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OCTOBER 2004
Shorten the Sales Cycle
John Chambers was recently quoted saying, "The SMB market is expected to grow more than any other market in the next couple of years. SMB will be both the fastest growing segment of the market in growth, but also in absolute terms". If you have been following recent technology announcements, you know that Cisco, along with companies such as EMC, BMC, CA and IBM are all focused on taking advantage of this expected growth, and are looking hard at the channel to bring in the business...but has anyone counted the cost of selling into the SMB market? There is gross profit to be made in the SMB space, but I believe that managing the cost of doing business will be a critical factor in bringing some of that money to the bottom line.
The effective use of wedge offerings
Shortening the sales cycle should be on the forefront of every sales manager and business owners mind if you are selling commodity products such as network components, servers, firewalls, VPN products, and many applications. As I have said in previous letters, we need to find ways to move our business left on the technology adoption curve to capture higher margin consulting business. At the same time, you should be building some form of monthly reoccurring revenue on the far right of the curve to create a stable financial model. The challenge is that these sales efforts must address business problems and therefore require the sales person to be a consultant (i.e. offering some value to the buyer other than price and product availability). The term "wedge product", refers to an inexpensive solution that gets you in the door to demonstrate that value in a non-threatening way. It must be something that allows you to demonstrate business acumen to an economic buyer. If you can do this, you will likely shorten the sales cycle and hopefully position yourself as a trusted advisor in the account.
1. The problem with selling product
In a recent workshop I conducted in Las Vegas, I had the opportunity to meet with many business owners from all over the United States and Canada. A common theme came up in several follow-up conversations; resellers are not making it on product margin alone. The problem with product sales is that the cost of sales (which is going up with the SMB market focus) often exceeds the margin, and as products commoditize, the service requirements are decreasing along with the rates one can demand for their services. Geoffrey Moore was right when he said that resellers who "fixate on any one product will be out of business in 5 to 7 years".
2. Assessments make trusted advisors
So far, what I have established here is that we need to move toward early adopter solutions and we need a value proposition to get there. Once we get there we need a way to shorten the sales cycle (especially as we approach the SMB market). Clearly it is a long sales process to sell large storage projects or even all encompassing managed services offerings as you begin this journey. Chances are its a new account, or your contacts are at the IT manager level where you have been selling routers and switches. By using a wedge tool you can get the audience you need.
The wedge tool I am referring to in the first part of this letter is an assessment tool. Assessments are great because they provide access to almost anyone in the account. In the last two assessments I was involved in I was "required" to present to the board of directors! In preparation I had to spend time with compliance officers, audit, the CIO, and the executive VP of operations. Can you imagine how hard it would have been to get sales appointments with these people? Since the client is paying for this (and you should be charging for it), its not sales. If you do an excellent job, you have the opportunity to be seen as an expert - a trusted advisor.
3. Opportunities and hurdles
Assessments are selling. Even in the SMB market, people want to know what they need before they start spending money. Wrong purchase decisions could be career inhibiting, so doing some type of assessment makes sense. The key is to create the assessment around things that people care about. I like to focus on Digital Asset Protection Strategies. Things like DR/BCP and security are great topics for assessments. But let me clarify something here. I have seen some assessments, developed by highly trained technical people that deal with complex technology issues. While they have there place, these assessments are not necessarily going to get you in front of the CIO. Wedge tools have to be business centric, addressing issues discussed in my September issue of Channel Concepts. The result will be reduced sales cycles and access to buyers, allowing you to take advantage of the projected SMB growth.
There is also a hurdle here. The person performing this assessment is the person who will become the trusted advisor. If you are wanting the sales person to be seen as important, they will have to learn to do this. The idea is to push down the cost, perhaps conducting the entire process in one day with a follow up report. If the assessor does an outstanding job you will have moved to a new level in the account, but as I stated a few months ago, if the person doing this is not prepared to deliver quality at the executive level, you may be out the door.
4. Where to go from here
To begin, all you need is an assessment tool, someone who knows how to use it, and a process to sell it. You can create this yourself or you can buy one. In either case I recommend practicing the sales process and delivery process in your upcoming sales meetings.
In my workshops, generally I spend a couple of hours working through the value proposition, two hours on sales process, and the afternoon on selling and using the assessment process in a role-play fashion. Only as people work through the process themselves will the inculcate the methodology.
I have used these tools successfully in a number of reseller organizations and continue to see tremendous results. One business owner recently emailed me stating, "Wow, this really works! we have been in this account for years, but now we are at a whole new level, working with the CEO". Contact me if you would like ideas or would like to obtain information on how you can use some of the tools I am working with today.
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