Shefaly blogs about the importance of keeping promises to customers. Drawing largely from the consumer product world, she paints an argument for timely delivery and the serious costs of messing up. In the highly transactional world of consumer goods with large volumes of relatively lower priced goods getting sold to the masses this is very true. You absolutely have to tie in your suppliers, manufacturing, marketing and sales to a tee.

Move to software.

Nick Carr talks of commoditization in the hardware and software product markets: "It's typical when industries mature and buyers start focusing on prices rather than features…. They're competing on cost rather than innovation and features."

What about the world of software services? Firstly, we deal with 'clients' and not 'customers'. Dawud nails the difference. With clients, the 'when' of delivery is important, but the 'how' of delivery is even more important.

When was the last time you had a large, complex program delivered perfectly on time? Let's face it. Slip ups happen. Unlike a P&G shampoo, each project is 'manufactured' to order and there is too much magic in the process for things to be perfect. What saves the day is relationships and the trust that comes with it.

So, how do you build trust while you deliver?

Honesty: Many delivery issues have two sides to it. Both the vendor and the client could have done things different. One way to open up clients to do their bit is by being honest about one's own mistakes. When clients see that they you are your own devil's advocate, they will stop feeling compelled to attack and will instead be open to meet you half way.
Honesty is also in being open about what is good your clients. Say you are trying to sell a rewrite of a large legacy mainframe application. There are two options in front of you.
Option a). Keep the backend as it is and rewrite the UI alone in a new technology. Price: $5M
Option b). Rewrite the whole thing lock stock and barrel.  Price: $12M.
Based on your analysis you are sure that Option b would be too high a risk to take and would likely lead to failure. Option a, though far from ideal would more than meet the needs and has a high chance of success. Which one would you recommend? If you put down the pros and cons in all honesty and recommend option a, this would lead to a high trust partnership and if you land up with downstream issues in delivery, you will have the client on your side. Joe Ippolito has some good tips on honesty in sales.

Communication: Communicate both the good and the not so good at the right time using the right tools. Often, bad news is bottled up and hidden away from the customer until it is too late. The reasons? Hope and fear. On one hand, people hope that somehow the problem would vanish and on the other hand they fear that bringing things out into the open would spoil relationships or make them look incompetent. Often, bad news is brought up through emails. Big mistake. Face to face communication of bad news allows appropriate communication of the context and ensures you have better control on the situation. Communicating bad news early and in a face to face discussion builds trust and shows the client that you really want to solve problems.

Listen, listen and listen: Listening to anyone provides that person psychological air and allows a climate of trust to build. Ask for ways in which your service can be improved and don't take "all is fine" for an answer. All is never fine. Probe to bring out small irritants. Nips these in the bud.

Choose battles wisely: Every client will have shortcomings. Overlook the small ones, complement the client and compensate for these lapses. Letting the small stuff pass builds trust and allows you to bring up the more important aspects where you need the client to change.

How you deliver does matter a lot.

Paul Allen, Partner and Managing Director, TPI shares his views on how the outsourcing market would evolve in 2009 given the current financial crisis. I have summarized some of the points below:

Impact for the rest of 2008:
-Budget for back office functions in most companies will get scrutinized and scaled back.

-Existing contracts maybe called upon to scale back on the bells and whistles to lower costs.

-New projects with even a strong business case would be held back.

Impact for 2009:

-2009 should see a growth in outsourcing through added scope.

-Divested operations could be a major growth factor.

-Transformational outsourcing will be put on the backburner.

-Increased government involvement in management will not lower outsourcing.

Jonathan Farrington over at the "Sales and Sales Management" blog writes about the importance of having relationship objectives for large accounts:

"Everyone in the account team needs to know what we want the relationship to feel like."

Accounts, both large and small are all about relationships. Before relationships can be built and sustained, it is important to have clear and well defined relationship goals. These goals need to be SMART - Specific, Measurable, Actionable, Result oriented and Timely and most importantly, they need to be consistent with your larger account plan. 
 

Figure out where the money is headed:  You will have a much easier time selling if you know where the money is headed - even if you are a super confident, super smart, gunslinger salesman. So, talk to your coaches and figure out where the spending is headed- which lines of business (of the client), what buying centers, which technologies and whether the spending is discretionary or non-discretionary. Knowing these details is the first step towards "SMARTNESS". It is the foundation needed to make your relationship plan Specific (Which clients to target), Measurable (How to tangibly measure relationship success), Actionable (Having an operational plan to 'actionize'), Result oriented (Ensuring relationship goals translate into revenue), Timely (Your targets are time bound, can your relationship plan be otherwise?).

Map out your relationship value chain: Now that you are done playing Sherlock Holmes, it's time to dive deeper. Knowing where the money is headed allows you to break down your overall revenue target into more detailed sub-account level numbers. It also lets you know how much can possibly be "mined" from existing buying centers and how much needs to be "hunted" from new areas. 

A single line of business might have multiple, distinct buying centers. This distinction is important as your relationship plan for a given line of business needs to align with these specific and distinct buying centers. The way the IT division that servers the treasury department of a bank ("Treasury" line of business for you) buys a consulting project might be completely different from the way it buys production support. You need to map out the relationship value chain for each buying centre that you need to engage with. By "relationship value chain" I mean mapping out the user buyer, the economic buyer, the technical buyer, influencers and gatekeepers. You can have the same person on the client side playing multiple roles, but knowing who is wearing which hat is critical. A very basic relationship value chain could look like this:

Here are a few good reads on the impact of the fiasco with some snippets below:

Investors.com 

"Hardware purchases will be postponed, software upgrades will be postponed and customer projects will slow. This is not a time for (corporate customers) to take big risks. No big spending decisions will get made."

"Total revenue for the Indian outsourcing market is down 31% this year"

"Disruptions and uncertainty for U.S. financial markets are likely to delay some new software projects until the fourth quarter or next year"

ZDNet.com

"Right now, there are four clear survivors: Goldman Sachs, Morgan Stanley, Bank of America and J.P. Morgan. Tech spending elsewhere may go kaput. "

"Infrastructure consolidation projects will last for years. In IT spending surveys demand for consultants hired by the project remains strong. "

"Project managers will be in demand. Systems integration skills will be critical and you’ll need project managers to consolidate all of those applications and data centers as well as rearchitect systems. "

Ganesh Nagarajan of Zensar.

"The preliminary analysis of the current situation indicates that the impact will be short term and company-specific and though all strategy planners will continue to keep a watch on any further downstream impacts"

Computerweekly

"Tactical software and hardware spending will be hit first, followed by the more-strategic IT services in the long run"

"Software as a service could be a winner from this as could any model where people pay on consumption rather than up front cash"



Yeah, I am lazy!

Ray Wang provides an interesting perspective on what customers are demanding from ERP vendors. 24×7 support, transparency, SLA based services and better pricing are some of the factors he brings up. I can see similar demands on the services side of the business as well. Below's a list of some of the stuff I see happening:

- Pay-as-you-go pricing for "horizontal" BPO processes.
- Committed year on year productivity improvement.
- SLA based reward/penalty clauses.
- Ability to "own" applications rather that just get by the day.
- Transition at zero cost to the customer.
- Usage of reverse engineering tools to improve the quality of transition and possibly move towards "ownership" faster.
- Ability to 'transform' the shop through improved and streamlined processes.
- Quick rampup and rampdown.
- Well defined "unit of work" based productivity.
- Virtual offshore development centers to minimize security risks and lower switching costs.

The language wizards at Oxford define "commitment" as

commitment
  • noun 1 dedication to a cause or policy. 2 a pledge or undertaking. 3 an engagement or obligation that restricts freedom of action.

Let me give it a little sales twist by defining "client commitment" : Clients showing dedication to your cause. Make a pledge to give you business. Get into an obligation that prevents them from going to competition.

Just writing that sentence made me feel wishful. Getting a client to say yes, means so much for recognition hungry sales people, one more step towards that magical close. At least in the complex world of software services sales, "closing" often equates to "getting commitment". Of course, the level and the type of commitment would vary depending on where you are in the sales cycle. At the very outset, a commitment to give you a hearing is victory. At the apex, a commitment to pick up a pen and sign on the dotted line is victory. A sale is nothing but the culmination of a series of client commitments -usually of increasing promise to the seller. The specific techniques one would use to gain client commitment would be contextual, but there are some common principles that are a must to get to the magic 'Yes!'.

Show value: Whether it is an introductory call or a formal RFP presentation, never go to a customer meeting without being in a position to offer something of value. I don't mean that a fifty page formal presentation is needed every time. But there should be something you give the customer that would make him want to speak to you again. It could be an alternative perspective on the problem at hand. It could be a case study story of what the competition is doing. It could be an industry analyst's viewpoint on a problem the client is interested in. It could be anything, but the common thread is value. When you ask for commitments without showing value, you make the customer think "He wants to make me buy something that I don't even know will help me. What a looser." When you show value and then ask for small commitments, you make the customer think "He wants to give me more value. Fair enough. What do I have to loose? Let me check this thing out." When customers associate your advances with value, they will become open to commitment.

Build a personal rapport: People like to buy from people they like and that applies regardless of how good your service is or is not. Be a 'smiley', be warm and be ready to look beyond people's titles. A CEO is as human as any of us. Sometimes, especially at the outset, clients will try to rebuff your advances. They still see you as a 'salesman' and not as a human being trying to make a connection with another human being. Relax and keep pushing. Have a few conversation threads ready to go. These topics need to be light, off work, something people would be passionate about and should help you engage at a person to person level. Reading a lot about a wide variety of topics surely helps. The wider your intellectual scope, the more things you will be able to speak about and the better your conversations get, the easier it will be to build rapport.    

Focus on the context and not your expertise: Keep the focus on the needs of the clients, rather than your expertise. It is easy to think that something that your company has pioneered will be of value to the customer. You will have people in your company trying to 'push' a solution on the customer. Push them back. Yell, cajole, coax. Do whatever. But never let anyone reach out to your customers with a "solution" without understanding the context and the needs. When people see that you are genuinely interested in spending time to understand their needs, that you really feel the pain from their perspective, they will be more open to making a commitment.

Keep irritants for the SOW: One of the worst practices in this industry is mixing up proposals and SOW's. Too often SOW's try to sell and proposals try to derisk. De-risking in a sales proposal is like telling your prospective wife about all the things that can go wrong if she marries you and then hope to get a yes. Good luck! There will always be uncertainty and risks in most complex software sales situations. De-risking too early and too explicitly is the fastest way to derail your sales wagon. It will give the impression that you are too conservative, closed, unwilling to work through issues and basically make the whole thing transactional.

Be honest: Be candid about the mistakes your company made in similar situations. Show the customer how your company worked with clients to resolve these issues. This is a huge step towards getting commitment. By being honest you show the customer that you truly understand the deeper issues involved and that you have been there before. By speaking about how you solved these issues, you build client confidence in your ability to deliver despite odds. The client will see you in a different light from the run of the mill salesmen.  

What are your thoughts on getting the client to commit?

Seth blogs about the importance of intagibles- those things that have no numerical value but are priceless- enthusiasm, speed, peer pressure and generosity.

One of the intangibles in selling software services especially within an account (farming as oppossed to hunting) is 'image'. What does the customer think about you? At one end, he can think of you as a thought leader who can be relied on for ideas. At the other end, you might be seen as a great executor who can get things done. He can see you as a flexible partner who understands him and is willing to work through problems patiently. Or does your customer see you as an able and strong willed "Rottweiler" type personality? No one image works for all situations and neither can one be a chameleon, switching colors at the drop of a hat. It is however helpful to know one's natural style and then be prepared to flex depending on the context. You can even choose people in your team who can complement your natural image! Here are my thoughts:

What image works in your situation? I'd love to hear.

Brad Trnavsky drives home the importance of expecting to win in every interaction you have with the customer. "If you are picking up the phone and saying to yourself 'I hope this works out' or 'all these leads suck there is no way I am going to schedule an appointment' guess what??? You WON’T schedule an appointment!"

I can't agree more. Selling is tough especially in these times. The fact is you are likely to loose more interactions than you will win. But you never know at the outset how an interaction will end up. This means you need to play to win every time. That can be hard. Here are some ways to motivate yourself to always play to win.

Make relationships an end in itself: We all focus on building relationships. You can't be in sales in this industry if you don't. But we often end up seeing relationships as a means to an end. 'Let me build a great relationship so that I can get more business'. Sounds great, but you end up building only those relationships that you think will lead to business and the fact is you don't. People get transferred, budgets and priorities change and yes, even the Cowboys can get beaten. Build relationships does not have to be a chore. Guy has a great post on building relationships. Making relationships an end in itself will not only improve your numbers, but also keep you pepped up because you get that 'Yeees!' feeling even when you don't sign an SOW.

Examine your own negative thoughts: Next time you think "This is not going to work. She's not going to give me any business", go a level deeper and ask yourself why exactly you think so. You'll be pleasantly surprised that you often have preconceived notions or mental projections that are holding you back- projections that have little to do with reality on the ground.

Think non linear: Before you condemn an upcoming interaction as a 'waste of time', think of what good can possibly come from the interaction. In what ways besides you immediate goal can you leverage the relationship? This could be work related or it might just be plain fun. But thinking non linear can surely enrich your interaction and make it more fun. That way even when you don't get business you will still be having fun. Catching a football game with a client who cannot give you business is a good example.

Think lifetime value: View the folks you sell to as 'clients' and not as 'customers'. Paul McCord has a great post on the difference. Think of what value you can leverage from the relationship five years from now, ten years from now. Not convinced? If you are age thirty or above, make a list of five people who were your peers when you started your career. See where they are now and how they could have helped you today. The fact is you can never predict the lifetime value of a relationship, but you can rest assured that lifetime value in many of your immediate relationships is immense. Think long term and you won't be flustered or beaten down by short term setbacks.