By Mark Shonka & Dan Kosch, Co-Presidents, IMPAX Corporation
The rise of procurement has hit business-to-business selling hard, but its sting has been felt fastest and most painfully in the software sales industry. Unfortunately, IT departments could teach procurement a lesson or two on how to put the squeeze on suppliers, and they have – technology has linked with procurement very effectively.
Exacerbating the situation is the necessity of selling to two audiences: The IT Department and the end user. The easiest way to achieve both has been demonstrating a product’s features, benefits and functions against the competition. But that kind of sale, which was fine just a few years ago, will snare you in the vendor trap fast, thanks to today’s strategic sourcing initiatives. These leading-edge buying approaches focus on getting the lowest price at any cost with everything from quality initiatives that streamline purchasing procedures, to buying consortiums, to online vendor auctions where the lowest bidder wins. And if they still can’t score bigger margins, there are always purchasing consultants who promise to save companies significantly more money than their fee.
Consider this exchange between one of our clients, a Fortune 100 marketing and sales executive, and one of these consultants who was working with his organization:
“You’ve got to stop the spread of sales!” exhorted the Consultant. “You have to do everything you can to keep sales people from selling value. Block them from speaking with decision makers. Force them to the bottom line!”
The Sales Executive was stunned by what this expert was advising. “But we teach our people to sell value,” he interrupted.
“Well, you can’t afford to buy it,” retorted the Consultant.
At this moment, procurement consultants are spouting this kind of advice at leading organizations that you want as customers. Make no doubt about it, procurement is influencing IT to control what you sell and to whom.
You can stop it from happening with these five strategies:
Make Up Your Mind to Sell Value or Become a Commodity
Value is in the eye of the beholder. You need to know how your customers perceive your value:
- Do they consider you a vendor who fulfills a product need, or
- Do high-level decision-makers consider you a business resource?
To win today’s sales game, it’s critical you elevate yourself from a vendor to a business resource. You must decide whether you’ll merely react to demand and focus on product and price, or be involved in linking you and your company to the business objectives and issues that are relevant to your customers.
Consider one of our clients, a leading supplier of backup software. More and more often, they were getting beat up on price as they landed on a spreadsheet with other backup software companies and compared on cost alone.
So they stopped selling backup software.
No, they didn’t change their product line, only their mindset. They quit selling backup applications to IT managers and started selling enterprise-wide storage solutions to CIOs, CFOs, and CEOs – the people who lie awake at night worrying about the outcomes of a system crash. You can’t sell bells and whistles anymore; you must reach a higher level by selling the business outcomes of your technology. In the case of our client, that includes business continuity, revenue, profit and brand protection.
Become Immune to the Procurement Trap through Superior Account Management
By reminding customers of the value you bring to the table, you’ll be doing them a huge favor. Too many organizations that make poor buying decisions often pay dearly; it’s your responsibility to be courageous and make sure that doesn’t happen.
A client who was selling to a multinational consumer goods corporation had absolutely no contact with the ultimate end-user of his product – the chief financial officer. Instead, his primary contact was with the VP of information services. In the midst of the selling cycle, the VP told the rep to, “Get the hell out,” with absolutely no explanation. The rep could only conclude that the VP was a jerk who felt compelled to put up an irrational block. It was his wakeup call to move beyond this gatekeeper and speak with the ultimate users of his products. After all, at that point, he felt he had nothing to lose.
Without the permission or knowledge of the information services VP, our client conducted four research meetings with much friendlier, disparate contacts within the organization. He interviewed them about their organization’s strategies, goals and objectives and how they hoped IT solutions would help achieve them. He diligently practiced the 95 – 5 rule: Speaking 5% of the time and listening the other 95%, purposefully not making any kind of a sales pitch. One of those contacts, who was upset that the information services VP hadn’t delivered on a proposed solution, connected the rep to the CFO, with whom he scheduled a presentation. Incidentally, the VP of Information Systems was not invited. This presentation was a far cry from typical product demonstration. Instead, he began his presentation by outlining the inside information he had attained through his research – the organization’s goals, objectives and issues. Next, he gave a brief overview of how his application could help them achieve those goals and objectives, while responding to their issues. Finally, he outlined how, as business partners, they could move forward together with more success than ever before.
The CFO was impressed with the rep’s knowledge of the corporation’s business and what the company could accomplish with the new information system. At the close of the meeting, the rep obtained the go-ahead on all of his proposed action steps and received guaranteed access to the CFO. This is very important, because on a periodic basis, at least once a year, you should strive to get in front of decision makers to review the value you bring to the table, address issues and identify opportunities where you can work together. This is a surefire way to stay beyond the reach of gatekeepers, in this case, the VP of Information Services, and build an impenetrable wall around your customers that will be almost impossible for the competition to penetrate. It’s also a chance to uncover new opportunities to work together.
Proactively Position Your Value
When you’re pursuing opportunities, fight for the line – proactively get in front of decision-makers who can buy and appreciate your value. A client who sold financial software had begun the sales cycle by making a product pitch to an organization’s financial analysts. Today, they call analysts to conduct research meetings about their organization’s strategies, goals and objectives. Ultimately, the sales reps goal is to identify coaches. These are people who are eager to provide inside information because if you win, they win. They use their coaches to network to the decision maker where they leverage the information they’ve gained through research for a presentation that closes the deal.
Change the Ground Rules
Take charge of your sales destiny. Embrace your value and sell only to those who can buy it. You don’t have to follow the process the customer sets before you. You can ask to interview people within their organization to get a better understanding of it. You can make a presentation instead of submitting a proposal. You can choose not to bid on the opportunity if it doesn’t meet your criteria.
Giving demos and making site visits, for instance, have been the modus operandi of the software sales industry. We would advise you to follow the example of one of our clients and only give demos unless they have already made a sales presentation to the decision maker. Not just any presentation – one like that which was outlined earlier – it begins by focusing on the customer’s goals, objectives and issues, how your organization and application can help achieve them and action steps to move forward together.
Even if you have no choice, but to deal with procurement, execute these strategies anyway. Treat them differently than they expect, ask more strategic questions, present to them in a way that demonstrates your value, elevate yourself so you work with the highest level of procurement as opposed to merely a buyer.
Check the power of procurement. Stop playing their games and seize control. Procurement experts believe, at best, that the only benefit sales professionals bring to the table is product knowledge. But a good sales professional brings process knowledge, industry expertise and operations insight that can help prospects see their business from an entirely new, and more profitable, perspective. If you want to thrive in today’s marketplace, this is precisely what you should be selling, but only to the people who are buying it.
When that happens, ‘everybody’ wins.