Carpe Diem Consulting - Sales & Marketing Blog For Microsoft Partners

You can't solve customers' problems....

Interesting article and ensuing discussion here, about whether or not "solution selling" is effective.

As is often the case, the problem is in the definition of "solution selling" - and the moral of the story is that YOU CAN'T SOLVE CUSTOMERS' PROBLEMS - ONLY THE REASONS WHY THEY OCCUR.

Certainly it's important to get a prospect's perspective on why they THINK the problem is occurring - but it's our job as sales professionals to CORRECTLY DIAGNOSE the reasons for the problem.

Sometimes we won't be able to solve the reasons the problem is occurring - in which case we just move on (or - ideally - refer the prospect to someone that CAN solve the problem).

For example - let's say we're selling for an organisation that provides sales training.  Our prospect says they have a problem - they're a sales manager, and they keep missing their target.

Sounds like there's a chance that we MIGHT be able to solve the problem - but on further questioning it turns out that, due to the fact that the prospect's products are uncompetitive, the sales people they hire keep resigning.

As we're not in the "how to make your products more competitive" consulting business - or indeed the recruiting business - we can't solve the REASON for the problem - and hence the problem itself.

So how can we turn Geoffrey James' article into a good news story?  How can we turn it into a sales opportunity?

Let's say we have a prospect that has tried a number of times to solve a particular problem - and each time they've been unsuccessful. Perhaps we can SELL a process to IDENTIFY THE REAL REASON WHY THE PROBLEM IS HAPPENING!

For example - in the IT world - a prospect's network keeps crashing.  They've tried many times to fix this problem - but they keep failing.  This sounds like a wonderful opportunity to sell some sort of all encompassing network analysis/audit process, aimed at identifying the REAL REASON why the problem is occurring.

In this way - WE'RE USING THE FACT THAT THE PROSPECT HAS PREVIOUSLY FAILED TO SOLVE THE PROBLEM TO OUR ADVANTAGE and - in true solution selling style - we're selling to make their life better.

Given their previous failures, they'll actually be more willing to pay for this diagnostic - and, because we get the chance to get inside their organisation, build relationships, and prove our value - we actually GET A HIGHER LIKELIHOOD OF SELLING THEM THE SOLUTION WE WENT IN TO SELL THEM IN THE FIRST PLACE!

How often have you successfully sold to a prospect that's unsuccessfully tried to fix a problem?

How to clone high performing sales people

The number 1 question we get asked from clients in relation to sales people is "where do I find a good one?"

The number 2 question would be "how do I clone this great sales person that I already have?"

We can take a lead here from the Sales Executive Council - they've undertaken reserach on a worldwide basis as to best practices in sales.  They've undertaken some fascinating research into the different "profiles" of salespeople, and which of these is the most successful.

In an earlier post, we spoke of the need to "provoke" the customer.  It appears the SEC research agress with us.  Out of 5 sales rep profiles, their research indicates the "Relationship Builder" (builds strong advocates within the customer; generous with time; gets along with everyone) is MUCH LESS SUCCESSFUL in sales than the "Challenger" (understands the customer's business, loves to debate, pushes the customer).

Specifically - whilst the proportion of sales reps that are Challengers and Relationship Builders are roughly the same - 39% of Challengers are "high sales performers", compared to only 7% of Relationship Builders.

But it's not just about provoking - the Challenger teaches customers something new about their business, something they didn't know before.  For example - in the IT world - I would think the Challenger salesperson could marshall the forces of their own organisation to bring the benefit of their experience in helping MANY IT departments to lower their costs, in a way that any individual CIO might not have thought of.  Provoke - Question - Teach Something New.  The art, obviously, is to teach them something new in an area where the salesperson's organisation does things differently to other suppliers.

As we say in our solutions sales training - if you've got something the customer wants and you're the only place they can get it - then it's game over.

So - are your sales reps "challenging" your customers?  When the CIO says they have no budget - does your rep meekly agree, or do they say "listen - I understand the pressures you're under - but do you realise if you invested in this virtualisation solution you'd actually end up saving your organisation money within only 5 months?  Here's a new approach for you, based on our experience with many other customers."

Are you looking to find that elusive Challenger in the marketplace - or would it be easier to take the members of the team you already have and train/support them to become Challengers?.........

Selling with trust #1 - convincing salespeople not to lie

In our new program that teaches field technical and consulting resources how to spot and pass on opportunities, we poll attendees prior to the course, to get general feedback on their perception of “sales”.

The results we obtain are now becoming consistent – the top 2 pieces of feedback we receive on how the services folk view the sales function provide comments along the lines of:

“forcing people to buy products they don’t need” and
“acting in the sales person’s best interest – not that of the customer”.

So – is this all fact or fiction?  Do sales people actually lie on sales calls?  If so – why?  And “does it work”?!!!

Do salespeople lie on calls?

Research summarised in an article just released entitled Ethical Salesperson Behavior in Sales Relationships (Hansen J D & Riggle R J, Journal of Personal Selling & Sales Management, vol. XXIX, no. 2 (spring 2009) reveals:

• sales managers report that 49% of their sales people have lied on a sales call, 34% have made unrealistic promises, and 22% have sold products the customer did not need (Whatever It Takes, Michele Marchetti, Sales & Management Marketing Management 149 (13) 28-36)
• 50% of sales and marketing executives believe that salespeople have lied on sales calls and that 74% believe their salespeople are encouraged to lie in the aggressive pursuit of sales goals (To Tell the Truth, Erin Strout, Sales & Marketing Management 154 (7) 40-47)

Why do salespeople lie on calls?

The article gives the following reasons as to why this behaviour occurs:

• as the salesperson sits between the buying and selling organisations, ethical conflicts occur as they attempt to balance the interests of both parties (research source here)
• as they often work in isolation ethical constraints are lowered – the employing organisation is less able to regularly reinforce the required behaviour (research source here)
• sales people are under enormous pressure to achieve targets, and they’re only human (research source here)
• sales managers will often overlook poor ethical behaviour if sales success is achieved (research source here)
• the nature of the negotiations undertaken by salespeople can promote dishonesty and exaggeration (research source here)

So what should we do?

Most of us will agree that – ideally – salespeople should have some sort of “moral code” that convinces them to create “win win” situations ie in a solution selling context the salesperson receives reward because she has identified a problem a customer has, and has removed this problem.  The salesperson “wins” because the customer “wins”.

The research, however, clearly says that something is breaking down.

We all know that ethical salespeople are generally more respected by buyers – but does this mean they win more deals?

There is anecdotal evidence that this is the case – for example in his brilliant book The Speed of Trust Stephen M R Covey talks about the “Economics of Trust”, and uses this simple equation

↑ Trust = ↑ Speed ↓ Cost

to explain that, in business situations, high trust increases the speed with which transactions can occur, and greatly reduces the cost of facilitating these transactions.  Certainly salespeople benefit by achieving greater “velocity” in their sales funnel.

What is interesting about the original article that sparked this entry, however, is that it offers proof that ethical behaviour on the part of the salesperson actually drives better returns.  Ethical sales behaviour positively influences buyer/seller relationships – this leads to greater economic returns particularly in the longer term.  Ethical salesperson behaviour (unfortunately!) plays a minimal role in producing immediate economic returns – however an enormous link is proven between ethical behaviour and the buyer providing positive word of mouth referrals.  Other research points out that customers gained via some sort of referral remain loyal buyers for longer, and are more profitable than customers gained through other demand generation programs.

We need to point out to salespeople that – whilst it “feels good” to behave ethically – it actually increases sales performance, making their job easier over time.

The implications are huge, and in coming articles I want to provide a framework that can be pursued to improve sales performance by displaying ethical behaviour – by building trust – through the sales process.  Many managerial elements come into play – training, incentives, sales management behaviour, sales process, how to market trust etc.

I’d value hearing from you about any specific programs you might have in your organisation designed primarily to improve sales performance by actively building trust throughout the sales process.

Sales Tactics for Tough Times - #2 Get the Field Technical Staff Spotting Opportunities

Here's a flow of logic that should lead to increased sales:

1. "Qualified Leads" are preferable to "Unqualified Leads"
2. A superior source of Qualified Leads is the existing customer base
3. On-site Technical and Consulting Resources - by definition - only deal with the existing customer base
4. Technical and Consulting Resources are (arguably) more trusted than sales people
5. Technical and Consulting Resources are ideally placed to identify and pass on Qualified Leads.

Great logic - but the only problem is that Technical and Consulting Resources generally aren't trained to spot opportunities - and indeed often object strongly to having to have anything to do with the sales process.

Our research at Carpe Diem, however, indicates that it is possible to train these on-site resources to spot opportunities whilst they're in the field - and by actually explaining what we mean by "sales" it is in fact not difficult to get them to take an active role in spotting real opportunities in the course of their everyday work.

Microsoft believes our research as well - so much so that Microsoft has internally taken on board a 1 day course we have built to train field services staff to identify opportunities whilst in the field - qualify the opportunities - and to then pass these on to sales on their return.  The course is being rolled out by Microsoft in Australia and NZ - and there are a number of Partners already trialling the course.

Check out an overview of the course here.

Perhaps tough economic times provide a good stimulus to critically review the success and potential of ALL your sales people - is it possible you could save significant money by removing the underperformers, and instead rely on your on-site resources to lift the returns from your successful sales people?

The McKinsey view - managing IT spending in tough times

Good article from The McKinsey Quarterly (December 2008) discussing the fact that "businesses badly need to extract value from their IT functions".

This sounds like a real opportunity for proactive sales people.

The flavour of the article is about reducing IT spending which initially sounds threatening - but if we're in partnership with the IT manager, and being proactive, we can add genuine value which will build the relationship into the longer term.

From a Microsoft platform perspective, we should focus on the part of the article that states "improvements can be made with modest investments".  Part of the power of the Microsoft platform is that subsequent minimal investments in different parts of the stack can actually unlock huge ROI from existing software assets.  For example - simply adding a mobility solution can mean a field sales force can better utilise a Microsoft CRM investment - increasing sales, improving customer satisfaction, and reducing downtime and travel costs:  utilising Performance Point Server can tap into deep Business Intelligence functionality that ships with SQL Server 2008.  The list goes on.

But is there urgency?  I suspect if YOU'RE not proactive and your COMPETITOR is - then you might be the one that is targeted for the cost cutting...........

The sales cocktail party rules

Throw away your corporate Powerpoint presentation - only present to customers about the customers themselves, their hopes, their problems, their dreams.

Don't talk about your product - only talk about the difference your product can make to the customer's situation.

Don't respond to "requests for quotation" - go talk to customers and find new problems to solve for them.

Don't talk about price - talk about customer value.

Don't close the sale - open the relationship.

Don't pay sales commission on receipt of the order or payment - pay on receipt of a customer signed case study/reference site.

Don't do canned product demos - do customised customer scenarios.

Any more to add to the list?

Sourced from the gapingvoid blog, brought to my attention at brand autopsy.

Sales Tactics for Tough Times - #1 Shedding Customers

This is the first in a number of articles I intend to write, focussed on outlining specific tactics for Microsoft Partner sales teams to achieve sales success during tough economic times.

 In Australia Microsoft is tackling this issue head on, outlining a number of strategies for Partners - check out Nick Mayhew's blog for details.  More on this in subsequent articles.

For now, I want to focus on the issue of customer profitability.  In our consulting efforts with organisations - both within but also outside of IT - inevitably we find that the Pareto principle applies to customer profitability ie often 80% of the profit comes from 20% of the customers.  (For a step by step guide on how to calculate cumulative customer profitability, download this extract from Carpe Diem's Action Oriented Marketing course.)

When we mention this to clients, there are general nods of agreement - but it is rare for us to see anyone doing much about it!

This phenomenon would not be so much of a problem, if it weren't for the fact that - in general - the majority of a Partner's resources are usually allocated to the tail - making this an unprofitable tail.  Chances are some of your larger customers are actually subsidising the smaller ones.

Here are the key steps you should consider following:

1. Undertake an analysis to identify which current customers are actually costing you money to service.
2. Divide this list of customers into 2 - customers which can be made profitable (perhaps by selling a managed services contract, or by renegotiating service levels etc), and customers that will likely remain unprofitable.
3. Implement a plan to exit the unprofitable customers from your business (perhaps by referal to an organisation that can service their needs, but that has a lower cost structure).

Don't, however, stop here - if you do exit these customers, there will be some loss of revenue - it is important you remove the costs associated with servicing these loss making customers.  This could mean shedding some staff - although it could also mean redeploying these staff into areas where they can generate more revenue, at the same time adding more value to the remaining customers.

If you think "exiting customers" doesn't happen in real life, check out this article from Brand Autopsy, that catalogues how US telco Sprint dropped 1,000 "demon" customers.

How good a plan do you currently have in place to ensure ALL of your customers genuinely contribute to your bottom line?  In tough economic times in particular - can you really afford to be charitable when it comes to supporting customers that will only ever cost you money?

Selling in difficult economic times

Have just finished reading an interesting blog by Gavin Ingham entitled 7 Tips For Sellilng in an Economic Downturn - and it caused me to reflect on the role of a solution sales process, and what its relevance is in difficult economic times.

Over the past 2 weeks I've had a number of "sales people" (quote marks intentional!) try to convince me that they should have a meeting with their sales manager to request a lower target over the next 6 months.  Their rationale is "tough times - less budget for IT - we will get less sales".

This sentiment should be offensive to professional sales resources!

The foundation of a solutions approach to sales is to bring to prospects' attention business problems they are experiencing BEFORE they decide to go out and obtain quotations.  Once the prospect achknowledges the business problem, a roadmap is then established so that both parties can work together to solve the problem.  This is why we sell outside - as well as inside - the IT department.

Now - it seems to me in "tough economic times" that businesses will be having even more problems - and hence if we come up with "problem solving opportunities" in fact there should be MORE business for us to do during a downturn.

To me this argument crystalises the difference between being a "high level sales administrator" (ie waiting for the customer to figure out the problem, come up with their own solution, and then approach the market - ie the world of competitive selling) and being a "true professional salesperson" (ie predicting in advance what problems a prospect may have, obtaining agreement from the prospect that the problem is real and needs to be fixed, partnering with the prospect to remove the pain).  If our role is to spot business problems and then work with prospects to solve them, our funnel should be even fuller than usual!

In their terrific book Selling is Dead, Marc Miller & Jason Sinkovitz offer this most appropriate quotation:

We see many high salaries being paid to glorified account managers and customer service people who bear the title of salesperson, but who are incapable of actually being consistent creators of business value and new business revenue.

That’s a lot of money to pay for a cream-skimming, easily replaced, noncreator of demand and growth.

In an earlier posting I wrote about the demonstrated link between IT and competitive advantage - surely in tough economic times it should be easier - rather than harder - to "genuinely sell"?

Are you a cream-skimming, easily replaced, noncreator of demand and growth?

Stop selling software - start selling competitive advantage

It is continually frustrating to see IT sales people that know so much about their products - but so little about the businesses of the customers they sell these products to.  In a 2006 Frost & Sullivan report on the key issues holding back the Enterprise Content Management market, they rate Difficulty in understanding business benefits and Mismatch between business needs and solutions offered as the highest and 3rd highest "market retardant" factors.

As an IT sales community, we should hang our heads in shame.

Increasingly research is at hand that points out the link between IT and "competitive advantage" within the firm.  A great example is the recently published article Investing in the IT That Makes a Competitive Difference, by Andrew McAfee and Erik Brynfolfsson in the Harvard Business Review.  They argue that the US economy has accelerated to unprecendented levels, and that the key engine behind this growth is IT.

They suggest a 3 step approach to maintaining a competitive edge:

1. deploy a consistent technology platform
2. innovate better ways of working
3. propagate those process innovations throughout the company

Andrew also references the article on his blog here.

This approach should ring bells of joy within the Microsoft community.  The concept of a consistent technology platform - as represented by the "Microsoft stack" - is a key element of the Microsoft value proposition.  Indeed, a course entitled Realising Platform Value has been developed to assist sales teams to have platform discussions with customers about realising the additional ROI that can be generated from the Microsoft platform.  (This is one of the few courses I'm aware of that was compulsory for EVERYONE within Microsoft Australia to attend.)

What a great conversation starter for a meeting with a CIO.  Instead of saying "what would you like to buy today?" we should be asking "are you happy that your technology platform is providing as much competitive advantage to your organisation as possible?"  What a terrific way of supporting our CIO customers - assisting them to provide a technology platform that can maximise their firm's competitive advantage.

This diagram - from the Realising Platform Value course - illustrates the progression we can achieve for customers in moving them from point solutions to an integrated platform:

Having written all of the above - it is also important to be aware of contrary arguments - and Nicholas Carr has written an excellent article entitled IT Doesn't Matter - arguing that "scarcity, not ubiquity, makes a business resource truly strategic", and hence - like electricity - IT is now a commodity, freely available to all and hence not providing competitive advantage.

Either way - wouldn't this all be a terrific - and differentiating - conversation to have with a prospect!

Trust and the $5 muffin refund

Today I was reminded about the difficulty - and the power - of being able to successfully market "trust".  I've been facinated with the "marketing of trust" ever since I wrote my MBA thesis - I've long forgotten the exact topic(!) - but I vividly recall it was a paper combining the theory of marketing trust with the difficulties in building the concept of trust into long term IS outsourcing contracts.

For anything but the most basic ICT transaction, ultimately the customer has to trust that we're going to do "the right thing" by them.  But how can we market the degree to which we can be trusted?  Every firm says they can be trusted - but not all firms can be trusted to the same degree.  How do we get this message across?

In our Essence of Selling Solutions methodology, we speak of the necessity of using Evidence - case studies of other organisations that are happy to go on the record to speak favourably about our work with them.  (Indeed - on our web site we use a quote from one of our key Microsoft contacts as Evidence that we're "up to the job".)

But what if we're in an existing relationship with a customer, and we're about to enter unchartered waters - perhaps they're about to outsource a significant chunk of their IS infrastrucutre to us, and it's just too hard to write a contract to cover every eventuality.  HOW DO THEY KNOW THEY WILL BE ABLE TO TRUST US?

Marketers define trust as (and I'm paraphrasing!)

A can trust B if B has the opportunity to rip A off - and chooses not to do so.

In an outsourcing contract, the vendor will end up with much more information about the customer than the customer has about itself - it would not be difficult to use this information to unfair advantage.  It's the very fact that the vendor has this information - but chooses not to use this to its advantage - that defines the trusted relationship.

So - where do the muffins come in?

This morning I went and bought the family muffins for breakfast.  I was charged $20 - there were quite a few muffins so I handed over the $20 note, and walked off, very happy as I was able to get the last muffins in the store.  (No fun returning to the muffin hungry family empty handed!)

Literally as I was driving out of the carpark - some hundreds of metres away from the store - I spied in the rear vision mirror the shop assistant that served me running frantically towards my car, waving madly.  I thought I must have left my mobile phone behind - but to my amazement she ran towards the car waving a $5 bill.  When she drew near she explained breathlessly "I'm so sorry - I overcharged you - the muffins are only $2.50 each - I don't know what I was thinking!"

WOW!  I would never have noticed this - there would have been absolutely no recriminations if she had not come after me.  But she did.  Once she realised her mistake, she had the opportunity to knowingly "rip me off" - and she chose not to.  I can trust her - and by association I can trust her store.  I now don't think I could ever buy muffins anywhere else!

SO - next time we quote a service fee to a customer based on the numbers of days it will take us - and it turns out we don't need anywhere near that number of days - do we reduce the size of our invoice?  If it's close to the end of the financial year, and we need a certain sale to make our target - but all of a sudden we become aware under confidentiality of a far superior solution that will only become available in the new financial year - do we deliberately postpone the sale, even if this means we won't make target?

What efforts are made in your organisation to "do the right thing" by your customers?