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Engineering Value Sales Conversations
Executive Summary
Technology buyers are in the midst of redefining their relationships with vendors, anointing just a few as value-added partners while relegating the bulk to the commodity supplier heap. To succeed in this dog-eat-dog world, sales enablement professionals must engineer a strategic program that empowers sales teams to efficiently configure messages, product combinations, and conversation strategies that match clients' needs and buying patterns.
To meet dual objectives of cross-selling a large product portfolio and achieving attractive margins, technology vendors must develop a more scalable and adaptive sales platform that creates consistently high-quality output while empowering salespeople to tailor the right relationship and deliverables.
Market Forces Fundamentally Altering Tech Buyer/Seller Relationships
Today, 71% of business leaders believe technology is a vital element to their success, and 58% are directly involved in IT decision-making. This shift from information technology (IT) to business technology (BT) and the resulting complexity in the way companies acquire and consume technology are creating acute challenges for vendor strategy professionals charged with growing the top and bottom lines of their firms.
Technology industry net margins are 26% higher than the overall market, and market analysts' profitability expectations are similarly aggressive. Given the downturn, pressure on strategists to maintain current margin levels and defend market share will only increase.
Financial analysts are increasingly scrutinizing the productivity and efficiency of vendors' revenue engines and putting pressure on CEOs to improve execution.
Client company business executives see technology as vital to driving global expansion, integrating businesses, and driving business model innovation. The demand for IT services from functional departments and business units is expanding while finance groups are scrutinizing capital expenses.
This puts CIOs in the squeeze of supporting the growing needs of various business constituents, while controlling costs at the same time. To succeed, IT leaders are transforming their organizations from stewards of technology assets into orchestrators of an ecosystem of interrelated business support services.
Business buyers are increasingly involved in purchasing decisions because their success or budget hangs in the balance. However, the responsibility for providing ongoing support and management of technology systems is generally assigned to IT.
Faced with cost-cutting pressures of their own, enterprises have dramatically expanded the role of procurement. Centralized spend management efforts are saving companies like Pfizer hundreds of millions of dollars.
When asked about the differentiation between competitors in a bid or competitive proposal, IT executives told us that there exists little to no difference. Buyers would prefer to funnel more spending through providers that add value; however, buyers perceive that less than 10% of the vendors that try to do business with them exhibit characteristics they consider valuable.
Vendor CEOs Are Stuck In The Middle
To position their businesses for profitable growth, CEOs of large technology vendors are responding to Wall Street objectives while also addressing the market realities of their evolving customer base. Four strategic initiatives, which reflect the competing pressures on tech CEOs, are typical among the leading technology vendors:
"While I realize that macroeconomic uncertainties exist, it's important to note that we control many of the levers that drive our performance. We are therefore confident in our ability to meaningfully expand our earnings per share." (Mark Hurd, Hewlett-Packard)
"In addition to strong revenue and earnings results, our deferred revenue and strong cash flow generation during the March quarter underscore the strength in our business. This strength was driven by our broad portfolio of offerings and continued focus on solid execution." (John W. Thompson, Symantec)
"We've been a pretty low-key company relative to visibility and brand visibility, and as we go forward, we're convinced that we need to raise that visibility and to better communicate our capabilities to the market." (Mike W. Laphen, Computer Sciences Corporation)
"Compuware sales teams engage in solution- and value-based selling and focus on the ability of our people and products to help increase revenues or improve performance. By focusing the abilities of our people and our products to provide rapid return on investment, our sales team will continue to execute." (Peter Karmanos, Jr., Compuware)
Random Acts of Enablement Create Inefficiency
Sales Execution Is Undermined By Complexity And Competing Demands. CEOs executing on their four priorities at the same time that their customers' worlds are undergoing a radical IT to BT transformation unwittingly create conditions that make selling a heroic effort.
The System Bottleneck: Inefficiency at Point of Sale
Vendor's World
- 1 Business unit construct - Competing P&Ls
- 2 Random acts of enablement - Uncoordinated efforts
- 3 Matrix organization - Complex decision paths
- 4 Quarterly focus - Short-term revenue pressure
System
Constraint
Customer's World
- 1 IT to BT shift - Business tech integration
- 2 Federated IT spending - Multiple decision-makers
- 3 Procurement professionalization - Central control
- 4 Perceived commoditization - Lack of value differentiation
Signal-to-Noise Problem
Information overload at the point of sale creates a signal-to-noise problem. Salespeople must filter through excessive, uncoordinated content to find what's relevant.
Coping Strategy Approaches
Large technology vendors typically operate more like holding companies for discrete businesses than as cohesive entities that bring the right combination of capabilities to customers. Lacking a holistic strategy, sales and marketing groups fall into suboptimal selling approaches.
Three Coping Strategies for Sales Enablement
Strategy 1: Customer Manages Complexity
Vendors passively let customers deal with complexity, creating commodity perception
Product-based Marketing
Multiple business units create product-focused materials without coordination
Value Proposition:
"Publish or perish"
Product-based Selling
"Show up and throw up" - Sales teams deliver generic product pitches
Value Proposition:
"More spaghetti against the wall, something will stick"
Commodity Offerings
Customers see vendors as interchangeable with little unique value
Value Communicated:
"These guys just want to sell something and offer no value"
Impact Challenge:
With customers managing complexity, vendors become commoditized and are evaluated primarily on price rather than value. This erodes margins and limits growth potential.
Strategy 2: Sales Teams Manage Complexity
Sales heroes individually manage complexity, creating high-cost inconsistency
Product-based Marketing
Portfolio organized into solution packages with limited flexibility
Value Proposition:
"Organize the portfolio into common packages"
Solution-based Selling
Individual sales heroes try to map capabilities to customer needs
Value Proposition:
"Match capabilities to customer needs"
Heroic Effort
Some customers receive value, but experiences vary widely by sales rep
Value Communicated:
"They made what they do relevant to us"
Impact Challenge:
Only 20% of sales force can perform these tasks well enough. This approach is costly, inconsistent, and not scalable. Revenue depends on a small number of high performers, creating business risk.
Strategy 3: Engineered Sales Conversations
Systematic, customer-centered framework creates scalable value delivery
Customer-based Marketing
Content organized by customer problems not internal structures
Value Proposition:
"Communicate best practices to solve problems"
Customer-based Selling
Systematic matching of solutions to customer needs and stages
Value Proposition:
"Add value"
Strategic Partner
Customers view vendor as valuable partner with relevant solutions
Value Communicated:
"Strategic relationship"
Impact Advantage:
Systematic approach creates consistent value delivery across the entire sales force. Increases revenue and margins while reducing sales costs. Customers view vendor as strategic partner.
The 5 Rules of Selling
Engineered Sales Conversations: The Key To Effective Sales Enablement. To meet the dual business objectives of cross-selling a large product portfolio and achieving attractive margins, technology vendors must develop a more scalable and adaptive sales platform.
1. Companies Don't Buy Products, They Invest to Solve Problems
There are a variety of different tools that decision-makers use to evaluate investments, but all of them are based on determining how a given proposal meets a business need, not the merits of a product or service.
2. People Buy from People
Different stakeholders are involved in the problem-solving process depending upon the scope of the issue, and each individual has a slightly different lens with which to evaluate their companies' options.
3. "Only a Customer Can Call it a Solution"
When asked if he could detect any difference between vendors' historical product packaging and the new approach to market "solutions," one IT executive commented, "their squirrel is just a rat in pretty clothes."
4. Problems Are Solved Over Time
While one stakeholder may have a vision for solving a problem, others in the organization may struggle to determine its root causes. Individuals and organizations process information differently and need to gain agreement at key milestones.
5. Problems Are Hierarchical
Executives delegate responsibility to subordinates based on the scope of a particular issue and its perceived level of importance. Elements of related projects often roll up into larger initiatives of a different name or scope.
Three Dimensions of Valuable Content
Relevant
What are the customer's problems?
How do they solve them?
Timely
When in their problem-solving process are they?
Where are they on a maturity chart?
In Context
Who is involved in solving the problem?
Why do they care?
Model-Map-Match Framework
To help technology marketers engineer more valuable sales conversations, a framework has been developed for all sales enablement activities that involves three fundamental disciplines.
Model
Start with stakeholders to understand their problems and decision pathway and organize this into a logical framework.
Vendor strategy, marketing, and sales enablement professionals should develop customer models based on the business themes that define clients' business problems.
- Why is there a problem and who is involved in solving it? Define a hierarchy of business issues that correspond to the business theme and the typical customer roles that are responsible for addressing those issues.
- How should the customer solve it? Create a framework that organizes all of the activities customers must perform to successfully achieve their desired output — independent of your products or services.
- When will you engage with the customer? Break the customers' problem-solving processes down into a set of logical decision gates that they will go through to gain internal agreement.
- What is the scope and level of the initiative? Customers require different levels and frequencies of vendor engagement depending on the level of a given initiative.
Map
Use the customer model as the key reference point to developing and coordinating all content required to produce valuable conversations and offers for a client.
To eliminate redundancies, increase adoption of marketing programs, and streamline workflows, sales enablement professionals must collaborate with their peers.
- Organize the product portfolio and supporting messages in a more flexible way To allow sales teams to better configure the right set of capabilities to meet the specific challenges of a given account.
- Find internal processes that are creating friction points Then create ways to build integration points between them. Use the customer model as a reference point.
Match
Develop a tool set that accommodates all primary and derivative value propositions in a standardized, customer-facing framework that allows sales people to quickly identify patterns.
This step is the one that requires vendors to use technology smartly.
- Create a common, unified, customer-centered platform To simplify salespeople's ability to locate relevant content and more easily manage multiple opportunities within complex targeted accounts.
- Use the customer model to develop an organizing construct To ensure all materials, processes, technologies, and training are logically organized to reflect a modeled customer image.
- Standardize all sales tools and support efforts To streamline how they interoperate with each other to reduce clutter and confusion for the sales force.
- Integrate all training activities To establish a common modular program that simulates real-life situations and reinforces all of the learning objectives.
Over the next three to five years, three distinct buyer-seller relationships will emerge
Business Partner
Deeply integrated vendors where both parties have a vested interest in each other's success.
Value-Added Provider
Vendors with a history of working collaboratively and offering subject-matter expertise not available internally.
Commodity Provider
Vendors constantly managed on price/performance metrics with restricted access to senior-level buyers.
Implementation Recommendations
Start Transforming, While Performing. The first step to engineering successful sales conversations is unleashing an empowered team to drive the radical changes implied by Model-Map-Match.
Critical Success Factors
Communicate, communicate, and communicate some more
Changing the muscle memory of an organization is extremely tough work. All strategic sales enablement programs must develop a sophisticated, well thought out, internal communication strategy or expect failure.
Measure the system, audit your performance
Sales enablement professionals should run their programs as businesses within a business. Co-develop metrics with finance that map directly to your organization's income statement to show direct contribution to the business.
Fix the plane while it's flying
Executive-level endorsement is important, but the path to success is blazed by identifying low-hanging-fruit milestones and compounding your results along the way. The Model-Map-Match approach is specifically designed to help you create an overarching architecture to provide the "sockets" to allow individual projects to be easily integrated in the future.
Planning Phase
ID pools of potential funding
Inventory all investments to enable sales across organization to find areas where funding can be redirected.
Pick the right place to start
Pick an issue (like demand generation or targeted sales campaigns ahead of the RFP) with a defined scope, then execute Model-Map-Match end to end.
Fund full campaigns, not deliverables
Define and evaluate success based on the targeted outcomes of the given program; the deliverables are only contributors.
Design to scale
Create campaigns that can be clearly related to others, modified for different audiences, or easily replicated in different channels.
Building Phase
Get more strategic about content
Implement robust content development and management strategies to make the material more reusable, easier to maintain, and less costly to create.
Be strategic with presentation
Develop a consistent presentation schematic based on consumption requirements and sales use before engaging usability and design experts.
Reduce the noise
Eliminate the clutter, disorganized communications, inconsistent recommendations, and varied definitions, which create confusion.
Test it first
Get your hands dirty, go in the field, and experience the same things your salespeople and customers experience. This will help you significantly tighten up the program before scaling it out.
Running Phase
Keep the content fresh
Valuable content is perishable, make sure you have cost-effective strategies to continually update information, or your program will wither on the vine.
Create a sales knowledge management strategy
Profile all of the informational requirements needed for salespeople to effectively execute their role in the program.
Rationalize disparate sales portals
Create an intelligent, dynamic Web application that allows sales to configure the right conversation, for the right person, at the right time, while supplying just-in-time coaching material.
Focus on the few, not the many
Too many sales enablement programs fail because they are designed for the average salesperson. Work with sales leadership to target programs for top performers. As they succeed, more and more sales people will adopt your program.