Saturday, April 29, 2006

Customer Relationship Management & Sales

Customer Relationship Management (CRM) is a well known business concept. Managers today are working hard to build and maintain a relationship with the customer - given the importance of customer lifetime value. While the concepts of CRM and Customer Lifetime value are well established and understood by managers, managing customer relationships has become a challenge for many managers. Several firms have implemented dedicated software tools (Seibel, etc.) for customer relationship management, and even more number of companies are planning to do the same. Few firms have even created offices of customer relationship management: Client partners, Account managers, Program Managers etc. In spite of all these efforts, managers are finding it hard to manage customer relationships.

The challenge of managing customer relationships led to a new concept called Levels of Customer Relationships developed by INSEAD, France. The central theme of this concept is:

  • Customer relationship is an evolutionary process that can be identified as 6 distinct stages.
  • Customers have different needs and expectations during different stages of this relationship.
  • Customer relationship is a dynamic process and can move from one stage to another based on customer’s aspirations and customer’s buying experience

In this article, I will briefly describe the levels of customer relationships and its impact to the vendor firm.

Why do customer’s have a relationship with the vendor?

Every salesman knows that customer often wishes to have a relationship with the vendor. Many firms therefore want to make use of this relationship and have instituted customer loyalty programs - aimed at rewarding loyal customers. For example, Airlines have free miles program, credit card firms have points program, Grocery stores have a special discount for loyalty card holders etc.

Looking from the customer’s perspective, customer expresses a need for a relationship with the vendor for a few basic reasons: satisfy their needs, convenience, reliability, lower cost of transaction. Customers need products or services and will obtain them, but they are willing to enter into a relationship with the seller to make the process of buying more easier and a more pleasant experience.

One has to note that the intensity or depth of the relationship which the customer expresses to have with the vendor depends in the intensity of his/her needs. If a product/service is vital to the customer, then customer is willing to have a deeper relationship in order to have their needs satisfied as precisely as possible. On the other hand if the customer wants a routine service or generic product, then the relationship is superficial - characterized by buyer’s convenience. To understand this consider the following examples:

  1. Customer, who is a car manufacture, wants to develop a new fade resistant paint which is available in few unique colors. In such case, the car company is willing to work closely with BASF( paint company) to develop the paint which it needs. This deep relationship can be identified by joint R&D efforts, commitment to buy a minimum quantity over a period of time etc.
  2. Customer, who is a car manufacturer, wants to buy fasteners. Fasteners (nuts & bolts) are commodity products and hence the car manufacture is willing to buy from the lowest priced vendor from India or China. This superficial relationship can be identified by lack of any long time purchase agreements, a single lot purchase order etc.
  3. Customer, who is a telecom service provider, want to implement a ERP software. Since the software has to be customized for the telco, the customer is willing to establish a deep relationship with the vendor by having a development & maintenance contract with the vendor.
  4. Customer, who wants a copy of MS Project installed in a computer. Since this is a simple purchase, the customer wants to buy it from a near by store and install it himself. Thus there is no real relationship between the customer and the vendor.

All the above examples point to the fact that the level of relationship a vendor enjoys with the customer is directly dependent on the criticality or importance of customer’s needs. In short, customer’s enter into a relationship with the vendor in order to serve their own needs.

Strengthening Customer Relationships

We now understand that the depth of the relationship between vendor and customer is directly dependent on the intensity of the customer’s needs. Also note that the depth of relationship is defined by the customer. This creates a challenge for a salesman or a marketer at the vendor firm. For a vendor to increase sales, the vendor firm must improve the relationship with the buyer. And to improve the relationship, vendor must know the current level/stage of relationship he has with the customer. So the first step in managing customer relationship is to know and understand the levels of customer relationships.

Levels of Customer Relationships

As mentioned earlier, relationship between buyer and seller can be identified in 6 distinct levels. Level-1 being the lowest level of relationship and level-6 being the deepest level of relationship.

Level-1: Utility Need
Level-2: Convenience Need
Level-3: Comfort Need
Level-4: Personal Recognition Need
Level-5: Self-expression Need
Level-6: CO-Creation Need

From a marketing perspective, the customer lifetime value is lowest at level-1 and is highest at level-6. This is also reflected in the revenue or sales from a customer. Customer with whom a company enjoys the highest level of relationship, will also be the most profitable customer. It is therefore in the vendor’s best interest to have very deep relationship with the customer.

Level-1: Utility Need

This is the most basic interaction between customer and vendor. Here the customer desires to buy a particular product/service. Customer interacts with the seller with the sole aim of acquiring the product/service. The relationship between the firm and the customer is characterized by efficiency in transactions, straight forward, no-frills selling. To increase sales, vendor must work on availability of the product/service. Customer will buy only if a product/service appeals to the rational side of the customer i.e. Price and convenience. Customer does not bond with the vendor as the relationship is a purely utilitarian one - exchange of goods/service for money.

The vendor should respond to the customer (in this level of relationship) by providing the required goods/service, And refrain from interacting at a deeper level i.e., by not offering added products/service - other than those requested by the customer. If the vendor insists or attempts to force a relationship to a higher level, the customer may "pull-out" thus risking future sales.

To understand this, consider this example: I purchased a laptop from DELL Computers. I placed an order online - for a particular configuration. My expectation from the vendor is that Dell will deliver the computer on stated delivery date. I am buying from Dell to meet by needs at a price which is attractive for me. If the salesman at Dell attempts to push additional hardware or software - which is not what I wanted, I might get annoyed and cancel the order.

Vendors must first identify the level of relationship the customer has with them, and then craft a strategy to deepen it. In this case, a vendor can deepen the relationship by increasing the number of interactions. This can be done by: Offering a wide range of products/service, having a 24/7 sales operations - i.e., Internet or all 24 hour shops.

For example, Dell can increase the number of customer interactions by offering a full range of computer accessories: Printers, Scanners, cartridges, office software, computer games etc. Dell can increase the number of customer interactions by offering value added services such as on-site maintenance, free software updates etc.

Utilitarian relationships can be deepened by augmenting the basic service/goods with a value addition: Cross selling or value addition.

Level-2: Convenience Need

Once the customer has easy access to service/goods that they need, customers look for ease of purchase process. This denotes a second level of relationship. The vendor should respond by providing services that simplify the buying process i.e., identify and eliminate those procedures that are a hindrance to obtaining a product/service. For example, having a shorter checkout lines in a store, having the products courier & providing the tracking number to the customer, having a service personal ready to attend the customer when the customer enters the bank/hotel/office etc.

To improve the buying process, the vendor must understand thoroughly the entire customer purchase experience and then eliminate the nagging problems in the purchase process. Service companies often resort to mystery shoppers - who act as customers and buy the product/service to measure & improve the buying experience. Often times, managers listen to feedback from front-line employees for suggestions to improve the customer’s buying experience.

For example, Dell provides the exact shipment details of the computer and is delivered on the specified time. In addition, Dell has a complete e-Commerce website which enables a secure and easy payment method. Airlines provide comfortable lounges at the airport - while customers wait for their flight. Airlines also provide e-ticketing, curb side luggage check in, on-line flight details etc., to make customers feel comfortable during the purchase process.

Often times, there are several instances of customers abandoning their purchase process in the midway. This is the sure sign of an inefficient and inconvenient buying process. For example, I have seen several abandoned shopping carts in a super mart. In one occasion, customer walked out of contract negotiations as the negotiations dragged on over minor details.

Relationships at this level can in strengthened by widening the service interactions with customers. By this I mean, look at the ways the customer buys your product/service and then provide additional services to make it simpler and easier for the customer. Customer Activity Mapping (CAM) & Customer Decision Mapping (CDM) are the tools that can be used to analyze the decision making, buying, using, and consumption experience. And in each stage, the objective of the vendor is to identify situations that pose obstacles to the buying process.

Making the buying process as pleasurable as possible, a vendor can strengthen relationship with the customer in this level and also take the relationship to the next level.

Level-3: Comfort Need

Once the customer has a convenient buying process, then they wish to have a "pleasant shopping experience" i.e., the customer seeks a buying interaction where he feels comfortable. This implies that the vendor should foster an buying environment in which customer feels comfortable and is characterized by an agreeable and relaxing purchase ambiance.

For example, many multi-million dollar business deals are done at resorts - away from the clutter of the office environment. BASF, a fortune-100 chemical company often conducts the contract negotiations on a luxury yacht. This provides the right ambiance and mood to put the customer at ease and feel comfortable during the buying process.

To provide a common example, look at Barnes & Noble bookstores. Their large stores are lined with comfortable sofas and coffee tables which encourage customers to sit, relax, enjoy a starbucks coffer and read a book before buying the book. Customers can freely browse the books for hours and are not pressurized in any way to buy.

Irony of this "comfort need" is that customer’s often overlook the comfort factor - and often customer notices the absence of the comfort. A discomfort during the buying experience is easily noticed and registered, while comforts are forgotten by customer.

CRM efforts in this level must be focused on making the customer feel comfortable, create a feel-at-ease feeling. The marketer should strive to provide customers comfort, fun, surprise, and other means of generating a positive feeling. Note that this is distinctly different than relationship building at level-2, where the focus was to remove any factor which caused inconvenience to the customer.

Relationship is built on a feeling of ease and comfort can be strengthened by providing more of the same - greater comfort, fun and pleasant interaction environment. This involves training the front-end employees to provide a comfortable experience to the customer and being sensitive and responsive to the customer’s level of interaction. The marketing efforts must be directed at improving/building the memory of pleasant experiences of the customer.

Level-4: Personal Recognition Need

Often times, regular/loyal customers expect the vendor to interact in a way that his/her personal choices are recognized. This implies that the customer is seeking a level of relationship where they expect the vendor to recognize their needs - without them asking for it.

At this level, the loyalty of customer has been well established; customer enjoys the convenience and a feeling of comfort. Here, in this level of relationship, the customer needs are "personal". In earlier levels, the needs were mostly contextual, i.e., based on the context of buying experience.

CRM efforts at this level is to personalize the service/product offerings. For example, financial institutions treat their high value customers with personalized checkbooks, providing a personal financial advisor, etc. In business-to-business environment, this is characterized by having a dedicated account manager who interacts with the client, who knows the clients exact needs and has the authority to deliver the customer’s needs. The "account manager" or "client partner" can also make suggestions, provide consulting advice to the customer - Along with dinners/luches, tickets to popular events etc.

Advent of Internet has created opportunities for vendors to provide customized web interfaces to each of their clients., etc. Provide customers with customizable web interfaces.

To bring a customer to this deep level of relationship, the level-3 relationship of making the customer feel comfortable must always be accomplished. Only when the customer is comfortable, vendor can discover (discreetly) the personal needs of the customer - and then move the relationship to the next higher level. Relationship at Level-4 is analogous to that of a romantic partner - but not a spouse or fiancé. The relationship at this level is more personal - but without invading the privacy of the customer. The timing therefore needs to be right - so that any potential tensions or conflicts are avoided or reduced to minimum. The company must know the customer details, possible tastes and preferences sufficiently well to build the relationship. Interactions must be respectful as exchange of personal information may be perceived as invasive.

The irony of the CRM systems at this level is that customer feels that the CRM systems compromise customer’s privacy - and for that reason most customers are reluctant to share personal information with the vendor, which in turn cause most CRM implementations fail. A salesman or marketer or account manager must therefore take extra precaution not to reveal any personal information of the customer to the CRM database system. This personal information must be carried in the heads of the vendor salesmen.

Customer’s need for personal recognition may be met by very simple acts by the salesman, such as rewards for customer loyalty (given to the customer - i.e., buying agent or the key decision maker), tailor made products, and words of appreciation.

Level-5: Self-Expression Need

Once the customer feels that the vendor recognizes him/her as person and can associate personally with the vendor, the customer is ready for the next level of relationship - that is of Self-expression. Customer who are in this level of relationship expect the vendor to focus on customizing and personalizing the product/service offerings. The customer expects the vendor to have a clear understanding of their needs and the vendor should be able to meet them. The relationship is characterized by mutual trust, confidence & respect.

For example, Dell Computers being a customer of Intel, expects Intel to know its needs for latest and most powerful microprocessors for the Christmas season. The customer then expects Intel (vendor) to announce and supply the latest processors in time so that Dell can ship the computers to its customers in time for Christmas.

Another example is Weyerhaeuser, a leading supplier of Timber products to Home Depot. Weyerhaeuser implemented a shipping system in which goods were loaded into trucks in such an order that it enabled Home Depot to unload the truck faster and sort out the goods in a more efficient manner.

In a consumer world, a common example will be that of a (famous) client and his/her fashion designer. The client expects the fashion designer to know his/her tastes and provide clothes accordingly.

It must be noted that in a B2B world, customers are more rational. Their business needs drives the relationship and is partly independent of personal factors. As a result, vendor can build this relationship by learning the customer needs. Based on this learning/insights, vendor should be able to offer highly customized and personalized offerings.

Customer relationships in levels 1-4 are defined by customer’s experience and is therefore heavily dependent to the external environment (i.e., external to the customer). At levels 5 and above the relationship depends on internal and external factors including rational and emotional considerations.

The key for success in building relationship at this level is to understand the customer’s implicit needs - i.e., those needs which are not expressed verbally. Vendor can strengthen the relationship by understanding the customer’s implicit needs and focusing on different ways to customize and personalize the offerings. In a B2B setting, this involves understanding the customer’s business operations, business models and then providing customized solutions: Like releasing products in time for Christmas or having goods packed in a truck in a manner it is efficient for customer etc.

Level-6: Co-Creation Need

This denotes the highest level of customer relationship. At this level, customer is very comfortable dealing with the vendor, the relationship is characterized by a sense of collaboration. The customer feels a need for a unique product/service and is willing to work with the vendor to develop the product/service. Often the idea of co-creation is initiated by the customer to the surprise of the vendor.

Co-creation relationships are personal and rational. At this level of relationship, the customer loyalty & trust is very high. Customers are willing to invest for joint development of products/service. Customer feel closely bonded to the vendor - to the point that the customer seeks a joint destiny with the vendor. I.e., some aspects of customer’s interests merge with that of the vendor’s interests.

A good example of Co-creation is collaboration between IDT Inc, and AT&T to develop a networking chip. AT&T provided the architectural guidance and design verification services while IDT provided the design engineering expertise to develop a network processor IDT32355. (I was a part of the design team at IDT Inc.) IDT was not bonded to sell the chip exclusively to AT&T and AT&T had the advantage of being the first user of this processor.

Alcoa’s wheel and forged products division does custom products for several auto manufacturers - Jeep Grand Cherokee, GMC Hummer etc. The result is a more distinctive products for the customer, and Alcoa increased it market share from 5% to about 35%.

Co-Creation denotes the highest level of customer relationships. This relationship can be strengthened by broadening interactions which involve co-creation of products/services.

Business Implications

Understanding the existing customer relationship levels has a huge impact on the future sales. The first step is to understand the level of existing relationship and then look at means of improving the levels of customer relationship. With every increase in level of relationship, the pay off in terms of additional sales in immense. One can only guestimate what the value of the increased sales. The increase can range from 2x to 100x or even 1000x!

Closing Thoughts

In most of today’s CRM implementations and its supporting policy - are based on revenue generated by customer. The customer’s are classified according to the revenue generated - this leads to a false sense of customer loyalty and a misplaced attention by the marketer or salesman. As a result, lot of valuable customers feel mistreated and move their business elsewhere. The idea of levels of customer relationships is simple & yet very powerful tool to explain complex scenarios - that have real business implications.

CRM policy must consider levels of customer relationship to strengthen the relationship. This can be done only with a high level of human involvement in terms of salesmen efforts, marketing efforts and even executive efforts to forge a strong relationship.

In a B2B setting, the development of customer loyalty - which is at the heart of marketing, falls right within the context of being customer focused and customer centric marketing based on customer relationship levels.

Tuesday, April 18, 2006

Make a successful sales presentation. Part-II

Selling enterprise software or custom software development services requires a long drawn consultative selling process. Consultative selling is a 5 stage process, and in each stage, a sales man needs to do a different sales presentation. In my previous blog on making a successful sales presentation , I had written about the importance of preparation in developing a successful sales presentation. The next step in the sales presentation is the actual presentation itself.

Before getting into the details of how to do a sales presentation, let me just reiterate the goals of a salesman. First goal of a consultant salesman is to establish a relationship with the potential customer and then make the potential customer make a purchase. Second goal is to maintain the relationship with the customer as that this "first-time" customer will make repeat purchases. Third goal is to intensify the relationship so that the "regular customer" becomes a customer champion and will make enthusiastic referrals. Presentations are an important part of relationship establishment and growth. (not to mention - dinners/lunches/games etc.)

Based on the above goals, presentations may be categorized by its primary purpose:
  1. Persuasion - make the customer take some type of action
  2. Informing - give new & valuable information to customer
  3. Reminding - make the customer aware of the successful relationship

A successful salesman will therefore have a set of presentations to make - but uses them with discretion based on different stages of selling process, different levels of relationship, and his goals.

Remember, that the presentation can take several formats:
  • PowerPoint Slides: For in-person, one-on-one or group selling.
  • Printed material - Brochures, letters delivered in person or by mail, which provide additional information to customer.
  • Telephone conversations: Talk to customer - reminding him, keeping relationship.
  • Computer data: e-mail, sharing documents, interactive sessions etc.

Developing a Persuasive Presentation

During your presentation, following guidelines will be useful:

Place Special Emphasis on the Relationship
Good rapport between the salesperson and the prospect is a necessary foundation for the use of a consultative sales presentation. People prefer to comply with requests or suggestions from people they know and like. They also will communicate more openly and freely when a relationship is one of rapport.

Sell Benefits and Obtain Customer Reactions
People do not buy things, customers buy benefits from the product. Don’t make the mistake of listing a number of features and assuming that the prospect will interpret them into benefits as you perceive.
Make sure that you:Translate features into benefits: E.g.. We have a large meeting room (feature) which means to you (translation words) that your meeting attendees will be comfortable and relaxed (benefit).

Obtain a reaction from the buyer
Follow the above translation of features and benefits with a question. For e.g. Ask "Is that what you had in mind?" This confirmation question allows you to check to see if you are on the right track. It allows the prospect to object to what you said and, thus allows you an opportunity to clarify what the customer really needs.

Minimize the Negative Impact of Change
Most customers resist change. By introducing new products/services and new solutions to the buyer, you are threatening the status quo. In most selling situations the prospect is being asked to consider change. Change is more acceptable to people who understand the benefits and do not see it as a thereat to their security. So whenever possible, help the customer to view change in a positive and realistic way.

Place the Strongest Appeal at the Beginning or End of the Presentation
Research indicates the beginning or end presentation of something is the most memorable. Appeals are the propositions which are of the highest concern or interest to the prospect. A strong appeal at the beginning with get the prospects positive attention and set the tone for interest in the presentation. Placed at the end, an appeal sets the tone for the closing or asking of the order.

Use a Persuasive Vocabulary
Words like partnership is a current positive and appealing word. The prospect feels good about terminology like this. Research has shown that the twelve most persuasive words in the English language are: "you", "money", "save", "new", "results", "health", "easy", "safety", "love", "discovery", "proven", and "guarantee".

Use Metaphors and Stories
A metaphor is figurative language that suggests pictorial relationships between objects and ideas. You can quickly paint vivid, visual pictures for prospects that will command their attention and keep their interest. For example, "This is the Mercedez-Benz of CRM solutions" which suggests high price and high quality/reliability of the product/service. Stories illustrate in a similar manner but also colorfully enrich the seller/buyer relationship.

General Guidelines for Creating Effective Presentations
  • Enhance the presentation with effective demonstration.
  • Pre plan methods for negotiating and closing the sale.
  • Plan for the dynamic nature of selling. Pre-plans may have to be altered on the spot – during interaction with the prospect as circumstances change.
  • Keep your presentation simple and concise
  • Summarize the presentation.
  • Use time wisely (since you have a presentation format to guide you, any long side diversions can quickly be brought back on topic as appropriate)

Closing Thoughts

Presenting a Sales presentation is an acquired skill. It takes time, practice for one to excel in giving presentations. In B2B selling - it is mostly a consultative selling process where the behavior and approach of the salesman makes a huge difference. I will be writing more about the actual human aspect of presentation in the future articles.

Wednesday, April 12, 2006

Make a successful sales presentation Part-1

What is a sales presentation? In a nut shell, a sales presentation is an advertisement delivered in person to the customer. The sole purpose of it is to make the customer buy your product. In consumer world, advertisements are extensively used - either in TV or Radio or Magazines/Paper or Internet. But In business to business world, advertising through conventional media does not work, so companies developed a set of slides - which contain certain messages to the customer. And this is conventionally called as "sales presentation"

Brief History

In early 1900’s, these slides were nothing but some printed sheets of paper accompanied with a live demonstration of the product. Later in 1950’s, few companies began to use a set of film slides which could be projected on a screen, a few companies in US also began to use film projectors to show short video clippings. These clippings were in fact advertisements made by a professional agency. This presentation using slide film projectors were very expensive and often it was out of reach of small firms - even in big companies, the number of presentations were very limited.

With the advent of plastic films from 3M and laser printers, a new form of sales presentation emerged - Computer generated slides which could be projected via a OHP (Over Head Projector). This marked the beginning of low cost computer generated presentations. (On a personal note, I still recall presenting my college project dissertation on a OHP - the slides were generated on a 386 PC - using MS Word & printed on 3M Film on a HP laser printer)

Today, with the advent of MS PowerPoint, many people (mistakenly) consider a sales presentation is simply a set of PowerPoint slides. But remember that a sales presentation is an advertisement for the company - and the main purpose of it is to entice the customer to buy.

Basics of sales presentation

Unlike a TV/Radio/Paper advertisement, a sales presentation has a longer format - and is delivered in person by a salesman. Thus adding a human element to this "advertisement". A good sales presentation is therefore the one which entices the potential customer to make the buying decision.

A successful sales presentation has two parts. Part one is Presentation Planning and Part two is the actual presentation and demonstration.

NOTE: Part -1 is described in this article. Part-2 will be described in the next article

Presentation Planning

First step in developing a sales presentation is to write out your presentation plan. Preparing a written plan requires one to think of the major selling points of your product or service. One must also think of the possible questions customer may ask. Consider the best case, worst case and most probable case, try to anticipate as much as possible. This requires lots of thinking - on what are the customer’s needs, what will be the major selling point to those needs, how would the customer possibly react, what would be the questions & objections, and how you can effectively show that your product or service can meet your customer’s needs.

The best preparation in developing a sales presentation plan is to know a lot about the potential customer themselves: Who they are, what market segments do they serve, who their competition is, what are the major challenges facing them etc.

Another important thing that must be taken into consideration while developing the sales presentation is the objective of the sales presentation. If the sales presentation is being delivered on the very first meeting, then the sales presentation must do the following:

  1. Establish rapport
  2. Discover needs
  3. Match your product features & benefits with customer needs
  4. Get commitment for the next action step.

In most business-to-business sales, the first meeting will not result in closing the deal or winning the order. So the objective for the very first presentation must be set accordingly.
In a multi-meeting presentations, the objective will be to:

  1. Reinforce the rapport established in the earlier meeting/presentation
  2. Build a relationship with the customer (based on inputs from the earlier meetings
  3. Jointly discover customer needs
  4. Set the stage for the next meeting
  5. Address any objections, concerns the customer may have
  6. Present the value of your product/service to the customer
  7. Close i.e., Get the order

Objective of the sales presentation drives the content of that presentation. In a complex sale, objective of various presentations are different, one has to prepare multiple presentations.

Closing thoughts

Planning a sales presentation is not something that can be done on a fly. Often in a complex sale, you would require inputs from various departments within your own company - to capture the value your product/service can provide, to answer the objections/concers of the customer, and to establish credibility to your sales presentation.

The primary purpose of the planning your sales presentation is to have a thorough preparation for the presentation. The thoroughness of your preparation will establish a strong rapport between buyer and seller (which is an essential ingredient for consultative selling).

Importance of Search Engine Marketing

In my earlier blog "Search Engine Marketing", I had written about how important it is to market on Internet through search engines like Google or Yahoo or MSN. Recently, I read some interesting research data on how people use search results, here is the summary of that research (done by iProspect) :

  1. Four of ten searchers tend to click on links on the first page of search results - then either revise their query or go to another search engine if they don't find what they're looking for.
  2. 62 percent of searchers said they click on a link within the first page of results, up from 60 percent in 2004 and 48 percent in 2002.
  3. 90 percent click on a link within the first three pages, up from 87 percent in 2004 and 81 percent in 2002.
  4. 16 percent of respondents said they revise their query or move to another engine after reviewing the first few entries; 25 percent said after the first page; 27 percent said after the first two pages; 20 percent after three pages; and only 12 percent beyond three pages.
  5. When re-launching an unsuccessful search, 82 percent of users use the same search engine as for the initial search, but add more keywords, That's up from 68 percent in 2002.
  6. 36 percent of search engine users think that companies appearing at the top of search results are leaders in their field.

This data makes it clear for all marketers that their company's web page must appear in the first page of the search results - especially when users are searching for the product(s) the company makes.

Tuesday, April 04, 2006

Consultative Selling - Way to sell Enterprise Software

Companies decide to buy enterprise software or opt for developing their own software based on the business needs. Customer will then choose a solution which will satisfy their needs. In other words, the "satisfaction of the needs" drives the buying decision.

To understand this better, lets consider a manufacturing firm (say DIY Inc) which makes and sells semiconductor I.Cs. The company has 40+ existing customer for its products and is talking to 500+ potential customers. The company wants to implement a CRM software to manage all its customer interactions. This represents a latent need for DIY Inc. The management at DIY Inc has recognized the need for a CRM solution - and calls for quotations from several vendors.

This is when a salesman - selling enterprise software comes in. To close the deal, the salesman must adorn a role of a consultant and work with the customer - to identify all aspects of the customer’s need, help in evaluating the options, resolve all the concerns the customer may have, help in making the purchase and support the implementation.

This process is called as ‘consultative selling’. Consultative selling involves five distinct stages:

Stage-1: Recognition of Needs

The value a salesman can add in this stage is to help customer recognize all the aspects of his/her needs. At the end of this stage, the customer must be able to define all his needs.A successful salesman will be the one who can get the customer define his/her needs in a way that closely matches with the solution he/she is trying to sell.

In our example, the salesman must help the management identify who all will use the CRM solution - Finance department - to account for sales from a particular customer account, legal department - to draw up the contracts with the customer, marketing department - to communicate with the customer on future marketing messages, Manufacturing department - to integrate their ERP system with any new orders from new customers etc.

Stage-2: Evaluation of various options

In this stage, a salesman must be able to present multiple options to solve the customer’s need with his CRM solution. A salesman must convince that the solution he is trying to sell can meet customer’s needs in more than one way. This will set the stage for the salesman to show the value of his solution and demonstrate that his solution is superior to other competing options.

In our example, the salesman must demonstrate the flexibility of his CRM solution - how the CRM software can be configured in different ways to solve the same problem. Demonstrate or convince the customer on how the CRM solution will integrate seamlessly to their accounting system, ERP system etc.

At this stage, it becomes essential to use value based selling techniques to convince the customer that his solution has a higher ROI (return on Investment) or lower TCO (total cost of ownership). A successful salesmen will be the one who can convince the economic value of his solution to the customer.

Stage-3: Resolve all concerns

Selling an enterprise software is always a complex sale. There will be few persons (also called as customer champion) in the customer company who will be supporting one solution, while there will be few persons who will be opposing it. People who oppose a particular solution will always raise concerns - regarding its functionality or ease of use etc., and will raise objections based on these concerns.

Salesman’s job at this stage is resolve all concerns and convince all doubters that his solution will work. This is essential because in most complex sales, decision makers will be putting their career and reputation at stake by opting to buy your solution - and if they perceive that your solution does not work for someone then they are more likely to back off.

To understand this better, say the VP of Sales is convinced about your CRM solution and wants to buy it. But the Marketing head feels that the CRM solution does not meet his needs. As a salesman, your task is to talk with the marketing head, understand his concerns and show how the CRM solution meets his needs.

Stage-4: Purchase

Purchase of any enterprise software is not simple. The purchase is a complex process involving several contracts, SOWs (Statement Of Work), payment terms, software support contracts etc. The salesman job in this stage is to work with the legal departments on both the companies - his own & customer’s firm and ensure that the purchase goes through smoothly. A salesman must answer any questions regarding the legal terms and resolve any objections to contract terms as quickly as possible.

In out CRM solution example, a salesman must ensure that maintenance terms & conditions are understood by the customer, get the paper work done, and contracts signed.

Stage-5: Implementation

A salesman’s job is not done with the sales contract. He/she must oversee the implementation and see to it that the software is implemented in the way the customer expected. The salesman must then organize training for the customer on how to use the new software - and see to it that the software delivers the value he promised to the customer.

Closing thoughts

"Satisfaction of Needs" forms the basis for consultative selling. This approach is customer centric. The salesman adds value to the customer and plays an important role as a consultant to the customer throughout the buying process.

Companies which sell complex software often do not use the term "salesman". The sales is handled by "Account Managers" or "Business Development Managers" or "Client Partners" etc. Irrespective of the job title, these people have to play the role of a consultative salesman.