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More brain-and-less-brawn

  1. 1. More Brain, Less Brawn More Brain, Less Brawn 7 Strategies To Eliminating Ugly, Filthy Cold-Prospecting Grunt Work, And Have Top-Notch Prospects Come To You Ready For Business A Business Development White Paper For Premium Information Technology Companies By Tom "Bald Dog" Varjan 2010 “Here is Edward Bear coming downstairs now, bump, bump, bump on the back of his head behind Christopher Robin. It is, as far as he knows, the only way of coming downstairs, but sometimes he feels that there really is another way, if only he could stop bumping for a moment and think of it.” ~ A.A. Milne, Winnie-the-Pooh CopyrightT2010, TomW W W . VVarjan, A N . C O M H T P : / / “Bald Dog” A R J Page 1 of 1
  2. 2. More Brain, Less Brawn Table of Contents Foreword................................................................................................................................................ 3 Re-Defining Business Development In A Rather Pervert Way............................................................... 3 Five Reasons Why Buyers Avoid Meeting Sellers... ............................................................................ 4 To Bid Or Not To Bid - This Is The Question ........................................................................................ 9 So, Where Does The Bidding Cycle Flop Rather Miserably?............................................................... 13 Giving Up Chasing And Focusing On Attracting ............................................................................... 16 An Alternative Qualification Approach................................................................................................. 19 Nine Main Change Processes ............................................................................................................ 22 Some Considerations About Change.................................................................................................. 23 Introduction To The Business Development Gearbox....................................................................... 24 Neutral: Qualifying to Drive................................................................................................................. 25 …The First Gear Of Your Business Development............................................................................... 28 …The Second Gear Of Your Business Development.......................................................................... 31 ...The Third Gear Of Your Business Development .............................................................................. 32 ...The Fourth Gear Of Your Business Development ............................................................................ 33 ...The Fifth Gear Of Your Business Development ............................................................................... 35 ...The Reverse Gear Of Your Business Development ......................................................................... 35 Summarising The Gearbox Concept................................................................................................... 36 Transforming A Peddler Army To A Business Development Commando ........................................ 37 Armies Of Duck Hunters Or A Commando Of Snipers ........................................................................ 38 Combining Duck Hunters, Snipers, Hunting Grounds And Watering Holes..................................... 41 The Traditional “Duck Hunter At The Hunting Ground” Type Business Development Model... ............. 42 High-Leverage “Sniper At The Watering Hole” Type Business Development Model... ......................... 43 The Commando Approach To Business Development........................................................................ 45 Comparing Hunting Ground And Watering Hole Type Business Development ............................... 47 Putting Together The Pieces Of High Leverage Business Development.......................................... 50 On Summary........................................................................................................................................ 53 About The Author ................................................................................................................................ 57 Notice Here and there you may find words in this document that are spelt differently from your way of spelling. Words like colour, honour, favour, realise, which you'd spell as color, honor, favor and realize. Being educated in the UK, I speak and write in British English, the so-called Queen’s English, which is a bit different from English used in other countries. However, there may well be some genuine typos and spelling errors, so feel free to let me know. Thank you and happy reading. You’re free to pass this document on to your friends, colleagues and associates who are involved in business development. Copyright 2010, Tom “Bald Dog” Varjan, Page 2 of 2
  3. 3. More Brain, Less Brawn Foreword D o you remember the type of car the Flintstones drive? Yes, the Flintstone-mobile. What is it powered by? Yes, it is powered by 20 toes. This is what Fred and Wilma jointly contribute. And what is it stopped by? Well, by the same 20 toes. Where is the problem here? Fred and Wilma are working far too hard to reach their goals much more slowly and ineffectively than they could with the help of an engine. And this is how business development works in so many IT companies. When executives decide they want to increase their companies’ sales in the following quarter or year, they usually try to achieve this by doing more of the same, that is, what they’ve always done but doing it harder and longer, including... • ...putting more feet on the streets to chase prospects harder and longer • ...putting more fingers on telephone dialling pads to make cold calls • ...putting more knuckles on doorsteps to knock or bang on more doors • ...inventing new tricks to wrestle with gatekeepers • ...memorising 1001 more closing techniques Basically, doing the same thing but doing it harder and longer using more people and new tricks. Sadly, over the years this “hunker down and try harder” approach from salespeople have created a response from buyers: They do their level best to avoid salespeople like the plague, and it seems the situation is getting more and more extreme with the more extensive usage of the Internet. And this has led to... Re-Defining Business Development In A Rather Pervert Way... As opposed to systematically attracting qualified buyers using art, science, research and finesse, over the past few decades business development has become a haphazard pursuit of apathetic and reluctant suspects using muscle, headcount and sheer brawn power. In plain English, systematic business development has become forceful selling. What buyers want has become secondary, and the main goal now is to hit the numbers and make quota. Copyright 2010, Tom “Bald Dog” Varjan, Page 3 of 3
  4. 4. More Brain, Less Brawn Many years ago Peter Drucker put it this way... “Foreign managers take marketing seriously. In most American companies marketing still means no more than systematic selling. Foreigners today have absorbed more fully the true meaning of marketing: Showing what is value to the customer.” Instead of offering valuable bits and bobs to the marketplace to attract them to the point of doing business with sellers, what most sellers can offer is more aggressive and commission-hungry salespeople, higher quotas and 1001 more manipulative closing techniques to squeeze as much money out of the market as quickly as possible. Sellers have lost their patience to walk buyers through their buying processes, and now they try to squeeze them into their retarded selling processes. When I was a buyer, I received lots of almost identical voice mail messages from sellers... “I’m Fred Cringingnuts from the Geriatric Giggles Granny Hurling Corporation. I’d like to get together with you to learn more about your business and show you how our state-of-the-art, robust CRM system can increase your sales. Can we get together on Monday at 2:00pm or is Thursday 10:00am better for you?” And that was in the mid-90s. Since then buyers have become even more protective of their time and keep aggressive, don’t- take-no-for-an-answer peddlers out of their hair in more innovative ways. For instance they ditch them into purchasing black holes like RFPs or purchasing departments. Buyers also make sure they sprinkle the road to purchasing hell with heavenly sweets, so unsuspecting sellers walk all the way to the end where the purchasing folks slowly and methodically torture them to death with multiple dazzling PowerPoint shows, price concession demands and multiple re-writes of proposals. While this may sound harsh, over the years I’ve found... Five Reasons Why Buyers Avoid Meeting Sellers... That’s correct. Buyers are sick to their back teeth of wasting their precious time and energy on salespeople who are pitching almost identical doodads in almost identical ways. Buyers are looking for business solutions to their business problems, but salespeople keep pitching technical solutions. It seems, most IT companies are selling IT for the sake of accumulating more IT stuff on the buyer’s premises. And since buyers can obtain all the technical information they need without meeting salespeople, they avoid salespeople and do their due diligence on the Internet. 1. Buyers Are Worried About Meeting Hyper-Aggressive, Hard-Nosed, Manipulative, “Don't Take No For An Answer” Salespeople Copyright 2010, Tom “Bald Dog” Varjan, Page 4 of 4
  5. 5. More Brain, Less Brawn Just take a look at sales career ads, and discover the character traits companies are looking for in salespeople: Aggressive, persistent, able to handle rejections, good hunter, have a bulldog mentality: Never let prospects go, etc. As long as salespeople’s mantra is about “hitting your numbers” and “making quota”, buyers will always have a truckload of unease to meet sellers. And they will do their best to avoid salespeople. And even if they buyers meet salespeople, buyers will be on their guards and keep up their defences in various forms, like... • Withholding vital information from sellers. What this means is that sellers have no chance in hell to offer to exactly solve clients’ problems because a large part of their work is guessing • Disallowing human contact between buyers and sellers => See the dysfunctional RFP process • Evaluating solutions based on cost not on expected ROI • Sellers and their solutions are screened by bureaucrats with little or no subject matter expertise. Engineering and medicine are clear-cut scientific disciplines. Purchasing is not. Actually most people in purchasing have neither technology nor business education. Realistically they’re bureaucrats. 2. Buyers Can Obtain All The Information They Ever Need They don’t need to speak to salespeople any more. All they have to do is to go to Google the service they’re seeking, select the company that is perceived to be the best, and initiate contact. Read it again... The buyer seeks out the seller with the intention of doing business together. Is it fair to say that this is a more powerful dynamic than when sellers seek out buyers and peddle their services? The harder salespeople force the appointment, the more buyer resistance and resentment they create for themselves. And they make a mess of the company’s reputation by being pushy. Just think of some industries and their pushy salespeople like multilevel marketing and car salespeople. 1 3. Buyers' Plates Are Already Full Of Mission-Critical Initiatives Buyers are already working on mission-critical issues and are already pretty busy. Actually the average buyer has 59 hours of “urgent” work on her desk at any one time. If you add to this that a typical B2B sale over $10,000 involves 22 decision-makers on the buyer’s side alone, you can see what sort of proverbial concrete wall companies banging their heads against by practising cold prospecting. 1 I’ve read somewhere that the typical B2B buyer has some 59 hours of urgent work on her desk, desperately waiting for her attention. Copyright 2010, Tom “Bald Dog” Varjan, Page 5 of 5
  6. 6. More Brain, Less Brawn And add some more interesting, well, rather scary facts. A typical B2B sale over $35,000 takes 5.12 sales calls to close. That’s great but the problem is that, on a weekly basis, typical B2B buyers take 4.61 telephone calls and grant 1.81 in-person meetings with salespeople. Can you imagine how many of your competitors are vying to get one of those 4.61 phone calls and one of those 1.81 meetings? One a weekly basis, a typical buyer receives over 50 sales calls, and each caller tries to push the buyer into a nasty dark corner and pin her down for an appointment. So, buyers have become pretty apathetic towards sellers. And you may have dozens of competitors targeting the same buyers, so as a result of the barrage of peddlers, buyers do anything to protect their sanity. In the best case, they redirect sellers to purchasing agents and other peddler fodders or simply ignore message s altogether and delete them. Buyers that are worth accepting as clients always have some vital initiatives going on to improve their businesses. They are working on what they perceive as the “next breakthrough” thing, and they are very protective of the little time they have available. So, when peddlers manage to infiltrate buyer’s defences (bypassing the dreaded purchasing departments or gatekeepers), buyers are very careful to sacrifice their time to spend it in the company of an unknown person, well another bloody peddler who is likely to pitch what 10 other peddlers have already tried to pitch during the same week. 4. Buyers Are Sick And Tired Of Sales Presentations In spite of its gross ineffectiveness, most high-tech companies still base their sales success on almost identical dog-and-pony show type presentation. The presenter steps up on the stage, grabs the microphone, the remote control for the projector for his 101 PowerPoint slides, gets the spotlights on himself and starts preaching to the audience. In 10 minutes audience members are bored out of their skulls and plain courtesy is the only thing that holds them back from walking out and sending the presenter home. So, they courteously nod and yawn through the presentation in case there are some good points which they can take to the current or the already selected consulting firm. At the end of the presentations our presenters receives some encouragement from the audience members and is sent on his way home with the instructions, “Don’t call us. We’ll call you”. But of course, the call never comes. A few weeks later our presenter musters up some courage and makes the call. And a reluctant, cynical, apathetic voice on the other end of the line tells him, “We’ve already selected a firm for this engagement, but we’ll keep you in mind for upcoming opportunities.” Remember, while real buyers are bone honest (in most cases), flunkies tend to be courteously deceptive, and a bit of lying here and there is just part of the job. Copyright 2010, Tom “Bald Dog” Varjan, Page 6 of 6
  7. 7. More Brain, Less Brawn Let’s face it, due to its “sell -> solve -> implement” nature, consulting services cannot be presented. So, what then? Selling Like Doctors - The Art And Science Of Diagnosis In contrast to the one-way preaching nature of presentations, diagnosis is a collaborative process of determining the root cause of a specific undesirable situation. It’s a kind of self-discovery and self-exploration. The situation is real because clients are experiencing them on a daily basis. There is no guessing, no speculation about what happens in the future. This problem is here and we have to solve it somehow. The dictionary definition of facilitation is to make easier; to bring about, to bring forth what’s already there. Id a way it’s similar to the definition education [Latin educare]: To bring forth, to bring out what’s in there (well, in people’s heads). In contrast training is about stuffing more into people’s heads. Maybe this is why Maya Angelou has written... “We train animals abut educate people.” Unfortunately schooling has shifted from education and has become training, but this is the subject of a different white paper. Facilitation is practised through... • Guiding and coordinating the conversation process • Giving instructions • Questioning and listening • Paraphrasing to clarify • Giving and receiving feedback • Building agreement in groups In presentations presenters stand up, separate themselves from the audience and perform to them. In facilitation the facilitators stay seated and blend into the group. In a way presenters and audience are the same people. Everyone’s comment, that is, solo performance, dovetails into the previous comment. Presenters steer their conversation in a pre-set direction fitting into their agendas. Facilitators have no pre-set direction because they have no agendas. If everyone presents its hard to differentiate between presentation and presentation. And one more point. Many years ago, Margaret Thatcher, the former British prime minister said... “Being powerful is like being a lady. If you have to tell people you are, then you aren't.” This is the problem with presentations. If you have to assert how good you are, then every time Copyright 2010, Tom “Bald Dog” Varjan, Page 7 of 7
  8. 8. More Brain, Less Brawn you assert it, the buyer’s bullshit filter jumps into overdrive and filters out half of your message. In diagnostic facilitation it’s the “deepness” of your questions that establishes your expertise and credibility. But it also establishes many other factors that are necessary for decision-making. 5. Buyers Are Missing The Peer-Level Match Buyers, most often high-level, highly trusted and respected and reliable folks, don't have peer- level relationships with the seller company's lowest level, least trusted, least respected and most rapidly coming and going people: The sales force. And here is another discrepancy. Executives are watching out for the long-term success of their companies. Salespeople are looking for the next sale as quickly as humanly possible. Since they’re on commissions, they need quick money to make the next mortgage and car payment. Tom Stevenson and Sam Barcus write in “The Relationship Advantage: Become a Trusted Advisor and Create Clients for Life”... An IBM area sales vice president from Dallas was sitting in the audience at one of our sessions a few years ago. When we offered our description of how partnerships conduct the Perform-Manage- Sell model, he approached the front of the room, turned our flip chart of the Pyramid upside down, and then returned to his seat. Stunned, I asked him why he did that. Pointing at the upside down chart, he replied: “That's us! The first thing we ask new employees in my organization to do when we hire them is to sell! We delegate the responsibility of acquiring relationships to these people, and our top managers assume very little accountability for executive relationships. We have no objective way to measure the quality of relationships they build. We only measure their quota performance. If they make quota for a few short years, we promote them and let them manage. I can see now why we are so overmatched when we encounter consultants in our accounts. Here are some considerations when sellers of high-tech consulting services met buyers... • Prospects want to meet respected experts, not glib, glad-handed salespeople Copyright 2010, Tom “Bald Dog” Varjan, Page 8 of 8
  9. 9. More Brain, Less Brawn • Prospects want to assess chemistry with experts before hiring them • Prospects expect to have a rough idea of what engagements cost • Prospects have questions and need real answers not vague manipulative guesses from salespeople When high-tech consulting firms ignore the above five reasons why buyers don’t want to meet sellers and choose the old-fashioned perseverance-based “try harder” sales approach, they usually bump their heads into the nasty concrete wall of competitive bidding. So, how should we define strategic business development as something different from forceful peddling? In my opinion it’s a process of guiding self-qualified prospects through their buying cycles and helping them to make two decisions... 1. Whether or not to go ahead with a planned initiative to seize an opportunity or eliminate a problem 2. If going ahead, whether going ahead with us or someone else And now paraphrasing Shakespeare let’s see if we ought... To Bid Or Not To Bid - This Is The Question The comparison may sound rather oddball, but I think RFPs are like flypaper. As a kid, I spend most of my summers with my grandparents on the countryside, where - partly due to the large amount of animals - there were lots of flies. And when these flies got inside the house, they could wreak pretty serious havoc, so it was vital to keep them out, or kill them when they got inside. Yes, you can kill flies by chasing them with a rolled up newspaper, but it requires too much effort and the effectiveness is very low. So, village people would hang flypapers on the ceilings of their homes, especially in their kitchens, and the flypapers would attract and catch all the flies in the house. In the business world, RFPs are like flypapers. Or as Frank Zappa explained to us many years ago in his song, entitled The Torture Never Stops (from his 1991 album, You Can't Do That On Stage Anymore Vol. 4) Flies all green and buzzin' In this dungeon of despair Prisoners grumblin Piss they clothes Scratch their matted hair A tiny light from a window-hole Copyright 2010, Tom “Bald Dog” Varjan, Page 9 of 9
  10. 10. More Brain, Less Brawn Hundred yards away That all they ever get to know 'Bout the regular life in the day 'Bout the regular life in the day He stinks so bad, stones are chokin' Weepin' greenish drops In the den where The giant fire puffer woiks And the torture never stops The torture never stops, torture The torture never stops The torture never stops On the surface RFPs look exciting and enticing, like flypaper from a distance. But when flies get stuck to them, they die slow and agonising death in that hanging dungeon, where the torture really never stops as long as there are flies to catch. And this is how so many IT companies fall for RFPs, and land in the stinky dungeons peddler fodder departments. And by the time they realise it's a trap, it's too late, they're up to their eyebrows in sticky legalise and unreasonable demands from price-obsessed purchasing agents. This bidding game tells a lot both about buyers and sellers. A few years ago a study by McKinsey found that... 75% of solutions don’t return a profit to sellers 50% of solutions don’t deliver the expected value to buyers In bidding wars bidders are forced to strip their services off of any unique value, so they can play buyers’ “level playing fields”, that is, they can be cheap enough to be considered. Just think about how many people NASA has killed over the years by hiring the lowest bidders. Engineers predicted both the Challenger (8 killed in 1986) and the Columbia (7 killed in 2003) disasters. Both were caused by “lowest bidders.” Engineers knew it but they were carefully gagged. So, this is how a typical RFP process goes... 1. Buyer searches for possible solutions and service providers on the web using Google 2. Buyer settles with a specific company 3. Buyer gathers information on the selected company 4. Buyer and seller agree on price and terms 5. Buyer issues an RFP to find some competitive(ly low) bidders - This is the point where most of the players join the game. Copyright 2010, Tom “Bald Dog” Varjan, Page 10 of 10
  11. 11. More Brain, Less Brawn 6. Buyer uses low bids to pressurise the selected company to drop fees and prices (Truly good companies tell buyers to shove their opportunities up their arses) 7. Some poor suckers actually respond to the RFP and submit their proposals, hoping that it’s a real opportunity 8. Buyer makes a shortlist of some poor suckers for further brain-picking, called the sales presentation 9. Buyer invites some salespeople to present their solutions. The audience of these presentations are usually mid-level opinion-makers and lower-level flunkies without decision-making authority and budgetary power 10. Anticipating manipulative presentations, audience members put on their “sales filters” designed to separate value from bullshit 11. Audience members passively watch and listen to the free “entertainment” and carefully filter the message 12. The buyer grades the presentation and the presenter. 13. The buyer’s decision is based on criteria the buyer established days or weeks before the presentation in the absence of salespeople! And most presenters don’t even know these criteria. They present blindly. When salespeople submit proposals in response to RFPs, they are not exactly selling anything. They are merely begging for attention. It’s a kind of reverse auction: The auctioneer shouts... “Who can do it cheaper?” And frenzied salespeople try to out-scream each other... “Me! Me! Me!” Then one winner, more often than not, the lowest bidder is selected. And for the rest of the engagement, this poor bastard suffers from the winner’s curse: In their frenzied zeal, bidders underestimate the cost of rendering their services. In order to win the bid, salespeople underbid each other so badly, that even if they win the contract, they end up losing money on it. So, eventually, the winner ends up being the biggest loser. Why? Because as we all know, RFP bidding wars are about low price not high value. On the seller’s side, responding to RFPs is a retarded approach to acquire high-calibre clients with high-margin, sexy projects, because these buyers don’t buy complex, high-ticket IT solutions by the pounds, like potatoes. They don’t issue RFPs. They are smart enough to understand that IT is a complex business and it’s a relationship business, and to find the best service provider, they ask around among their friends and, an increasingly more often, buyers go to the Internet and punch some keywords in Google, and do their due diligence without even talking to anyone. Yes, the Google search outweighs word of mouth referrals. 93% of business prospects go online to research upcoming purchases and 69% of business Copyright 2010, Tom “Bald Dog” Varjan, Page 11 of 11
  12. 12. More Brain, Less Brawn prospects turn to search engines as a first step2. Forbes magazine has asked corporate executives what they consider to be their number 1 source for information. 85% of all respondents said the Internet and the search engines. And these three facts alone are enough to refute the validity wasting time on RFPs. And on the buyer’s side issuing RFPs is a disaster because it leads to hiring someone from the mediocre lot that can do the project at a competitive(ly low) price but the quality, budget and deadline are likely to suffer. So, here we have to change our mindsets from chasing RFPs to market positioning that allows IT companies to attract buyers who have already qualified themselves using the seller company’s automated “stay in touch system”. Why is this important? Neck-and-neck with cold-calling, responding to RFPs is probably the least effective way of acquiring clients. So, why do so many IT companies do it then? Because it’s cheap, easy, traditional and doesn’t require serious thinking. It’s just a matter of repeating what we did yesterday, and doing it again and again till the end of time. And not even the pathetic response rate and the relentless price objection can motivate IT professionals to search for a more effective approach. And though these firms end up like the hamster in the wheel, they rather keep running than changing their approach. But this endless running comes with some grave consequences... • Average salespeople spend some 71% of their time prospecting because their marketing departments fail to provide them with qualified leads. The remaining 29% is split between selling, attending company meetings, handling paperwork, travelling to and from appointments and advancing their skills 3 • Some 90% of prospects are not intending to buy now. Actually most of them are tyre- kickers and bargain hunters4 • One face-to-face sales meeting costs some $350. An out-of-town meeting costs over $1,0005 So, everyone is chaotically busy and gets busier by the day. Nevertheless, in this shuffling sales madness, between 40% and 80% of new sales leads are lost, not followed up upon, or otherwise 2 Internet Marketing Report 3 Dartnell 28th Sales Force Compensation Survey 4 The Gartner Group 5 McGraw Hill Copyright 2010, Tom “Bald Dog” Varjan, Page 12 of 12
  13. 13. More Brain, Less Brawn 6 mishandled. Yet, most IT companies’ response to this problem is doing the same again and again, but doing it harder and longer... More feet to pound pavements, more knuckles to knock on doors and more fingers on dialling pads. Paraphrasing Thomas D. Dee Professor of Organisational Behaviour, Stanford Graduate School of Business, Jeffrey Pfeffer’s quotation... “What kind of doctor would you be if your patient was bleeding faster and faster, and your only response was to increase the speed of the transfusion?” ... “What kind of business owner would you be if your profits were eroding faster and faster, and your only response was to hire more salespeople to increase the speed of peddling? If you feel like the proverbial hamster in the wheel with regards to your business development, running, running and still running to hunt down new business, using brutal pavement pounding and telephone dial pad banging grunt work, then maybe this white paper is exactly what the doctor has ordered. All right, not really the doctor but the embalmer that I was many years ago. Well close enough. Both are - sort of - medical professionals. So, Where Does The Bidding Cycle Flop Rather Miserably? There are three change processes at work simultaneously. One is running in the buyer’s head (Thinking). One is running in his hands (behaviour). And the third one is running in the organisation, called the buying process. In the behavioural change area, the model developed by Dr. James Prochaska and Dr. Carlo DiClemente is broadly recognised and applied to how human beings change. So, let's see the stages of change... Thinking change process Behavioural change process Organisational change process 1. Consciousness Raising: Stage 1: Pre-contemplation - Early Stage This stage involves providing Blissful Ignorance. At this and gathering information point people are not convinced about the unsafe nature of the they need to change at all. current behaviour and the Definitely no change is in the positive impact the new pipeline within the next six 6 The Yankee Group Copyright 2010, Tom “Bald Dog” Varjan, Page 13 of 13
  14. 14. More Brain, Less Brawn Thinking change process Behavioural change process Organisational change process behaviour can offer. months. Step 1. “Disturbing” buyers’ comfort with various educational pieces. 2. Dramatic Relief: In this stage people identify and express their emotions regarding the risk inherent in the change process. By Stage 2: Contemplation - expressing their emotions, Sitting On The Fence. they actually relieve Convinced but not committed. Step 2. Buyers make a mental themselves of the burden of Change is planned within the commitment to change the old habits. next six months. Uncertain whether or not to change. Not considering change within the 3. Environmental Control: next month In this stage people evaluate how the change will impact people around them. This is Middle stage when smokers start thinking of their children's health in their smoked-up homes. They reconsider social norms and establish themselves on a new moral footing. They start Stage 3: Preparation - Testing Step 3. Buyers start exploring listening to other people's The Waters - Making a plan to possible solutions (start opinions. make the change within the searching on the web) next 30 days. Some behavioural changes have 4. Self Re-Evaluation: This is already taken place. when people re-assess their whole situation. Step 4. Buyers committing to 5. Commitment: Here people specific a solutions feel a certain level of inner encouragement, and they realise they can do this and Stage 4: Action - The change make the change. has taken place in the past six months. Already in the 6. Social Liberation: Here process of change. Copyright 2010, Tom “Bald Dog” Varjan, Page 14 of 14
  15. 15. More Brain, Less Brawn Thinking change process Behavioural change process Organisational change process people seek out other people Late stage with similar problems and by becoming change mentors to others, they guarantee their own successes. Stage 5: Maintenance - Step 5. Buyers build their 7. Helping Relationships: Forming a habit after the business cases to justify Setting tighter relationships change has been made for their decisions with people who need help. over 6 months. Continued commitment to sustaining new behaviour. 8. Reward: This is a reward system contingent of the sustained new behaviour. Step 6. Buyers gain the needed support for the change, 9. Countering: Here people select solution providers measure the "for" and Stage 6A: Termination - and move forward "against" of the change. The Leaving the past behind and key is to keep the balance in living in the new world with favour of the "for". no danger of ever returning to the old habits. And sometimes... Stage 6B: Relapse - "Fall from grace" - Resuming old behaviours. This time the change didn't work out. Back to square 1 and start again. The problem is that RFPs are issued just before Step 6, so bidders, by definition, ignore steps 1 to 5. By step 6 the buyer has selected the solution provider, and the RFP is often just used to gauge the accepted solution and the solution provider. Yes, some shithead buyers use the collected proposals to pressurise sellers to drop their prices or else..., but these buyers should be abandoned to their fates. As we learnt it from James Bond many years ago... “Live and let die.” The good news is that steps 1 to 5 can be done 100% on autopilot. It takes bit of upfront work but the system is yours and you are not in the mercy of salespeople coming and going, taking Copyright 2010, Tom “Bald Dog” Varjan, Page 15 of 15
  16. 16. More Brain, Less Brawn your company’s best clients with them. Human involvement comes in at the end of Step 6 when buyers are definitely ready to buy. Vendors in pursuit of the quick buck join in at Step 6. Smart sellers start from Step 1 and patiently wait until buyers are ready to move forward. Now some people may say this sales cycle is pretty long. Well, it depends. If it’s automated, you don’t even realise what’s going on. But if each step requires human effort, any sales cycle is too long. I’ve just started working with a company whose VP of marketing joined my newsletter three years ago. And the company has just become a client. Would you say my sales cycle is too long? Maybe. But I’ve never invested any special effort in this company. My newsletter goes out to some 4,000 small and medium sized IT companies world-wide, and he is one of the subscribers. To me the sales cycle started when, after reading my stuff for four years, he contacted me out of the blue and sent me the money after three emails and we started the project. I didn’t do a dickybird of selling. So is my sales cycle four years or a few hours. I suggest it’s the latter. Now we know the insidious effects of participating bidding wars. Now, some people may say, if the bidding process were so bad, no one would use it. This is what I'm thinking. The bidding process was invented by governments with the intention of getting bidders at each others’ throats, and the last one standing, a.k.a. the lowest bidder gets the contract. Governments all over the world are famous for their innate corruption, dishonesty and an obscene obsession with price competition. Should we really model an example from an institution that are is riddled with incompetent nincompoops who would starve to death in an entrepreneurial world, where the mantra is fair value exchange? The way governments stay alive is by "over-regulating" the entrepreneurial world, and redistributing the wealth the entrepreneurial world creates. And redistributing a lot to themselves. So, what the sausage can IT companies do then? I believe, first they have to consider... Giving Up Chasing And Focusing On Attracting And here we have to consider how we qualify and disqualify buyers. Why is the disqualification bit important? Because, on average, IT salespeople spend a whopping 27% of their times to disqualify buyers who erroneously ended up in front of them in the first place. This is sad because these buyers could have been disqualified by the seller’s lead nurturing system without any human effort. At least, the 27% could be reduced quite significantly. When we put valuable information onto the marketplace, sooner or later we start receiving Copyright 2010, Tom “Bald Dog” Varjan, Page 16 of 16
  17. 17. More Brain, Less Brawn various responses from the market. It’s like fishing really. You bait your hook, and depending what bait you use, and where you fish, you catch different fish. If you fish in a river and bait your hook with a hunk of pig liver, you are likely to catch pike but definitely not carp. If you fish in sea, the same bait gets you some sharks but not some plant- eating fish. So, we have two ingredients to the fishing equation: 1. The location where to fish 2. The bait to use to attract the right fish And we select both the location and the bait according to what we want to catch. That is, we create a “Perfect Fish Profile”. If I like pike but don’t like carp, I go to the local lake, NOT to the ocean, and bait my hook with a piece pig liver, NOT with corn. Pike love liver, but can’t stand corn. The corn is food for carp. Also, pike don’t live in the ocean. They are sweet water fish. Knowing all this, I can now formulate a pike catching strategy that is likely to land some nice pike on the dinner table. Then I go fishing, cast my line with a piece pig liver on the hook, and that’s all. I don’t have to run around chasing fish one by one. I just wait and let the fish come to me. The fish will indicate pretty clearly when it’s ready for the bait, that is, to do business with me. Well, it’s a rather miserable business for the fish, but for me it’s a great dinner. So, direct response marketing is like fishing. Well, direct response fishing. It is my fishing system that qualifies the fish, including the location, the bait, the strength of the rod, the line and the hook. Business development is pretty much the same... And then when your enquiries come in from the marketplace, your business development system must be ready to qualify them. So who qualifies these enquiries and how? In many IT companies, enquiries from chunks of warm meat with a wallet and a pulse beat warrant appointments and the submission of proposals. That’s why the typical proposal acceptance rate is lower than 10%. Sales and marketing departments have different qualifying criteria. What usually happens in business development is that marketing defines the ideal client profile, and then the sales folks go and start collecting prospects. But the problem is that there is a discrepancy in their compensation structure. The marketing folks are paid salaries, whereas the sales folks are paid a commission. What that means is that sales folks are compensated for Copyright 2010, Tom “Bald Dog” Varjan, Page 17 of 17
  18. 18. More Brain, Less Brawn instant results, so, they don't have time to fiddle around with ideal client profile and similar nonsensical minutiae. They want to make money and see money in their own piggy banks... Right now. So, salespeople’s qualification criterion is the well-known BANT. That is Budget, Authority, Need and Time frame. The problem with this model is that it is 100% self-centred and pretty superficial. The message is that... “We accept anyone with a pulse beat a wallet and a need.” Budget Salespeople have to make sure prospects actually have the budget for the proposed solution. But buyers often are reluctant to share the budget because they are worried that if they share this piece of information, then salespeople try to sell them something... anything that is very close to the absolute upper limit of that budget. Just think of a typical computer retail shop. You go in and state you're looking for a computer. The salesperson's first question is, “What sort of budget do you have in mind? If you're a bit rusty on recent computer prices, and give an over-generous budget, the salesperson will fill it in for you by trying to sell you the most expensive computer you don't need but your budget can handle. A good few years ago I was shopping for a digital recorder at a musical instrument store. This was before digital dictating machines. I told the guy that I needed the recorder to record my speeches, but he kept pushing me higher up on the price ladder, saying how extensive percussion and keyboard sections I could have on the more expensive model. He tried to maximise my budget by trying to sell me something I didn't want and didn't need. Well, but it would have been great for his commission. Authority Salespeople have to make sure they talk to the person who can sign the contract and initiate the project. But a lot of time is wasted because salespeople falter on this puppy, and if they can't see the economic buyer, they go and see someone at lower levels. Also, it's more convenient to discuss possibilities with lower level managers. But the problem is that they can't initiate the project, so all the time is wasted. In selling big-ticket technology solutions in the B2B world, there are usually several people who are involved in the decision-making process. Actually over $10,000, there can be as many as 22 decision-makers on buyers’ sides. Need Need is the other part of the qualification process. But it can be very misleading. Personal trainer: Fred, you're 450 lbs with a resting heart rate of 95 beats per minute. You need to lose some weight or, based on statistics, you run a 31% (just made up this number) risk of being killed by your heart. Personal training prospect: Yeah, but I'm not ready and willing to change right now. Personal trainer: When then? Copyright 2010, Tom “Bald Dog” Varjan, Page 18 of 18
  19. 19. More Brain, Less Brawn Personal training prospect: I don't know. Some day, but not now. Complex sales situations are the same. Many companies may desperately need your stuff, but are they ready and willing to change, and start using your stuff instead of staying with the status quo? The need is a very shaky qualification point. And if you try to make them buy, using traditional manipulative techniques, you can get kicked out permanently. Time Time also has a lot to do with companies' willingness to change. Have they reached a point in their existence when living with the status quo is more painful then kicking it all over and building a new situation, if necessary, from scratch? Maybe. Maybe not. The typical B2C sales cycle is 1 to 60 days. In contrast, the typical B2B sales cycle is 30 days to 2 years. SiriusDecisions7 also reports that, during the last five years, B2B sales cycles have stretched by 22%. In the B2B world, most prospects are long-term buyers. Only 13% of all enquiries buy within 90 days. 45% buy within 12 months. And 42% buy beyond 12 months. And the sales cycle is like lovemaking. If you try to rush it, you can easily ruin the experience pretty badly and often forever. According to Wellesley Hills Group's research, 53% to 88% of B2B buyers are willing to switch to new solution providers. So, as you see, even your own clients are pretty fickle, and the ones that are still only considering being your client are even more so. You have to be very careful with them. So, we can see that just because buyers have budget, authority, need and time, it doesn’t mean they are ready to change. Yes, you can send out a peddler to try to convince this buyer to buy your stuff by using 1001 closing techniques, but in most cases this approach can only upset buyers. Yes, on the surface of it, you may make good money with this approach on each of your projects. The problem is how profitable projects really are, and what you actually keep after paying your expenses. Also, consider how sexy and exciting your project are, and how pleasant to work with this client. There is not much point in accepting jerk clients regardless of the money they are willing to pay. An Alternative Qualification Approach The reason for changing the buyer evaluation process lies in the major differences between marketing and sales. In most companies marketing folks are paid salaries and sales folks are paid commissions. This happens because management wants to single out a group of people who are single- handedly responsible for the company's success, and when something doesn't go according to 7 2005 Sales and Marketing Benchmarking Study Copyright 2010, Tom “Bald Dog” Varjan, Page 19 of 19
  20. 20. More Brain, Less Brawn plans, the salespeople can be blamed and fired. Personally I think this is a rather dirty practice by incompetent managers and executives who shift blame on a group of frontline warriors who simply implement what comes from high above. When managers say... “We pay our salespeople for performance!” ...they automatically admit, that salespeople are the only people in the whole company who are accountable for their work. All the others can come and go as they please, chat by the water cooler and sip their coffees all day and get away with it. Only sales folks get punished when the monthly quota is not reached. Because of this difference, marketing and sales qualify opportunities differently. Marketing folks can be more objective about the qualification process because they are on flat salaries. Sales folks have to sell something... anything to someone... anyone or they don't eat. With this, they have an emotional engagement in every opportunity, and want to turn that opportunity into commission. I've mentioned it several times and mention it again, that I firmly believe that paying commission for sales folks is a coward act from management and ruin any possibility of collaboration between marketing and sales. The two different compensation methods create two clearly separated silos in the company, and none of them can operate at top performance. When marketing starts with a new lead, it has to be qualified according to marketing specifications. Later when the lead has reached that point, the BANT method may come into the equation, but first we have to find an alternative. So, what qualification system can we use that is more long-term focused? B2B direct marketer, Russell Kern of the Kern Organization suggests the APNRP method which was developed by Bill Hell of CMP Media. It stands for Attributes, Position, Need, Readiness and Preferences The shift in qualification is important because salespeople must know where these leads are from Marketing's perspective. Also, it's vital that Marketing passes the leads on to Sales at the right point in the nurturing cycle, and those leads are ready for the next step. Using the language of lovemaking, if you go south too soon, then you miss out on some of the greatest bits and bobs of the exercise. I leave the rest up to your imagination. So, let's see these new qualification criteria... Attributes Is this lead a definite match against our Perfect Client profile? Can we see a possible fit for working with this client? The whole idea is that the lead starts out the nurturing process at marketing, the department that generated it. But will this lead be nurtured at all or will it be abandoned right away? This is why the lead's attributes are checked against specific, pre-determined criteria. At this point a rough match can also be made as to which of your company's services this lead is likely to need. Copyright 2010, Tom “Bald Dog” Varjan, Page 20 of 20
  21. 21. More Brain, Less Brawn Position Can this person make a go/no go decision and does she have the authority to sign a cheque for it? We've talked about different buyers. This must be the economic buyer. While the Attribute was about the company, Position is about the person associated with the lead. While there are user buyers and technical buyers in most B2B sales processes, there is one economic buyer with her hands on the purse strings. She makes the final buying decision. Yes, there will be several people evaluating your offer, but what really counts is the economic buyer. Need Does this lead have a clearly defined symptom it suffers from? This is why the symptom. Think of the doctor. You don't go to the doctor because you want to be healthy some day in the future. Your go to the doctor because you feel rotten right now. You don't even know your actual problem. Think of the lower back pain in the previous section. All you know is that your back hurts and you see a professional to eliminate an undesirable situation. In the hectic B2B selling world, buyers are far too busy to deal with future desires. They're up to their eyebrows with alligators that have to be kept under control. And here we have to discuss one more important distinction. The distinction between “needs” and “wants”. The patient may want only some painkillers to reduce the pain (symptom), but considering the root cause of his symptom, that is, advanced gangrene in the leg, the doctor knows that the patient really needs the amputation of the leg. And any doctor who gives in to the patient's self-diagnosis is a charlatan. And so is any professional who blindly gives in to prospects' requests. Marketing passes the lead to sales when there is a clearly established symptom the lead experiences and wants to be eliminated. Readiness Are prospects ready and open to discuss their symptoms with someone who could eliminate them? And here we can take a short journey on how people change. In the world of counselling and therapy, a model developed by Dr. James Prochaska and Dr. Carlo DiClemente is broadly recognised and applied. So, let's see the stages of change... Stage 1: Pre-contemplation: At this point people are not convinced they need to change at all. It's a state of blissful ignorance. Definitely no change is in the pipeline within the next six months. “Ignorance is bliss and my weight is not a concern for me right now.” Stage 2: Contemplation: Convinced but not committed. Change is planned within the Copyright 2010, Tom “Bald Dog” Varjan, Page 21 of 21
  22. 22. More Brain, Less Brawn next six months. Uncertain whether or not to change. Not considering change within the next month. “Yes my weight is a concern for me, but I'm not willing or able to begin losing weight within the next month.” Stage 3: Preparation: Making a plan to make the change within the next 30 days. Some behavioural changes have already taken place. “My weight concerns me. I know the benefits of losing weight, and I'll start in the next month or so.” Stage 4: Action: The change has taken place in the past six months. Already in the process of change. Stage 5: Maintenance: Forming a habit after the change has been made for over 6 months. Continued commitment to sustaining new behaviour. Stage 6A: Termination: Leaving the past behind and live in the new world with no danger of ever returning to the old habits. Stage 6B: Relapse: Resuming old behaviours. This time the change didn't work out. Back to square 1 and start again. Nine Main Change Processes 1. Consciousness Raising: This stage involves providing and gathering information about the unsafe nature of the current behaviour and the positive impact the new behaviour can offer. 2. Dramatic Relief: In this stage people identify and express their emotions regarding the risk inherent in the change process. By expressing their emotions, actually they actually relieve themselves of the burden of the old habits. 3. Environmental Control: In this stage people evaluate how the change will impact people around them. This is when smokers start thinking of their children's health in their smoked-up homes. They reconsider social norms and establish themselves on a new moral footing. They start listening to other people's opinions. 4. Self Re-Evaluation: This is when people re-assess their whole situation. Copyright 2010, Tom “Bald Dog” Varjan, Page 22 of 22
  23. 23. More Brain, Less Brawn 5. Commitment: Here people feel a certain level of inner encouragement, and they realise they can do this and make the change. 6. Social Liberation: Here people seek out other people with similar problems and by becoming change mentors to others, they guarantee their own success. 7. Helping Relationships: Setting tighter relationships with people who need help. 8. Reward: This is a reward system contingent of the sustained new behaviour. 9. Countering: Here people measure the “for” and “against” of the change. The key is to keep the balance in favour of the “for”. Some Considerations About Change Behaviour change is almost never one clearly isolated, discrete, single event. People move gradually from being uninterested (pre-contemplation stage) to considering a change (contemplation stage) to deciding and preparing to make a change. Most people go through the stages of change several times, through mini relapses, before the change becomes truly established. People in the pre-contemplation stage appear to be argumentative, hopeless or in denial, and the natural sales practice is to try to convince them, which usually generates objections. People get ready to change at their own pace and in their own tine. Any effort to speed up the process is like wrestling with a pig. The pig gets pissed off and you get dirty. I've heard somewhere that marketing is getting people to the door and selling is getting them through the door. So, it's easy to see that getting people to the door requires a different qualification process from getting them through the door. Marketing can use the APNRP method to bring prospects to the door, and then the sales folks can use the BANT method to select who to bring through the door. Marketing should pass leads to Sales only when prospects fully qualify on APNRP. And again, as we've discussed it so many times, try to automate as much of the process as you can. The idea is not to manage a sales army that chases lots of tyre kickers, but running a small business development commando that precisely maps out and follows super-high calibre leads while the rest is taken care of by the automated lead nurturing process. The interesting point is that the qualification processes are drastically different between pursuit- based and attraction-based business development. Copyright 2010, Tom “Bald Dog” Varjan, Page 23 of 23
  24. 24. More Brain, Less Brawn Just imagine the dynamic of a prospect your people hunted down... "We're the best and we want to do business with you. Can I get together with you for 10 minutes to find out about your needs?" And many of your competitors are competing with you, yelling the same sales pitches to the same buyers. And now imagine the dynamic of a prospect who’s heard of you and knocking on your door for help... "We've heard you're incredibly good. We've heard you're obscenely expensive. And we've heard you're worth every penny you charge. When can we start?" I find the second approach more interesting. And it’s more profitable too. What do you think? Introduction To The Business Development Gearbox Have you ever thought that in a fiendishly oddball way business development can be compared to a car's gearbox? You start at the lowest gear when the car is standing still. At this point the engine works very hard to exert the power that’s needed to get the car moving. Then as the car slowly gains speed, you need less power, and use more momentum. You switch up to higher gears, until you eventually reach 5th gear, the cruising gear. At that point the car is travelling at the highest speed and the engine is working almost effortlessly. By now you have lots of momentum to help your engine to move the car. And let’s stop here for a moment. The engine in the car is a system. And what is a system really? A system is a collection of parts or subsystems integrated to accomplish an overall goal (a system of people is an organisation) neither part of the system could accomplish by itself. Systems have inputs, processes, outputs and outcomes, with ongoing feedback among these various parts. If one part of the system is removed, the nature of the system is changes. A pile of sand is not a system. If you remove a sand particle, you've still got a pile of sand. However, a functioning car is a system. Remove the carburettor and you've no longer got a working car. But a bunch of car components piled high in the back yard is not a system. And if you don’t have a system that consistently and predictably fulfils your wishes, you have to rely on a group of people to push your car every time you want to travel. And here is the huge difference. The engine (a.k.a. system) means a largish upfront investment, but then it works for you like clockwork. Well, unless you buy a General Motors car. It’s a dead system from day one, although it can fool you for short time. Then it conks out once and for all. Copyright 2010, Tom “Bald Dog” Varjan, Page 24 of 24
  25. 25. More Brain, Less Brawn And after the upfront investment, you can operate the system at a pretty low cost. The other option is not to invest in an engine, but hiring some minimum-wage people and relying on them to push your car. But what happens when someone offers your people a slightly higher wage than you pay? They quit on you, of course. And you’re back to square zero of hiring and training a new set of people. And while hiring and training your people, your car is standing still. Then, again, someone offers your people a bit more money, and they leave you high and dry. And the cycle continues until doomsday. And business development is the same. Business owners either cough up the dough upfront and invest in business development “engines” or cough up the dough on an ongoing basis to hire, train, replace their salespeople at an annual rate of 43%8. But by then businesses are going to cough up copious amounts of blood as well, indicating a pretty serious problem. And replacing half of your company’s frontline is a pretty serious problem. So, let's use the car gearbox analogy here. That is a system on which you can't skimp. You must start in first gear. If you are awkward, the car will shake you up a bit. If you're really awkward with the clutch, the engine will die and you have to start it again. If you try hard you can start in second gear or for some lucky and delicate souls even in third gear, but the engine won't appreciate it. The car will sneeze and cough a few times, and finally you just burn out your clutch and you're in for some repair work. So, even before you sit in the car and touch the gear lever, while standing still, lingering in neutral, you have to do some preliminary work before action. Neutral: Qualifying to Drive Even before you earn the right to sit in your car and switch into first gear to progress one single inch, you have to make the right preparations. Your car must be mechanically ready, officially tested and approved for participating in traffic. And you must have a valid driving licence to drive your car. And while you’re doing all these preparations, you can’t make any progress with the car. Not a sausage. You can’t even touch the car, let alone driving it. 8 Gartner Group survey on the annual attrition of salespeople. And the replacement cost of one salesperson is about 2-4 times of their gross annual compensation, but since this number never shows up in the accounting system, most business owners blissfully ignore it. Copyright 2010, Tom “Bald Dog” Varjan, Page 25 of 25
  26. 26. More Brain, Less Brawn Similarly, your business must be ready to participate in the game of commerce. What that means is that first your solutions must be positioned and packaged. Positioning Your Business for Maximum Market Recognition Where are you located in your industry's pecking order? Is your service perceived as and compensated for as a Timex or a Rolex? A Ford or as a Ferrari? A Wal-Mart or Harrods of London? There are some vital considerations here. You must know your target market. You must have a Perfect Client profile. The sad thing is that far too many IT companies adopt the “We do anything for anyone for money” approach and are not selective with their clients and the work they take on. The main question becomes: “Can the work pay the upcoming bills?” If the answer is yes, then they accept the work. In the area of positioning, ask the following questions... Mission: Do you have a clearly articulated, problem-based answer to the “What do you do?” question? Does it clearly state who you work with and what problem you solve? Target market: Do you know exactly who your clients are? Do you have a clear Ideal Client profile with polished demographics and psychographics? Do you know where they are? What their problems are? What typically those problems cost them? Where you can connect with them? Why they would buy the kind of services you offer? Benefits: Do you have several well-defined specific result-focused benefits that your clients receive when they use your services? Uniqueness: Do you have a Unique Value Proposition to approach your target market? Do you have a Unique Selling Proposition to fend off the competition and help you to stand out of the crowd like a trombonist in a heavy metal band? Are you clear about what all this means to your clients? Qualities: Are you crystal clear about the unique qualities and character traits you bring to the client's business? Packaging Your Business For Maximum Market Impact How do you package your services for attraction, differentiation, risk-free sampling and maximum compensation? Here we're talking about how you want to render your services. And don't just think about offering your services in person. There are many other ways, and technology is becoming more and more affordable. You can offer your services packed into special reports, consumer's guides, questionnaires, websites, Power Point presentations, CDs, DVDs, MP3 downloads, books (both printed and e- books). The list is pretty big. Here are some key questions to consider regarding packaging your services Copyright 2010, Tom “Bald Dog” Varjan, Page 26 of 26
  27. 27. More Brain, Less Brawn Identity: Do you have an attractive “Business Identity Package” (Website, business cards and letterhead printed with your own unique company identity) that appropriately and uniquely represent your business? Value: Do you package value into your client communication? Do you answer their non- asked question “What's in it for me?” Do you present all this in a one to two-page “Executive Summary”? Services: Do you communicate clearly what exactly your clients get from you? Do they know what you do and how you do it? Do you clearly present all this in your marketing collaterals? Pricing strategy: Are you ready for incoming enquiries? Do you have a clear, well- defined strategy to set and explain your fees? How do you charge? What do you get paid for? For the number of hours and other inputs you pump into your engagements or for the value your clients perceive in your help and support? Huge difference. Proposal submission process: Do you have a clearly mapped out proposal outline and a proposal submission process? Buying cycle: All in all, do you have a clear-cut mapped out “From first contact to signed contract” buying process? Resource library: Do you have a range of valuable resources you can use to stay in touch with buyers who’ve enquired about your solutions? Do you have different information pieces to different buyers? For instance the CFO doesn’t care about the kind information the CIO wants to receive. Do you segment your information based on recipients? Write your information from at least four angles: Strategic angle for CEOs, financial angle for CFOs, technical angle for CIOs and production angle for COOs. Personal interaction: Do you have a clearly defined process for face-to-face interaction? And when you meet buyers, what do you do? Presentation or diagnosis? This is vital because this establishes your value. What percentage of your interaction is presentation and diagnosis? Have you thought that doctors don’t have price- or other objections from their patients? Yet, they don’t even sell. What percentage is discussing solutions? Is the whole process authentic to you? Does it allow your personality to shine or are you just desperate to close the deal? The interesting thing is that people don't buy services per se, which are endless entities, like sand. You don't buy sand. You buy packaged sand. Packaged in buckets, in bags, in trucks, etc. Services are the same. People buy packages of services. Why? Because, unlike services, which are infinite concepts, services packages, which are finite processes, have specific start and end points, objectives, measures of success and value. People want to know how long it takes and how much it costs. It's not good enough to say that I can sweep your chimney for $125 an hour and have no idea how long it takes. No one buys that. Buyers want to know at least roughly how much they have to invest. And if and only if you've done all this preliminary work, you are ready to reach out and switch into... Copyright 2010, Tom “Bald Dog” Varjan, Page 27 of 27
  28. 28. More Brain, Less Brawn …The First Gear Of Your Business Development This is where we put into action everything we’ve done so far. Now you're in active client acquisition mode. But when you just reach out, you're a… Stranger No one knows you, no one trusts you and no one cares about you or your services. As far as your target market is concerned, you can take a running jump at a freight train or die in a ditch, and they wouldn't even turn up at your funeral. As a former gravedigger, I can tell you that when we were burying business owners (most of them killed by stress), not many people from their target markets attended their funerals. Somehow they just didn't care. You're just another ingredient in the noise of commerce that surrounds us. You're nicely blended into the crowd. So, what you have to achieve now is to perform the magic act of... Infiltration Into Your Target Market This is where your positioning will help you. You need a good Unique Value Proposition to craft a valuable offer with which you can approach your target market. If you don't do the preliminary work, then here you're in deep yoghurt. You end up shooting in the dark but in the absence of competitive intelligence all your work is speculation and rather uneducated guesswork. And sooner or later you'll shoot your own toe or ear, which is a rather miserable way of ending an otherwise nice day. Then you also need a good Unique Selling Proposition to differentiate yourself from the competition that is approaching the same target market. You're not the only company aiming at the same target market. And rest assured, your competitors want to see you out of business, with your head safely resting on the tip of a long pole at your city’s gate, and your body artfully quartered and comfortably relaxing on display in the four corners of your city. Harsh? Yes. Gruesome? Yes. True? I dare to bet some vital parts of my anatomy that it is. And then as a result of your infiltration strategy, be it good advertising, a radio interview or dancing naked at your city's main square, you eventually draw the attention of qualified prospects. This is the point where I like offering very specific free information to the target market. It can be a free white paper, CD or any information-carrying medium. I changed my approach after I quit dancing naked at the city square. The new approach seems to work better. Other free offers can be... • Free guides, booklets, white papers, executive briefings Copyright 2010, Tom “Bald Dog” Varjan, Page 28 of 28
  29. 29. More Brain, Less Brawn • Free assessment tools • Free support or skill building programmes • Free project planners or calculators • Free demo CDs of computer programmes • Free performance audits and diagnoses Unlike in the B2C world, in the B2B world... • Sweepstakes • Coupons • Free shipping • Discounts • Gifts • Extra products (buy two and get third free) ...don't play out really well. And let's stop here for a moment. Most businesses barge into the marketplace and try to sell their services to a crowd that doesn't know and doesn't trust them. Instead of lead generation, they try to generate orders and contracts right away. It's the same as walking up to a woman at a public place and suggesting to her that the two of you should have sex right away. It's retarded. Don't get me wrong. The approach is used quite commonly. But look at the quality of those relationships. Do you really want that kind of “transactional” relationship with your clients? Or do you prefer some kind of transformational relationships? So here is a little comparison for you to consider what sort of relationship you are aiming to create... Opaque, Transactional Relationships Transparent, Transformational Relationships Basic Question for buyer: What can you do Basic Question both for buyer and seller: FOR me? What can we achieve together? Basic Question for seller: What can I sell you right now? Work FOR me and make ME successful Work WITH me so WE can be successful Short-term focus: Proverbial one night stand Long-term focus: Proverbial romance with a with a hooker special person Copyright 2010, Tom “Bald Dog” Varjan, Page 29 of 29
  30. 30. More Brain, Less Brawn Them - We're on opposing sides Us - We're on the same side Outsourced labourer, situational elbow grease, Trusted advisor, hired brainpower extra pair of hands, hired brawn power Suspicion, duplicity and scepticism Mutual trust, respect, peer-level candour Obligation, compliance and following order Making commitments and keeping accountabilities Detailed, legalise-infested contract with lots of Handshake on paper” small print and special closes Impersonal, detached business-like style Personal, intimate, engaged style Focus on the present: Reap today whatever Focus on the future: A healthy balance of was planted yesterday reaping today's harvest and planting for tomorrow Opaque, antagonistic confrontation Transparent, collaborative symbiosis Being extra cautious not to upset each other Being truly authentic Being dutifully impressive and looking Being helpful and professional expediently “business-like” Listening to what is being said Listening for why it's being said Interaction is tense, defensive, protective, Interaction is relaxed, open, inquisitive, formal and business-like informal but professional Master-servant relationship between superiors Collaboration between peers and subordinates Copyright 2010, Tom “Bald Dog” Varjan, Page 30 of 30
  31. 31. More Brain, Less Brawn The overall goal is to get the job done The overall goal is to preserve and advance the relationship Buying decisions are based on testimonials and Buying decisions are based on personal fit references Sellers are regarded as fungible vendors Sellers are regarded as trusted advisors Small misrepresentation, exaggeration, Bone honesty is expected and practised expediency, artificially created appearances are normal and even expected Focus is on impressing prospects Focus on improving the prospect's business Becoming the corporate parrot: Saying what Becoming the unbiased observer: Saying what clients want to hear while creating good clients need to hear, while creating impressions improvements and results The difference is significant. Neither is right nor wrong. They just require different approaches. But, for instance, if you go for the transactional relationship, don't expect to be fully trusted. And if your infiltration strategy works out, then you... Gain The Attention Of Your Target Market Now certain members of your target market selected themselves to initiate a connection with you based on your initial free offer. There is nothing to force. No convincing. No manipulation. People decide for themselves whether or not they want to play your game. The first gear can be fully automated. And after gaining sufficient momentum, you then switch up to... …The Second Gear Of Your Business Development Great. You've gained your target market's attention to your message, and now you do your best to keep prospects' interest. At this point you're building… Familiarity With Your New Prospects Let's face it, at this point both you want to get to know your prospects and they want to get to know you. You are assessing each other for fit. I hope you have an Ideal Copyright 2010, Tom “Bald Dog” Varjan, Page 31 of 31
  32. 32. More Brain, Less Brawn Client profile and reject everyone who doesn't fit into it. You want to become somewhat familiar with each other. What can you do to achieve that? Here are some pieces for the puzzle. Information The more information you provide, the better. People can skip if it's too much, but if you don't give them enough, they put the puzzle together for themselves, and very often that can be the wrong puzzle. Can you leave this to chance? Yet, look at many websites and see what they do. They are chronically short on quality content because they believe that no one reads long copy. My contention is that before I make a significant investment decision, I want to learn about it as much as I can both about the service and the people behind the service. Experience Outline the experience your people bring to clients. But outline it from the perspective of benefits. There is no benefit is saying, “Vumpit Luluprat has a triple Ph.D. in chimney sweeping.” But you can say, “Vumpit Luluprat helps his clients to improve their quality of life using his extensive research that earned him a triple Ph.D. in chimney sweeping, coupled with over 12,000 hours of client work.” This sounds more benefit-orientated. And this whole stage can be fully automated too. So, let's go now to... ...The Third Gear Of Your Business Development At this stage you have gained your prospects' interest and obtained their consent to send repeated messages to them. You've been given the permission to stay in touch. However, they agreed to receive valuable information from you, not retarded sales pitches. You have to learn how to package your messages that are both of interest to prospects and gently move them towards the next gear up in your gearbox. And at any point you must be ready to switch into reverse gear and disengage. You must give prospects a way out and avoid hard sell situations. Just read this article, entitled to Rotten Effort by Don Tennant9 on a Microsoft sales manager. But be careful. If you are any ethical and moral in your business, this story may turn your stomach. Now you're in the stage of building desire for your services. At this point your prospects are interested but interest is not enough. People don't commit to what they're merely interested in. 9 Copyright 2010, Tom “Bald Dog” Varjan, Page 32 of 32
  33. 33. More Brain, Less Brawn Tell Them More About Yourself At this point buyers want to know more about you, your company and how you operate. They're looking for a fit. They are checking your beliefs, values and how you manage assignments. It's important to discuss both the pros and the cons of working with you. For instance, I always tell prospects that if they become clients, I will push them very hard to achieve the goals they set out to achieve. I tell them that I'm a former military, so my style is a bit rough around the edges and very demanding. Tell them that it will be both exhilarating and exhausting to work with me. They know what they get into. And I know that this honestly loses me potential business left, right and centre, but clients who decide to work with me are truly amazing, committed people. And when they understand why I work the way I work, many of them follow the same approach with their clients. Discuss More About Them Talk more about the problems they may have. Start doing some high-level diagnosis. Diagnosis is good because it talks about their problems, which they are concerned and anxious about, not about your solutions, which they don't care about. And if you barge in with your solutions too soon, most prospects back off. You have to raise people's awareness by outlining the problem they're struggling with and the consequences that could be waiting for them if they don't take action. And here lies a huge difference. The difference between peddling your own services... “Unless you hire me right away and give me a huge pile of money (an accountant) your business goes bankrupt in two years.” ...and making general recommendations for accounting help... “Based on the numbers you've shown me, unless you have an accountant take a closer look at this issue, your business could go bankrupt in two years.” The former uses scare tactics to make an instant sale. The latter makes a general recommendation and trusts prospects' intelligence to make a decision. The former offers a pre-designed course of action. The latter offers some guidance but still relies on prospects' ability to decide for themselves. It's collaborative. Expected Results Here you outline what results your prospects can expect when they become your clients. You can talk about both your processes and the end results other clients have achieved working with you. And to make life really sweet, this stage can be fully automated too. ...The Fourth Gear Of Your Business Development Copyright 2010, Tom “Bald Dog” Varjan, Page 33 of 33
  34. 34. More Brain, Less Brawn Now your prospects are considering projects with you. At this point you may offer some personal time in preliminary meetings, but I suggest you still automate the process as much as you can, and offer personal time only to highly committed prospects and not for mildly interested suspects. Here are some of the considerations in fourth gear... Next steps What is the exact process of moving forward in this section of your funnel? You have to give prospects very clear directions about what the next step is. Don't overwhelm them with many steps. Just one step at a time, so they can make a decision whether they want to move to the next step or want to quit. Remember, by the time you come to in-person meetings, you want to meet only “wildly committed and enthusiastic” prospects not merely “mildly interested” ones. Conceptual Agreement At this point you establish three parts of the engagement, you might even call them the holy trinity of the engagement... 1. Objectives to achieve: What exactly do clients want to accomplish? What are the symptoms that must be eliminated to accomplish that? 2. Measures of progress: How do clients measure progress? How do clients know that they are progressing? 3. Value delivered: What is the expected impact on the clients' condition? How are they better off after the engagement? Signing The Agreement I reckon this is as obvious. The Proposal The proposal is NOT a sales document. The proposal is a written summary of the conceptual agreement which you've already made with the buyer verbally. And although this is the first time your client sees your fees for the engagement, they must be prepared for the ball park they can expect. And that's what you do during the conceptual agreement. Money Exchange Here I have some ground rules. 50% upfront and 50% 45 days after commencement. I never leave anything to “completion” because the date of completion is out of my hands. I've recently worked with a web design firm on their fee structure. They would sign the contract and the client was supposed to pay the down payment after the initial draft design was done. The design was done pretty quickly, but the client took 11 weeks to review it and then 4 more weeks to request Copyright 2010, Tom “Bald Dog” Varjan, Page 34 of 34
  35. 35. More Brain, Less Brawn some more changes. The firm received the - heavily haggled-down - down payment after 17 weeks in the project. That's retarded. Make sure you have very clear guidelines around payments. And guess what? For great clients this is not a problem. First Sale And Fist Client Experience Now you've done your first sale, so you can celebrate and provide a kick-arse experience for clients. And here I mean overall experience not merely great work. Your mechanic may do great work on your Mercedes but if he sits on your white leather seats wearing his greasy overalls, that will ruin your experience... well, and your seat upholstery. Since we're comparing business development to the gears in a car, we have now to talk about an important manoeuvre that can only happen in fourth gear, that is, when we have a pretty good momentum. And that is merging into the highway traffic and making significant progress. You see, before you merge, all you have is high fuel consumption happens and low progress. Once you have the momentum to merge onto the highway, everything changes; your fuel consumption comes down and you start making some serious progress. And this rule applies even in Canada although the top speed on the only highway is a ridiculous 90 km per hour. And then soon after merging, you gain more speed so you can switch into... ...The Fifth Gear Of Your Business Development After the first successfully completed project three things are likely to happen 1. Repeat business: Clients got huge value form collaborating with you and now ready to bring you more of their problems. 2. Referral business: By now your clients have so much confidence in your expertise that they are willing to refer their contacts to you. You just have to make sure you show appreciation for these referrals. 3. Abandoning client: Abandoning inappropriate clients is really switching into... ...The Reverse Gear Of Your Business Development So, why would you abandon clients and turn business down? Because you're picky, and you work only with clients who fit into your perfect client profile. You have your target market, and in your target market the cream at the top and the sludge at the bottom. Copyright 2010, Tom “Bald Dog” Varjan, Page 35 of 35
  36. 36. More Brain, Less Brawn The first project is a honeymoon, and now you know beyond the shadow of a doubt whether your prospect is in the cream or sludge category. You've assessed each other during the project, and at this point you decide whether or not it's worth carrying on working together. And if the client proves to be in the sludge category, you have to make a tough decision for your own sanity's sake. The fact is that the more sludge you have in your roster, the less space you have for cream. As the saying goes, you can't expect chicken shit to turn into chicken salad. So, why specifically do you abandon clients? There are several reasons. Some of them are... • You don't like clients and don't feel you can truly care about their business welfare • You find their projects boring or incongruent with the direction of your business • You're not learning from these projects • You can't provide huge value and receive a huge fee in return • You aren't stretched beyond your professional comfort zone • You are expected to go the extra mile without extra compensation - Learn from taxi drivers • You aren't likely to get referrals from this client Summarising The Gearbox Concept So where is the problem here? Well, many IT companies want to bypass the first two gears, and abdicate forced peddling to people who are the... • ...least loyal • ...least reliable • ...least trusted • ...least respected • ...least predictable • ...least consistent of people, called the commission-based sales force. Yes, you're right. I have a major issue with commission as a method of compensation. It rewards the wrong people (greedy, individualistic mercenaries) for the wrong thing (competing with each other for personal glory with no regards for the company) and for the wrong reason (short-term quick buck). That's all really. Then this commission-based sales force is sent out to pound pavements and dial for dollars to Copyright 2010, Tom “Bald Dog” Varjan, Page 36 of 36
  37. 37. More Brain, Less Brawn sell the company's “amazing solutions” no one has ever heard about. Of course, at this point executives all say, “Our stuff is so good is that it sells itself.” There lies the next problem. If it is so good, then why do you need an army of salespeople to ram it down people's throats? Foregoing the first two gears and just condemning your sales force to cold-calling, pavement pounding and door knocking is just as futile as trying to outsell Amazon through peddling books door-to-door using more and more salespeople. You can never “out-peddle” Amazon's seamless automated book distribution system that sells millions of books but operated by only a few people. You see, you can free up lots of your people's time by automating the first three gears, so your salespeople can meet only prospects who are ready, willing and able to buy. Instead of chasing, it is prospects who will contact you and ask you for appointments. But then knowing all this, what is the reason so many companies just keep hiring more salespeople chasing more suspects? It is really like trying to out-sail the fastest cruise ship by hiring more slaves, giving them bigger oars and whipping harder. You need an engine with fuel not more people with oars. So, what to do next? Transforming A Peddler Army To A Business Development Commando In the movie The League of Extraordinary Gentlemen, Allan Quatermain, played by Sean Connery, asks American secret agent, Tom Sawyer... A.Q.: Can I teach you how to shoot? T.S.: I can shoot. A.Q.: Well yeah, in the American way. You keep shooting all over the place and hope you hit something. When you look at the weaponry of typical duck hunters, you find they use shotguns. A shotgun, like the Remington 1100 Classic Field, Remington’s world-renowned 20 gauge shotgun. This gun fires normal cartridges from a smoothbore barrel. In the cartridge there are many shots and after firing, these shots fly in a general direction. The shots cover a wide area, hitting some ducks, trees, window frames, park rangers, stray cats, wandering grandmas and maybe even some elephants on their paths. The accuracy is not exactly world-class. It’s not Remington’s fault. These are the innate characters of shotguns. And there is not a sausage, or even duck liver pate, Remington can do about it. Copyright 2010, Tom “Bald Dog” Varjan, Page 37 of 37