One former employee of professional services firm EDS says he used to sum up the companys approach to selling IT services in a soft market like this: “Look for the cow in the ditch.” In other words, locate the customers pain points—those pressing business problems that cant be put on the back burner until the economy improves—and aim your sales pitch right at the heart of those problems. Offer solutions that provide an immediate payback, in the form of reduced operating costs or lower budgetary expenditures. In a recession, lofty promises to reinvent the customers business (did anyone say “e-commerce”?) go over about as well as William F. Buckley on the “Jerry Springer Show.”
All this is covered in Salesmanship 101, under the heading of “selling ROI” (return on investment). Every salesperson with an ounce of training knows these basic techniques like lawyers know the rules of evidence or physicists know the atom.
But youll have to forgive the industrys salespeople if their skills are a little rusty. Its been ages since anyone has had to resort to selling ROI. Indeed, in the past two or three years, just about all it took to sell Internet-based solutions was the ability to answer the phone and take orders. Some of the most prosperous solutions providers didnt even bother hiring in-house salespeople—their leads and referrals came right over the transom from their venture capitalists. It was fat city all around.
And then, all of a sudden, recounts Steve Waterhouse, president of the Waterhouse Group, a sales training firm, everybody seemed to figure out that the “New Economy” was really just the old economy run by people who didnt know what they were doing.
“And once they realized that profit has something to do with keeping an organization running, we started getting back to fundamentals,” says Waterhouse. He notes that the industrys fixation on the top line created enormous month-to-month pressure to book business and ultimately led to sloppy deal-making. But now, that mind-set has been replaced by a clamoring for the “basics of filling the pipeline with good stuff,” Waterhouse says.
A Tighter Window of Opportunity Janet Szilva, president of AJS Group, a sales consultancy, says that in going back and reacquainting her clients with the concept of ROI, she drives home the point that selling ROI isnt what it used to be.
Years ago, she notes, a three-year payback was an acceptable horizon, but today, 12 months is a more typical requirement.
“In a tight economy, customers are looking for an initial cost savings in a short time,” says Szilva.
Scott Silk, senior VP at ePresence, a provider of directory-based solutions, agrees that projects with a payback period of a year or less are more likely to be green-lighted in a recession. Silk says the eProvisioning applications offered by his firm have a nine-month payback window (these apps allow companies to more efficiently allocate e-mail and network accounts, PCs, and cellular phones to employees).
Indeed, even the former Web consulting hotshots that treated the sales function like an old-economy relic are emphasizing rapid ROI as a cornerstone of their efforts to survive the ongoing shakeout.
Bob Howe, the CEO of Scient, which previously focused on fast time-to-market and building elaborate e-commerce vehicles, says the firm is now responding to customer demands for “an accounting period return … ROI in some timeframe that makes sense to them.”
Only the Shadow Knows Recognizing the need for instant payback, and identifying where the payback should come from, however, are two different imperatives. Janet Szilva of AJS encourages her solutions provider clients to “shadow” their customers employees to discover where the time and money are going to waste. Szilva says one of her clients learned from following his customer around that its people were using a toll number for Internet access. After presenting that finding to the customer, Szilvas client landed a contract to implement a cost-saving solution.
Ed Coleman, CEO of CompuCom Systems, says his company is trying to help customers identify the “shadow people” involved in their desktop support operations. These people, who work within the business units, tend to be overlooked when companies formulate plans to reduce support costs.
“Consultative sales are essential when the customer cant see, touch or feel what its buying,” advises Coleman. While identifying customer needs and understanding what drives those needs are critical in a down market, he concludes, a good IT service provider should always be training its sales staff to drill down to the pain points.
After youve identified those pain points, continues Chris Pariseau, VP of business development at Stonebridge Technologies, a Dallas-based Web consultancy, the next task is to “peel back the onion” to find the root cause of a problem and sell the appropriate solution to the right customer executive.
“You can talk to the project managers in the bowels of the IT organization, but more likely than not, their first concern is whether it works,” explains Pariseau. “You need to get to the person who signs the order, look that person in the eye and get that person to dollar-ize the problem, to understand the real monetary cost to the organization.”
One of Stonebridges Fortune 100 customers, for example, recently called in the consultancy when its users had trouble signing on to a mission-critical CRM application. The services vendor sent in a SWAT team to determine if it was a network glitch, a systems engineering error or a security problem. “We quickly fixed the symptom, which involved the deployment of middleware in the Web space,” recalls Pariseau. “But the important question was how and why did they get into this situation in a 24/7 production environment with a zero tolerance for downtime?”
Stonebridge managed to present the issue to the CTO in terms he could relate to—namely, the immense dollar cost of losing clients. The vendor ultimately stuck around to perform a complete application audit, which led to a 90-day job load-balancing the customers servers, revamping its policies and procedures, and deploying new Oracle database applications.
Solutions for a Rainy Afternoon Among those service offerings and applications that tend to do best in a down market are some that have fallen out of fashion.
Asset management solutions, for instance, should return to favor, as companies look for ways to physically track and monitor the financial value of their IT assets.
“When times are flush, customers dont see the need,” says CompuComs Coleman. “But in a recession, asset management is a definite pain point.”
Indeed, any application or service that helps get a handle on runaway expenses is likely to thrive. Robbins-Gioia LLC, a project management firm in Alexandria, Va., recently developed a portfolio management solution that helps customers determine which project investments are winners, from an ROI perspective.
Barry Calogero, executive VP of business development at Robbins-Gioia, says the process aligns an organizations projects and investments with its goals and strategies. A gap analysis tells a companys executives which projects to fund and which to scrap.
“Sometimes the best decision is to stop,” notes Calogero.
Another hot area right now is outsourcing—traditional data center engagements, Web and application hosting, and various managed services offerings. Outsourcing generally meshes well with the customers need for cost reduction, while maintaining service levels and a fixed price. It is no accident that major outsourcing providers like EDS and IBM are holding up relatively well in a declining technology market.
Content management and customer relationship management apps also are seen as solid plays when it comes to crunching ROI numbers. In an environment where cold-calling is not effective, youve got to make sure that you keep your existing qualified customers happy.
And, finally, some service providers are having success offering “self-healing” tools. CompuCom, for example, is moving from the use of live agents on-site to self-service tools that deliver greater efficiency. Coleman says CompuCom is making this transition via an alliance with Support.com.
Hopefully, say industry observers, the renewed focus on selling ROI will extend beyond the current downturn. Chris Pariseau of Stonebridge says that no matter what the business climate, every solutions provider should be moving from a transactive to a consultative sales process, where “relationship cycles” and billing cycles do not necessarily correlate.
“You always want your customers to be dollar-izing the benefits,” he says.