March 09, 2004
2004's Solution Selling Challenge: Twice the Result at Half the Cost
In the post-bubble enterprise software market, customers are better-informed, demand is driven neither by fear nor greed, and the "tech-savvy" black turtleneck has been superceded by the "process-aware", "industry-experienced" suit as de rigeur for the sales team. Consequently, virtually every job description for open sales positions in the business today screams for "solution selling skills".
However, collapsing price points driven by three big "O's" -- operating discipline, offshore development, and open standards -- are constraining the typical technology firm's ability to spend on these skills. In response, many are trying to shoehorn what was $200k/year (total comp) sales talent and experience into $100k/ year jobs, relying on a surplus of supply to hold comp costs in check. However, in an improving market, people have alternatives, and loyalty's under pressure. So what's a technology firm to do?
A few years ago, vendors sold CXO-high, deals were big, and margins were huge. Sales reps could be indiscriminately complemented by their own or a partner consulting firm's specialists, each with 10-20 years' experience in the relevant function or industry, to chase leads. Today's market requires more efficiency. To date, however, meeting this need for efficiency has been tackled narrowly and tactically with sales training, collateral development, and knowledge management applications, with indifferent results. A more thoughtful approach takes a more global, process-based view of sales and marketing activities, retains fewer but very-highly-qualified "solution-selling" specialists, and invests these resources more intensively in the earlier stages and in a more leveraged way later on.
A sales and marketing pipeline has three basic stages: lead generation, qualification, and advancing to close. Based on our experience, most firms need to invest more in developing and communicating process- or industry-related intellectual capital for lead generation. They need to use this intellectual capital more intensively to screen leads for customers' likely investment, potential payback, and organizational commitment to implementation. Finally, they need to spend more to codify solution skills into documented workshops that can be charged for, and executed by less experienced staff.
Here's a quick litmus test:
How many business functions and industry verticals do you sell to? For how many of these:
-do you have a specific white paper with at least one relevant case study or survey? (5 points)
-do you have an article published in an independent third-party journal or analyst firm report? (For a good example, see Jamie's recent article in MX Magazine.) (10 points)
-do you have an expert (in-house or tight partner) that would be regarded as such by customers and the media, based on prior jobs and visibility (e.g., quoted in relevant press 3-4x/ year)? (10 points)
-do you have at least one speaking engagement in the last six months in a relevant forum? (5 points)
-do you have an academic research partnership that has had you jointly in front of customers? (10 points)
-do you have a specific process- and financial model for calculating potential ROI? (5 points)
-do you have a formal workshop (with detailed, specific materials like interview guides and sample outputs) for customers that defines the solution roadmap around your product or concept? (10 points)
-do you budget specialist time to deals based on size and stage, and have a way of accounting for that to determine which deals and reps are consuming these resources? (5 points)
Less than 15 points-- you have issues; the silver lining is plenty of opportunity, too.
15-45 points -- you need to move beyond lip service to solution selling. Maybe the quiz can suggest some additional ideas
45 points or more -- you've got the idea, if it's not working maybe it's a question of execution -- what do your customers think?
So how does this translate into twice the result at half the cost?
On the front end of the process, going narrower and deeper in selected functions and industries has the inevitable effect of getting your firm's expert better networked with customers in the relevant sphere. Research by the Sandler Sales Institute (as quoted on page 24 of Dianne Darling's "The Networking Survival Guide" (McGraw Hill, 2003)) quantifiably bears out the vastly higher sales success rates from networking versus cold-calling. (This helps to explain the appeal of social networking solutions.) Sandler found close rates from referral-based leads to be at least 15%, versus 1% for traditional cold-calling.
On the back end of the process workshops are a great way to "trial-close" to qualify and advance more effectively. "If I can get our senior financial services expert -- who is much in demand -- in for a workshop on applying our solution for your business, can you get the senior decision-makers for this investment to agree to attend?" Or, "If you can commit to get all of the senior decision-makers there, I can offer the workshop for free, since it makes the process more efficient for both of us." And by documenting these workshops rigorously, a senior person can be leveraged by more junior people for the less "high-touch" aspects of the solution implementation process (data gathering, etc.)
So as they say, "publish or perish". Please let us know what your experience has been.
Copyright 2004, ESM Partners and Cesar A. Brea
March 9, 2004 | Permalink
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