Cost versus revenue

Cost versus revenue

How to sell solutions to customers has always triggered debate, but most believe identifying the business pain points is the first step in discovering what a customer’s IT requirements really area. IBM’s Joe Arcuri broke down customer buying behaviour into three areas: Growing top-line revenue, reducing bottom-line costs, and reducing risk.

“IT implicitly address two – we can easily reduce risk, and we can show how we reduce cost. The most difficult one for IT is how show a file server, or licence, is going to grow their revenue,” he said.

Guests at our Selling Solutions roundtable agreed IT providers could position their solutions around cost and risk reduction, but the focus on revenue improvement got mixed responses.

As the economic downturn filters through to all segments of the market, cutting costs is priority number one. In this context, Avnet’s Gavin Lawless argued IT suppliers didn’t necessarily need to address the revenue question.

“In the end, it’s all about how to make money, and bottom-line profitability. So how important is the discussion about not shrinking your bottom line, versus growing your revenue? Sure, your revenue is not growing, but how important is it I help you stay flat, rather than lose $10 million?” he asked.

“I’m not sure how many CEOs would take revenue growth, over cost reduction, at the moment. Over the next 12 months, I’m not that focused on growing my revenue – sure I don’t want to go down too much, but if you’re going to face reality in today’s environment, it’s cost reduction.”

But Avaya’s Andy Hurt argued different divisions within an organisation had varying requirements and would not necessarily respond to the cost reduction argument. In these cases, tying an IT solution to revenue growth was vital.

“Today’s priority about cost reduction is the highest priority. But if you speak to a sales manager, they’re absolute priority isn’t about cost – it’s about revenue growth and customer retention. So you’re still selling solutions that do that,” he said.

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