Your prospect has sat through all your presentations. He’s called all your references. He’s convinced.
“We are ready to buy,” he says. “Just one more thing. We want to witness a live demonstration of your equipment as a final confirmation of your competitive advantages and value proposition.”
A demo request contains some good news and some bad news.
First, here’s the good news. So far, you’ve substantiated your value proposition. The prospect has decided to buy from you. You are on track to achieve value-based pricing.
Now, the bad news. A demo stands between you and your purchase order. A demonstration is the closest a prospect can get to experiencing your value without actually owning your equipment. A failed demo destroys value-proposition credibility and all hope for achieving value-based pricing. The best salespeople view demos as so risky that they try to close orders without them.
Unfortunately, no matter how hard you try, you will not always escape the need to conduct product demonstrations to substantiate your value. Success comes from knowing when to use product demonstrations in the sales process and careful preparation.
When to Demo
Do not perform demonstrations for unqualified prospects. A demo at this early stage doesn’t help advance the sales process. You’re not far enough along for a potential buyer to act on the demonstration results. Plus, you’ll be flying blind. At this stage, you have not discovered purchase timing, budget, application, value-driver, and competitive position details. Without these, you cannot define and execute a demo that will put you on a path to a purchase order with value-based pricing.
Furthermore, capital equipment demos are very expensive. The equipment alone can cost more than $1M. It takes a team to prepare the system and execute the demo. Plus, test materials can be expensive. It’s worth it when your demo-to-order close rate is high. But that’s not the case if you’re demonstrating your equipment in the prospect qualifying stage of the sales cycle.
It’s best to use product demonstrations to confirm a prospect’s decision, not help him make one. Before you agree to a demo, the prospect should have already decided that if the following are true, he will buy your equipment:
- Your framing of the important buying criteria
- Your value proposition
- Your competitive advantages
- Your data and proof statements
When you accomplish this, the prospect will show up at the demo focused on confirming your value proposition and amenable to a demo script you have scoped to do so. Therefore, it’s best to demo once you have finished the establish-value phase of the sales process. See the figure below.
Be patient as you work through the establish-value phase. If you demo too soon, you could get sucked into a prove-your-spec-sheet pageant. That’s when your prospect
- Takes your spec sheet,
- Asks you to demo it,
- Lines your results up side by side with your competitors’ results, and
- Makes up his mind on how to weigh and evaluate them.
The ensuing defense of each specification line item will be a huge distraction to your efforts to establish value. So, hold off on scheduling that demo until your prospect is fully qualified, you’ve established your value, and all that is needed is a final proof point to confirm a decision that your prospect has already made.
How to Prepare
The likelihood of success for a product demonstration is determined long before the prospect arrives at your factory. It is all about how well you have prepared. Everything from the prospect’s expectations to the actual demo system must be in perfect order to ensure a successful outcome.
Negotiating the demo plan is the most critical step. You don’t want to allow the prospect to prescribe anything that strikes his fancy. You need to run a demonstration that confirms your advantages against the competition. If you’ve established your value, this will be what your prospect also wants. Your demo plan should capture at least the following:
- What tests will be run, in what order, and how many times
- Which tests will be witnessed live and which will require just a data review
- The configuration of the demonstration system
- What data will be collected and how
- The definition of success
- How the results will be evaluated
Should You Agree to Ship a Free Evaluation System?
Sometimes your prospect will insist that you ship them an evaluation system before they commit to purchasing from you. Conducting your demonstration at the prospect’s site means more risk and more costs for you. It follows then that agreeing to provide a prospect-site evaluation system requires even more rigor than a demonstration conducted in your demo lab. First of all, you need to decide if the costs and risks are worth it. Key questions to ask in this regard include
- Is there a high probability that you will meet the success criteria?
- Does the prospect have budget approval to purchase the system once the evaluation is completed?
- What is the potential sales volume from this prospect?
- Is this evaluation broadly supported by the prospect’s organization and management?
If the prospect-site evaluation risks and costs are worth it, you’ll want a formal agreement that defines the terms for
- Evaluation duration
- System shipment
- System purchase or return
- Equipment repair and maintenance during the evaluation
- Consumable and repair parts
- Equipment supplier’s resource commitment
- Prospect’s resource commitment
Even with a comprehensive evaluation agreement, you can still get stuck in a never-ending evaluation. You can usually trace this issue to one of two root causes.
The first occurs when the system ran well enough to provide significant value to the prospect but failed to achieve an insignificant performance measure. The prospect wants the system. He might even be using it in production. Yet, he uses the missed performance measure to drag out his free evaluation period. This never-ending-eval trap can be mitigated by including and communicating a time-based evaluation termination term independent of any performance measure. For example, you can incorporate a term like “The evaluation period shall end on October 28, 2021. On this date, the prospect shall elect to purchase the system or return it to the supplier.” The equipment supplier can invoke this take-it-or-leave-it term if the prospect takes advantage of a minor performance shortcoming.
The second recurring never-ending-evaluation issue occurs when the prospect doesn’t have budget approval to purchase the system even if it has met all of its success criteria. Mitigating this issue includes confirming budget approval before shipment and only shipping that system on a conditional purchase order.