Archives For CFO

How will you get to the right people?  This is the question every sales person should be asking and it seems to be the focus of just about every sales training program or methodology.  Several years ago I had been working to get a meeting with a large healthcare organization in the southeast.  Our team had successfully met with the IT people several times and had established fairly good rapport; however, sales were slow in coming and budget seemed to be our primary obstacle.

Our strategy was to land a meeting higher in the organization where perceived business value might move some budget our way.  Finally, I was granted a meeting with the Vice President of Operations.  This person had the authority to approve money and would certainly be central to a successful proof of concept or pilot type project.  Our meeting started with the Vice President showing up late, but we were ready with our list of promising questions and discovery skills.

After an initial greeting and introduction, I launched into my “solution selling discovery process.” Giving me just enough rope to hang myself, our VP prospect answered the first question.  But as soon as I began presenting my follow-up question, he looked over at our IT advocate and roared, “I thought you said these guys had something important to share with us.  So far all I’ve heard are a bunch of open-ended sales questions.  What is the purpose of this meeting?”  How do you recover from that?

There are all kinds of tricks and strategies for getting that meeting at the top. However, in my experience, this is not the real challenge.  The real challenge, which is not adequately addressed in most sales books, is that of building peer level relationships at the executive level.  We have all gotten the “Big” meeting at some point in our lives, but how many are consistently staying at this level after the first meeting?

© 2011, David Stelzl

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I was recently talking with an account manager responsible for breaking into a large fast food chain.  He could have brought in his PowerPoint slide deck riddled with company statistics, product offerings, roadmaps, and perhaps a list of customers currently using his product.  If he had, he would have looked just like everyone else calling on that account.  Instead, he did the unthinkable…

Reaching out to the local fast food franchise, he explained his role as an account manager to the local store manager and offered to come down to their location and work for free.  His assigned task the first morning of work was to help unload the eighteen-wheeler that shows up around 6:00 AM every morning.  It took about an hour to unload that truck, along with half of the people working at the restaurant.  But look what happened.

After working there for a couple of weeks, this rep was able to compile a compelling list of operational inefficiencies, from which he laid out a roadmap for improvement.  Calling the headquarters was now an easy task, armed with all kinds of data and recommendations that could turn around any fast food restaurant.  He had best seller material in hand.  He requested a short 20 minute meeting, citing his observations of cars leaving the restaurant simply because the truck was in the way.  He offered software and hardware solutions that would turn this truck around in about 15 minutes, freeing up parking space, making it easier to get in and out of the lot, and freeing up an army of people to go serve customers!  This is what executives want to hear, and this led to a multi-million dollar sale that put him ahead of quota after one short 20 minute meeting.  What are you doing for your customers?

True operational efficiency  can be easily shown if certain criteria exist.  First, you absolutely need to be in touch with you customer’s business, and second, your offering has to affect the business process in an undeniable way.  Business opportunities can be created when both of these are true, as long as you can get an audience with someone who cares.  Armed with the right message, this is not difficult.

© 2011, David Stelzl

Uniquely Yours…

March 29, 2011 — Leave a comment

Photo taken by David Stelzl

As I mentioned yesterday, when someone requires you to deliver ROI or TCO numbers as part of the red-tape process, the sale really isn’t based on ROI or TCO, but rather this is just a protocol the company has for vetting possible providers.  In most cases they will have a format or model for doing this, and your best bet is to work with them, using their models to make your case.  However, don’t fall into the trap of believing numbers are the deciding factor.  They rarely are.   The lowest price only wins when offerings are equal.  So what are you doing to set yourself apart?  Anything that can be documented can be commoditized.  And anything that can be commoditized can be computerized.  And anything that can be computerized can eventually be done on an appliance or smart phone.  Creativity and perspective are yours uniquely.   But make sure they are uniquely great.

© 2011, David Stelzl

ROI vs. TCO

March 24, 2011 — Leave a comment

A question came in today asking, “What is the difference between ROI and TCO?  Our company uses the terms interchangeably.”

This is common…but they really are different.  Here is some explanation:

I use the term TCO specifically to mean that it will cost you less to produce the same or better results.  By focusing more on business results and less on cost, the seller has a chance to avoid a true ROI study; which may be analogous to asking the CFO to audit your proposal.  The last person I want to sell this to is a CFO (or anyone in the purchasing department).  Once the focus on business moves to finances, value is compared only to the cost of other options, and not on the value you bring to the business.

You might think of ROI as purely mathematical.  One way to describe it is:

ROI = (Financial Gain – Cost of the Investment)/ Cost of the Investment.

True ROI calculations involve a deal’s net present value ( taking into consideration  a proposal’s future estimated cash flow the cost of capital), payback period or hurdle rate, and an internal rate of return.  In other words, ROI at its core is a math problem dealing with investments, returns, and the cost of capital.  The average sales person’s ability to compute these numbers, or even review them with a financial officer is limited in most cases.

TCO might be defined as the cost of acquisition, installation, and operation.  In this case, we can take into consideration only the current solution and whatever solutions might be under consideration or in use at the present time.  Gartner Group often reports TCO numbers for various technologies,  taking into consideration the above as well as long term operations and future replacement or decommissioning of a technology solution.  When TCO is fairly evident, meaning one solution might involve many smaller servers or appliances that require data center real estate, cooling, and possibly additional staff, it makes sense to use this as justification to buy your solution.

I put this under operational efficiency because the cost savings generally are tied to an efficiency gained by the solution, and that is where the seller’s focus needs to stay.  To focus on the math is to kill the deal, unless the customer is already determined to buy, and is just price shopping at this point.

© 2011, David Stelzl

Where’s the ROI?

March 17, 2011 — Leave a comment

ROI is likely the oldest approach as far as sales books go in providing justification.  People are always talking about ROI on the selling side, trying to talk customers into seeing that their product will deliver ROI and therefore should not be constrained by budget.  In theory, this is correct thinking.  The problem here is, ROI is demonstrated with math, not emotion, and when it comes to really proving there is an ROI, a certain depth in financial experience is needed.  Most sales people I know have never analyzed profit & loss, balance sheet, and income statement reports.  They understand the real meanings and effects of capital expense vs. operational expense or how full-time W-2 employees differ from contractors when valuations and stock prices and other financial metrics are reported.  How can they?  If you’ve not worked as a CFO at some point in your life, what is the likelihood you can really show the CFO true bottom line returns on their financials?  It would be nearly impossible.  So while I hear sales methodologies calling for ROI, I strongly disagree and recommend sales people pick a different tact for demonstrating value.

To be clear, I am not saying it can’t be done.  I am simply saying, “It requires some very special training”, not something you’ll learn in a one day class.  Car leasing sales people are trained to talk about ROI and do a good job of it, but in most cases they are talking to people who don’t know better.  They might get away with it, you won’t.  Plus, it’s always a bad idea to base your value on a pitch rather than your ability to actually meet a real need.  The first is deceptive and manipulative, the second is honest value.

© 2011, David Stelzl