I love a bake sale. Fresh bakery and hot coffee are wonderful treats on a Sunday morning. But I am a little jealous of the baked-goods seller. They've got everything going for them. Their customers know just what they want and approach them directly. The off-the-shelf product needs no modifications. Competitors steer clear (and often agree to produce only non-competitive offerings). The asking price is considered reasonable. And customers happily tell their friends about the great product they got.
That's not the sales world of my experience and I'll wager it's not yours either. None of the "bake sale" conditions hold true when selling enterprise software. Customers don't know what they want, so they don't come looking for you. Your product never quite fits, so they ask to modify it. They find your service rates too high and invite competitors to bid against you. Discounts are expected, while referrals are rarely given in return.
Maybe it would be better to bake cookies, right? Take heart! The answer could be simpler than you think. You might just be selling the wrong way for the right customer.
Even with all the variation and unknowns of the sales environment there are only four approaches to selling software (or anything else):
- Sell commodity products at the lowest price.
- Promote product features that the client finds advantageous.
- Devise operational solutions that solve a client's specific business problem.
- Advance strategic enablers that fundamentally change the way the client does business.
As a sales professional, it's your job to match the right method with the right customer. Your choice will depend on the complexity of what you sell, what resources you have at your disposal, and how the customer wants to buy. The key characteristics of each approach are outlined in the figure at left (click to enlarge).
It's not always clear when to use a particular approach. To help you choose we will explain each one, provide example value propositions, and touch on the pros and cons of each approach.
1. Sell Commodity Products
This approach isn't any easier than the others. It might actually be the hardest one. Yes, you will strip down the sales organization until you're left just with order takers, but even commodities have supply chains, production schedules, distribution networks, points-of-sale, customer service, and product warranties to contend with. Optimizing all those interlocking processes down to the last penny takes a tremendous amount of dedication and effort. Wal-Mart didn't appear overnight, but many commodity players do disappear that way.
I mention the commodity approach as a warning: be careful not to discount your product to the point where you unwittingly compete with freeware or Wal-Mart.
2. Promote Product Features
This is the easiest entry strategy. It requires only a rudimentary understanding of the client's business. It's also a low-level entry point- you don't need to get to the CEO to sell. In this approach, you tell as many prospects as you can about the great features of your product. You increase your odds of success by spreading a wider prospecting net (review Influence: Science and Practice by Robert Cialdini to increase your chances of success).
Example: Our visualization software let's you combine design data from several different CAD systems in one place, and you don't have to be an expert to use it. Is that something you would be interested in?
Advantages
- No need to build high-level relationships in the prospect company
- Little need to understand company or industry
- Few selling resources required (a friend mine refers to this as the three D's: Demo-Dinner-Discount!)
- Ask simple, leading questions aimed at exposing problems easily resolved with your product's capabilities
Disadvantages
- Margins aren't great- discounting is common
- Low barriers to entry if competitors get wind of the sales pursuit
- Few strong relationships established across the company
- Product features may not benchmark well against competitors' offerings
- May not be able to define the parameters of the engagement if competitors are selling at a higher level (i.e. using a more appropriate approach than you)
3. Devise Operational Solutions
This approach moves from talking to listening. Your goal is to question users about pain points and problems in their current environment and get them to explain what solution they need (see SPIN Selling by Neil Rackham and Selling the Software Business Case for advice). Even when customers understand that they have serious operational issues they might still be unfamiliar with the technologies that address them. Once you've got enough evidence, you can present the features of your product as the solution to these issues.
Example: You've explained that you don't have a way to hold design reviews with overseas facilities without traveling. With our visualization software, you could virtually collaborate with these groups and keep your work synchronized without any travel. Wouldn't the time, effort, and money that your engineering organization saves be worth the cost of the software?
Advantages
- Naturally has wider exposure across company, as solution-focus impacts more people
- Gets away from selling an application and moves into solving industry-specific problems
- Shows concern for the customer's issues, elevates beyond simple product pusher
Disadvantages
- Need to understand the industry value drivers
- Need experience solving industry- and company-specific problems
- Requires wider relationship net, need to secure buy-in of more people
4. Advance Strategic Enablers
This approach lives in the rarefied air where few dare to fly. It evolves from listening to advising. Your goal is to educate the client about problems they don't even know they have. If you act as a partner that is committed to improving the client's business in innovative ways then you become a trusted advisor at the complete opposite end of the spectrum from the low-cost provider (see Defining the Benefits of Software, Building Trust in Selling, and Growing a Software Consulting Practice for help).
Example: We've investigated your product development costs and found that you spend 15% of your budget building physical prototypes. In our experience, you have an opportunity to integrate virtual design data into your manufacturing process and eliminate 50% of these prototypes, generating an annual return of 150% on your technology investment. Is that something your shareholders would consider worthwhile?
Advantages
- Difficult for competitors to affect your sales pursuit when you understand the client's strategy and are trusted to help make it an operational reality
- Able to develop contacts at highest levels in customer organization due to the far-reaching scope of your work
- Benefits much wider than user- or workgroup-targeted functions/solutions
- Can become known in the industry as vendor of choice for enabling strategic improvements
Disadvantages
- Takes a great deal of time, resources, and expertise to accomplish
- Requires the industry knowledge of an experienced strategy consultant
- Need deep understanding of strategic planning, operations, and cost-benefits analysis
- Must develop the skills, stamina, and mindset to sell "high and wide"
Which Approach is Right For You?
As you were reading, you might have had a feeling about which approach you attempt to execute as opposed to which approach you are currently structured to execute. The wider the gap, the less effective your organization will be. Without diving too deep, there are two ways to sort it out:
A) Align the resources you have with the approach they are most able to execute at the lowest Cost of Sales
B) Develop new capabilities to execute a specific approach for specific customers, industries, and specialties to generate the highest revenue
You'll want to do both, but one will be more important to you. Work with your sales enablement teams to optimize your organization to sell with the right approach to the right customer!
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