Archives For Solution Provider

Your Fired!

April 4, 2011 — 2 Comments

My first exposure to a strong value proposition came on the heels of being fired from a great position.  As Vice President of a technology solutions firm I thought I had it made until one day, a number of bad things came together all at one time; the bomb was dropped right on my corner office desk!  While cleaning out my office I was plagued with the important question, “How do you find another one of these?”  No one advertises for such a position.

After the initial shock of being in this unbelievable situation, it occurred to me that I had bestseller material sitting right in front of me.  Our company had achieved some unbelievable success, so why not put together a short seminar on how to take your company from “Good to Great” (borrowing here from Jim Collins).  Rather than sifting through job ads and contacting headhunters, I went right to the phones.  I called every decision maker I could find in the Southeast and started setting up thirty minute meetings with presidents and CEOs of technology firms,… offering to share with them research on business performance, growth factors, inhibitors, etc.  The demand was strong and I found myself landing five and six meetings a week!

Rather than going in with a resume, begging people to buy “me”, I showed them undeniable value.  The presentation would often end with an agreement to explore further how we might work on such a strategy to grow their company.  Within a couple of weeks I was getting offers.  It was so much fun I wanted to do this full time – but of course no one was paying me.  Eventually I settled on a position similar to the one I had left.  It was just a few years later that I discovered a way to take my material to market on my own.

I relate this to selling technology.  The connection is easy, people need help with business growth and if someone appears to have answers, leaders will listen.  As you’re heading out this week, are you carrying with you lasting answers to your prospect’s biggest problems or are you begging them to buy another widget?

© 2011, David Stelzl

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The Var and the Vendor

February 25, 2011 — Leave a comment

When I first entered the technology consulting business, my new manager referred to our firm as a VAR (value added reseller).  VAR!  He said it with pride as though it meant something special.  Coming from a large bank where we referred to our services providers as vendors and VARs, I knew this was no complement.  Yet our manager seemed to take pride in something that, on the client side was viewed as a commodity.   I soon learned that, on the provider side, VARs were partnered with vendors, but in my heart, I knew the client perceived us all as one thing – the vendor!  Simply put, we didn’t see any value in those we called vendors and there was no such thing as “Value-Add”; vendors provided people and products at the lowest possible price, and free lunches on occasion. This is not the way to position your company if you are looking to build a profitable business.

© 2011, David Stelzl

Photo by Hannah Stelzl

I returned from DC last night, having spent the day with a solution provider in the software space.  One thing  that stands out and is worth repeating here is the discovery of a profit multiplier.  According to Jim Collins, every company should have an economic engine, and most resellers can put more on the bottom line if they figure out what the multiplier are and where profits are leaking out.  The comment that triggered our direction should be understood by all resellers, “Thinking your sales  team will double sales this year simply by working harder is tempting by unrealistic.”  I would add, that setting strong financial goals and then hoping to acheive them without a significant change to the way you do business is foolish thinking.

Once identified, we were able to come up with twenty ways to stop the leak.  Not all 20 will prove to be do-able or realistic short term fixes, but 4 or 5 of them stood out clearly as ways to multiply bottom line profits over the next several months.

Isn’t it worth taking some time out of the field to study the business model, identify the levers that multiply the business, and formulate a strategy to get them in motion?  This is what it means to work on the business rather than always working in the business.

© 2011, David Stelzl

Here’s a great example showing just how much you lose when you discount services or consulting efforts.

Let’s assume you quote a job, fixed price, but calculated by estimating your time.   Here are some considerations you use in your quotation process:

1. Engineering rate: $150/ Hour.  (example rate).

2. Company’s published burden rate: $75/ Hr.

3. Hours estimated to do the job: 8 (one full day)

4. Total proposed price (Fixed Fee): $1200

5. Expected burden cost on the deal: $600

6. Expected gross profit (GP) on the deal: $600

So you put together your proposal and submit it to the client along with whatever products are to be installed.  The client looks at it and figures there’s no harm in asking for some discount.  “How about if we just go with $1000 even?”  Well,  that’s fair.  After all, it’s so close.

Assuming your engineer does complete the work in 8 hours, the client get’s billed $1000.

Looking at the numbers more closely:  That is about 17% off.  Not a huge discount, so you’re not worried.  However, let’s look at the GP discount:

Your fee: $1000

Actual burden cost: 8 X $75 = $600  (Same as above)

Realized GP: $400

Whoa, you gave away $200 right off the bottom line.  That’s a 33.33% discount which is about twice the discount you thought your were giving!  No wonder the numbers don’t work at year end…

© 2010, Dave Stelzl

They all say they’ve got it covered…no one does!  Here is a summary article from one of my contacts at DiData…great info, thanks Matt.

http://www.msnbc.msn.com/id/37115813/ns/technology_and_science-security/#storyContinued

Summary:

  • “Our systems are probed thousands of times a day and scanned millions of times a day,” – speaking of government defense systems…
  • “We are experiencing damaging penetrations — damaging in the sense of loss of information. And we don’t fully understand our vulnerabilities,” – Now I feel safe!
  • Hackers have already penetrated the U.S. electrical grid and have stolen intellectual property, corporate secrets and money, according to the FBI’s cybercrime unit. In one incident, a bank lost $10 million in cash in a day. (Yet your clients all have it covered!)
  • “We’re talking about terabytes of data, equivalent to multiple libraries of Congress.” – (But those in the SMB don’t need to worry – right!)
  • United States military would need to prepare for fallout from a cyber attack, which could leave cities in the dark or disrupt communications. – (If you don’t offer DR planning, you might reconsider)

When your clients say, “We’ve got it covered”, remember, most are just ignorant, some are lying.  Don’t take no for an answer – instead educate them on what is really going on, and drive forward with the sale.  Take advantage of my latest ebook on selling through assessments… it’s free!  http://www.stelzl.us/training/CreatingSales.pdf

© David Stelzl, 2010

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This week the PCI council has posted updates to implementing PCI compliance.  As a solution provider you should be aware of the 12 areas for PCI DSS compliance and the council’s recommended approach.  As you review this remember that Heartland was compliant, yet vulnerable.  PCI compliance does not mean a company is secure.  In fact you’ll notice that the end-node security requirements don’t necessarily stop computers from being part of P2P networks (note: we’re not saying it would be in compliance, but taking these steps won’t prevent it).  As a sales person selling high-tech solutions, you should know the 12 points if you call on anyone taking credit cards.  The first PDF link on the PCI council site explains the 12 steps, the excel sheet then elaborates on the recommended process.

https://www.pcisecuritystandards.org/education/prioritized.shtml