Archives For IT spend

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

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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

Will you Walk Away?

November 12, 2010 — 2 Comments

Will you walk?  I’ve been writing about fee setting, and no fee setting series would be complete without facing the reality of a failed negotiation.  If you’re not willing to walk away from the business, you have no business negotiating.  Once the client perceives your willingness to discount, they’ll require it as part of every deal.  Set your fees wisely, being honest with yourself, and your ability, and be consistent.  Everyone knows that car dealers are more willing to negotiate at year end, and that Cisco, HP, Sun, Oracle, (fill in whatever product company you sell) will do the same (Usually at month or quarter end) for any big deal.  Anything to make the numbers work.  So what have we trained our customers to do?  Wait.

Your job is the be the best.  Jim Collins talks, in his book, Good to Great, about the hedgehog.  Being the best, having the passion, and finally the economic engine.  When clients see your value and know your prices are fixed, they’ll stop playing games.  Michael Bosworth, in his book, Solution Selling, explains it like this, Once you start discounting, the client will continue to squeeze, like a wet washcloth, until there is no water left.

What’s the solution.  Be great, be willing to walk, and leave the client wanting you.  Then continue to market to them until they realize they really do need you.   In the long run you’ll waste less time, make more money, and have better clients.

© 2010, David Stelzl

What happens when the client can’t afford something?  Naturally, the conversation turns to dollars and discounts.  “We don’t want to short-cut the solution, yet we can’t afford the price.”  In other words, “It’s not in our budget, but we still want it – what can you do?”  We talked about establishing value prior to price several days ago, but now the price has been proposed, and the client can’t come up with the money.  Or, in another scenario, you have a contract (perhaps recurring revenues through managed services) and the client can no longer afford the level of services originally contracted for.  So what do you do?  Here’s a simple way to get back on track.

“Price aside….”  Money can never become the central issue.  People don’t figure out how much they have to spend and then look for something / anything that will fit the budget.  At least they shouldn’t.  That’s how people end up with a lot of junk they just don’t need.  Instead, set the price aside for a moment and figure out what really is needed.  If money is tight, scrutinize what the client really does need.  Great consulting means improving the client’s condition, not selling more stuff.

So I simply say, “Price aside, let’s look at what we are proposing and figure out if this is really what you need.”  Let the client see the pros and cons, the value and risk, etc.  Ask probing questions such as, “If we cut this out, people will be able to send any type of sensitive company information through email unchecked.  Is that okay with you?”  “If we cut this out your data won’t be backed up off site.  So if someone forgets to run the back up, the tape fails, or the person who takes it home loses it or it gets stolen, your data will be unrecoverable and on the street.  Is that okay?”

Force people to look at the solution, it’s value, the risks and opportunities.  They may still not have the money, but if it’s clearly what they need, at least they will want it, may find the money, or start saving for it.  Discounting is never the right answer.

© 2010, David Stelzl