The sales models used by your vendor partners, and your own sales team, are not keeping up with the dramatic shifts in how clients acquire products and services.
By Martin Sinderman
September 06, 2013
The sales models of major IT providers are not keeping up with the dramatic shifts in the ways customers approach and acquire their products and services, according to a recent report from Gartner Inc. Moreover, many SMB VARs and MSPs are in the same boat.
The report, The Future of IT Sales, is based on research that included interviews with sales execs at a multitude of major providers, including Amazon Web Services, Box, Cisco, Dell, HP, IBM, Juniper Networks, Lexmark, Microsoft, and SAP. It states that continued surges in IT innovation have spawned a “Nexus of Forces,”—that is, social, mobile, information, and cloud—that has profoundly impacted customer behavior.
“These four forces have had the effect of completely changing the ways in which customers find out about, consume, and buy technology,” according to Tiffani Bova, vice president and distinguished analyst at Gartner.
But some things haven’t changed much at all. At the head of this list are the traditional sales models utilized by the big tech providers and resellers alike, characterized by Bova as having a “relentless focus on getting ‘feet on the street’ in pursuit of an ever-larger installed base.” And, she notes, “We’re seeing that a lot of these sales models, though they have worked historically, are no longer effective.”
In addition to anecdotal accounts, evidence of this growing inadequacy can be found in recent tech-business news. Along with Microsoft announcing the largest reorganization it has done in decades, “We have seen more challenges show up on quarterly earning calls,” Bova says, “including two major providers (Oracle and IBM) over the past two quarters that missed their numbers, and actually pointed the finger at their sales organizations for failing to deliver.”
What’s to be done? According to the report, “What is needed is a radical transformation of the technology sales model grounded in a view of growth that involves three key areas: the products and services offered, a more granular view of target market and customer (beyond standard geographic and demographic segmentation), and the sales models deployed to meet the customers where and how they want to buy.”
And any successful sales model will be based upon recognition of the changing dynamic between sellers of IT products/services and customers, according to Jim McGregor, founder and principal analyst for Tirias Research.
“More and more, customers are making it clear that they don’t want just a piece of hardware, or just a piece of software,” McGregor says. “What they do want are IT providers that can come up with complete, tailored solutions.”
And that’s an important point for VARs. As they train and prepare their own sales teams to work with prospects, says Bova, they must keep in mind that customers are far more educated now then they have ever been when it comes to purchasing IT and IT services. “You can’t sell in the same fashion with the same sets of ‘activities’ which you did in the past and expect equal results,” she notes. “Customers are now more demanding and are far down the buying journey by the time a partner’s sales force reaches out.” Bova’s advice? “Meet the customer with different value propositions and pay close attention to the new buyers.”
THE “SELLER’S DILEMMA”
For large, traditional IT providers, completely changing existing sales models to conform to new market realities is, to understate, not easy. One of the biggest barriers to innovation, according to Gartner, is lack of flexibility on the part of these organization’s sales leaders to reinvent their models without placing all-important quarterly revenues at risk—a situation dubbed the “seller’s dilemma.”
To get past the horns of the seller’s dilemma and ultimately create new sales models that better address the needs of today’s customer, the big providers need to identify “innovation teams,” or groups within their organizations that are not held accountable for quarterly numbers, and focus solely on analyzing the sales models to the extent normally reserved for areas such as finance, according to Bova.
That apparently isn’t happening much yet. “Providers that are missing their numbers are responding with things like hiring more salespeople or doing more cross-selling, instead of taking a step back and asking why they are coming up short,” says Bova, adding “There is a problem, and we don’t as of yet see anyone responding appropriately.”
While the likes of Cisco, Oracle, Dell, IBM, and other tech giants dither, SMB channel partners must consider hiring a new type of sales rep, says Bova—“one who can have both business and IT conversations, who is able to listen and guide the customer on the journey they want to take. This is not about technology or speeds and feeds. This is about delivering true business value.”