Cardboard Spaceship

Interesting Notion of Trust - But That`s Not the Point

Via Gaping Void, I saw a very interesting point about the destruction of trust in large organisations, and the current lack of it.  However, the point is not trust, because trust is something between people, the point is predictability.  If I buy something from a person from IBM, for example, then that is because I trust the person who is selling it, at some level, but what I am also buying is the predictability of the corporate behaviour of the IBM corporation, and I think that it is this predictability that has been eroded by the post 1980`s downsizing. 

It used to be that you knew that if you dealt with IBM you got high prices but good service, if you dealt with DEC you got that kind of "silicon valley" laid backness rather than just the white shirt brigade, and if you dealt with other organisations, you could kind of model that likely behaviour, and you would not be too shocked by what happened.

But then in the drive for "shareholder value" the corporate memory, and the corporate style was thrown out, often by outsourcing, or just by slaughter of the ranks.  This led to a change in two important ways.  The existing style of the organisation was often heavily impacted, but moreover, in the case of outsourcing, the turnover of the workers, often less than 12 months, meant that the predictable corporate behaviour never re-congealed.  In essence, you could find yourself dealing with effectively a new organisation in a very short time frame.  So all transactions and interactions carried a new cost - you never knew what would happen next. 

Yes, you may or may not have had trust in the organisation`s people, but the golden rule is, if you want to engage the mammalian brain, - "be predictable, especially in ways that allow people to understand what the relationship between you is going to be. 

I don`t trust my bank in the way I trust my family and friends, but I do expect them to meet certain norms, and to react consistently, for me, that is the basic tenet of them being easy to deal with. 

Qualification in Selling

Complex Sales - yeah!

Okay, time to relaunch this category a bit.  And if I am to do that, then I think that I need to talk about the one thing that non-professional sales people cannot do well, or even understand is necessary.   And that thing is:  Qualification. 

Qualification is the rather hard hearted but very necessary process of determining whether someone you are dealing with is ever going to turn from being a nice person to go and visit, and who likes you and your products, into someone who will insert cold hard cash into your organisation`s bank account in return for what you have to offer.  In word, how confident are you that they will actually buy something?

To slightly paraphrase Hugh.  "Markets are conversations, Sales are conversions"  In other words, the conversation was converted into hard cash, and a contractual relationship.

Also, I have written rather naughtily about the Quarterhack, the on the ground sales person, well, actually, qualification and another process that we will discuss later, closing, are the two things that they are responsible for.   They can actually be pretty average at the other things, but the had better be damn good at those two, or get rid of them before they bankrupt you. 

So, how do you qualify a sales process?  Well, first we assume that there is some relationship with the client, and that you have been discussing some notion that looks like you might do business.  In a complex sales situation this is usually quite clear cut, there is a tender process for these kind of projects in most organisations, whether it be IT procurement, building a factory, signing a commercial services deal, etc.  What do you need to have in place for the deal to work?

Several things, and I have a checklist that I use, to question whether all is in place.  There are a number of Acronyms for this, all of which have been copyrighted, and trademarked or whatever, so the one that I will use, courtesy of wordsmith is the highly original and non-business friendly TRAM BURP.

Timing
Requirements
Action
Money

Budget
Uniqueness
Relationship
Priority

For reasons of structuring, I will explain this in the following posts.

Complex Product, Complex Sale

It's been a busy week here in the spaceship.  In my real-life job as an SAP consultant I had a couple of customers I needed to do a lot of work for.  Normally this doesn't pose many problems as I have most of the answers either in my head or close to hand.  However this week has been a little bit different.  I work on a product called the Bank Analyzer that is designed to handle the reporting of finance and risk information for large multinational banks.  If you want to line up the buzzwords, then we would be talking about Basel II, IFRS, and other new regulatory changes that are being introduced.  I know I've talked about this before, but basically the amount of data that this regulation requires is nothing short of staggering.  As a consequence, SAP have been building an analytical solution for this area for the last five years.  Now, we have reached version 5.0.  If you are one of the few individuals who have been following this blog for a long time, you may have seen my opinions about the life cycle of software before.  However, briefly I can summarise it this way, usually version 5.0 is version 1.0 in a new life cycle.  I am delighted to find that I have been consistent in this prediction, because the Bank Analyzer is really no different. 

What we have now introduced is something called the Integrated Risk and Finance Architecture, which brings together the previously separated worlds of accounting and risk management for banking.  The reason this has made me busy however it is that the huge shift in functionality available within the system means that I have to spend a lot of time, particularly when making promises to customers, checking what is actually in the software.  I know that there are specifications, and I know that these are what the developers used when they put the system together.  However, interpretation is everything, what did the developers actually make of the specification and therefore what have they actually delivered?

This is something that I have talked about briefly in the complex sale discussion before.  One of the main tasks of the competent salesperson is actually to understand their own product.  This may seem self-evident, but it is amazing how many salespeople don't seem to want to make that effort.  Luckily for me, I am a complete geek, and enjoy wandering round talking to Germans about what they have been doing with the coding.

Increasingly I feel that I'm facing a new challenge.  The solution that we are selling is moving into territory where we are solving a problem that many people do not realise they have, or have great difficulty in understanding.  If I come back to the concept of the Integrated Finance and Risk Architecture, without going into too much detail, it is obvious that personnel from both finance and risk departments in a bank might use a combined solution.  There are very sound external and internal business reasons why the combination of these two areas makes sense.  The problem is that these two departments have never been aligned historically, and generally from a political and functional point of view have no particular desire to be aligned in future.  As a result, much of my current work is not just about explaining why are product meets the need, but about finding convincing ways to explain why the need exists.

It is an adage in sales that the customer knows best, it on the face of it is actually quite reasonable, but with the increasing complexity of different knowledge domains, it is notable that people who know how to do a job have a huge amount of specialised knowledge, but generally a very poor appreciation of the framework in which they work, whereas the management who are supposed to provide a framework, generally do not have enough time or bandwidth to keep up with the enormous rate of change in each of the underlying specialist domains.  I am sure that Sig would agree with me that a hierarchy is actually very poor way to manage these kinds of problems, but as long as the budget is released by convincing the upper part of a hierarchy of the lower part needs the solution, then that is a problem that we have to tackle. 

I suppose one of the reasons that my job was enjoyable, is that I have to spend my time thinking about how to not only respond to a requirement, but how to persuade people that it exists in the first place.  If I were to liken it to the old training model, I suppose my job is turn unconscious incompetence in conscious incompetence, and then sell the roadmap through conscious competence to unconscious competence.  In other words, you didn’t know you were unhappy, I’ve told you, and now, guess what, I can sell you the answer to happiness.  Only it turns out that happiness is more difficult than you thought. 

Such is corporate life.

Finding the Likely Customer

Wow!  Complex Sale time.  Just when you thought nothing would ever happen about this again...

The next subject in the lifecycle of the complex sale is finding the likely customers.  Makes sense really, if you want to sell something, find someone who wants to buy it.  However, much that is obvious is not always enacted.  I had a job selling advertising space pretty soon after leaving University.  Now, I had no idea that no matter how they dressed it up in the adverts, and the fact that it was called a graduate training scheme, it was basically a telesales sweatshop, that let you out after a bare minimum of training, and because of the exceptional cheapness with which they snared us in with the promise of a free lifestyle with every job, it must have been cost effective.  "But it's advertising, darling!"

(Free lifestyle with every job is a Gaping Void phrase, and its what I call the "I work at the BBC" phenomenon.  I have known a few film and TV producers over the years, and they are all desperate free-lancers, either working very very hard on their current project, or working very, very hard on getting the next one, and most of their conversation is monotone grunting about what a miserable place the world is, interspersed with lots of beer sipping and smoking of roll-ups.  Then you meet people at social gatherings who swan about saying "I work at the BBC!"  inevitably, in contrast to their hard-bitten cousins the producers, the people who work at the BBC are very poorly paid, and often nothing whatsoever to do with the process of program production, e.g. administration, human resources, etc.  To make up for the fact that they have a not very interesting job that doesn't pay well, they get to say, "I work at the BBC!"  Free lifestyle with every job.)

Right, so I am let loose with the following tools of the trade:  one telephone, a jobbie brown BT standard Viscount usually, and a number of boxes of scabby cards that are full of customer contect details.  And I get to sit near a window, which in summer in a Georgian era building in London is a big perk.  (Now, I know, everyone out this there is going - Wow! Cluelessness!  Some people work things out from first principles, for me at 22, this was a bitter experience approach to the problem.)

So, what do I do?  I start, God help me, at the beginning of the box, and I start calling through to the back of the box. (Duration, about 10 weeks.) I do not even have a notion of which of the cards in this box have been spoken to last, and I keep my on notes on when to call anyone promising in my diary, which given that the punter who had this seat and box before me has gone and taken the diary they used with them, I have no idea when anyone before showed any interest.  Each card has a bunch of cryptical dated and scribbled comments, like "WCMB" or Will Call Me Back, which is the telesales equivalent of being told to go take a long hike off a short plank.

In other words, I had no idea of really what I was selling, who might be interested, at least in theory, who the main players in that theoretical market would be, who the current players in these organisations would be, who the other competitors were other than a brief run through a couple of other titles in the same space from different publishers, and when they might be interested in buying, such as for industry events, awards, etc.  Targetted activity, it was not.

All I can say is that the margins on the empty pages must have been high, and in retrospect, we must have been cheaper than I realised, if this random process was commercially viable.  And indeed this would all have been computerised by now, in CRM systems, which is the same process, but instantaneous rather than hand-written cluelessness.  What is missing is the question that is most important:  "What are we selling, and therefore where will I find a likely customer for what I do?"

Seems obvious, but most sales people that I know, with few exception, do the big grown up version of arriving at the desk and starting to call through the box of cards.  It's even called a territory, or an account, just to make sure that there are boundaries in place.  So having talked about the way not to look for customers, next I'll talk about just how would you do so?

Yesyesyesyesyesyesyes!

Not complex selling, but big adverts.  This is class.

Mind you, it's going to really piss off the telly ad boys when they try and sell the next big ad concept.

"Wot, you mean like the lager?"

Cultural Tidbit

Here in Istanbul presenting to a number of the local banks.  I had drafted the presentation before I came here, and sent it through, and I did what I normally do, which is try and find an image that is representative of the country and use it on the Agenda slides, or in some of the graphics.  It's a bit of a cheap trick, but it does give the impression of having made at least some effort to do something other than a completely generic "show up and throw up".

Now, the big friend for this is Google Images, as you might imagine.  I went and typed in Instanbul, and got a really nice sunsetty, hazy view that was recognisably Istanbul, and included the Boporus, and the buildings near the Blue Mosque.  I took a sliver of this and used it as one of my better visuals, I thought.

Now, actually, this is where I unintentionally hit a nerve.  Modern Turkey is determinedly secular, and the salesman I am working with smiled and said.  "Good presentation, but drop the Mosques.  Banks don't want to think that's how we see them..."

I suppose I would be like the well intentioned Japanese guy who dreamt up the whiskey called "Queen Victoria's Sporran."  Well intentioned but missing the cultural cues...

Complex Sale - Understanding Your Own Offering

Expanding on the notion of the complex sale a bit more.

It may seem old fashioned, but one of the things that you are going to need to succeed in sales is something to sell.  (No, really.)  Product origination is something that I have discussed here earlier.

Basically products fall into two main classes, innovative or derivative.  Innovative products, briefly, are those that solve a new problem, or solve an existing problem in a new way.  One good example that springs to mind is the Segway.

Problem, I need to travel a distance in a semi-urban environment that is not conducive to taking a car, but is too far to conveniently walk, and I am too stupid/lazy/malco-ordinated to buy a bicycle.  Answer, a gyroscopically controlled golf cart, with an intuitive lean-where-you-want-to-go steering system.

Derivative products are those that expand on a well-known and understood class of problem, and the existing solutions.

The derivative problem solving solution in this case could be the bicycle; I need to travel a distance in a semi-urban environment that is not conducive to taking a car, but is too far to conveniently walk.  I go to a bike shop and explain my requirements, and they offer me a range of broadly similar options, and I pick the one that I like the best.  The products are all derivative of the same class, e.g. bicycle, but the range of options and styles is a positive advantage, from a customer point of view.

The offering does not have to be a physical product, I personally sell (SAP) ERP solutions, and the deliverable in this case is a number of DVD-ROMS with zeros and ones on them.  What the customer is buying is the fact that the code will do something useful when put in the right environment, e.g. a large computer network.  Services are also saleable, lawyers, doctors, bankers and musicians just a thin sliver of the possibilities for sale of services.

So, in understanding the offering, there are some things that are common:

·    What is the problem that what I am selling is going to solve?
·    How does it solve this problem?
·    What elements make up the product?

·    How is it packaged?
·    Contractually, what do I have to manage?

·    What are the generic benefits of this approach and product?

What is the lifecycle of this product, through the following stages?

·    Conception
·    Design
·    Build or creation
·    Packaging
·    Implementation
·    Daily usage
·    Maintenance in use
·    End of life or replacement issues

In addition within this there should be some concept of the replacement cycle for the products predecessors and successors.

I am going to go into more detail in each of these areas in subsequent posts.  But carry this thought, until then:  “Cheapest or Best, there is nothing else.”  Which does your product that you will sell wish to be? 

The Steps in Selling

The Big Map – A Sales Cycle in Brief

I sat and thought briefly about the identifiable elements of a sales cycle. I am sure that I will think of others, but this is a good start.

• Understanding the Market
• Understanding the Offering
• Finding likely customers
• Prospecting
• Initial discussions
• Engagement
• Managing  the Sales process – External Sale
• Managing the Sales process – Internal Sale
• Handling the Competition
• Qualification
• Handling Objections
• Demonstrating capabilities
• Negotiation
• Closing the Sale
• Handing over the delivery team
• Managing  the post sale
• Account Management
• Extending the footprint
• Managing the support and services revenues

This looks like a long list, and it is. Complex selling is exactly that, and the ability to manage this complexity successfully is one of the main reasons that it is a rewarding process.  This is the list of topics that I am going to much upon over the next little while here in the spaceship. Interlaced with the odd rude joke, rant against DRM, and denouncement of international capitalism, or more specifically globalisation. So, no internal discontinuities there then…

Unlesson Seven: "I work in Service and Support"

“I work in support and services, and I do not need to be a sales person.”

In most complex sales situations, the initial sale represents a fraction of the overall investment over the lifecycle of the relationship. If we take the example of software. ERP licences typically cost a million or so Euros, according to the size of the customer, the scope of the implementation, etc. In software, licences are not the end of the story, then there is the maintenance fee, that is generally 15-20% of the original price, per year. So there is a big revenue stream from the mere existence of the licence. In addition, the project is not about the software, but about the implemented system being used by the organisation and the people in it. This means hardware and infrastructure, and it means most especially implementation effort. As a very rough rule of thumb, and ERP implementation will cost 1:1:4. That means for every dollar of licence there is a dollar of hardware and infrastructure, and four times that in implementation effort. (This takes internal costs as well as external costs into consideration. Your mileage may vary.)

Taking another example, earth moving machinery. This is a complex machine that has a lifecycle, and an estimated number of working hours over a life time, depending on the conditions, type and intensity of usage. The maintenance costs and running costs over the lifetime of the machine may exceed the acquisition costs by some considerable margin.

Thus, the people who work in support are going to be major guardians of the revenues of the organisation. Additionally, the cost of doing business with an existing customer can be a fraction of the cost of doing new business. Where there is an existing relationship, and a need to service and support an existing complex relationship, this is where the most profitable revenue can be gained. The other main benefit is the ability to extend the footprint of the product or services in the organisation. If you have an ERP system, taking another function or module from the same organisation is logical, and easy to justify. If you have one brand of machinery, you will stick with it for operational and cost reasons. (Nearly all low cost airlines have a single aircraft type, let alone supplier. Usually this is the Boeing 737, although Airbus has managed to make some inroads of late.) Not all support people need to have revenue targets or even to be sales trained, but they should have some awareness of the importance of their job.

 

Unlesson Six: "Selling is an Anathema in Professional Services"

“We are a professional services organisation, and a sales force is an anathema to our clients.”

Actually, there are two kinds of people in the senior levels of the professional services organisations, the grafters and the getters. The grafters do the top end work, the surveying of the work of the other people in the organisation, and the checking of the delivery to the clients. The senior law partner who does the last review of the big contract, or the actuary who does the final review of the estimation data, the audit firm partner who reads the file, and because they have trained the staff, and know and trust them, signs the audit opinion, are all grafters. They are important people making the guts of the operation tick.

Then there is the partner who seems to be at a lunch a lot, spends a lot of time talking to people, and while they know the business, they are the ones working on the new business proposals, taking the lead in the presentations at the client site, and so on. These are the getters. The revenue of the firm to some extent depends on their ability to keep the client happy, fix any problems, and make sure that any work that is available is coming to the firm. It is not the grafters job to bring in the new revenue, and it is not the grabbers job to complete the execution of the work. Now, I would be the first to agree that the roles are not so clear cut in reality, but if you want to make to a senior level in a professional services organisation, then you will have to get good at selling new business and protecting your existing relationships. Otherwise, your revenue levels will gradually slip, and your business will decline. Consider, also, that one of your key sales messages will be that you are honest and have great integrity. Not all sales are driven in miasma of dishonesty, not matter what the stereotypes may say.