Truth Doesn’t Sell Well
One aspect of being a part of a radically self-organizing company is that we often openly discuss and challenge how we do things. A discussion that received more attention recently was one about sales. I’ve been involved in sales at Lunar for six and a half years. What’s more, for the better part of my career I’ve been indirectly or directly involved in the sales process with customers ranging from early-stage startups to major banks and mobile network operators (and anything in between). It’s no wonder I occasionally get summoned to share my experience on the topic.
There are a few recurring themes in our discussions, but there is one that is especially relevant for Lunar Logic: how to balance what we believe is true with what a customer wants to hear.
What Experience Teaches You
Let me set the stage for this thread. We take our shared values seriously. When we say we are open and transparent we don’t limit it to the internal context only. We behave in the very same manner when we are in front of a customer. Or a potential customer. It has been a cornerstone of how we communicated during the sales process for years. If something is unlikely to happen, we’ll say so. If something doesn’t make sense, we’ll let you know. If we don’t want to or don’t feel competent to do something, we’d be completely clear about that.
Throughout Lunar Logic’s almost 15 years on the market, we’ve been involved in more than 150 projects. We’ve seen a lot. We’ve seen good choices, bad choices, risks that tend to pay off, those that don’t, well-designed experiments, and pretty bad ones. We’ve seen how very, very few plans end up turning out, well, as planned. Most of all, we’ve seen lots and lots of work, done and paid, that shouldn’t have been done in the first place.
Early-stage startups constitute a prominent part of our potential customer pool. Typically, they do have some funds, an idea, and most frequently a strong opinion on how to proceed. They are looking for a software development partner who will turn the idea into a product within the budget they have available. What they primarily want to hear is that it is possible. Further on, they want to confirm that the price they’ll need to pay is modest and well within the range of their available capabilities.
A side note: a host of our customers that are not early-stage startups choose their software development partner similarly, except they use a narrower scope – a part of their existing product or a small project – to make an assessment.
Mixed Blessing of Transparency
That’s where the issue emerges. On the one hand, we have a potential customer with expectations that whatever they thought of is possible within the constraints they face. On the other, we are painfully aware that it is unlikely going to fly. We see unvalidated assumptions that require validation before it makes sense to make a more significant commitment. We see common product mistakes that burn the budget without providing much value. We see an overly optimistic stance toward estimating the effort needed to build the whole thing. What the customer optimistically expects and what our experience suggests can’t easily be merged.
We have a choice there. We can tell the customer what they want to hear. The price, however, is compromising our shared values, especially transparency and trust. That’s one thing we don’t want to do. The other option is telling the truth the way we see it. This way we live up to our values. Such a choice, unfortunately, means that the customer hears things they don’t want to hear.
Let me give you just a few examples. If the client wants to get what they expect and at a good quality it will cost more than they assume. If they freeze both the scope and the budget they will pay with cutting corners on quality, future rework, and maintainability. More importantly still, most of what the customer thinks they do need they do not. There are, on the other hand, crucial things that they do need to succeed but no one is yet aware of these features.
We could pretend that we are aware of neither of these. We could cash on a customer’s dreams before they understand that what they are asking for won’t give them the outcome they hope for. We could manage the inevitable disappointment through making sure we “did what was explicitly expected of us.”
We choose differently. We decide to be honest about the journey we plan to embark on with the potential customer. And that’s where the problem is.
Truth Doesn’t Sell Well
Telling the truth, heck, selling the truth, is a tough job. It’s like telling a car buyer that ten thousand bucks they have won’t be remotely enough for a luxury car they dream of and, by the way, they likely don’t need a car at all.
No matter how you phrase the message, in the vast majority of cases, a customer will walk away. They will find someone willing to give them what they want. The customer won’t need to look too far away. Sure, such a seller would forget to tell how old the car is, and that it instantly requires further investments even to keep it operational, and that the maintenance cost will go through the roof very soon. But hey, no one explicitly said it was supposed to be a new car; don’t blame the seller for delivering what the customer asked for.
Now, the curious part. The argument presented like that stands its ground. Quite often when we share it with a prospective customer, they’d nod in agreement. They’d go with us through a Discovery Workshop, where we explore the business context, key assumptions, analyze competitors, and so on. They’d attentively listen when we argue that the original scope is overinflated, highly speculative, and not validated in any way by future users. They’d seem to understand that it doesn’t make sense to make a significant commitment on an uncertain idea. They’d even agree that neither they can afford to build everything nor does it make any sense.
And then, almost inevitably, they will choose a company that provides an attractive quote on the scope they initially planned. Oh, and they would likely praise us for our professional and mature approach when discussing the product idea too.
A sensible argument is not a match to a promise of fulfilling dreams.
In the world of software product development, an honest message is rarely welcomed. Because we deal with an intangible product, we expect it to be quick and easy to build. Because the industry is truly global, it is possible to find a company that would do precisely what anyone expects within almost any set of constraints. Because we notice the immense success of the startup scene and staggering stories of a host of software companies, we massively inflate our hopes for the success of almost any software product born in our brain.
The truth is nothing like that. Out of more than 150 projects that we built or contributed to a significant majority is dead by now. Many of the surviving ones never made a good return on the investment. Several turned into a lifestyle business sustaining a couple of founders and little more. A few achieved real commercial success. Neither has become another Twitter or Facebook or anything remotely close.
When I shared this post with my colleagues I received feedback that the previous paragraph may sound discouraging, off-putting even. I believe it is the opposite. When you look at the statistics you will find that at least 9 out of 10 startups fail. That’s the industry benchmark. In these unfavorable conditions, we do better than average.
An explanation may be that our approach to the sales process likely discourages quite a lot of potential clients with unsustainable ideas; thus I’d expect our results to be favorably skewed. Honesty and candor in communication is an integral part of this story.
We all are a subject of the illusory superiority bias. It doesn’t matter whether we evaluate our driving skills, our performance, or the quality of our idea. We tend to overestimate our qualities and abilities. What follows is that we don’t want to hear the truth, let alone act on it. It’s unpleasant.
And yet, to improve our chances of success, that’s precisely what we need to do.
If you are evaluating Lunar Logic as a potential software development partner for your product or project now you know our motivations. You understand what you can expect of us and why we may be reluctant to give you what you ask us for. It’s neither the most natural nor the easiest path to follow, but these are the standards we aspire to. We believe that this brings both our clients and us closer to sustainable success.