The IT Sales Model is Broken
The IT Sales Model is Broken
Selling As A Value Exchange Process
Today’s markets are characterized by rapid commoditization, and it is seldom possible to compete on the basis of product features and benefits for any length of time, if margins are to be maintained or improved. Increasingly, the question being posed to suppliers, by their most important customers is – “How much better off will my company be if I buy your product/service or business solution?” If suppliers cannot answer this question in precise terms, (and they almost invariably can’t) price becomes the primary determinant of which buying decision is made.
However, this is but one side of the equation. It is all very well delivering demonstrable value to the customer. But, for obvious reasons, it is also vital that the supplier earns an equitable return on the value delivered. In far too many cases, suppliers struggle mightily to enhance the value they provide through a range of so-called value-added services, only to receive “commodity” prices for their products. This leads to the disastrous situation where margins erode and costs increase.
The Incentive To Purchase
Value – Price = Incentive To Purchase
In virtually all sales interactions, price is crystal clear. However value is usually extremely unclear. In fact, in most cases, neither supplier nor customer has the faintest idea whether any value was delivered or, if it was delivered, how much or when! If sales organisations are to professionalize, then the capacity to identify, quantify, deliver and track the monetary value provided by their offerings will become a core competency required for success and survival. This is no trivial task and in hundreds of discussions with senior executives in IT, chemical specialties, banking, telecoms, financial services, software, outsourcing and manufacturing, we have yet to find an organisation that has dealt with the issue convincingly.
Increasingly, customers are demanding proof – hard evidence – that I.T. offerings are delivering added value in excess of price. However, for IT sales professionals the challenge is even greater when client executives are asking:
1. Is there an ROI and, if yes, how much?
2. How do I convince the board to vote the budget?
3. How do I prove to the board that the return has actually been delivered and when?
The IT industry’s inability to respond creates a major communication problem that results in slower decision making, protracted selling cycles and staggeringly high selling costs.
A More Helpful Approach – Value-Based Selling & Delivery (VBSD)
To date, I.T. industry responses to these challenges have centred around TCO (total cost of ownership), which has nothing to do with the delivery of value, and traditional spreadsheet-based ROI calculations, which are typically complex, cumbersome and simply not believed by the client or the supplier. Neither approach has proved terribly useful from the customer’s perspective. Furthermore there is no mechanism for tracking the actual value delivered.
A more helpful approach is Value-Based Selling and Delivery which assists suppliers to:
• Build a financial model for an IT offering (e.g. call centre, ERP, CRM etc.)
• Isolate the value drivers impacted by the offering. (These are not always obvious).
• Assign measures and monetary benefit to them
• Populate the model with these numbers
• Make them accessible, obvious and easy to understand (no 200 page reports)
• Encourage the client to challenge, change and verify the numbers
• Show how the value will actually be delivered
• Reach consensus based upon the agreed facts.
• Do it all fast! (In days or weeks rather than months)
A Radically New Way Of Selling
I.T. delivers little business value of itself. Actual business value depends on how well I.T. investments are targeted and how well they positively impact the identified value drivers and unlock the value that exists. In the new world of IT selling, sales teams will develop the skills to build financial models for their offerings, run preliminary numbers through the model and then engage senior client executives (typically CEO or CFO) in a process of debating and verifying the predicted value. This positions the salesperson as a business consultant, achieves buy-in and support from the highest levels of management in the client organisation and dramatically shortens the sales cycle.
A further element of value-based selling and delivery is the ability to gain closure on the predicted value by developing a robust work program linked directly to predicted value and combined with a tracking process that provides a clear view of what value is or isn’t delivered. Deviations are highlighted, their financial impact highlighted, and executive attention focused on what action needs to be taken. This approach is dramatically different from the traditional approaches still employed by IT companies we have encountered.
IT sales professionals need to have a new focus. The primary role of the salesperson has changed:
• From day-to-day transaction management, specialized technical support and customer service
• To customer business consultant
As “consultants” salespeople much first understand their customer’s business (perhaps better than they do), elevate their points of contact beyond the customer’s purchasing, IT or administrative personnel (CEO, CFO, CIO), and then add measurable value (beyond delivery of the billed product/service) to the customer’s business results.
In our experience based on work with many of the major IT players worldwide, IT salespeople do not make the transition to value-based solution selling easily – even when armed with the tools and methods of value-based selling and delivery. In many cases, the best approach is to create a small specialist or pathfinder group, staffed by innovative salespeople and given the necessary coaching and guidance. Successes with a few carefully targeted deals then reinforces the “buy-in” and commitment and releases funds for further transformation of the salesforce. In many industries the best way and, in some industries the only way, to enhance salesforce effectiveness, is a new focus on delivering and receiving value
The IT Sales Model is Broken - To learn more about this author, visit Peter Gilbert's Website.
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We are in the midst of a genuine revolution in the way I.T. sales are made. At the heart of this revolution is the issue of competing on value. In many cases, the differences between traditional sales approaches and value-based selling appear to be subtle, but in fact, they are profound, requiring changes in strategy, corporate culture and selling skills.
Selling As A Value Exchange Process
Today’s markets are characterized by rapid commoditization, and it is seldom possible to compete on the basis of product features and benefits for any length of time, if margins are to be maintained or improved. Increasingly, the question being posed to suppliers, by their most important customers is – “How much better off will my company be if I buy your product/service or business solution?” If suppliers cannot answer this question in precise terms, (and they almost invariably can’t) price becomes the primary determinant of which buying decision is made.
However, this is but one side of the equation. It is all very well delivering demonstrable value to the customer. But, for obvious reasons, it is also vital that the supplier earns an equitable return on the value delivered. In far too many cases, suppliers struggle mightily to enhance the value they provide through a range of so-called value-added services, only to receive “commodity” prices for their products. This leads to the disastrous situation where margins erode and costs increase.
The Incentive To Purchase
Value – Price = Incentive To Purchase
In virtually all sales interactions, price is crystal clear. However value is usually extremely unclear. In fact, in most cases, neither supplier nor customer has the faintest idea whether any value was delivered or, if it was delivered, how much or when! If sales organisations are to professionalize, then the capacity to identify, quantify, deliver and track the monetary value provided by their offerings will become a core competency required for success and survival. This is no trivial task and in hundreds of discussions with senior executives in IT, chemical specialties, banking, telecoms, financial services, software, outsourcing and manufacturing, we have yet to find an organisation that has dealt with the issue convincingly.
Increasingly, customers are demanding proof – hard evidence – that I.T. offerings are delivering added value in excess of price. However, for IT sales professionals the challenge is even greater when client executives are asking:
1. Is there an ROI and, if yes, how much?
2. How do I convince the board to vote the budget?
3. How do I prove to the board that the return has actually been delivered and when?
The IT industry’s inability to respond creates a major communication problem that results in slower decision making, protracted selling cycles and staggeringly high selling costs.
A More Helpful Approach – Value-Based Selling & Delivery (VBSD)
To date, I.T. industry responses to these challenges have centred around TCO (total cost of ownership), which has nothing to do with the delivery of value, and traditional spreadsheet-based ROI calculations, which are typically complex, cumbersome and simply not believed by the client or the supplier. Neither approach has proved terribly useful from the customer’s perspective. Furthermore there is no mechanism for tracking the actual value delivered.
A more helpful approach is Value-Based Selling and Delivery which assists suppliers to:
• Build a financial model for an IT offering (e.g. call centre, ERP, CRM etc.)
• Isolate the value drivers impacted by the offering. (These are not always obvious).
• Assign measures and monetary benefit to them
• Populate the model with these numbers
• Make them accessible, obvious and easy to understand (no 200 page reports)
• Encourage the client to challenge, change and verify the numbers
• Show how the value will actually be delivered
• Reach consensus based upon the agreed facts.
• Do it all fast! (In days or weeks rather than months)
A Radically New Way Of Selling
I.T. delivers little business value of itself. Actual business value depends on how well I.T. investments are targeted and how well they positively impact the identified value drivers and unlock the value that exists. In the new world of IT selling, sales teams will develop the skills to build financial models for their offerings, run preliminary numbers through the model and then engage senior client executives (typically CEO or CFO) in a process of debating and verifying the predicted value. This positions the salesperson as a business consultant, achieves buy-in and support from the highest levels of management in the client organisation and dramatically shortens the sales cycle.
A further element of value-based selling and delivery is the ability to gain closure on the predicted value by developing a robust work program linked directly to predicted value and combined with a tracking process that provides a clear view of what value is or isn’t delivered. Deviations are highlighted, their financial impact highlighted, and executive attention focused on what action needs to be taken. This approach is dramatically different from the traditional approaches still employed by IT companies we have encountered.
IT sales professionals need to have a new focus. The primary role of the salesperson has changed:
• From day-to-day transaction management, specialized technical support and customer service
• To customer business consultant
As “consultants” salespeople much first understand their customer’s business (perhaps better than they do), elevate their points of contact beyond the customer’s purchasing, IT or administrative personnel (CEO, CFO, CIO), and then add measurable value (beyond delivery of the billed product/service) to the customer’s business results.
In our experience based on work with many of the major IT players worldwide, IT salespeople do not make the transition to value-based solution selling easily – even when armed with the tools and methods of value-based selling and delivery. In many cases, the best approach is to create a small specialist or pathfinder group, staffed by innovative salespeople and given the necessary coaching and guidance. Successes with a few carefully targeted deals then reinforces the “buy-in” and commitment and releases funds for further transformation of the salesforce. In many industries the best way and, in some industries the only way, to enhance salesforce effectiveness, is a new focus on delivering and receiving value
The IT Sales Model is Broken - To learn more about this author, visit Peter Gilbert's Website.
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David AchesonDavid Acheson is the founder of DCJA Consultancy. DCJA Consultancy is a management consultancy business specialising in B2B sales consultancy. They offer bespoke and packaged sales consultancy including Sales Optimisation Review, Interim Sales Management, Sales & Marketing Review, 1:1 Sales & Management Staff Analysis, Management Training, Solution Sales Training, Creation of New Pay Plan, KPI's, run Customer Feedback Campaigns, assist with Recruitment, Coaching, Appraisals and set up Strategic Marketing Campaigns. David spent his early career in accountancy and then moved into sales in 1982, working in Office Equipment, IT, Advertising, Training, Outsourcing and Consultancy. He has held many Senior Positions in SMBs and Global Organisations including Head of Sales Operations & Head of Business Development. His knowledge, skills and great experience of the Sales Industry has led to David making keynote speeches and running educational sessions to key businesses through organisations including The Chamber of Commerce and Business Link. - Visit David Acheson's Website |
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Dave KurlanDave Kurlan is the founder and CEO of Objective Management Group, Inc., the industry leader in sales assessments and sales force evaluations, and the CEO of David Kurlan & Associates, Inc., a consulting firm specializing in sales force development. Dave has been a top rated speaker at Inc. Magazine's Conference on Growing the Company, the Sales & Marketing Management Conference and the Gazelles Sales & Marketing Summit. He has been featured on radio and TV, including World Business Review with General Norman Schwarzkopf, in Inc. Magazine, Selling Power Magazine, Sales & Marketing Management Magazine and Incentive Magazine. He is the author of Mindless Selling and Baseline Selling – How to Become a Sales Superstar by Using What You Already Know about the Game of Baseball. He created and wrote STAR, a proprietary recruiting process for hiring great salespeople, and he writes Understanding the Sales Force, a popular business Blog and is a contributing author to The Death of 20th Century Selling and 101 Great Ways to Improve Your Life, Volume 2. - Visit Dave Kurlan's Website |
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Leanne Hoagland-SmithAre your sales where you want them to be? Will you be one of the few who achieves sales or business success or one of the many who have failed to change? Are you tired of being told you are like everyone else? Then you may find my first book on sales of interest. Be the Red Jacket in the Sea of Gray Suits, The Keys to Unlocking Sales available at Amazon or at http://www.processspecialist.com/red-jacket.htm. This book is a reflection of my no-nonsense approach to improving sales to overall business results. If you are truly committed to making sustainable changes, then I can help you secure a positive return on your investment because I focus on executable solutions not telling you the problems you already know you have. From training to corporate (group) coaching to executive one on one coaching, my approach is to assess, create awareness, build a goal driven action plan and then execute. The bottom line question is "Not do you or your employees know it, but do you or they want to do it?" Please call for a free strategy session at 219.759.5601. - Visit Leanne Hoagland-Smith's Website |
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Linda RichardsonLinda Richardson is the Founder and Executive Chairwoman of Richardson, a global sales training and performance improvement company. As a recognized leader in the industry, she has won the coveted Stevie Award for Lifetime Achievement in Sales Excellence and she was identified by Training Industry, Inc. as one of the “Top 20 Most Influential Training Professionals.” Ms. Richardson is credited with the movement to Consultative Selling and is the author of ten books on selling and sales management, including Sales Coaching — Making the Great Leap from Sales Manager to Sales Coach, and Stop Telling, Start Selling. She teaches sales and management at the Wharton Graduate School of the University of Pennsylvania and the Wharton Executive Development Center. Linda is a frequent speaker at industry and client conferences, has been published extensively in industry and training journals, and has been featured in numerous publications, including The Wall Street Journal, Forbes, Nation’s Business, Selling Power, Success, and The Conference Board Magazine. Learn more about Richardson's sales training and performance improvement solutions at http://www.richardson.com web - Visit Linda Richardson's Website |
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John BrennanJohn Brennan Ed.D. Dr. Brennan is President of Interpersonal Development, LLC, a training and development firm. Interpersonal Development has provided sales training and coaching to more than 3,000 sales reps from over 100 companies. A native of Australia, Dr. Brennan received his doctorate from the University of Rochester. His dissertation researched the effectiveness of Behavioral Modeling Technology in training people in interpersonal skills. While he has spent most of his career designing or delivering training, he was also a Vice-President of Sales of a training and development franchise with operations in 25 markets. Dr. Brennan has designed and delivered sales training in North America, Asia, Europe, Australia and the Middle East. He has been a guest speaker at numerous national and regional professional conferences. When Microsoft wanted Best Practices articles on sales for their web site, they called Dr. Brennan. The results are at http://office.microsoft.com/en-us/FX011387391033.aspx His firm’s clients have included Volvo, The Prudential, Merrill Lynch, Eastman Kodak, Gannett, Equifax Europe, the Economist Group and countless small businesses. - Visit John Brennan's Website |
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George LudwigGeorge Ludwig is a recognized authority on sales strategy and peak performance psychology. An international speaker, trainer, and corporate consultant, he helps clients like Johnson & Johnson, Abbott Laboratories, Northwestern Mutual, CIGNA, and numerous others improve sales force effectiveness and performance. Though it's George's strategies and processes that help corporations increase productivity and performance, it's his tremendous energy and dynamism that spark the transformation. Again and again, clients remark on his amazing ability to unleash human capacity and inspire men and women to break out of their comfort zones. The result is a whole new type of salesperson. His customized presentations teach achievers to make stunning advances in their lives. From helping salespeople realize cherished dreams to helping corporations exponentially accelerate revenue streams, George Ludwig leaves audiences and individuals empowered, emboldened, and clamoring for more. George is the best-selling author of Power Selling: Seven Strategies for Cracking the Sales Code and Wise Moves: 60 Quick Tips to Improve Your Position in Life & Business. - Visit George Ludwig's Website |
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Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
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