Seal The Deal
11:58 AM EDT Wed. Jul. 30, 2003
From the July 30, 2003 issue of VARBusiness
"We have successfully used event marketing to help attract new customers. For an investment of as little as $20 or so a head, we have pulled in potential new customers with the promise of a free seminar on a key technology and the offer of a free lunch," Mackey says. "It might sound basic, but in tandem with all the other things we have done to reposition and strengthen the company, it's been a sales plan that has stayed us through the rough economy."
Simple, basic salesmanship. But, alas, it is too often overlooked. Ask any VAR what sets them apart and chances are he or she will tell you it's unrivaled technical expertise or unequaled dedication to customer service. But sales excellence? Not too many will single out that as a differentiator. And it's a crying shame, given that sales are the lifeblood of a company.
Despite being one of the key pillars of success, most VARs tend to focus their energies on other aspects of their businesses. For years, many VAR companies have gotten by in good times and in bad with an informal approach to sales. Case in point: VARs are good at mining their installed base of customers--which accounts for two-thirds of the typical VAR's annual revenue--but struggle to find new clients.
Today, however, more VARs are trying a different approach--one that treats sales as seriously as the financial, technological and service aspects of their companies. That's what Jeff Medeiros has done with his company, rs-unix.com, an IBM Business Partner based in San Francisco. Two years ago, Medeiros began experimenting with sales strategies. One radical idea: He fired a telemarketing company that he had hired to make cold calls on his company's behalf and replaced it with one of his best salespeople. That's right: He reassigned one of his best sales specialists to roll cold calls eight hours a day. It created a backlog of new opportunities, which Medeiros then had his best closers pursue.
In addition, he set about building what he calls an Opportunity Management System. Essentially a Lotus Notes database application, the solution helps rs-unix.com salespeople and executive managers track sales by reps, customers, sales cycles and by products and services, too. A former IBM salesman himself, Medeiros recognized at the onset of the economic downturn that only companies with professional sales management would survive. Knowing he couldn't at the time systematically and scientifically track prospects from the moment of demand-generation through deal closing to customer satisfaction after installation, he began building the sophisticated tool. Medeiros credits the system--which tracks, among other things, every quote, diagram and project plan for each customer--for helping keep his company afloat in a market that has seen several highflyers, including Avcom, shut their doors. For example, with the systems-engineering time-tracking module, Medeiros can see at a glance whether the company is netting sufficient gross profit from the projects it has assigned to its technicians.
"As a former salesman myself, I have always tended to stay very close to the sales process. But in order to stay in business, I've had to bust my ass and get closer and closer to our sales machine like never before," Medeiros says. That includes mandatory weekly sales meetings that begin promptly at 7 a.m. each Monday to review qualified opportunities. The result of taking a more scientific approach to sales? For one thing, revenue at the company has stabilized at around $20 million per year, after peaking around $27 million in 2000 and then falling from there.
In this feature, VARBusiness showcases the steps other VARs are taking with their sales departments to stabilize and strengthen their businesses. We also include tips and ideas from several sales specialists who have done wonders for VARs. These sales consultants provide advice on everything from recruiting new sales talent to closing deals to keeping in touch with customers. We also provide a yardstick of excellence in the way of VAR salesman Scott Vinson (pictured on our cover). A senior account executive with I.B.I.S. Inc. of Norcross, Ga., Vinson has sold more copies of Microsoft business applications than just about any salesman in the United States. We reveal his techniques and approach, and pinpoint what makes him the success that he is. If your company is feeling pressure from high-volume discount resellers on one side and offshore service providers on the other, then the following might be just what you need to put the lift back into your sales.
The Science of Selling
As companies grow and mature, their practices become institutionalized. When institutionalized behavior does not produce desired results, however, a company must change its culture and approach. That's more easily said than done, especially in the world of sales, where even seasoned veterans tend to fall back on old, familiar ways. But sometimes a radical shift is the only way to change a company's culture. IBM Software, for example, recently changed the way it rewards software technicians who work to help IBM Business Partners build solutions for customers. Today, as much as one-third of their compensation is tied to customer satisfaction, providing their technical professionals a significant incentive for delivering on promises made by IBM and its allies. Has it changed their behavior? You bet.
Unfortunately, there are all sorts of ideas and no single definitive method for boosting sales skills. There are almost as many strategies as there are companies in the channel today. One of the strangest, notes Michelle Drolet, founder and CEO of Conqwest, a 10-year-old security VAR based in Holliston, Mass., is the "no-sales" approach taken by some consultants.
"I love it when other companies say they are just consulting companies and don't sell products," Drolet says. "Why? Well, customers need to buy from someone. And that person has a better chance of understanding the customers' needs and requirements." One of the reasons she chose to focus on security back in the mid-1990s was because of the solutions-sales aspect of the market segment. Security, after all, is as much about people, processes and methods as it is about technology. And that realization has allowed her salespeople to participate in discussions where price is rarely mentioned.
Across the partner landscape, most companies are making changes great and small to their sales strategies. They are hiring new talent with different capabilities, deploying better sales technologies, including sales-force automation and customer resource management (CRM) software, and bringing in outside sales consultants to help advise on what to do next. They are also toying with sacred sales strategies, including basic sales-compensation plans. In some cases, the results of these changes have had remarkable impacts on companies.
In four years at DigiTerra, for example, Bill Geddy, director of client development at the Indianapolis-based company, has seen as many as six different sales-compensation plans. Geddy, who joined the company after 23 years in the U.S. Army, where compensation was an open secret, says all of DigiTerra's plans worked to some degree. But no single idea worked quite like the decision to spread individual sales professionals' commissions over an extended period of time. That made the company, which specializes in the sale of high-end Lawson software, more competitive than ever.
"Time was, we'd pay a salesperson their entire commission after a deal closed. But that led salespeople to make quick sales and then move on. It doesn't take into account long-term customer care and repeat business. Now we pay commissions in installments at time of billing. That has cut down on salesperson turnover while improving customer satisfaction. Referrals, too, are increasing," he says. For example, one large hospital customer of Geddy's has referred three different health-care facilities to him for new business. Although he has yet to cut the individual in for a part of any deal--a novel idea, he agrees--he has bought the person "quite a lot of steak dinners."
Those close to the channel with a window on many VAR strategies, note that there are significant differences in how companies approach sales. Contrary to what some may think, big, publicly traded companies don't have a corner on good ideas. "There are some incredibly sophisticated selling models that are used by some not-so-big [partners] that we would benefit from," says Bernie Dennis, group vice president of North American channels at Oracle. "And I've seen some traditional approaches, frankly, to a marketplace that we all know aren't working. It's a mixed bag and is not dependent on size." The better companies simply have a better way in which to position value in order to get customers to loosen up their budgets, he adds.
So how do they do it? Many have turned to outside experts for help. One popular method adopted by numerous companies is the Solution Selling strategy pioneered by Michael Bosworth. His book, entitled, aptly enough, Solution Selling: Creating Buyers in Difficult Selling Markets, makes the case that how a VAR goes to market and sells is every bit as important as what a VAR sells. The work has spawned a cottage industry of consultants and followers who are helping VARs grasp the Solution Selling concepts.
Mike Kenney, a principal with San Diego-based sales consultancy Bosworth & Kenney, is one of those who has worked with dozens of VARs helping them improve their sales methodologies. Among other things, Kenney, challenges his clients to give up the notion that they can rely on the verbal opinions of eternally optimistic sales managers when it comes to forecasting. Executive managers would be better off reviewing sales prospects individually and studying a customer's propensity to buy based on his or her current business needs. By taking the hype out of forecasting, Bosworth insists that companies can take better control of their sales cycles while shortening them, too. Among those who have benefited from such thinking is I.B.I.S. Inc., the 14-year-old Microsoft solution provider that is home to benchmark salesman Scott Vinson.
I.B.I.S. Inc. has been using the Solution Selling methodologies for eight years; company president Andy Vabulas credits the strategies for helping his business expand beyond various plateaus that had stunted the company's growth. The company has warmed to the Solution Selling practices so much that it has developed modules based on the principles for Microsoft CRM and other packages. Microsoft liked the software so much that it will give a copy of I.B.I.S. Inc.'s software away with its CRM software.
"We were cowboy sellers before, selling by the seat of our pants and going with a gut feel," Vabulas says. "Then we learned that there's a science out there."
The privately held, $8 million company figures it can triple its business in the next few years by continuing to follow the principles. If that sounds unrealistic, then consider that I.B.I.S. Inc. grew its business by $2 million last year in a down economy, selling a product whose suggested retail price was cut 35 percent. Instead of showing up and demonstrating a product, Vabulas now has his salespeople study what specific customers need. If they cannot come up with a bona-fide value plan, he doesn't have them make a pitch.
After convincing his salespeople to stop prescribing solutions before they had diagnosed problems, he then convinced them to start using common methods and terminology at every step. Those who refused were let go, and other top performers were brought in. Unlike others, Vabulas places no caps on his salespeople; despite the economy, some can make several hundred thousand dollars a year. That includes his top salesman, Scott Vinson.
"We made a decision to function as a tier-one company. So we went out and hired tier-one people from SAP and elsewhere. And we treated them as tier-one people and gave them tier one-level training. It's made all the difference in the world," Vabulas says.
Formulas and methodologies aside, some VARs are benefiting from practicing basic, proven sales techniques. Medeiros of rs-unix.com, for example, has his salespeople religiously follow the BANT principle, which says that before going after a deal, learn who has "budget" and "authority" to make a decision, and understand what that person's most immediate "needs" and "timing" are. "If you don't know these four things, you're better off taking a vacation instead of wasting 90 to 120 days worth of people's time and ending up with a goose egg," Medeiros says.
Sales expert Ken Thoreson, who has been hired by Microsoft to conduct sales seminars for its Certified solution providers, advises that VARs pinpoint ways to counter objections as they determine buyers' decision criteria. The president of Acumen Management Group, Thoreson has helped scores of VARs formalize their sales approaches. He advises clients to initiate multilevel contact with influencers inside sales prospects and not put all their eggs in one basket.
One last thing that has worked for some VARs: understanding their limitations. DigiTerra, for example, has walked away from $8 million opportunities that it honestly felt it could not win. "It takes a lot of $15,000 projects to make up for that," Geddy says. "But one of the most important things in sales is being honest and true to yourself about what you can realistically expect to get. Spending time and money on a deal that's not going to come your way simply is a waste of time."
And who can afford that at a time like this?
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