Demos That Don't Suck With Peter Cohan
How many times have you been part of bad software demonstrations? Far from just being a harmless fail, a bad demo can negatively affect a prospective client’s perspective of the product and prevent a sale from being closed. Obsessed with solving this pesky problem, Peter Cohan set out to improve the software demo world, demo by demo, person by person and company by company. Peter is the Principal of The Second Derivative and author of the book, Great Demo! In this conversation with Chad Burmeister, he walks us through the five predictors of demo success according to an analysis of 67,149 demos conducted by Gong.io. He also gives us some ingenious and useful tips that can make the difference between a bad demo and a brilliant one.
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Demos That Don't Suck With Peter Cohan
I have with me Peter Cohan, who is the Founder of The Second Derivative. He started the company many years ago. He's got about a dozen or so folks who are helping companies around the world do better demos. I'm excited to have him here because I’ve been part of a lot of very bad demos. With that, welcome to the show, Peter.
Thank you so much. You took away my typical starting point, which is if somebody asks me what I do, I returned with a question that is, “Have you ever seen a bad software demonstration?”
I’ve probably given a handful of my day as well when I was first learning and I see them on a regular basis. Nowadays, if you're 2 or 3 minutes into a bad demo, it's literally time out and I'm going to go ahead and jump everybody. You're in great hands with Shannon, my Director of Operations.
That is why we are in business to demo by demo, person by person and company by company improve the world of watching a mouse fly across the screen.
It's interesting because literally we're changing our website and we've been debating on should the button say request a demo or not? There's always this debate of should you set the wrong expectation that I want to give a demo before it's time to give a demo. I want to dig into all of those questions.
I’ve got a suggestion for that. Put up two buttons. The first says, “Book a conversation,” and the second says, “Book a demo.” People will self-qualify. If all they want to do is get a sense of what the product looks like, they'll say book a demo. If they're interested in learning something about the solutions and they're interested in having a discovery conversation, they're much more likely to click on the book a conversation.
Let's dig in here. I like to first help our audience get to know you and how you got to this place, not just where you are physically, but this place in life. Let's go back. Where were you raised? Which part of the country or world were you raised in?
In the San Francisco Bay Area in California. I'm a California native protected under federal law.
That's like The Beach Boys. Were they in San Francisco?
No. That's Southern California. We're talking to The Grateful Dead.
If you think back to when you were at a very early age, what was your passion then? I like to try to connect the dots between how'd you get to here from where'd you come from.
I had two passions. The first was peanut butter with a spoon or eaten with a spoon and the second was being ADHD. I'm semi-serious about that.
I still like peanut butter with a spoon and I don't know too many people in sales who aren't ADHD. That puts two things in common right out of the gate. Where did you go to college? Did you stay in San Francisco or somewhere else?
No, I went down to the land of the beach boys to UC San Diego, University of California in San Diego, where I matriculated in Chemistry, Biochemistry and Computer Science.
What did you learn in those days that's applicable to what you're doing now? Is any of that applicable?
Probably the most applicable thing in that era, believe it or not, and yes, I'm this old, we were programming computers using these things called punch cards. When you built punch cards, it taught you to type precisely. If you made a single error, you had to reject that card and start all over again.
I don't know if I did the punch cards. I remember in one of the elections, they had the hanging chads, but that's a different thing.
It’s a similar concept. Basic principles of science can be applied extraordinarily well to the world of sales. Sales have always been considered an art and that's incorrect. That is probably part of the core of this whole business. Demos have also been considered an art and that's incorrect. It's a set of skills that can be learned, topped, applied and improved.
Artificial intelligence, that's obviously the topic of the show. A lot of times we talk about how companies use AI and I’ll give an example. We're seeing companies use AI to pull a data set. Now instead of randomly blasting a group of people, you can find out who has the best intent to look for your products, what geography and how many employees do they have? Are they growing or not? There's so much data in machine learning that you can use to get a better data set. You then build out an email approach with multiple emails that can be fully automated. You can also automate social outreach and you can even automate voicemail drops. What it feels to me having done this for a few years and over 100 deployments is that what used to be the job of the seller is they're now able to focus on higher-value work.
I would put having a great demo in that bucket. This conversation is extremely important and what you're doing is extremely important because if you spend all that money on the AI and on the leads and building pipeline, and it converts at a low level, then you've wasted a lot of money and time. If you can improve the conversion rate by 2x, 3x, 4x, then the investment in demo skills is easy. Breaking it down, we talked at the beginning that you could book a conversation or book a demo. I love that idea. I'm going to do that. What are the other 3 or 5 things? Do you have a process that you break it down, if you could, for the audience? What are the most important things in a demo?
Let me introduce us in a form of a brief story. In 1998, I was a president and founder of a business unit as a part of an overall operation. I grew it up over a period of five years into a $30 billion business with about 120 reports. Along the way, in addition to selling software, I was buying a bunch of software. I was the customer and we were rather buying a CRM system. We invited a pile of vendors in and all the demos went the same way. They all started a long linear almost day in the painful life. Here's how you enter a new record. Here's how you nurture it. Here's how you add more records to that same record. Here's how you run some marketing campaigns. Two hours later, several of the vendors that came in and consumed hours of our time said at the very end of the meeting, “It looks like we're out of time. We know you wanted to see some reports and dashboards on forecast and pipeline. Trust us. They're fabulous.”
After the third of these demos where they never got to what the executive, which was me in this case, was looking for, which was dashboards and information on the current forecast, how solid it is, how to coach, who's solid, who's weak and so forth. Looking at the pipeline, going forward with the same kind of concerns, I realized something horrible. That was we were doing the same thing to our customers in our demos. We were saving the best for last and in many cases running out of time or getting to situations where the hiring folks had left the room and everybody else's brains were mush.
I got the team together and I said, “We've got to do the last thing first.” That became the hallmark, the methodology called great demo, do the last thing first. We began to practice it. We refined it. When I finally got tired of having an incredible amount of whining in an organization, I founded my own business in 2003 and have not looked back. “Let me pause here and ask any questions. I can go through 5 or 7 key items with respect to the methodology, but wait, there's more. I can tell you that it has been validated using AI technology.”
I think of Webex from 2005 to 2008, pre-Cisco acquisition, I was running a sales team thereof a dozen people. Stu Schmidt was the head of training at the time. He's now gone on to a lot of other CEO type of jobs. He's the SVP of sales at one of those lead companies right now. He taught exactly what you're saying and that is in the first 3 to 5 minutes, let's understand what you are looking for. Let's go to the last as first because I don't want to make a guesstimate of what the most important things are. In a lot of web meetings, when you're doing high velocity, we didn't have the luxury of let's do a one-hour discovery and then let's do the next call and the next call. We had to jam that all into a 45-minute conversation. Quick discovery, we'd share a whiteboard, we take a few notes and then we share the screen and we'd show what the customer asked us to show in the first five minutes.
A few years ago, a company called Gong.io did a study of 67,149 recorded demos and analyzed the results using machine learning and AI. They teased out some key indicators of success and I’ll offer five. The first was that the most successful demos had a pre-demo discovery. That was a leading indicator of success. It shouldn't be a challenging concept. In order to present a compelling demonstration, you need to be able to effectively do a diagnosis before you offer a prescription. That's been in sales methodology since the early 1900s, at least. That's item number one. You’ve got to do discovery.
Item number two is a crisp review of the customer's situation. In other words, you could almost put up a slide that starts with the words, “What we heard from you.” It's all about the customer. There is no corporate overview presentation, no product overview presentation and a very limited introduction to the sales team. “Dear customer, this is all about you. Let us review our understanding of your situation and confirm that our understanding is correct or that there are things we need to edit.” That's number two, key indicator for success.
Our VP of sales started with us. Even I think I'm good at this and I found myself back on the track of wanting to go in, “One hundred fifty customers. Here are some logo slides,” and he said, “Time out.” To my credit, I said, “Townsend, I put in the 2 or 3 slides. That's the backup slides.” I only go to 1 or 2, but I did catch myself in that area. He came in and it's all about the customer. You need 300 opportunities and a quarter. You're going to get 150 if you keep doing it the way you are. Here's the value of getting the other 150 and it's $1.5 million in revenue. This is a big problem you need to solve and you don't have a way to solve it. Once you get in that kind of alignment, it's like, “That's exactly what we need.” As Skip Miller would always train me was all you need to say at that point is, “Yes, we can do that.”
Number one, pre-demo discovery. Number two, the demo begins with a crisp review of the customer's situation. With that confirmed, number three is do the last thing first. The Gong study showed conclusively that the most successful demos started with the end result that the customer was looking for. That deliverable, report, dashboard or whatever it was. Number four is an intriguing concept called the inverted pyramid. I can introduce this briefly by asking you the question, how do you read a newspaper article? Let's go back half a step. Remember newspapers. If you think about newspaper articles or the way news is presented on the web, they follow this concept called the inverted pyramid. The first thing we do when we're scanning a news site webpage, is we look at what and read what?
The picture and the word in the pictures are where I would go.
The pictures and the headlines. Those are designed to capture our interest and engage us. That is, in fact, that example of doing the last thing first. What do we do next? Do we read the entire article?
Not usually. You scroll downways.
The way most articles are drafted, you read the first paragraph because in a well-written article, it's the crisp summary of the whole rest of the thing. That's something we teach in great demo methodology. We call it the fewest number of clicks to execute any particular task. You keep reading and you exit on your own in accord with your depth and level of interest. This is what we teach people to do in demos. You keep testing to see, is this what you like? Is this all you need? Do we want to go any further? At some point, most people will say, “No, I'm good. Let's move forward.”
You didn’t sell the deal and sometimes you can get yourself into a trap that you don't need to go down.
Do you remember in solution selling, they had a terrific phrase, “Stop selling when the customer is ready to buy?”
There was a vendor and I'm not going to name them. They're a dialer. Years ago at Riverbed Technology in the Bay area, I lived in Belmont and commuted to the city. This company came in and we saw the first five minutes and we're like, “We're ready.” An hour and a half later, I said, “Can you send us the order form? I will send you a check for $25,000.” He was like, “We’ve got to set up the technical call next. There's a whole lot of next steps.” We ended up buying from ConnectAndSell. That's where I ended up going to work as the VP of sales later because they made it seamless and easy to buy. I ended up becoming the VP. That's the repercussions of a bad demo. That other company, they do $8 million in sales right now. They're a legitimate company, but the demo done by the CEO at the time was horrendous.
That's known as a sales prevention team.
We're on three. What's number four?
Number one, pre-demo discovery, number two, crisp review of the customer's situation. Number three, do the last thing first. Number four is inverted pyramids. You hit the most important things early in the demo. As you go deeper and deeper, you're getting to finer and finer levels of detail so that you can exit out, or more importantly, the customer can exit out when they're satisfied. Think about it from this standpoint. Executives, they only need about six minutes to say, “This is what we need.” They may say something like, “I’ve got another meeting I want to go to. You guys can stay here and torture the vendor as long as you like, but I'm comfortable to proceed.” Execs, they're satisfied rapidly. Middle managers are next. Staff members are thinking, “I'm going to have to run these workflows.”
They'll want you to go through some of the details and the system administrators, they’re interested in how do you set up and administer the software? They have a totally different set of needs and capabilities. We teach people the inverted pyramid so you can map it to each of those constituencies. That's number four. Number five is make it a conversation. We say peel back the layers in accord with the customer's depth and level of interest. One of the compelling indicators of success from the Gong study was that the most successful demos enjoyed speaker switches, meaning vendor talking versus the customer asking a question or commenting. That's a speaker switch. I’ll ask you the question. What do you think the average number of minutes or seconds were for the most successful recorded demos?
Less than 40 minutes.
That would be a person talking nonstop for 40 minutes.
I was saying the whole interaction.
No. We're talking about how long between like you and I had a speaker switch.
Less than five minutes then.
The number is 76 seconds. On average, if you are doing a successful demo, it should be a conversation. This means that if you've been talking for 3 or 4 or 6 or 8 minutes, which is what most demos are like, that is way too long.
There's a company that I should introduce you to that you probably have never heard of and it will probably change the way that you work with your customers. Are you ready?
I'm ready. What is it? I’ve got my virtual pen and paper.
It's called Balto Software. What it does is it's a Chrome extension that plugs into any kind of audio discussion. Imagine a little sidecar right now in this Zoom video that your prospect can't see, but that you, the seller, can see, and it will pop up on the window. You're approaching 76 seconds. All of the guts of what to be true, which is to move it upfront, do discovery first, all of those things can now be built into the platform and served up. If you say a competitor name, then it pops that up and says, “Here are the 7 or 8 questions you could ask Peter at this time during the call.
This beats the heck out of using an Egg Timer.
One of them is funny. It says, “You're talking 70% of the time. You're talking too much.” You see the rep of the demo video leans back and goes, “I’ve been talking for a while now. What questions might you have now that we've discussed this?” The person interacts and comes back to interactions.
There are several things going on here. One is I have to say it's enormously gratifying to have a methodology validated with hard data. In fact, the Gong studies now, the first study was 67,000 data points. Now, it's well over three million demos that they've analyzed with the same results. It's one thing to know in your heart that a methodology is a successful approach. It's quite something else to have it validated specifically by AI machine learning and an enormous amount of data. That is a delight.
I’ve heard a few things on studies that say, “What's causation versus correlation?” and it loses me when people start to diagnose the results. At the end of the day, sure, there's some level of variability, but three million audio files don't lie. The data is the data. What you're doing is tremendous. If I could go to an 80-20, where 80% of the demos were as good as what you're sharing, the world would be a better place.
Early on in this business, I had some conversations with Guy Kawasaki, who of course is the author of The Macintosh Way. He ended up asking for a copy of my book and read it. He sent me this beautiful quote. He said, “If everyone practiced chapter one, the world would be a better place.”
I'm glad I have some of the same lines of thinking as Guy Kawasaki.
Great minds think alike.
He published this. He said, “The best subject line in an email is RE:” when I say the best, it means the most opens, probably. I don't know. The customer in some cases might feel duped.
Nowadays, there's a little disingenuity there. Far too many people have figured that out and their lead emails appear like it's a response to something you sent and that's disingenuous, but it's true. It gets you to open it.
I’ve enjoyed this conversation, Peter. Thank you so much for sharing this with the audience. This may be my first that goes in the new platform that we're launching called SalesClass.ai, because this is extremely valuable content. I will publish this as my first contribution to my own second company.
Congratulations to both of us.
Thank you for joining us. If anyone wants to get ahold of you to learn more about how you can help them, how would they reach you?
It’s easy. They can go to GreatDemo.com. That's our business website. If you wanted to take a sample of the methodology without having to contact us, strangely enough, there's a book on Amazon called Great Demo!
I appreciate your time. It's good getting to know you and I'm glad you're putting your major to use in what you're doing and teaching.
In ways, yes. Thank you so much.