Selling Your Proposal to Senior Executives – Part II

11/1/2005 | Palmer, W., LossPrevention Magazine

Originally published in LossPrevention Magazine, Nov/Dec 2005

“In God we trust. All others bring data.”

In the September/October issue of Loss Prevention, we focused on mapping out the process by which we sell a proposal to senior executives and identifying the premise on which that proposal might be justified (Part 1). In Part 2, as we continue to explore the framework of gaining approval for implementation of a project, we will examine the final steps:

  • Establishing proof that what we are proposing will bring the desired results and
  • Preparing the presentation that will most effectively communicate our proposal.

Proof

A CFO for a major retailer sent an invitation to his executives cordially inviting them to the annual budget review process. He inscribed this message across the top of the invitation: “In God we trust. All others bring data.” In other words, bring proof.

While the premise we identified in step two of this framework is the underlying reason that an initiative or project should be adopted and invested in, there has to be some proof that the proposal will accomplish the results promised.

When presenting the proof, we may take a variety of approaches:

  • Appeal to the decision-maker’s logic or emotion,
  • Cite statistics, research/models, case studies, or pilot test results,
  • Compare another organization’s experience to our anticipated results (benchmarking), and/or
  • Share a personal experience or observation (anecdotal).

We’ll look at each of these types of proofs and identify how they can be used to support your proposal.

Logic. One approach to proof is to simply make a logical argument that the proposed project will have the results intended. For instance, in considering a training program targeted to store employees, one might start with the question, “Do we, as an executive group, believe it is important to involve our store-level employees in the shrinkage control effort?” If not, then any efforts to implement such a program will fail to gain executive support.

However, if there is consensus that getting store employees involved is to the organization’s benefit, the next logical question becomes, “How do we accomplish that objective?” At that point, a logical sequence of questions may lead to a conclusion that supports your proposal.

This process is officially called syllogism and it dates back at least as far as Socrates. The structure is as follows:

  1. Given—We all agree on this basic problem (store-level employees don’t know enough about how they impact shortage)
  2. Since—Addressing this problem will benefit us (if we educate them and get them involved shortage will go down)
  3. Therefore—We should take the following course of action (implement the proposed training program)

While one might not use this formal structure, a proof based on logic can be very straightforward, simple to understand, and appeal to the rational decision maker.

Emotion. When we first look at the word “emotion,” most of us think, “Oh no, I’m a logical, rational business thinker. I wouldn’t use emotion as a proof.” However, it is often used in the business context and most loss prevention practitioners have used it at one point or another.

As we discussed in the previous article, fear is often the underlying premise as when one says something like, “If you don’t do [blank], shortage will go up?” Consider this, “If we don’t prosecute people we catch stealing, word will get out on the street that we are an easy mark.” Or, any number of scenarios where we warn of bad consequences if your proposal is not adopted. These all play on the emotion of fear.

When using emotion as a proof you sometimes hear the term “gut instinct.” Have you ever worked with someone who, in support of a proposal, says something like, “I just know this is the right thing for the business,” or “I have a gut feeling that this will improve sales?”

In fact, many times a “gut instinct” may be right. Malcolm Gladwell, in the business best-selling Blink, details many factors from science that explain how there are times these instincts are correct. Many times those feelings are based on observable, logical, and concrete data that simply cannot be articulated by the individual who is making the judgment. However, Gladwell also gives many examples where these instant assessments (in the blink of an eye) are wildly incorrect.

It is also important to consider our audience when we consider using emotion to establish proof or our proposal. For example, if the decision maker is someone who really wants to deal in data, finances, and rationality, it is not going to be as an effective appeal. According to Ken Blanchard, the famous management consultant and author, their studies show that most senior executives are rational decision makers who are not easily influenced by emotional or idealistic appeals.

Another downside to emotional proof is that we have to be careful not to overuse it. If you go to the point of “drawing a line in the sand” in order to get your way on a project, you can only do it so often before its effectiveness is diminished.

Statistics. Statistics represent the language of business. Senior executives such as CFOs love statistics. Loss prevention executives love statistics, too…when they can find them. That’s the biggest challenge for many LP departments. Once we get past shrinkage and apprehension numbers, there isn’t much else. We really need more data streams, even if that requires manually counting and testing.

Pure statistics, such as averages, medians, distribution, variance, and standard deviation, are all easy to calculate in today’s technology environment if time is taken to collect and feed the necessary information into the computer. It also requires a basic understanding of each measure. But, the “trump” cards in the business environment are the measure of financial return on investment. Some of the more commonly used measures include:

  • Payback period
  • Net Present Value (NPV)
  • Internal Rate of Return (IRR)
  • Economic Value Added (EVA)
  • Total Cost of Ownership (TCO)

Research Models. Citing research studies and models can be a very effective way to establish proof, but finding this type of information may take a bit of research of our own. A good source of information is the Security Journal, an academic publication. While the journal is not geared specifically to retail loss prevention, it can provide us with helpful data nonetheless.

For example, Bob Leonardo published a study in the Security Journal a number of years ago about EAS/ink tags. The study showed a store in the United Kingdom that had a consistently high shrink rate. They put in EAS/ink tags and the shrink immediately dropped. They took EAS/ink tags out and the shrink went right back up. They put EAS/ink tags back in and shrink dropped again. Anyone arguing for EAS or ink tags needs a copy of that study.

Other excellent sources of research include the RAND Corporation, Martin Gill and his company Perpetuity Group, the work that Dr. Richard Hollinger produces every year, and the Loss Prevention Research Council are a few. [See the Industry Links section of the magazine web site, www.LPportal.com.]

We may also want to explore research that falls outside the retail discipline. Take interview and interrogation as an example. Where does much of the research in this area originate? It comes from psychology, language, and neuroscience studies that aren’t necessarily about interview and interrogation per se, but still may be applied to that environment.

Case Study. When we study one company’s experience, we perform a case study. We may liken this to the Harvard Business Review method because in every issue they present a case study. Sometimes it’s a case study about a company that did a great job, and sometimes it’s a case study about a company that failed miserably. For example, it could be, “What happened at Enron?”

Often, we use a case study in establishing proof, and we don’t even realize it. For example, we may call or email a colleague who is in loss prevention in another organization and ask that person about their company’s implementation of an initiative and the results. That is a basic, simple case study. This can be especially useful when proposing a new initiative and no internal data is available. In those cases, it makes sense to look around to see what has worked for others and then use that information to predict what will happen for our organization.

The caution in using this approach has to do with causality and context. Causality is asking, “Did the stimulus cause the results?” In other words, did the company’s actions produce the results, or was it some other factor? Context is asking, “Just because it worked in that context (that is, at that company), does that mean it will work in this context (this company)?” The more similar the organization studied is to our organization, the more likely we are to experience the same results

Pilot Test Results. A pilot test can be a very effective way to get budget approval for something we haven’t done before because we can avoid making a big investment until we see if a program is going to work. Many companies have done this with EAS, alarm systems, and digital video.

In a successful pilot test, it’s vital to select a correct sample of stores in which to conduct the test. If we are not careful in our selection of locations, then the results from the test may not extrapolate. For instance, if you test a new strategy only in your highest shrink stores and see a dramatic reduction in loss, will those same results occur if you roll out the program chain-wide?

When done right, pilot test results can provide very convincing proof. This is especially true when our proposal is one that we expect will encounter resistance from senior management or requires significant financial investment.

Benchmarking. This is asking the question, “What do others do?” or “What are others spending?” Unlike the case study approach where we look at what one organization does, benchmarking involves looking at a broader cross-section of the industry.

For instance, the National Retail Security Survey is used by many loss prevention executives to benchmark their budget against the industry average. If we see that other companies are spending .52 or .54 percent of sales on their loss prevention efforts, then we can evaluate whether our .41 is enough.

Again, as we discussed in the case study method, the more you can compare your data with companies of a similar nature and industry segment as yours, the more valid this data becomes.

Anecdotal. “Once upon a time…” Anecdotal arguments involve telling a story, relating an incident that occurred, or sharing a personal experience. This is very commonly used and has strong appeal to some individuals.

For example, perhaps you’ve been in a meeting and someone supported an idea by saying, “I was in the stores last week and talked to our Flint, Michigan, store manager, and she was telling me…”

This type of “proof” is often used by store personnel when they are trying to impress upon the loss prevention manager why they need more resources to combat shoplifting. They will give examples and stories about incidents that have occurred in the recent past. They might even use memorable examples for a few years ago to illustrate their point.

While the anecdotal approach to proof has some validity, we need to use it with caution, since stories by themselves can lead to knee-jerk reactions where significant resources are devoted to issues that have not been quantified.

The best use of anecdotal stories is in combination with other, more quantifiable proof. In those cases, anecdotes can be used to give an easy-to-understand glimpse of how the project will make things better while relying on the data to show that it applies on a broad scale.

Presentation

Once we’ve established the first three components of the framework for our proposal–process, premise, and proof–it’s time for the final step: preparing the presentation that will best communicate our ideas.

Whether we are preparing a paper document or a PowerPoint presentation, it’s important that we dedicate a fair amount of time and attention to how we will present our proposal, striving to communicate it in the most effective manner possible. After all, if our message is not expressed clearly and in a way that will generate the desired response, it really doesn’t matter what we’re proposing.

Organization. The most common problem most of us have is that we write our business proposals as if they were stories we read in a book. We tend to write in a chronological order that starts at the beginning of the project, details all of the steps that have been taken, presents all of the data we have collected, and saves the final recommendation for the very end. A proposal written in this manner often begins as in the “Before” example below. This is not an effective approach.

Do you notice that you are a couple of paragraph into the document and don’t really understand the point of the memo yet? In the newspaper business, they call this “burying the lead.” Most newspaper editors require their reporters to give the essence of the story in the very first sentence, or at least the first paragraph. By giving the reader the “bottom line” at the very beginning, it captures their attention.

We need to write our proposals the same way. Why? Think about it. Senior executives are busy people. It’s hard to get on their calendars. And they receive countless emails and innumerable memos every day. What do you think will happen if we give an entire history of our project and all of the details? They simply don’t have time for it.

What we need to do is present the bottom line first and then give the details. This is not to suggest, however, that the details are unimportant. Rather, we need to employ an underutilized organizational device, namely, appendices.

Perhaps most people have had a bad experience with formal writing while they were in school or find the term “appendix” to imply “boring.” But, whatever the reason, most do not use them.

However, an appendix saves us from having to give an executive a twenty-page memo that buries the lead on page twenty. Instead, we are able to prepare a cover page that is clear, concise, and to the point, and then use footnotes to point the reader to the appendix for details. The executive reads the cover page and gets the main idea of the proposal and then refers to the appendix only when he or she needs more information and background.

Call to Action. The other important component of the presentation that needs to be included in the very beginning of the document is the call to action. In the sales business, this is what is referred to as “asking for the sale.” In fact, some people are very good at the sales process except for one thing–they never ask the person to sign the contract.

To be effective in selling our proposal, we can’t omit this critical component. We have to let the decision maker know what we want them to do. Oftentimes, this is either omitted completely or buried in the conclusion in the back of the document…an area the busy executive may never reach.

Wordiness and Passive Language. How we use words may also hinder the reader from adequately considering a proposal. Go back and reread the “Before” example. Do you notice that the memo tells the reader things they already know? It also tells the reader things they probably don’t care to know – for instance, the history of acousto-magnetic versus RF technologies in the EAS industry. Did you also notice that there is no “call to action” in the opening? Consider how these issues are handled in the “After” memo.

Use the following questions to evaluate the revised memo:

  • Is the revised version more meaningful than the previous version?
  • When the executive reads the subject line, will he or she understand exactly what is being proposed?
  • Does the first sentence communicate the “lead?”
  • Why is the deadline necessary and is it helpful or unhelpful?
  • If we don’t give a deadline, what could happen?
  • Does the memo show proof that the expenditure is justified?

Might the CEO or CFO want to see how we calculated a 43.7 percent return on the revised memo? Clearly, there is more detail that will have to follow for a proposal of that magnitude, but we are aiming for a one- to two-page summary that includes

  • The premise for the project,
  • Proof that identifies why it will meet our objectives, and
  • A clear call to action for what we want the executive to do and when.

Is it reasonable to expect that the executive reader might want to see more details supporting our contentions such as the internal rate of return we cite? Of course, that’s why we will put it in the appendix so they can review the data if they so desire.

Try this four-part framework for your next project or budget proposal, and see if it doesn’t help you better articulate your business case, clarify your own thinking, help you get others involved in the process, and result in a better presentation that includes a clear call to action from your readers.

For more examples and ideas on how to make your business writing more effective, read Deborah Dumaine’s Write to the Top, where she gives more ideas and also addresses how to make your email communication more effective.

————–

Before…

To: Senior Executive

From: Loss Prevention Executive

Subject: Meeting Minutes – EAS committee

As you know, we formed a committee to examine the possibility of using EAS back in March of this year. This committee is comprised of representatives from all major functions that would be impacted by implementation of EAS. During the course of the last several months, we have met on a bi-weekly basis and examined the costs, possible benefits, and operational impact of installing EAS in our stores. Additionally, we have looked at the various options available relative to the technology, vendors, and reliability of various options.

There are two major technology standards in widespread use throughout the retail industry – RF and acousto-magnetic. After talking with two major vendors, each representing one of the major technology standards, and speaking with client references for each of them…

———————

After…

To: Senior Executive

From: Loss Prevention Executive

Subject: Capital budget approval needed for $2.1 million EAS implementation

The EAS committee has unanimously approved chain-wide implementation and needs capital approval from the Executive Committee by July 6 to meet the drafted project timeline. This implementation will have the following benefits:

  • Generates a 43.7% internal rate of return over the next three years
  • Supports the corporate “open-sell” initiative
  • Provides a platform for future RFID adoption…