- 03 June, 2009 16:31
The economic downturn is being blamed for a lot of things, not least its impact on customer spending.
After many years of market buoyancy and prolific IT procurement, customers from all ends of the spectrum are buckling down in a bid to control or shift risk, and reduce costs. These market forces have left IT suppliers working harder than ever to get deals over the line and resulted in a need to “sell” again.
“In good times, people get lazy as the growth is there,” director at channel consulting firm Channel Dynamics, Cam Wayland, said. “The good companies are still performing today, as they have a strong value proposition.”
Director of third-party sales training organisation Organised Solutions, John Butel, said IT sales were down by an average of 30 per cent because of the downturn.
“Right now, customers are spending most of their money to keep IT going – about 60 to 80 per cent of spending is on those operational costs. But they’re not now spending the capital expenditure on top of that,” he argued. “[IT providers] have to help them reduce those operational costs by redesigning, realigning and reconfiguring.
“IT has not traditionally been too risk-oriented, so players have been squeezing bits of work here and there, but that’s not going to make a big impact long-term.”
Butel recommended business partners and their vendors position what they sell against the operational costs equation, and as the solution which will make the most difference to the customer’s business while saving some money in the short-term.
“How to consolidate costs to get through this period now is the focus for customers,” he said
Whichever solution IT suppliers present, the critical ingredient to keep bringing in sales is to demonstrate confidence and evidence of your own value, Butel said.
“I think [Barack] Obama [US president] has achieved it: He said ‘believe me and I’ll get you out of this’. Business partners can provide the right values with their strategies and solutions. They have also had exposure to what’s occurring in many other IT departments and can tell their customers what works and what doesn’t in whatever arena they are in.”
Co-director at Channel Dynamics, Moheb Moses, advised IT providers to be proactive around two things: Focusing on what they do best; and qualifying their customer base.
“Organisations have to be clear on what they do, and more importantly, what they don’t do,” he said. “There are lots of companies trying to find new business right now, and the approach is to contact more prospects. The outcome is customers are being bombarded left, right and centre. Providers need to be clear around why they’re good at it and why they’re cutting edge.”
Concentrating more on the things you do well also means letting go of the things you don’t, Moses said.
“If you’re putting more effort, investment or resources into those key areas of focus, you either have to get more resources, which no one is doing right now, or move resources from elsewhere,” he said. “It’s like running a share portfolio – you have to sell off the BHP shares to buy more Woolworths shares, or you have to find more money. “This is not an easy thing to do as there’s always that concern that you’re leaving business on the table. But customers are negotiating harder and angling for a lower price, so they will shop around for someone better.”
The second most important step was qualifying whether a customer was in or out, Moses said.
“Often when vendors talk about a reseller being qualified, it’s around resellers selling their kit. But I mean this in regards to customers: Are they a prospect, or should you move on?” he said. “There are a lot of customers out there who won’t have the budget, or a need for your product.
“Last year, you could find one business problem and sell a solution, but this year, that one need may not be enough – you may need to identify two or three problems to show a quicker return.”
As budgets are tightened and move up the executive chain, the person who signs the purchase order may also have changed. As a result, suppliers need to not only consider the needs of the IT manager, but also the CIO or other business executives. “It’s about asking more questions, more often,” Moses said. “You need more information and to be more insightful this year.”
More broadly, composing or reviewing the company position statement then ensures business remains on track regardless of the financial climate. “How do you describe yourself to stand out?
Often, when partners lose a deal, they have a loss review, but I think they should be having a win review when they have secured business,” Moses said. “It’s also important to get this in the language of the customer, so when you take this to another customer, it resonates more.” ---P---
The right solution
Solution selling has become a buzzword in recent years as technology products become increasingly commoditised, and as organisations look for business oriented tools to solve pain points. With the economic downturn, the concept is gaining renewed fervour as the best way to truly understand the customer’s business first and then adapt technology to suit.
Founder and technology specialist of SMB integrator Correct Solutions, Wayne Small, said selling solutions was important regardless of good times or bad.
“The reason it is so important is because it shows customers the total solution and the types of returns they will get on their investment,” he said. “Selling an entire solution, rather than taking a piecemeal approach, shows those returns upfront and then proves it works.”
The best thing an IT supplier could do was to think about what they want to achieve, then take that approach to the customer’s environment.
“Very few people like to be sold a product, they do want a solution,” Small claimed. “The challenge in the current climate is everyone is in for what they can make right now. You still have to look at the future and what will make that customer succeed. People who focus on good customer services now will be around for the longer term… this is what we’re doing as we believe it will keep the customer focusing less on the dollars and cents and more on the solutions we provide.”
Marketing and positioning
Hand-in-hand with sales strategies is marketing. In order for IT providers to sell their own value effectively, it’s important to understand their customer market intimately. Director of marketing and PR agency Raw Consulting, Sarah Hillier, said the economic downturn is triggering more demand for direct and strategic marketing activities and those that generate more immediate returns of investment.
She said Raw witnessed a recent increase in its B2B customers doing outbound sales calls.
“Make sure you are very focused and direct in the marketing activities as now is not the time for random activities that don’t show a report on your success,” Hillier said. “For example, billboards aren’t a good idea as it’s not as easy to measure that return as specific things to drive new customers.”
While bringing on new customers was integral to ongoing cash flow, IT providers also shouldn’t lose sight of their existing client base.
“There has never been a more important time to give excellent customer service than in the downturn,” Hillier claimed. “People are more focused in these times on what is being provided.”
For distributor, Express Data, one of the most successful marketing techniques was strong and consistent interaction with vendors and resellers to understand their markets, marketing director, Peter Masters, said.
“For most people, we’re certainly seeing more getting into market intelligence and what’s going on in the channel to target the right audience,” he said. “It’s about a lot more connections around hand-to-hand combat.
“To understand the right players and who wants to be dealt with in different ways... the key is personalisation of marketing..