Wednesday, December 7, 2011

What is the Compelling Event?

Google “What is a sales opportunity” and you will find some five hundred million pages to view. Conversely, if you Google “What is a compelling sales event”, you will find less than four million results.

With sales teams, the results are similar. Most will have a plethora of sales opportunities; many fewer will be able to identify the compelling event that will cause their sales opportunity to move forward with velocity.

The absence of a compelling event does not rule out the possibility that the prospect will take action. Organizations frequently take action based on a risk/reward analysis. I change the synthetic oil in my cars every 7,500 miles whether or not the engine is making abnormal sounds; indeed I pay a premium for synthetic oil and change it regularly to reduce the likelihood of abnormal sounds and engine damage. For the oil change, my compelling event is the identification of a spare 30 minutes on a Saturday morning. If it’s sunny, the oil change is deferred and the bike gets ridden. In this scenario, if the deferral goes on long enough, I decide that the oil change cannot wait any longer and it gets a higher priority than the bike ride.

On the other hand, the end of a car lease is a compelling event. If the lease is over on February 28, the car must be turned in by February 28. (This begs the question as to whether anyone changes the oil on a leased vehicle).

Similarly in sales, most responses to the question “what is the compelling event” driving this opportunity initiates a conversation about the symptoms or factors that may drive a risk/reward decision. “The system is performing poorly.” “We’re running out of space/power in the data center.” “Profitability is down.” “The CIO thinks our stuff is cool.”

None of these will cause the organization to act. How long can the company continue to run with a poorly performing system, without any spare space/power in the data center, with low profitability? Many function for years in this environment, choosing to invest in other, higher priority activities or to make no investment (all too common over the past couple of years.)

A workable definition of the compelling event is as follows:

A compelling event has an economic owner, a defined date and is a direct response to a business pressure. The action is expected to deliver a significant business result (either improving opportunity/capability or reducing pain). The compelling event defines the reason for the economic owner to act.

The compelling event, or its absence, is a strong leading indicator for the probability of success regarding the opportunity.

The symptoms described above may well be contributing to a risk/reward decision. I coach sales teams to look beyond the symptoms (and the technical owners of those problems) and identify for the economic owner. If that economic owner has chosen to address the issue, he or she will have a project plan with milestones and actions. The technical owners will hold the pieces of that plan but may not be able to identify the underlying plan. Once the sales team connects with the economic owner, a discovery process will determine whether the opportunity is real, the “fit” between seller and buyer, and ultimately the likelihood of success.

It’s time to surgically remove the sales person’s “happy ears” (“they think our stuff is cool…I have a deal!”)  and train them to focus on issues of real importance to their customers…issues that have significant business value when addressed.

Happy Selling!


Wednesday, March 16, 2011

Why Johnnie Can't Buy

Corporate IT buyers report that completing a typical enterprise IT purchase takes more than five months, two months more than they would prefer. While they blame their vendors for contributing to just over a quarter of the delay, they acknowledge that their own faulty buying processes contribute to two-thirds of the delay (source: IDC 2011 Buyer Experience Study).

What’s going on here? Why can’t buying teams be more efficient with their enterprise IT purchases?

It’s not their fault…mostly.

Many, perhaps most buying teams are assembled on an ad hoc basis to address a specific business issue. They may have little or no experience in working with one another and limited (if any) experience in evaluating, purchasing and implementing the specific product or application. After all, this is probably a one-time exercise for them. As a result, they lack the structure and processes necessary to identify and prioritize critical business requirements, application and service criteria, implementation challenges and more.

Typically, the members of the buying team with repeat buying experience include those from IT, Finance or Procurement. These participants tend to focus the discussions on either technical or cost details…not where most vendors want to focus (or where the buying team should focus!). Few buying teams include formal facilitators with deep process experience who can extract the critical business requirements and develop consensus among the members of the team.

Selling teams, on the other hand, engage with buying teams every day. They work with multiple organizations and handle the same set of questions, concerns and objections over and over. They see the patterns across these organizations. Based on these repeated experiences, the selling team should know what’s important to the individual buyer and be able to propose a well-thought out evaluation and decision framework.

While the selling team is in a unique position to guide their prospect through the consideration and evaluation process, most don’t. They either don’t believe that it’s their job to do so or out of habit they defer to the buyer’s (flawed) processes.

Top salespeople will identify the void in the buying team’s experience and assist them in identifying and prioritizing critical business requirements and in developing consensus among the members of the team. They do this naturally and without specific attachment to individual outcomes. If the fit isn’t right, they disqualify the prospect and move on to other opportunities. A few large vendor organizations incorporate engagement project managers on their enterprise account teams to help ensure this focus (and the delivery of the appropriate resources at the right time throughout the engagement process).

B and C level sales people, on the other hand, work within the buyer’s flawed processes, searching to match their assets with what appears to be important to the buyer. Since the critical business requirements are a moving target in this environment, the sales person will never really connect. Purchase decisions are made on faulty assumptions and the desired business results may never be reached.

Enterprise buyers place tremendous value on the consultative capability of their vendors. They know that their vendors work with a wide variety of organizations and can bring deep and broad implementation and business expertise to the table. It’s up to sales management to ensure that this expertise is developed and offered as a primary benefit of the relationship. It also requires a shift in focus from “solution selling” to true consultative selling. (See Buyers Don’t Want Solutions for a deeper discussion of why solution selling is bad.)

In adopting and fostering this consultative approach, the vendor will move from simple (and fungible) “vendor” to “trusted advisor” status and enjoy higher sales productivity, share of wallet and customer satisfaction.

Resources: I’d strongly suggest the book entitled Mastering the Complex Sale by Jeff Thull. Jeff has developed a formal process for managing consultative selling opportunities, one that helps to surface the key decision criteria and to gain consensus on the value and weight of those criteria.  You can purchase it here on Amazon.

I'd also recommend taking a look at the emerging vendor LeveragePoint. A spin-out of the Monitor Group, LeveragePoint provides an environment that assists sellers in surfacing and validating the handful of key decision criteria and in weighting those criteria to support optimized pricing on a deal-by-deal basis.



Friday, February 11, 2011

Marketing Plans and Sales Executes

Marketing plans and sales executes.

Okay, so it’s not quite that cut-and-dry, but in considering the roles of the two organizations, we find some key distinctions.

Marketing - Step 1

Marketing sets the “tone” in the market before sales engages with individual prospects. Marketing identifies the “best prospects” based on market size, competitive environment, and product or service capabilities. Marketing establishes the overall value proposition – “our products solve this problem”, the positioning, pricing, etc. Marketing creates the sales assets used in developing individual opportunities.

Selling - Step 2

Sales follows through to establish the relevancy of the offering for individual prospects and converts prospects into customers.

I’m simplifying a bit…

In this model, step 1 naturally precedes step 2. You sand before you paint. You scramble the eggs before you cook. You date before you marry. Step 1 is necessary for the success of step 2.

A change in step 2 requires changes in step 1. Cooking paella requires different preparation than that for cooking an omelet.  To transform sales, you must create a new set of preparations in step 1 (marketing).

Results are what matter

We don’t actually care about sales transformation; instead we care about the results of sales transformation. In this conversation, we don’t even care much about the short term results of sales, what we’re focusing on is building a more robust, healthy business, a qualitatively better set of results.

Selling is a means to this end -- the creation of profitable, long-lasting relationships between buyers and sellers. These profitable, long-lasting relationships generate the highest shareholder value.  And what shareholders really care about is shareholder value (not this quarter’s sales).

Unfortunately, our current set of preparations (in marketing) doesn’t usually lead to that end. If measured using the Six Sigma scale, selling is at best a one sigma activity. Buyers complain that less than a third of their sales people show up “very prepared” for sales calls. Buyers cite a poor relationship with their vendor as a primary reason for switching vendors. More than 50% of all reps failed to make quota last year. (Source IDC 2010)

Vendors are failing miserably to meet the relatively low expectations of their buyers. In talking with senior executives at Global Fortune 500 companies, I repeatedly hear stories of sales people driving to a deal rather than building relationships. One executive at a global financial services firm described a storage rep who, despite being invited to coordinate a brainstorming session, essentially showed up with an order pad and an expectation of booking something that day. The damage to the relationship by his actions can be measured in the millions of dollars of lost revenue.

Most vendors mean well. They want their sales people to do the right thing. They hope that their sales people are doing the right thing. They need their sales people to be doing the right thing. But wanting and hoping and needing don’t constitute a strategy.

To create more productive, profitable relationships between buyers and sellers that actually drive shareholder value for both sides, both parties must commit to change. Both parties must invest in the relationship. If vendors do not make this investment, buyers will treat them as commoditized suppliers rather than value-adding partners.

Where to start?

A good place to start is to evaluate the needs of your best customers. What value do you provide these customers? What other organizations have similar needs? How should your engagement process change to enable more value creation and transfer? What else must change within your organization to ensure consistency?

If you undertake sales transformation with the goal of improving relationships with your customers and actually make the changes necessary to ensure this transformation, you will be rewarded with higher share of wallet, longer, more profitable relationships with your customers, higher revenues and profits, and increased employee satisfaction.

Seems like a no-brainer to me!



Monday, January 31, 2011

Sales Transformation Starts in Marketing

Five years ago, I launched a consulting practice at IDC with the express goal of “fixing how the technology industry sells.” We made a lot of progress over the years, developing a formal sales productivity framework that provided a context for the conversation, identifying specific improvements for selling and related processes and changed team roles. Many of the practice clients have made substantive improvements in their sales productivity.

Today, however, most organizations remain stuck in their old paradigm – “let’s get what we can from our customers now”, or “we’ll get to transformation later, right now we have to keep the lights on.”

And I know why.

For most, what they’ve been doing is “good enough.” It has kept the lights on, engineering fed, sales people paid, investors or shareholders happy. Few technology organizations want to believe that their approach to selling is broken, that it’s damaging to long-term (and sometimes short-term) relationships, that the adversarial relationship that they create with prospects and customers is simply unhealthy for both organizations.

But “good enough” is crap.

It’s "short-term, this quarter" thinking, it serves nobody, and it robs the company of the opportunity to build real profitability and shareholder value into the relationship for everyone.

My ongoing research supports this perspective. Buyers willingly switch suppliers at the drop of a hat because they see no real engagement or commitment on the part of their suppliers. Buyers report that sales people continue to show up unprepared for the conversation with their key prospects. They do this not because they’re lazy or stupid (far from it!), but because it’s accepted by their own company. Sellers simply don't invest in the processes and resources to create the possibility of a powerful, productive, profitable relationship.

Sure, buyers have some culpability here too, but that’s a different conversation, one that led me to create the concept of a “Buyer-Seller API” a few years ago. For now, let’s focus on the sellers. While the buyers may have the upper hand with regard to the availability of information, it is the sellers that have the goods. And buyers need these goods to improve their productivity or competitiveness or customer service.

So let’s consider the possibility of creating powerful, productive, profitable buyer-seller relationships. Sure sounds better than fixing something that’s broken.

What do powerful, productive, profitable buyer-seller relationships look like?

We’ve all experienced great transactions…when I asked this question during my keynote at an executive lunch seminar in the fall, most of the audience indicated that they had recently experienced positive, productive transactions as buyers.

But transactions aren’t relationships…transactions can lead to relationships, or conversely, relationships can lead to transactions. For example, last summer Diane, a senior IBM executive, was clear with me – she had neither budget nor need for my services. What she was looking for was information, a conversation with a similarly minded person that might help her to do her job better.

Most transaction-oriented sales people would simply have moved on; I engaged in the conversation she needed to have and started to build a relationship of trust with her. Several months later I received a call from another senior executive, a referral from Diane that led to the first formal agreement between IBM and my company. And through that transaction, I'm starting to build a relationship with the person Diane referred to me.

How do we create powerful, productive, profitable buyer-seller relationships?

I’ll sign off with this teaser – it begins in marketing. Not in sales, where the dysfunction is so visible, but in marketing, which is tasked to provide both the Voice of the Customer and the overall direction for the company. Nowhere else do the market inputs and outputs meet so concisely; as a result, it’s up to marketing (with the necessary blessing and support of the executive team...and the active participation of sales) to drive sales transformation.

My next post will explore this question…stay tuned.