling energy calm runs some really good sales fundamentals. So if you're like looking for more of that, hey, how do I profile accounts, things like that, I would point you over to him, if you're looking for the technical aspects of selling, and how do we actually build a consultative sale? That's what we're going to be covering in this podcast. So you you go and you profile your customer, right? You are figuring out who's the influencer, who's the decision maker, you're finding out budgets, you're finding out procurement and purchasing process. And you're going to find out how is your customer service if you don't already know because sometimes you're coming into customer accounts that already have service relationships with an outside mechanical or an outside controls firm. Unfortunately, for them, they didn't go and reach maybe the level of decision maker that you're reaching out to, which is typically at the high D level to the executive level, and you're reaching out to them, and you're starting to understand their business, and you're starting to sell solutions that will impact their business, but you need to be aware of how they're serviced. Because if they're self serviced, when we later in this episode, get to customer sensitivities, that will be really important. If they're serviced by some managed service provider, then that will also become important. So you'll map out the customer organization, and if applicable, if it's like a really large organization, you're trying to do a large retrofit, then you can create an account coverage plan. I will tell you typically, in the consultative sales process, smaller is better initially, especially if you've never done one before. Because there can be a high cost of sales. What I mean by high cost of sales, is that the effort you are investing to secure a consultative sale on a large scale can be quite high. Lots of meetings, I would say travel But no, it's traveling right now. Lots of iterations, lots of discovery calls, etc. So the smaller your scope initially, as you're learning this process, the better. And also, just like with retrofit, when I talk about doing retrofit, quoting a retrofit sales, I highly recommend the simpler, the better. You start off with simple verticals, which in my opinion, Commercial Real Estate's a simple one, in my opinion, from commercial real estate, I would move maybe to K through 12. that's relatively simple, then to higher ed, and then into healthcare. That would be kind of my progression of advancement as I get more skilled in what questions to ask what discovery to do and how to position. That's both for retrofit, as well as for consultative sales. So from there, right, now we have to initiate the conversation. So what starts the conversation? Where does this data come from? Now, if you have a relationship already with the customer, especially if you have a service relationship, then you can work with your service team to understand pain points. If it's a commercial office building, and they're worried about IQ, that is a conversation that you could start if they have reduced occupancy. And they want to be able to better control the HV AC in their buildings so that they can get very granular and what zones are on and what zones are off to reduce operating costs. I mean, those are two very simple discussion points that are pertinent across our market right now. Now, obviously, you can get into much more complex things. You can get into data center and uptime, you can get into health care and environment. You can get into educational areas, there's a variety of areas that you can focus in on. The important point is understanding the vertical you're serving, understanding the pain points, like for example, if I go to an art, I


national real estate investor I like to read there, especially for the commercial real estate market. So that's nrti online.com. I get their daily newsletter. It gives a lot of good painpoints understanding what is going on in the commercial sector? What are real estate, real estate trusts doing? What are real estate investors doing? What moves are they making what are kind of the financial pain points they're focused on. And so you start to read that and you start to understand kind of the messaging, as well as any potential impact you could have. Maybe it's around analytics, maybe they are looking to reduce their operational costs by reducing their workforce and using automation and analytics could potentially do that. So you start to connect with trade organizations that serve the verticals that you want to do a consultative sale in, start to learn the lingo start to understand their pain points, and then you start seeing if those pain points resonate. So let's move into step one, which is identify the problem. As I mentioned, I gave you a couple ways to define your problems, right to kind of list out them. But now what you need to do, let's say you're really targeted on that commercial real estate operator, and you want to reduce their operational costs by automating some of what they do. So you're looking at a cost avoidance strategy. So your return on investment will be the cost of the investment to automate the control solution. And then you will look at the reduction in cost that that automation will cause. And you'll be able to come up with a return on investment projection, based on the cost of your investment versus the return of the investment. I mean, that's basic ROI math, right? So you'll have to identify your current state. That's the first thing you need to do with most consultative sales, is identify the current state understand what is currently in place, what systems do they have? Do they have an old pneumatic system? Or do they have a modern control system? Those are two big, different states. And once you understand the states of their current facility and their current systems, then you can start to project solutions, you can start to figure out kind of, hey, what are the solutions? And you also want to identify the root cause of what is driving them to engage with this problem? Is it that they have limited operational budget, is it in the case of most commercial real estate buildings right now that they have limited cash flow, that their tenants are starting to not pay rents, or they're having reduced occupancy rates? What are these root causes, because you're going to spin them into your messaging, as you do presentations, as you create your proposals, all of that messaging is going to come through. So up to this point, right, we've identified our influencers or decision makers or budgets, our procurement processes and purchasing processes. That way, if like, there's a three bid rule or something like that, we can negate that as much as possible. And we have went and started our conversation. So we've identified the current state and we've identified a root cause. From there, we have to define the problem, we have to define the cost of the problem. And this is where you can look at some historical data, you can go and Google, you know, operational cost per square foot of commercial real estate, or you can look at average electrical cost per square foot, whatever it is that your problem statement is, go and find data. And the more data you can find, that way you can benchmark, how is your customer comparing to the market? And


then how could your customer compare, if they were to implement your solution? From there, we have to identify the opportunity cost of the ROI, or of the solution rather, opportunity cost is let's say, I have $10 and I can choose to invest it in investment a or investment B. Now once I use that, $10 that $10 is used. So that was my opportunity cost, right? I have this opportunity and the cost of the $10 for option A that may return $100 and option B may only return $50. So option A on the surface looks like a better investment. But if I find out later that option B may return $50 but then for the next five years, it's also going to generate $10 that gives me $150 and then you have to start doing time value of money and understanding does that investment work for me? Does it not, I really like if you don't have financial know how you've got to get it in order to do consultative selling, because a lot of the business cases that we at least for the next couple years are going to be making are going to be directly tied to financial benefits. Unless you're doing like data centers or health care, then it's going to be tied to uptime, it's going to be tied to redundancy, it's going to be tied largely to measurement, verification, of indoor air quality, making sure spaces are safe. Now, once you have identified that opportunity cost, and you've listed it out, you need to gain consensus on the business impact. And this is a big step that a lot of people miss. Because they don't get with not only maybe they get with the decision maker, and they say this is what we see. But they don't get the decision maker to come to the same agreement, or they miss out on a couple influencers. And those influencers start to question the value or maybe they're doing an operational cost reduction. And they haven't went and dealt with potential issues of the staff, you know, basically revolting being like, hey, you're letting us go. So we're going to question the business impact. So you've really got to make sure you get that step down, you got to gain consensus on this business impact. So from there, we move into strategies for problem validation, we start to look at using customers during problem validation, we want to have the customer This is where you do a iterative meeting with the customer and identify the problem gain agreeance on the problem and say, Hey, this is how we're going to prove the problem out maybe it's logging, maybe it's document review, maybe it's mmV. Maybe in our case of operational efficiency, we're looking at response time, on trouble calls historical response time. And we're looking at utilization of staff. And we're saying, Hey, you know, we could automate this, we could reduce response time by x. And we could also reduce your staffing levels by x. And so there you go, that's, and you get the customer to go with you on that journey of problem validation. And because of that, what happens is the customer has now basically created the problem themselves in their mind, and thus, it will be much easier to position it moving forward. Plus, you'll have more engagement and buy it. From there, we move on to Step three, which is defining success. And this is critically important. Because oftentimes, what I like to do from a consultative sales approach is I like to use little wins as springboards to large wins. So for example, if I were to go to a commercial real estate firm, and maybe some someone who's managing multiple properties, and I go and show that by using this analytics solution, we have reduced operational costs and increased tenant satisfaction, and increased response time by X percent to a baseline, then that makes it very easy for me to go and say, okay, we've done this for building


  1. Now let's go do it for y, and z. Because you've defined up front,


current state, that's why it's so important, these steps build upon one another. And when you shortcut these steps, you're really missing out you build current state, right, you identify current state, you get customer agreements with this problem. And then from there, you define the post state, you say, Okay, this is the post state, this is the KPIs, we agreed we were going to measure baseline here. And a year later, or six months later, here's where we are. We met our projections. This is the result. Let's now take it to the other buildings, and you can go and springboard and it makes it much easier. The most difficult consultative sale is always the first one. Because if you have no track record, and the customer cannot visualize what success looks like, then they are operating in kind of a fog, I like to say, and a confused customer almost always says no. So because of that we really want to focus in on using data, getting numbers, especially as you start to deal with the executive level and being able to prove out the results of those numbers. Okay, so we move from there, defining success and benchmarks. And we start to move in to proposing the solution right. So we've defined our KPIs. We've defined our success markers, and we're going to propose the solution Now, this is another area where my friend Mark jewel does really well on teaching folks how to write solution oriented proposals and develop proposals, we do really well and to teaching folks how to develop solutions, or more of a technical approach to things. So what you need to have is kind of two skills here. I've seen some absolutely horrid proposals, things that were, you know, broken English, no executive summary. So I'm going to give you kind of a base framework for proposal writing. This is super high level though, like I said, if you want to dive deeper, go talk to mark. Now, that being said, here's the base structure for a proposal, the base structure, obviously, introduction, title page, right, you want to have that title page, then from there executive summary, you know, summarize in one page, you want to summarize the problem, the solution to the problem, the justification for the solution, and the details for the implementation of the solution. So the problem was, our operational costs are too high, and we don't have cash flow. Our solution for that is an analytics platform that will help automate, troubleshooting and automate control of the building automation system. The cost is x, the return on investment is why we're going to validate the return on investment. Here's who we we've engaged, and here's your next step, you need to approve this proposal within 30 days, and then we will be able to start on x. And then what you naturally do. That's your executive summary. And then what you naturally do in each kind of Section after that is you expand on problem, boom, we've got a section for that solution, boom, we've got a section for that, throw in a couple testimonials of people who have used your solution, then the actual cost and return, boom, we've got a section for that with financial breakdown analysis, and then boom, next steps, basically, what's going to happen, what's the project timeline, you should be clear in that because that's something I see hang up a lot of proposals is they don't have a project timeline, they don't have a visualization of what implementation would actually look like. So people get hung up, and they don't take action, you need to say, if there are constraints related to this project, then you need to communicate those. Alright, now let's talk through some common deal killers. And then we're going to look at consultative selling in construction environment. So one of the things that I didn't know when I started working a lot with customers or customer sensitivities,


you know, being a very technically oriented person, being a very quantitatively minded person, I'm very data focused, I thought that if I showed people the data, they would immediately see the logic in the data. And they would be like II know, this makes absolute complete sense, of course, we're going to move forward with it. That is not the case. There's not even close to the case. There are quite often customer sensitivities that you need to be cognizant of, in order to kind of head off, and This usually happens, this will usually happen right between step one and step two, you'll identify a problem and a lot of those customer sensitivities will pop up. And then if you don't resolve them before you define the impact, you will start to get these kind of sticks in the mud who do not engage with the impact and the opportunity, and you've lost them and they will sabotage you all the way through proposal, and you probably won't even know it's happening. So what you need to identify when you profile that team is potential sensitivity. So if you're reducing staff, that's a very common sensitivity. So Stafford action, people are going to naturally get very worked up about that. And there's no real good way other than having that painful conversation with the executive upfront and being like, Look, you're probably going to get a lot of pushback because we're recommending a solution that's going to reduce your staffing levels. And people are going to push back against that because naturally they do not want to be replaced. Another one that will come up is more work, this solution is going to create more work for us. And that usually is actually tied to, it's going to point out that we don't know what we're doing or that we aren't properly handling issues. When I hear more work, that's key for, I'm afraid that this is going to point out that I'm replaceable, or that there are issues I'm not currently handling. I've heard this time and time again, when I hear more work, that usually means those two things. And you've got to work with them to resolve that of how this will actually make you more effective, how this will actually make your life easier. And it will help reduce the opportunity for mistakes, then we move to kind of the more logistical aspects of things, downtime, insight impact. Now, realistically, when you're doing the solution we've proposed, which is you know, just basic analytics for commercial real estate, because we're using a basic example, in this podcast, there's not going to be a whole ton of downtime, insight impact, there will be process impact. And you definitely need to have a proper process plan. And I would even include time to work shoulder to shoulder with the customer post implementation. In order to secure adoption of the technology, you've really got to protect your baby in its infancy, until it hits those KPIs. And you see the executive see the impact. And then they have buy in and they start to drive adoption within their culture. So once they have buy in, and they see results, which is usually within the first six to 12 months, then you can start to relax on your kind of babysitting of the solution. But in health care in K through 12, things like that when you're doing major retrofits that involve mechanical systems, or involve controls upgrades on the large scale, there is downtime, there's potential side impact, and you need to be cognizant of that and have mitigation plans for that. And then there's perceived value and cost. And this deal killer, this objection tends to come up if you have not properly defined the impact, and the KPIs during step two, and three, if you have not engaged your customer effectively, to go and define these impacts, then you're going to really see a perceived value and cost mismatch. And that is a key sign that you need to go revisit with your customer. And you know, if they say something like I'm not seeing the ROI you're seeing, or I'm not sure if this is the best investment of our cash.


Those are key phrases that it may not be worded as obviously as that. But those are key phrases that indicate that you have not fully connected with the buyer, or maybe some influencers who need to really be sold essentially, for lack of a better word on the perceived value and cost. All right, so let's talk about consultative selling in construction environment, and then we'll wrap it up. So consultative selling in a construction environment can be done, it is definitely more difficult. You talk about a high cost of sales, this one definitely has a high cost of sales, at least owner direct, you can figure out pretty early in the sales process, if this thing's gonna move or not. When it's construction, man, it could potentially look like you're moving you could be teaming with the right team go through a year of selling this consultative solution. And you know, someone comes in $10 less than your team and all the sudden all that is gone. So there is definitely a higher cost of sales in my experience. And in my opinion, this is not the place I would first focus because as I mentioned, construction sales. I don't see how it doesn't take a dip. I just don't see how that doesn't happen. I would love to be wrong. I would love people to come back this time next year and be like Phil, you are completely wrong. The capital market just exploded. And you're wrong. You read it completely wrong. I'd love that to happen. I don't see how it happens. But hey, who knows I'm not you know wizard. That being said, you still can deliver some consultative sales solutions. You have to understand first off how the project is being funded and the delivery models and the construction models that are being utilized. So you really really have to understand the funding because is there flex in the funding is that a GMP guaranteed maximum price What is the funding for the project what was tendered. And once you understand that, then you have the range in which you can work to actually build out a consultative opportunity, you have to understand the buyer types and who you can actually reasonably engage. If you've got a GC that's blocking you from ever talking to the architect or owner, then your likelihood of doing a consultative selling approach is probably pretty low. And you're better off just quoting the spec and calling it a day. If you're able to get to the owner and you're early enough, then you have the potential to influence construction projects, this influence can look in multiple different forms, you could have influenced by working with the owner prior to the project prior to Capital Planning, and getting a standard put in place with standardized use cases that get implemented that is a consultative sale. That's basically planting some seeds and letting them grow over the long game. Now, if you're actually in the process with a project right then and there, then you may be able to work depending on the design type, you may be able to work with architect with the engineer, with the owner to go and create use case based solutions as a pet potential ads or potential project changes. Once all of that is done, right, once you've worked through all of that, then it's just a matter of driving the project like normal. Now, that being said, I just want to reiterate, this would not be my primary focus, my primary

focus would be owner direct, I really think you all should be stacking your pipeline with some owner direct work right now, I really think you should be tying it to operational budgets if you can, as well as any capital budgets that are still in existence. And I would really identify pain points that resonate with your customers. And I would be building out business cases around that. What I did back in 2008, when the market collapsed, I started to focus on K through 12. Because I understood that market pretty well. And I focused on upgrading legacy systems so that they could go and have the best control and best environment for their students because they still had money. At this point, I don't know if that's going to be the case moving into next year, if municipalities are going to be constrained in their budgets, we've dumped a lot of cash into the economy, at least here in the United States. And I'm not quite sure how much more cash is going to be put into the economy. And I'm not quite sure how we're going to have resolution of budget shortfalls within these metropolitan areas. So I'm not sure if the old look at institutional work approach as kind of your hedge against a potential collapse in the private market is going to work. I'm not sure if that strategy is going to be the best approach. Alright, so with that being said, I hope you enjoyed this episode. This was a very high level like 50,000 foot summary of our course control consultative sales for building automation. If you found this podcast to be informative, and you would like a very deep and intricate dive into the consultative sales process with many, many examples and work sessions that we go through this information in the detail level that you need in order to be able to implement a consultative sales process, then definitely go and check out our consultative sales for building automation professionals live course. You can find information about the course at podcast smart buildings academy.com Ford slash two to three. Once again, that's podcast smart buildings academy.com Ford slash two to three. Hey, Thanks a ton for listening. I hope you enjoyed the episode, and I look forward to talking to you

Phil Zito

Written by Phil Zito

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