As we explain in chapter five of our new book, How to Close A Deal Like Warren Buffett, you can’t land your next Warren Buffett big deal by selling to the same types of people in the same size companies at the same level of organizational authority, speaking the same sales language. You’ve already gotten as much out of that approach as you can. Your prospect is higher up the food chain and has a different problem. You have to think like that prospect thinks if you’re going to cook up a Warren Buffett kind of deal.
Doris Christopher, the founder of The Pampered Chef™ never dreamt that borrowing $3,000 on a life insurance policy would lead to her making a mega deal with Warren Buffett and Berkshire Hathaway (BRKA).
In 1980 Christopher was 34 when she began looking for a way to earn money while staying at home with her daughters. She was an avid entertainer and her friends often asked about her kitchen gadgets. Trained as a home economist at the University of Illinois, she knew how to discover the best kitchen tools.
Selling utensils sounded good, but how? She mentioned in-home parties instead of opening a store, and her marketing executive husband Jay embraced the idea. He suggested that she could redefine the direct marketing concept.
By 2001 The Pampered Chef served 12 million customers nationwide and had annual revenues of $740 million. While it has been said Buffett followed the money that led to Christopher’s doorstep, actually she reached out to him in a letter (with a little help from Goldman Sachs).
“Warren was wildly smart, knew the numbers and spoke with total candor,” recalled Christopher when we interviewed her at the 2012 Berkshire Hathaway annual meeting. She said when he made the financial offer to buy The Pampered Chef it was obvious he valued great managers and was impressed with what she had built “from scratch.”
The Name of Game is Find the Dealmaker
For your next big deal, you’ll need to sell to the executive-level person who has the perspective on the problem you can solve, such as the CEO or other high-level executive officer. You need someone with a larger budget, more flexibility, and more impact on the entire company.
Its language breaks down like this:
1. Managers think about their suppliers as providers of products or services. They make their decisions based on budget, ease of the vendor to work with, amount of effort to switch vendors, and whether the product or service will work in their current operation. A manager’s goal is to make his or her day-to-day operations work with little change and some incremental improvement as measured by the boss’s scorecard. Managers’ problems revolve around price, service, and quality.
2. Directors think about changes to systems and processes that will make departments have more capacity, increase their efficiency, and increase their speed. They think less about budget and vendor approval than managers. They are measured on numbers both in and out of budget. Their problems are about yield, throughput, and ratios.
3. Senior executives think about moving the needles of market-share, profit, and share-price. These measures drive budget, which means they are outside of budget. Their problems are about speed to market, first-mover position, and bottom line impact.
What was in Christopher’s recipe that whetted Buffett’s appetite? For starters, the Pampered Chef had no debt, high profit margins, an enthusiastic management team, and world markets to conquer. And the concept is simple and something Buffett could relate to. Warren’s language is brand, profits and strong management, so that is what Christopher talked about.
From 1995 to 2001 Pampered Chef’s revenues grew 232 percent, compared with 49 percent for the industry. The company had never had debt, save for that $3,000 life insurance loan that Christopher and her husband used for the launch.
For your next deal, make certain that you are talking to the right level of person in the right language. Those ingredients make the winning recipe.