!"                                # $ #% $
                                                         &                     ...
STZ— a Sales Consultancy


Because of additional scrutiny and the implications of decisions, decision levels are rising in...
STZ— a Sales Consultancy


Which means that sales, presales, sales support, sales management and executive management now ...
STZ— a Sales Consultancy


               2. What business problems were solved? Are the best customers operationally simp...
STZ— a Sales Consultancy



Test the Zebra…
Go backwards and score the opportunities that closed last quarter. [Business c...
STZ— a Sales Consultancy


Answering questions about where business has been closed since September, 2008 (when the recess...
STZ— a Sales Consultancy



In the new normal this proposal as well as all prospect proposals will compete with every othe...
STZ— a Sales Consultancy



In order to have complete credibility with Power all other total project costs must also be re...
STZ— a Sales Consultancy



A word of warning; this approach is designed for success when calling on Power— not for middle...
STZ— a Sales Consultancy


Using Zebra principles, Chad established a reputation for exceeding sales targets at organizati...
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White Paper - Selling in the New Normal: For Organizations with Complex Sales, Here is Strategic Account Management Evolution to Help Succeed in Today’s Tough Economy!

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Still waiting for the economy and business opportunities to get back to normal? Change is Required to Survive! In the “New Normal” complex sales organizations have learned that their best efforts and previous approach to selling customers in complex sales cycles no longer work; sales levels, margins and average deals sizes are down and sales cycles are longer with many ending in non-decision. Jeff Koser describe the necessary components to be successful in the New Normal.

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White Paper - Selling in the New Normal: For Organizations with Complex Sales, Here is Strategic Account Management Evolution to Help Succeed in Today’s Tough Economy!

  1. 1. !" # $ #% $ & ! % ' Change is Required to Survive Still waiting for the economy and business opportunities to get back to normal? Business is grappling with unemployment in the U.S. that is at a 26 year high of 10.0%, financing organizations have tightened credit making corporate debt almost three times more expensive than it was in 2005, and growing a business in 2010 when global GDP is expected to shrink for the first time since World War II is going to be difficult. Ram Charan in his bestselling book Leadership in the Era of Economic Uncertainty, states: “with the world-wide business crisis company executives are categorizing all expenditures into one of three buckets; Keeping the business lights on Compliance—there will be more than ever Discretionary spend—there will be less than ever”
  2. 2. STZ— a Sales Consultancy Because of additional scrutiny and the implications of decisions, decision levels are rising in the organization. Power— the person who makes the promises, owns the results, and the budget is one or two levels above previous levels. A decision that once required director level approval now goes to the Chief Financial Officer. Previous CFO-level approval now will require CEO or even board-level approval. About fourteen months ago Jeffrey Immelt, CEO of GE coined the term “The New Normal” in order to focus and re-engage the world’s largest conglomerate. GEs business leaders where focused on the slow economy each presenting reasons the economy would not allow them to achieve the business goals. Immelt stopped talking and took action. Team leaders where told the conversation needed to change from: “The markets slow” to “There’s an 90-locomotive order in Egypt–let’s go get it.” In the most recent copy of the McKinsey Quarterly (2010 Number 1) in the Adapting to new realities article, Blackstone Group cofounder Pete Peterson speaks of changing from “financial engineering to operational improvements.” Unilever CEO Paul Polman says he “clearly sees delays in big-ticket purchases…less spending on discretionary items.” Bill Ford, Chairman of Ford Motor Company was also quoted. “One of the lessons learned,” says Ford,” is that we have to get our breakeven point down so that no matter what happens to the industry worldwide we can be successful.” The article goes on to say…”Against this backdrop of change and uncertainty, one thing is crystal clear for executives: the post-crisis era— or the new normal, as many call it— requires an approach with far greater flexibility…continually revisit plans and assumptions, whether they are long held or only months old… ” What does all of this mean for sales? In the “New Normal” strategic account management sales organizations have learned that their best efforts and previous approach to selling customers in complex sales cycles no longer work; sales levels, margins and average deals sizes are down and sales cycles are longer with many ending in non-decision. World-wide pipeline close rates are at a record low of 13%. ((((((((((((() * (((((((((((((( + - ,. ) * /) /) 0# 2
  3. 3. STZ— a Sales Consultancy Which means that sales, presales, sales support, sales management and executive management now put time and resources into something that 87% of the time isn’ t going to happen! As a result, the role of the sales person has risen to a level requiring even stronger business acumen, more acute understanding of the financial and business problems facing prospects, and requires talent and expertise not previously necessary. Plus the cost of complex sales is getting even higher, including direct expense, and the opportunity costs associated with each prospect sales engagement. A long sales cycles with highly-compensated teams, travel, domain and subject matter expert participation, managerial and legal reviews, add up to a very large expense. This opportunity cost and implications is an important complication creating even more urgency in the imperative to improve Sales. These problems are causing strategic minded executives to ask for help. Jeff Immelt says “ let’ s go get it.” But— Sales is asking “ How do you go get it?” How should companies that sell complex solutions address this problem? The solution has two components. The first is to apply a simple new metric to sales. The metric is simple so Sales will quickly and effectively adopt it. The new metric we propose starts with the identification of the perfect sales prospect— the Zebra. Why do we call it a Zebra? Simply, we call the perfect prospect a Zebra because once you’ ve identified the characteristics of your Zebra, you can spot it amidst all the other prospects quickly and easily. A Zebras’ s stripes tell you exactly what kind of animal you’ re looking at-you can’ t mistake a Zebra for any other animal, so you know for sure when you have one. A perfect prospect should be just as easy to spot. To start… Answer the following questions; 1. What types of companies have bought since this economic downturn began? Where are the located? What is their size? What is their culture (quality focused more so than price for example)? 3
  4. 4. STZ— a Sales Consultancy 2. What business problems were solved? Are the best customers operationally simple, complex, centralized or decentralized? 3. Who was the person in a position of Power— the person making the promises and responsible for achieving results? 4. What was the required level of funding? Was a capital appropriation (CAP-x) approval process required? 5. What type of ROI was provided? 6. What role did technology play in the decision? 7. What is the level of service that will be required to ensure success? This process will help produce the seven attributes to be asked about every prospect before and throughout the sales cycle. Learn to score a prospect: Before engaging resources spend just five minutes and score all seven attributes. 1. Company: Score the company against your perfect prospect profile as a 0, 1, 2, 3 or a perfect 4. 2. Operations: Is there evidence the prospect has the business problems the solution solves? Score operations and business problem fit (0-4) 3. Power: Has the sales team met Power? Has Power acknowledged the business issues and a desire to solve them? Score the contact person (0-4) 4. Funding: Is there minimally a level of funding available to guarantee that the promises that Power makes will be achieved? Score the level of funding (0-4) 5. ROI: Has Power endorsed the ROI produced to justify the project? Score ROI (0-4) 6. Technology: Technology plays a roll (for or against) in every strategic account management sales cycle regardless of industry. Score the technology advantage or disadvantage (0-4) 7. Service: Does the prospect recognize the value of the proposed service(s)? Score service (0-4) Make the tough choice early: Assess the risk verses reward in the following way: [A perfect Zebra score is 28 (7x4)] 1. A score of 0-10 says stay home and continue to prospect rather than wasting any time and resources. 2. A score of 11-19 says proceed with caution. 3. A score of 20 or above says pursue this prospect with everything you have! 0-9 10-19 20-28 High Some ZEBRA Risk Risk 4
  5. 5. STZ— a Sales Consultancy Test the Zebra… Go backwards and score the opportunities that closed last quarter. [Business closed before this financial crisis began is not useful - use recent success.] Evaluate the “ scores” of those opportunities that did close to learn “ the score” needed to determine which deals will close in future. For most a Zebra score of 23 means that prospect will buy 90% of the time. Test the last five deals that were won— they should score at or near 23. Test the Zebra score against deals that were lost to competition. Finally test the Zebra with a deal that sales management doesn’ t believe will ever close. Lost deals and deals that sales management doesn’ t believe will close will always score less than 19. Congratulations you have a Zebra! Some will say this is nothing new, that a Zebra is nothing more than account targeting. Have you met anyone whose sales organization operated at better than 90 percent efficiency? Meet Patrick Williams, former Senior Vice President Corporate Sales, at StarCite, Inc. Pat’ s sales organization used the Zebra and closed 91 percent of the business they forecast on a quarterly basis. Other business benefits Pat has enjoyed include a reduction to sales cycle length of 21 percent, and an average selling price increase of 74 percent. These other two business benefits are a result of selling value. Let’ s discuss the value-based sale that is the way to sell value in a down economy where company executives are categorizing all expenditures into the three buckets; keeping the lights on, compliance, and discretionary spend. The Installed Base Audit The second aspect of the solution for helping organizations that have a complex sale be more effective in The New Normal… In our research most strategic account management sales organizations do not have access to Power even within the customer base. Account relationships are at the middle-management level putting the business at risk of losing even its best customers. Also from our research we have learned most sales organizations can’ t answer basic questions about the business problems the solution addresses. Features and functions are offered as answers verses Power-level business problems— again this puts present and future business at risk. 5
  6. 6. STZ— a Sales Consultancy Answering questions about where business has been closed since September, 2008 (when the recession began) will help to identify where future success is highly likely. The first goal was to define the perfect prospect— the Zebra. In the future our pipeline will be filled with Zebras improving the chance of success. The second action is to create a “ customer audit process” . Projects are approved because someone in a position of Power has positive expectations about the business problems to be solved and the resulting value to be achieved. Find out what promises were made, who made them, by conducting an audit and determine how well expectations were met. As audits are conducted the specific quantifiable value created will surface. It’ s best to categorize results based on industry type, size of business, and even region of the country or world. Formulate a hypothesis of value based on company or industry expectations so there is something to test (prove or disprove and adjust). The questions to ask of Power: Was a capital appropriation request (CAP-x) necessary for the justification purchase? Who signed off on the CAP-x (if no CAP-x who signed off on the project)? What were the predefined measurable metrics? Was success defined in any other way(s)? Is the project considered successful? Have the results been communicated to the team, to management, to the board? How long did the project take to implement? How long was the ramp-up to “ full implementation” ? What were the total costs including the internal people costs of putting in the solution? As a result of the first audits “ best practice” recommendations for how products and services should be implemented and used will surface. Use this information to create a repeatable “ best practice” comparison with how the customer is currently utilizing the solution, identification of gaps between present use and a best practice use, and the incremental value achievable if best practice recommendations are adopted. No-cost or low-cost recommendations will be made on how the customer can get more out of what they are already paying. This is obviously a win for the customer but also ensures the value they are already getting is known so they don’ t reduce, consolidate, or eliminate the solution in a cost-cutting move. As installed base audits are conducted invariably other opportunities to create value will surface. Create a cost justified proposal for additional products and services to address these opportunities. 6
  7. 7. STZ— a Sales Consultancy In the new normal this proposal as well as all prospect proposals will compete with every other way the prospect might choose to spend the same dollar. Remember with the world-wide business crisis company executive are categorizing all expenditures into one of the three buckets. If a solution helps to keep the lights on or is in the compliance bucket there is a better chance of success. All other solutions will have to be accompanied with a business case that creates a “ compelling” reason to buy. As we all know competition for the sale of a solution is coming from places never even imagined. The normal competitors and more are involved in every deal and the biggest competitor of all— apathy (doing nothing) is constantly rearing its ugly head. Even seemingly unrelated projects will be competition because there are less discretionary available dollars. How can anything be successfully sold in an environment where a project to automate a warehouse is in competition with a new computer software application, or a punch press, or “ doing nothing” ? Against this backdrop it is going to take something that is true sales innovation to win business today. There is a way to sell that can help and it’ s involves utilizing a calculation called Economic Value Added— “ EVA” . EVA is the value over and above all of the costs of implementing a solution, including the cost of the capital (money) used to purchase the solution. Peter Drucker, the famous author and innovative business thinker once said: “ Until a business covers the cost of capital, it doesn’ t create value, it destroys it.” Money has a cost. Recognizing this can help Sales sell. ROI of this project over 3 years is: ROI of this project over years is: 1139% Selling value is not new, but selling the EVA that a solution can generate is new! Here is how it works. Ask a prospect how they measure the financial success of projects. They will NPV of this project over 3 years is: NPV of this project years is: $733,434 essentially explain how they evaluate competing projects, I.e. their CAP-x process. This EVA of this project over 3 years is: EVA of this project 3 years is: $577,938 evaluation might include return on investment (ROI), payback period, net present value IRR of this project over 3 years is: I RR of this project over years is: 1005% (NPV) and/or internal rate of return (IRR). Once how a prospect evaluates projects is known ask, “ what is the return of the top project currently under consideration” ? Power Payback Period of this project is: Payback period this project is: 3 Months will say something like, “ I am expecting this new punch press to deliver an 18% annual Monthly cost of indecision is: Monthly cost $25,116 return on investment and pay for itself in six months.” NOW the rate of return to beat in order to compete for the available funds is visible. The installed base audit process helps to unearth your solutions specific quantifiable economic value. 7
  8. 8. STZ— a Sales Consultancy In order to have complete credibility with Power all other total project costs must also be reduced from the value claim. They include the cost of the solution including education, consulting, and integration (if needed) partner products (if needed), partner management and very importantly change management. The previous questions are classic total cost of ownership (TCO) based questions, but to get at real net value, or real EVA you have to go farther. What is the expected “ ramp-up” period and internal people costs associated with putting in the solution and continuing to operate it? Also most business problems are not new. Therefore investments have been made in solutions to solve them. As a result some value was probably created. To ensure there isn’ t any double counting of value, identify the value created by the previously purchased solutions and remove it from the value expected of the new solution. Selling to Zebras offers free tools that can help kick-start this process. A “ free” value model template can be downloaded from www.sellingtozebras.com. Sign-up for a free subscription to Zebra U, and under the “ Steps to the Zebra Process” , download the “ Economic Value Model” spreadsheet template. Our Economic Value Model template will allow the entry of all the solution costs needed to create value. It will allow the entry of an implementation time (and won’ t calculate value benefits during that time). It will allow the identification of all the ways value is created. The template will REDUCE the value claim by the amount of time it takes to “ ramp-up” the solution. It’ ll also apportion some of the value away from the claim by allowing for a distribution of the benefit to other solutions the prospect has put in place which are designed to solve some of the same business issues. In other words the template model will reduce your value claims and make them ultra conservative. Further it will do the heavy lifting for you by calculating the ROI, payback period, NPV, IRR and EVA your solution creates. We will even estimate the cost of their people’ s time to put in, maintain and run your solution. Remember we asked the prospect “ what is your top project projected to return” ? And we learned the answer was, “ we are expecting this new punch press to deliver an 18% annual return on investment… ” Now comes the real innovative part of this process because we are going enter a cost of capital of 18% into the value model. By entering the cost of money as 18%, the model will reduce the value claim by 18%. When the value is reduced by the cost of the solution; the prospects internal people cost to put it in and run it; reduce it by the implementation time; ramp-up time; further only the value over and above all other ways the prospect has tried to attack these same business issues, and finally the value claim is further reduced by the amount of return on investment that is expected for the best project they plan to approve, WHAT is left is the EVA of the project! Can you feel the power in this? 8
  9. 9. STZ— a Sales Consultancy A word of warning; this approach is designed for success when calling on Power— not for middle managers. This is the language of Power. Power will understand ROI, NPV, IRR, payback period and EVA. Middle-management might even be intimidated by this message. This language of Power is not understood by everyone. Now you’ re ready. The message for Power is: “ if you have these business issues and care enough to solve them now, the EVA the solution generates is the value over and above any other way your business might choose to spend these same limited discretionary dollars.” Do you see how such a presentation would change the game? Summary The role of the sales person has risen to a level requiring even stronger business acumen, more acute understanding of the financial and business problems facing prospects, and requires talent and expertise not previously necessary. The Zebra and the installed base audit process can help equip sales organizations with the tools they need to succeed. Even in tough economic times there is opportunity. Learn to invent a new game— one where it is possible to book as much as 90% of the business you pursue faster, more easily and more profitably and be successful in THE NEW NORMAL! “ Jeff and Chad Koser wrote a book [Selling to Zebras] that I consider one of the best sales books I have read in the last decade.” - Marc Kramer, Wharton School of Management at the University of Pennsylvania. Jeffrey A. Koser former Chief Operating Officer of Baan Supply Chain Solutions, is the founder of Selling to Zebras, LLC, and the USA Book News and the Library Journal' Best Business Books Award Winning co-author of Selling to Zebras, HOW to CLOSE 90% s of the BUSINESS YOU PURSUE FASTER, MORE EASILY, and MORE PROFITABLY. You can contact Jeff directly at 414-659-1494, via email at Jeff.Koser@SellingtoZebras.com and via the website at www.sellingtozebras.com . Chad J. Koser is the USA Book News and the Library Journal' Best Business Books Award Winning co-author of Selling to Zebras, s HOW to CLOSE 90% of the BUSINESS YOU PURSUE FASTER, MORE EASILY, and MORE PROFITABLY, has eleven years of business and sales experience and more than fourteen years of experience working with Zebra and Zebra Buying Cycle philosophies. 9
  10. 10. STZ— a Sales Consultancy Using Zebra principles, Chad established a reputation for exceeding sales targets at organizations including VoiceStream Wireless (now T-Mobile), and GE Medical Systems Ultrasound. USA Book News WINNER of Library Journal's Best Business One of Five finalists for the National Best Books 2008 Books of 2008 - Sales 800CEOReads Business Book Award for Best Book in the Category. Awards - Sales Category. “Business Sales” category. 10

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