Archives For IT budget

Here are some ways to increase fees without penalizing your clients.

  1. Measure risk – Impact and likelihood, of a disaster, jointly place a value on it and set your fee accordingly.
  2. Look for problem areas that consistently show up across the companies you do business in.  Come up with solutions and use this material to call higher.
  3. Trade product gross profit for recurring revenue.  This builds annuity rather than a one-time transaction.
  4. Use Assessments rather than traditional open-ended questions to discover larger opportunities.
  5. Be willing to give away assessments in order to reach higher-level people in the account.  This leads to selling larger value priced deals.
  6. Propose options to build adjacent business in the accounts you are already working.
  7. Build greater expertise into your consulting group to offer more complex solutions
  8. Develop presentation skills that appeal to the executive level.  You’ll find that you are worth more to them than the next guy.
  9. Pass up smaller transactions to create more time for complex deals that offer greater reward.
  10. Develop stronger marketing programs to position your company as the expertise leader, rather then the low price leader.

© 2011, David Stelzl

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Traditional thinking says that more sales will lead to a higher income.  Here is one more example demonstrating the deception in this type of thinking.  I frequently come across sales people working for smaller VARs, selling into small mom & pop companies.  These customers don’t spend much, so the deals are smaller, yet the VAR model was built on high-involvement sales; making calls onsite, taking people out to lunch, and perhaps performing demos or providing evaluations of the products being represented.  The problem is, they are transactional, and so volume becomes a focus.

So let’s say each deal is priced in the neighborhood of $1500 (which is typical),  and most of the deals are product install.  For argument sake, we’ll say the product is two-thirds of the deal, with a half  day install.

Total Deal Price: $1500

Margin: $350 (Assuming ten points on product and the balance on services)

Income based on 10% payout: $35

(and all if this assumes that the rep priced the services correctly and didn’t go over)

So how many of these transactions do you need to make a reasonable income?  With a 30K base, you would have to do about 166 of these each month to make 100K annually!  You can extrapolate from there, but the point is, you don’t want more deals, you want larger deals, recurring deals, and margin-rich deals.  Stop selling transactions and start solving big problems.

In a recent discussion I had with a young entrepreneur, he asked, “But can this company afford the larger project?”  Great question!  If it’s central to his Twenty Million Dollar business, he can.  If it’s just some new cool technology, he can’t.  So once again, you have to ask, “What problems am I solving, and how much are they worth?”

© 2010, David Stelzl

P.S.: Happy New Year Everyone!

Vendor to Adviser

December 20, 2010 — 2 Comments

If you missed my teleseminar last week on moving from Vendor to Adviser…Here are some examples of how I’ve turned mundane deals into profit-rich, consultative relationships:

  • A firewall upgrade opportunity referred by a vendor/partner turned in large profit and product.  Rather than going in with quotes and features, I presented cybercrime trends to an executive VP, identified their mission critical applications, data, and some process, and showed them how current trends are attacking companies similar to theirs.  The meeting ended with an agreement to perform a simple assessment, which was then expanded to a $65,000 contract.  From there we spent over a year implementing security controls, locking down operating systems, and eventually signed a three year security management agreement.
  • A firewall replacement opportunity from a non-active client turned into a larger assessment and perimeter security initiative with dual-authentication and application security consulting.  In this case, the client wanted to review competitive quotes.  Rather than responding with numbers, we called a meeting with the VP of operations, reviewed mission critical applications, and discovered a need for stronger application security and authentication for users who are members but not employees of the organization.  We proposed a simple assessment which closed for $35,000, and demonstrated the need for two-factor authentication, intrusion detection with event correlation, and upgraded various components of the perimeter as well as website security for the application in question.
  • An intrusion detection opportunity with a newspaper company turned into a larger policy consulting project putting us in front of all major company stake holders.  Rather than responding with numbers we were able to show the need to identify company policy in order to properly place and managed intrusion technology.  This effort led to a portal based policy server, intrusion prevention technology along with managed event correlation.  Future projects were easier to win with our new executive level sponsorship.
  • A large network project was put on hold at a major southeast university.  Instead of giving up, I was able to convince them to conduct an operational efficiency and risk study on the need for new network equipment.  This allowed us to gain entrance to all major stake holders positioning us for future project business.
  • At an educators symposium I was offered a breakout session to speak for free.  I used that platform to present trends on cybercrime, approached being taken by large organizations, specifically in the education/university space, and was able to follow up with one of the attendees with economic buyer status.  Our team conducted an assessment for $125,000, and then leveraged that relationship for introductions throughout the southeast.  Similar projects followed in North Carolina, South Carolina, Georgia and Florida, many of which required remediation efforts.
  • A similar speaking opportunity was given to me at a CLEC symposium for NC, SC, and VA.  Similar results followed the educator symposium.
  • A small staffing role was awarded to us to install some server technology in a large multimillion-dollar financial application project.  By researching their proposed plan we were able to show how their approach was not going to produce the results they were looking for.  At the risk of losing our position on the project, we proceeded with recommendation on how to change the program, putting us at the helm of a 3 million dollar initiative to role out a lending application nationwide.

You get the idea.  Taking existing product opportunities, free speeches, and by proposing contrarian approaches, a savvy sales person can move up.  One who has taken the time to stay on top of trends and developed consulting skills, can move to a consultative, and highly profitable position within the organizations they are already calling on.

© 2010, David Stelzl

There are only 8 seats left in my January Virtual Workshop – don’t miss this!

We’ll be covering the materials from my most popular workshop, Making Money with Security….all through an Interactive Webex format…

[Click for more info and registration]

1. Security provides the most effective means of attracting executive level clients and the primary means of creating new business.

2. Security trends are changing, and while the economy is still not great, security providers who understand these concepts are still growing at rates of 50%, 100%, and greater – I’ll have specific examples of this and how they do it!

3. Urgency is key in a slow economy, and every company has urgent issues – I’ll put you in the center of this!

4. Armed with the right message, focused on the most urgent issues, and equipped to create justification, you’re opportunity for success is much higher in 2011.

5. Creating justification is an essential part of the sales process…there is a prescription for doing this.

6. Assessments are profitable, central to developing larger profit rich projects, and recurring revenue.  We’ll dive into this in a way that will get you headed in the right direction.

You get the idea.  Your 2011 approach will be strengthened, your confidence will greatly increase as you approach executives, and you’ll have solid justification for getting new/larger budgets approved.  I recommend this for anyone serious about selling or marketing in the high-tech space this coming year.

[For more info and registration – click here]

© 2010, David Stelzl

Illustrations by David Stelzl

Do you create business or just fulfill it?  Look at your pipeline…where do your deals mostly come from?  Referrals?  Referrals are good, however, there just aren’t enough of them.  When the economy is weak, companies cut back on expansion, decision making moves higher up the ladder, and sales cycles lengthen.  Only those who are able to create business can experience long term success in this type of market.

The 5% Rule

Michael Bosworth, back in 1995, wrote, “Assume 5% of the people you might call on are in the market for some new thing (in our case,  new technology), the remaining 95% don’t perceive they have a need” (Paraphrased of course).  But they do have needs, they just don’t know what they are, or feel they are impossible to solve right now.  The average sales person is going after that 5% group, and it’s crowded!  The competition is fierce.

Creating business

Creating business means, going after the 95%.  The creative sales person gains access to buyers who don’t know they have a need, and then demonstrates that need with compelling justification and a track record to prove they can fulfill what they’re talking about.  Security is just one area that is predictably needed in every account.  Most companies are doing the wrong things, and security issues are going unaddressed.  But how do you find these people, and what does it take to move them forward?

The Value Proposition

We’ve been lied to.  We’ve been lulled into thinking people want great technology features; the latest gadget (Unfortunately, the latest gadget sells for about $500 and is made by Apple, which you probably don’t sell).  But they don’t.  At least the economic buyers don’t (well, maybe they do want an iPad).  They want strong businesses, profitable businesses, efficient businesses, and secure businesses.  The “value proposition” must focus on real business value, and that means you’re addressing real business issues.  As you’re planning for next year, start thinking through your message, your selling strategy, and what you say in your meetings, especially those early meetings while introducing your company.  Is your message unique? Compelling? Interesting?  And are you getting in front of people who can make a decision?  Are you getting demoted back down to non-decision makers after a first meeting?  Be honest with yourself.  If you’re answers are, “Not very unique” and “Not associating with higher level managers”, your messaging and positing are likely central to the problem.  From there, you need a way to reach the 95%.  And that means getting the message out.  Events, social networking, educational presentations,…there are numerous ways to do it.  So, bottom line; first you must have a message built to stimulate action, then a means to take it to market.  This is the foundation of your 2011 sales strategy.

© 2010, David Stelzl

Old School Selling

Product knowledge used to be a key part of the sales role.  “Tell me what you have, how it works, features, benefits, etc.”  Google has changed all of that.  Today the purchase starts with Google.  Since most high-tech sales are done by referral and lead follow-up, the prospects tend to be people who are already in the research process.  They are Googling to learn what they can about technologies under consideration, and given the technical bent of the IT people doing the shopping, they likely spend more time reading and researching the bits and bytes than you do.   Sales has become a commodity, and the basic sales person is no longer worth their wages.  An electronic chat person online does almost as good, and the prices online can’t be beat.  So what’s the answer?

Reaching back to the 70’s

In the 1970’s Mack Hanan wrote “Consultative Selling.” He describes a process of measuring return on investment over various clients, creating a database of norms from which the sales person can now draw justification based on ROI, and predict hurdle rates to sell the product.  While I tend to steer away from ROI with most sales (given our inability to face CFOs with confidence), I do whole wholeheartedly embrace the idea of focusing on value (in this case, financial justification) to improve the client’s position.  Every budget has business purposes behind it.  The sales person must become enough of a consultant to figure out what these are and then demonstrate a connection between the proposed sale and the client’s business needs.  If you want to beat the online e-tailors, you’ll have to change your value proposition; you’ll have to become a consultant.

So What is a Consultant?

The first thing people think of here is billing time, but that doesn’t do it for me.  When I hear someone say, “I’m a doctor”, I get it, same for insurance rep, teacher, police officer, etc.  But when I hear consultant, I have no idea what they really mean.  They might be anything from a PWC partner to unemployed…I’d rather hear what they do than what they call themselves.  “I work with manufacturing companies, helping them improve efficiencies in the widget manufacturing process.”  This works for me.  It’s an improvement in the client’s situation, taking them from current to future state, with improvement, cost reduction, efficiency gains, or risk reduction (you can fill in yours), in mind.  They provide the analysis/discovery, make recommendations, and point them in the right direction with practical, specific information.  In the end, it may be a product sale, but the real sale is in helping the client acheive something specific.  Note: the later you are in the sales cycle, the less likely it is that you actually do this.

This doesn’t mean that every consultant bills time.  Some make their money through the sale of products or other services.  But they consult with the client to bring this value, delivering it through the product or people they then sell, others will do the follow-through work themselves with an associated fee.  So in 2011, consider this; what problems do you specialize in solving, what business benefits or gains do you specialize in giving?  Can the value you bring be provided through Google and e-tailors, or are you unique in some way that requires you be there?  Is your value worth the additional price of the product or is the client better off buying it from a major distributor?  This is the question we all need to be asking as Google grows.

© 2010, David Stelzl

http://www.stelzl.us/business_strategy_TeleS.asp

Tomorrow at 11:30 est I’ll be covering fees in much greater detail – by request, I did change tomorrows topic to “fees”.  Everyone struggles with this, everyone paid on gross profit is hurt by this. One of the most important changes you can make in 2011 is how you price projects and how much margin is realized per deal.  Doing thousands of small deals is exhausting, so learn how to increase deal size, gross profit, and value price.

The program is one hour, it will be recorded, and all those who sign up will receive a free recording of it on Monday.

Remember, if you are attending, feel free to submit questions and issues by email prior to the meeting.  I will cover as many as I can based on relevance.

Here is the link: http://www.stelzl.us/business_strategy_TeleS.asp

© 2010, David Stelzl