What a cookie-selling kid can teach us about guided selling

It all started with the doorbell ringing in the middle of Sunday dinner. A young kid that I somewhat recognized from the neighborhood stood right outside my door. “Would you like to buy some cookies? We’re selling to go on a class trip.”

If this kid would have been someone I knew, the answer would have been yes, regardless of whether I wanted cookies or not. But since this kid didn’t know my kid, I said something like “I don’t eat cookies …” and something “yada-yada-yada-not-healthy.”

But this kid had obviously attended some advanced sales training. 

“Oh, that’s too bad. So, you’re that kind of person that only buys traditional Swedish whole grain crispbread?” I nodded my head and said something like “Yes, you’re absolutely right.”

“Well, in that case, you should really try our crispbread. Everybody loves them.”

In this situation, I didn’t really have any other option than to sign up for the crispbread. If I didn’t, I wouldn’t be consistent with what I just said. So, I ended up contributing to this class trip anyhow.

What just happened?

From a very early age, we learn that it’s important to be consistent. And before we’ve mastered this, anything inconsistent we say is usually pointed out by peers and parents. In short, we learn that it’s very important that what you’re saying makes sense in relation to what you’ve said before. This urge to be consistent means that our first choice will have a big impact on the second choice.  (This works very much like em>priming/em> in behavioral psychology, but we don’t need to be that academic to understand the consequences.) Yesterday’s story is just a short example of how the need for consistency helped the cookie kid seal the deal.

So, why is this important when it comes to CPQ?

Because the logic used by the cookie kid applies to CPQ, too. When we answer the guided questions in CPQ, one answer will inevitably influence the next. Let’s look at an example.
 
Say that you’re configuring a car and the first guided selling question makes you choose between “Environmental” or “Performance”. How you answer this question will influence how you answer the rest of your questions no matter what options will be available to you. If you decided to go for “Environmental”, it will not be consistent to buy the bigger motors anymore. The opposite is true if you selected “Performance”. That’s why it’s important to understand how one question will lead the customer down a certain path.
 
We must understand that when answering one question, we might make choices about the other questions as well, without us being aware of it. When you make your choices, you’re priming yourself in a certain direction – simply because we always strive to be consistent. To create a strategic sales tool, we must understand how one question influences other questions, no matter if they are limited by logic or consistency.  This is one of the challenges for my workshop tomorrow. The second challenge is that I promised to bring something for the coffee break. The only thing I have at home is whole grain crispbread, but I guess that’s the way the cookie crumbles.

Is it easy for your customers to do business with you?

This is a guest blog post from Frank Sohn, Novus CPQ Consulting, who is one of our speakers at TactonDay later this week!


Most people intuitively know that quick and efficient responses to customer requests increase the chances of satisfied customers. These satisfied customers will, in turn, come back for more business. The question is why it’s so difficult to actually deliver quick and efficient responses to customers?

I think we all have different experiences of this, so let’s first look at some examples of what makes it hard to do business with a company.

Customer Service

Support

 

Every company should keep in mind that the ease of doing business with your company is about what the customer needs, and not what makes life easier for you!

 

While nowadays many businesses offer a multitude of ways for customers to connect with them, the most important differentiator is still a personal touch. Who doesn’t like to be treated like they are special? Note that a personal touch does not necessarily mean face-to-face contact: it might be a small notification about an online product training that the customer is interested in and that is now available. The objective here is to provide personalized and valuable information to a customer on a regular basis.

 

Now, let’s have a look at things that can help make your company easy to do business with.

 

Tasks

 

CPQ solutions are an excellent way to make your company a company that is “easy to do business with”. Why? Because they can address many of the negative business examples that are mentioned above.

 

How Configure-Price-Quote (CPQ) solutions can help you become easier to do business with:

Examples by Route-to-Market

Sales Team

Channel Partners / Distributors

eCommerce

 

While the maintenance of a CPQ solution does not impact the CPQ user, it is a very important cost consideration for every CPQ customer. It simply doesn’t make financial sense, in most cases, to have a completely different user experience for every Route-to-Market because it will only cause confusion. Here’s an example:

If a sales rep sees a feature “Hard Disk Drive” for a product “Laptop”, but the channel partner does not see that feature, there will be confusion regarding why the channel partner does not see that feature and what he/she must do to see that feature. This becomes very confusing when a customer buys directly from your company and via channel partners, because they may expect a certain behavior that is simply not supported in the other Route-to-Market.

A key objective should be to reduce CPQ product model maintenance by having a common or at least aligned user experience, across all Routes-to-Market (as far as possible and desirable).

Nevertheless, the guiding principle should be to use Configure-Price-Quote (CPQ) solutions and processes to make your company a company that’s “easy to do business with”. This may also mean that you have to invest more in a CPQ solution and the integration of this CPQ solution with 3rd party systems (e.g. CRM, ERP, PLM). If it is done right it can pay great dividends! To check if you reached your objectives, you should put some Key Performance Indicators (KPIs) in place before you move forward with any CPQ Project.

 

Want to know more? Contact Frank Sohn if you have any questions!

Tacton is awarded the Frost Sullivan 2017 CPQ Product Leadership Award

We’re very proud to announce that Tacton has received the 2017 Frost & Sullivan North America Product Leadership Award for best practice within the CPQ industry.

Over the past 12 months, we’ve been working extremely hard here at Tacton to deliver the most significant developments in our 25-year history. This includes the release of our new flagship product Tacton CPQ, Tacton Extension for Salesforce, Tacton for SAP, as well as a series of high value mobile apps. We’ve expanded our footprint in North America and Europe, cemented some strategic partnerships and made several key acquisitions. To all of us here at Tacton, this award recognizes all this hard work, but more importantly, it also validates its relevance, and the value it brings to our customers.

Not just any award

Each year, global industry analyst Frost & Sullivan presents this award to the company that has developed a product with innovative features and functionality, while gaining rapid traction in the market. The award recognizes outstanding achievement and superior performance in areas such as leadership, technological innovation, customer service, and strategic product development.

What’s different about Frost & Sullivan is the way they select their winner – by thorough analysis, in-depth study and customer interviews across the industry. There was no application process. We didn’t even know we were being evaluated. We got the award based solely on our accomplishments and merits.

So, what was it about Tacton CPQ?

Frost & Sullivan opens its motivation with, “Tacton focuses on anticipating and meeting the needs of innovative manufacturing businesses, particularly those engaged in smart manufacturing (Industry 4.0) initiatives.”

The key difference when compared to other CPQ vendors lies in the level of complexity that the Tacton configurator can handle, and how it synchronizes what’s being proposed by sales with downstream processes. The analysts at Frost & Sullivan picked up on this in the report, “Tacton’s CPQ applications enable and support digitization end-to-end”.

The motivation also recognizes the importance of Tacton’s long term vision and leadership as well as our strong track record of delivering real value to our customers. “Tacton has, from its research beginnings, been focused on developing leading edge product configuration solutions. Tacton’s technologies and its product set have been validated by sales to over 250 businesses, which have experienced excellent results. The company is building on its innovation and success with plans to enhance its products and to expand its market. Based on this impressive background and performance, Tacton has justly earned Frost & Sullivan’s 2017 Product Leadership Award for Configure, Price, Quote solutions.”

Simply put, Tacton is leading the way towards smarter manufacturing, and this award recognizes both the strengh and relevance of our existing product portfolio as well as the validity of our direction going forward.

Read the Frost & Sullivan press release here.

Meet the Team behind TactonDay

Any given day, chances are most people at Tacton are working with our configuration engine in one way or another. But there’s also the marketing department, working day and night (well, almost) to make sure the manufacturing industry knows about Tacton CPQ.

Along with executing marketing campaigns, giving the company a fresh logo (you can read about our re-branding here) and running the website, marketing arranges TactonDay, our annual customer event. This year’s event is the sixth and holds the theme “Tacton in the digital era/digitalization”. But before getting into the details of the event, let’s get to know the team a bit better.

 

 

What’s one thing that most people don’t realize about working in marketing?

Paulina: – It seems to me that some people think marketing “just happens” and that there’s no structure behind it. I’d say it’s the opposite. It requires a lot of structure and thought to make a complex product, such as Tacton’s, easily approachable. It’s a fun challenge.

Bénédicte: – I agree. Since we don’t produce concrete products, people often don’t see the value of marketing. It’s usually seen as costing a lot of money.

Paulina: – I do think, though, that most people can see the value of a strong brand in a long-term perspective. Marketing is bigger than a single campaign or a Facebook post. All the little things add up to a well-known and trusted brand – and that’s all marketing.

Petra: – Our new branding is a good example. Every single detail in our new graphical profile is there for a reason – every color, the look of the logo – everything.

Anders: – I want to add that it’s really a lot of fun! Especially when you have a team such as ours. Plus, working together with Tacton’s salesforce to make sure that all prospects get contacted makes marketing bigger than campaigns and the brand. We’re an important part of the sales eco-system at Tacton.

Paulina: – Producing high-quality material as resource-efficient as possible is another challenge. I must say, though, that we’re doing pretty good in this area. Just a month ago, we redecorated the entire office with posters I designed with pictures of our employees. It didn’t cost much but made a huge difference for the office atmosphere.

 

What’s a challenge with marketing software products?

Petra: The hi-tech market is a fast-moving market. Competitors keep popping up, but they also keep disappearing.

Also, not having a physical product is both an advantage and a challenge, I would say. An advantage because we can easily realign. A challenge because our message and offer easily become abstract and hard to understand for our target group. You can’t touch and hold a CPQ solution in your hands. That’s definitely a challenge for software companies in general, not just CPQ vendors.
Bénédicte: – CPQ is also a very technical niche, which means you can’t sell it to just anyone. We’re constantly working on finding a balance between being value oriented and technical. It’s tough targeting the right people with the right content and message, especially when one message addresses CEOs and the other, engineers.

Anders: – Because of the narrow niche and that our product is a software, we work a lot with activity-based marketing. This means that we analyze all activity that people do on our website, and then send the relevant material to each specific person, based on what they’ve shown interest for.

 

So, TactonDay! What is it and what can participants expect?

Petra: – We host TactonDay every year and this is the sixth time we welcome close to 200 attendees to Stockholm in October. The day consists of breakout sessions where we share the latest within CPQ, as well as best-practices and great networking opportunities within the industry.

Anders: – From our point of view, the event really is a highlight during the year since it’s our biggest event. It’s the perfect time to connect with customers, partners and analysts and get some facetime. The annual meeting of Tacton User Association is also held during TactonDay.

 

What’s it like arranging an event like this?

Petra: – Definitely a lot of stuff to do, ranging from setting the agenda and booking speakers to making sure that we have food and drinks for everyone. It’s quite stressful at times but still so much fun. Seeing things coming together is the greatest satisfaction I get in my job.

 

What’s your best memory from TactonDay?

Petra: – It’s hard to pick just one, there are so many! But for me, the best memory happens every year when the conference opens and you see all the participants, both new and old. It’s like seeing your extended family again. It may sound cheesy, but it’s true!

Anders: – It’s a professional event but with a warm and familiar feel to it. I think we have succeeded in balancing professionalism and a relaxed setting.

Petra: – The fact that we constantly develop and improve the event makes for great chances to create new memories each year. We’ll see what we bring from this year!

 

What will be new for this year’s TactonDay? Why will the ‘17 edition be the best one yet?

Petra: – Apart from presentations and breakout-sessions, we’re adding a panel discussion on CPQ in Industry 4.0. This is a format we haven’t done before, which is exciting.

Anders: – Obviously, you can expect some great speakers, like previous years!

Paulina: – The overarching goal, which we always have, is of course to inspire the participants and offer some new knowledge and insight into CPQ. We want them to feel confident and comfortable with choosing Tacton as their CPQ partner.

 

And after TactonDay – what’s next?

Bénédicte: – We’re going to Dreamforce in San Francisco, where we will be a Gold sponsor. It will be a great time to connect with the American market and learn from others in the industry.

Petra: – We will also continue to expand our footprint in the DACH region, where we now have two offices and many exciting opportunities.

 

Want to know more about TactonDay? You will find everything you’re looking for, here.

The traveling salesman, Tacton and orienteering

Believe it or not, traveling salesmen and product configuration go hand in hand. Here’s a story of a mathematical problem we used to stimulate the minds of our employees – the Tactonites – during our company’s spring kickoff. So, what do traveling sales consultants have to do with Tacton and the navigational sport of orienteering?

 

The traveling salesman

The traveling salesman problem, or TSP, is a classic. Basically, this problem presents the challenge of finding the most optimal route between a number of nodes. If you have appointments in 10 different cities in a week, how do you travel between these appointments? If each city is connected to all other cities and each direction is counted individually, that’s 100 different possible paths. What is the most optimal path the traveling salesman should take to visit each city only once?

To solve this quest, it’s often helpful to visualize it as in the map of France below. The human mind is great at solving these types of puzzles to a certain extent. We use our experience about certain paths and reuse them easily, visualizing them with maps that support us in our decision-making. But the human mind is limited and biased. We can really only understand patterns and paths of certain sizes. The TSP website offers an excellent example of how to solve visiting 24,978 towns in Sweden in the most optimal way.

 

The TSP has been around since the 1800’s, and ever since the 1950’s people have been trying to solve it in different and better ways. (If you’re interested in computational theory, you can read here on Wikipedia about how the TSP is a “NP-complete problem” and thus “NP-hard” to solve.)

It turns out that one great way of solving such problems is using the Tacton configurator. The configurator engine is state-less and uses constraints instead of sequential rules to solve the problem. Finding the right nodes to use and understanding which paths connect them presents a similar challenge for the traveling salesman as for product configuration.

Reducing the paths is the same as creating constraints. We don’t want to travel too far on some days, too little on the next, we don’t like to backtrack and revisit the same place, maybe some nodes aren’t directly connected, and so on.

Orienteering at Tacton

Quite a few of us at Tacton do sports, and we have an athletic section focused on a quirky outdoor sport that combines brains with brawn – orienteering. Originally a military exercise, orienteering has its roots in 19th-century Sweden and combines racing with navigation. Participants use a specially created map to select their route and navigate as quickly as possible through often-unfamiliar terrain (usually in a forest). We’ve participated in the world’s biggest orienteering relay, Jukola, plus local orienteering competitions. We even go out running during lunch breaks. You can follow us at https://www.instagram.com/tactonok/.

 

For this year’s kickoff, our team wanted to introduce more people to this fun sport. So, true to our corporate and cultural heritage, we built an orienteering course configurator and made sure that everyone at Tacton could enjoy the sport based on their own abilities, not just for the sake of competition. The organizers asked employees questions about the pace they wanted and the level of complexity of the controls (nodes) they felt they could manage. We then created a configured map based on their input. In short, we provided them with some guided selling options to create a valid, optimal solution based on their input. The “users” could even add more controls, add more minimum distance, or decide to take part in the competition if they wanted to.

 

In orienteering, the competitors have to visit each control in a specified order. Basically, they’ve got to execute the traveling salesman route that someone has set up. This time, we used the Tacton configurator engine (our so-called constraints solver) to help the competitors set up their individual courses, which they then got to execute.

Solving the TSP when orienteering

First, we took the map of the area where the kickoff was held and charted out 40 different nodes, thus creating 1,600 possible paths assuming that each node should connect to the other. Each path was documented with its length, bearing (direction angle compared to north), difficulty, and the From and To nodes it connected. Next, we removed all the paths that were too short (<50 meters) or too long (>600 meters), leaving us with 1,274 paths.

 

Then, some constraints were applied:

The sum of all individual path lengths in a course must be longer than the guided selling input.

The sum of all difficulty points for each node had to adhere to the user input.

 

Since orienteering includes changing bearings for each control, the course was designed so that no next control could be in a sector ±50° within the bearing ahead or behind the path leading up to the initial control.

 

 

In order to create a spread of the courses, we inserted a JavaScript randomizer that outputted different starting points within a given cluster of nodes. If we hadn’t done this, the people with same inputs would have received matching courses, and we wanted to create a disruption by having a wider spread.

 

The courses we created were integrated to an orienteering course-creating tool and then printed at the venue. Each competitor received their individual map and a compass. And when they ran their course, they helped create a great event utilizing our own IT tool!

 

In the end, we had 149 participants on 59 different configured courses, apart from the 28 in the competition class. Who knows what future developments at Tacton will bring?

Why 3D-configuration will help you sell more

Why 3D-configuration will help you sell more

If you are working with sales, you have probably asked yourself one, or two, of these questions:

Here’s some consumer behavior theory for you: prior to purchasing a product, a consumer always struggles with whether she should follow her Desires or her Fears. The consumer typically Desires to solve a problem but also Fears that a certain product will not, in fact, work as expected or solve the problem at hand. The more the consumer desires a product, the more likely it is she will buy it – as long as the Fear of purchasing the wrong type of product is not stronger.

For example, if you buy a pair of shoes in a street store you can look, touch, and try the shoes beforehand. If you buy the same type of shoes online you do not have that same benefit and this introduces a fear of buying uncomfortable or ill-fitting shoes. These are important features that could keep consumers from making the purchase even though the desire to purchase the shoes online is high (perhaps due to lower prices or a better selection).

The same goes for more complex products and especially complex, configurable products.

I will go with one of my favorite examples: a configurable truck. Trucks can often be customized and configured to suit every aspect of the customers’ need. Obviously, you can’t keep every configuration of the truck in the demo room so the customer typically has a couple of different configurations to look at. However, the exact product version the customer would use will rarely be on display. When the configuration of the truck is created, the final view of the product will usually be created only in the customers’ imagination.

When the customer cannot be 100% sure of the end result, a certain fear of a discrepancy between her view of the end result and how the actual product will be, might surface. This fear is costing money in terms of missed out sales and missed opportunities in upselling.

With 3D-configuration, the consumer will be able to see the result of every change on the product, both minor and major. This will reduce the fear of the end result not being as expected, which will push many customers to actually making that purchase decision. This benefit of 3D-configuration is quite straightforward and easy to understand. The upselling benefit of 3D-configuration is, however, an added benefit that is often overlooked.

Imagine the same truck and you, as a customer, get the option to add a “Deluxe Seat”. Even if the benefit is described in words, the visualization of it takes place in the customer’s mind – which leaves it out of your control. If you are able to show the customer how the “Deluxe Seat” will look and how this, in practice, would improve the driver’s comfort you can bring the customer’s idea of its benefits much, much closer to the end result. This will, in practice, reduce any fear of buying something unnecessary. It also creates a desire to add features the customer did not even have when he started the configuration of your product.

 

When you raise the Desire to add features to your product and reduce the customer’s Fear of making a bad decision, the result is simple: you will sell more with 3D-configuration.

The importance of mental accounting

The specification was almost completed. After hours of explanations and presenting a state-of-the-art tipper truck was being specified and visualized within the new and shiny CPQ-tool.

 

This is the ultimate tipping truck, said Bob. It’s exactly what I wanted.

I think it will sum up below the budget you mentioned, said Sue. Let me get back with a price tomorrow.

 

Sue almost pressed the button to send Bob the offer. The price summed up to 100. Just remember the number 100 and keep in mind that budget mentioned above was 120.

 

When Sue did a final review of the order she realized that they could have included the popular multi-angle rear mirrors. The only problem was that it would raise the price another 10. If she added it as an option Sue knew it would backfire and this would typically be Bob’s reaction:

 

– How dare you charge me 10 for that mirror?! It’s a rip-off. In the spare catalog, it only costs 2!

 

What Bob didn’t realize was that that particular mirror would require significant changes to the truck’s configuration. The order summary would differ in no less than 14 different places! All in all, that added up to the higher price of 10. From a “total cost of ownership” point-of-view, the new price would still make sense. However, this is usually a difficult message to get across.

What Sue understood was that even if the new option provided a much better handling of the truck, Bob would perceive it as far too expensive. In the end, Sue could never sell this option if she just added it as an option reflecting the real price tag.

 

What is going on here? Why does it matter how the price for this fantastic mirror is added to the quotation?

This is an example of what is called mental accounting: the fact that we tend to split things we buy into different accounts. Mental accounting is exactly what was happening with Bob and his tipper truck. Indeed, in our mind the truck is one account and the additional benefit of an option is another. The truck is not price sensitive if we’re not maximizing the budget, but the option sure is.

 

So, what tactics did Sue use for the pricing?

She knew that simply putting the price increase as an option would be seen as a scam by Bob. She knew better than that. Instead, she put part of the additional price on the truck, increasing its price but keeping the mirror price seemingly low. This way, she kept the mirror option attractive. So, the final price was 109 for the truck and 1 for the option. Playing the game this way, Sue sold a better truck, at a higher price, to a happy customer. Bob still got a price below budget and added the mirror option at “half price”.

 

What’s the lesson learned here?

Make sure to have the flexibility to manipulate the price and when you do, make sure your reps understand the basics of mental accounting. Sometimes options turn out to be unreasonably costly. And to be able to close this kind of deal, you must have a CPQ-tool at hand to package your offer in a way that sounds and looks better.

Meet the People at Tacton: Ann Jerreborg

If you apply for a job at Tacton, you will eventually meet Ann Jerreborg as she is the head of HR. Today, she will tell us a bit about how it is to work at Tacton and how the recruitment process is here.

 

Why did you choose to work at Tacton?

I have been working a lot with engineers in previous HR jobs which is something I really enjoyed. Engineers tend to be very ambitious people and people who work with something they have a great interest in. So when a former colleague invited me to apply for this position at Tacton, I was excited about working in a Swedish high-tech company with its own product. I also loved the challenge of being in a key position to find talents for a company with a very high expansion rate.

 

I want to make sure Tacton is a great place to work at so I can market it genuinely towards new talents.

 

When you recruit new talents, are there any specific skills you always look for?

In most positions, whether you are a developer, a sales person or a business consultant you need to be good at problem solving and have great social skills. It is also important to be comfortable with constant change since we are working in an ever-changing environment.

 

What do applicants usually find special about Tacton?

Something that appeals to many of our applicants is the fact that we are a company with a strong international presence. We work all over the world and we have people from all over the world working at our office. With offices in Germany and USA, you also have a chance to work abroad if you want.

 

Another thing that applicants are positively surprised by is our Talent Program that gives each employee a kick-start into the company. It also enables each employee to get a great network in the company from the very beginning.

 

During the interviews, everyone gets to meet our CEO, which may come as a surprise to some applicants. We want everyone who are hired at Tacton to feel they have a personal connection with our CEO.

 

What do you do to ensure the Tacton employees are happy with their job situation?

For me, it is very important to really make sure Tacton is a great company to work in. I want to know for a fact I am ”selling a great product” when I market our positions towards new talents.

 

In order to verify the quality of our work environment, we work with ”A Great Place to Work”. It is an excellent tool to evaluate, perform work culture audits, and develop your workplace. This is a very important tool for us to make sure we catch up on what we do well and what can be improved.

 

Which factors receive the highest scores on these evaluations?

One of the things that always score high on our evaluations are factors regarding the co-workers and the camaraderie. People truly like to work with each other here, which is something we value highly.

 

The employees also have a pride of the product we deliver. We strongly feel that we have a great product on the market which is a very important feeling, especially when you work with the technical or sales aspects of the product.

 

One thing that is generally appreciated is the possibility to work with interesting and challenging projects that affect the core business processes of our customers. Another thing is that there are many ways of pursuing a career within the company and it is easy to move around since we always try to hire internally first.

 

Ian Fleming, too, realized that visualization is the future

Did you know Ian Fleming predicted 3D configuration in the old James Bond movies?

 

My dad was a major James Bond fan so when I grew up in the 80’s we were watching a lot of classic James Bond movies. I must have seen every one of them at least three times (my favorite being ‘The man with the golden gun’)! During the 80’s, and as a kid, the movies did not feel so dated but it is quite fun to watch them nowadays. Especially since all the technological, “super modern” gadgets they are using (like watches with lasers, cars with revolving license plates and spy cameras) all feel so ancient.

 

My favorite gadget of them all is from ’For your eyes only’ (1981) starring Roger Moore as 007. In this movie, there is a scene where a witness is helping out in identifying a villain to MI-6. Since this is MI-6 they are not using a normal sketch artist but instead the most state-of-the-art computer there is (think early 80’s “state of the art”), together with an amazing 2D-configuration software, in order to create the phantom picture of the villain. The software is literally just a green outline of a human face with very crude details.

 

So, the witness describes the villain while the computer sketch artist adjusts this extremely crude phantom picture: “How wide was the nose? This wide? OK, a bit smaller, then”. After configuring this extremely simplified phantom picture, they print it out on yet another state-of-the-art dot-matrix printer. The funniest thing though, and the reason I remember this so well, is that despite the super simplified phantom picture the print out looks exactly as the villain in real life! It is truly hilarious! Check it out here.

 

What makes this interesting for me though is that Ian Fleming predicted already in the early 80’s what we are currently doing today with our 3D configuration visualization software. Nowadays, with the Tacton CPQ, you can alter a configuration and see the adjustments visualized as a 3D image in real-time. The idea of it is really not that far away from the James Bond-movie but instead of adjusting the size of a nose, we usually adjust the size of a nozzle. Still, the principle is the same. Well, except maybe the 2D line-graphics and the need for a dot-matrix printer… Maybe we should create a 3D configuration solution for phantom pictures and give MI-6 a call?

 

The wins and losses of narrow framing

 

The CEO Stan called a meeting to discuss policy of risky projects, internally known as TNG projects. Guess you wonder about the abbreviation. It stands for Thanks N Goodbye.

 

There are currently ten projects like this every year. Truth be told, these projects are genuinely difficult to estimate since a variety of unpredictable factors – like the weather – come into play. On average, every other TNG project is a success and generates a profit of € 1,000,000. But the downside is that the rest of the TNG projects don’t generate any money at all. They mean losses ranging from a couple of hundred to sometimes over a million euros. On average, these projects lose around half a million euros. So, if you do your math it’s easy to figure out that half of the projects would generate a profit of € 5,000,000 and the rest would give a loss of € 2,500,000. Overall, it’s profitable to take these projects on. But enough with the figures – let’s get to the point of this story.

 

What had caught Stan’s attention was the fact that there were many projects just like this: projects with both great potential and great risk involved. When he asked the top sales reps about it, they admitted that they were aware of many opportunities that they never even tried to win. This is how Sue explained it:

 

If you get yourself involved in a couple of TNG projects that generate great losses, you better find yourself a new job. I’m smart enough to avoid those nightmares.

 

This is a very normal behavior. Even if there’s an average chance of winning, most of us would not gamble if there’s a fifty-fifty chance it could backfire. If you look at these projects from a sales rep’s perspective, it actually makes sense to avoid them.

 

This illustrates what is known as narrow framing in behavioral economics. When you see these TNG projects in a narrow setting – from the sales rep’s point of view – it’s only natural to avoid the risk. The sad story is that this means that the company will lose many potential and overall profitable projects. Too narrow a perspective tends to make people miss the bigger picture. Because even if there are big losses in some projects, it’s in the best interest of the company to take these projects on. Despite losses, there’s an overall profit. Instead of Thanks N Goodbye, TNG could actually stand for The Next Generation of sales.

 

All the information we need is currently hiding within your CPQ installation. That’s why I’m passionate about CPQ analytics and its cornerstones. To reveal the missing overall picture is one of them, getting some hard facts for better estimations is another.

It’s time to get rid of the blinders of narrow framing. I can show you how.