Tomicide Solutions, July 2010

Should Information Technology Companies Do Sales And Marketing Or Integrated Business Development?

By Tom "Bald Dog" Varjan


Podcast version: MP3 Version. Right click the link and click "Save As".


Do you know what Hitler and Napoleon had in common?

Well, besides their megalomania, each of them had only one testicle. This amazing fact reminds me of many IT business development executives who don't have the balls to make long-term commitments and unite sales and marketing but rely on their sales legions' doing cold prospecting grunt work to keep their companies alive.

And while they are busy cold calling and tearing down doors, what do marketers do? They sit in their air conditioned offices and invent fancy slogans and cute images.

And at the end of the fiscal quarter, management praises marketers for the great creative work they have done and beats up the sales folks for failing to bring in quota... again.

And now the freshly praised marketers set out to create some more useless slogans and images, while salespeople would like to go to the pub, drown their sorrow in booze and get drunk as a skunk.

One of the biggest problems with business development is that in most IT companies it doesn't exist. What they have is separated silos of sales and marketing departments, and they hardly ever talk to each other.

Sales folks regard the marketing folks as creative clowns, and marketing folks regard sales folks as losers who permanently got stuck at the bottom rung of the professional achievement ladder and don't have the brains to get decent jobs.

And there are the client services folks who usually are minimum-wage grossly under- or unqualified people, putting in minimum effort until they find better jobs. If you've ever dealt with your web hosting company, you know what I mean. Yes, there are pros, like Bluehost and Dreamhost, but most of them are borderline disaster zoneswhen it comes to client service.

Conflict Among Information Technology Sales, Marketing And Client Services

One of the main reasons of this conflict is compensation and working conditions.

Marketing people are paid straight salaries and bonuses. They live in their cute, little ivory towers, paying little or no attention to what the sales folks do. They are too busy doing their creative magic of creating fancy slogans, cutesy images and organise promotional campaigns, whatever that means. All in all, they are not accountable to contributing to revenue generation.

Now look at the sales department. The month is over and the cute promotional campaign has bombed... again. The sales folks get beaten up because they've failed to bring in enough money to pay the rent and the overheads and the nice bonuses for the creative souls in marketing.

And some of the sales folks who exceed their quotas, have their commissions reduced and quotas increased, so their incomes can be capped at a "reasonable level", and don't get obscenely rich. After all, management wants to keep the sales folks under control.

So, some sales folks get pissed off, and leave. This explains the 43% annual attrition among sales staff. And of course, they take lots of their clients with them, which is another slap in the company's face.

And now let's look at the client service folks. They are expected to keep in touch with clients, present new offers to them and answer some questions they may have regarding the products and services they have purchased.

Since these folks are paid for the number of calls they make, they don't really care about engaging in meaningful conversations. They are too keen on jumping on the next call to make their call quotas.

So, you have three groups of people who are treated and compensated differently, thus work against each other. So, what do you really expect of them?

On the top of all this, most companies have an antagonistic corporate culture in which spying on each other, backstabbing, power struggles, rank-pulling, threatening, gossiping and personal attacks are daily events, and even if management doesn't encourage it, it accepts it and turns a blind eye to it.

So, when we have three distantly related departments, then what we expect is that 100 people pull the "corporate cart" in 101 different directions.

The funny thing is though that most of these people either don't give a shit about their companies' success or diligently work towards their own personal successes even at the company's expense.

A 1990 poll revealed that 17% of employees felt it was all right to steal small items from their employers. I guess the term "small item" is pretty relative. For some folks a bulldozer is a small item. In 1999 this figure had risen to 37%.

Pollster George Gallup, Jr., whose organisation has been conducting this kind of research for more than 50 years, has said...

"We now have people debating the relevance of The Ten Commandments. Is the first one applicable? Two? Three or four? Should we ignore the one on adultery? Is bearing false witness really lying?"

Sad though this may sound, this is how so many companies operate. And information technology is right on the top of the employee apathy ladder.

The Components Of Information Technology Business Development

So, let's see how the business development process breaks down segment by segment.

Integrated Business Development Segments

Marketing includes positioning your company, packaging your products and services and promoting them. Of course this takes a bit of time and investment, and since we live in a short-fused society, most IT companies want it all, want it now, want it world-class and want it free or very cheap.

So, they skimp on marketing and start selling something no one knows about. They hire an army of peddlers and send them out to chase after the market and start convincing them to buy something they don't even know.

These "high powered" salespeople typically use emotions like fear, shame and guilt to pressurise prospects to buy their stuff.

Sales is turning the best qualified leads into paying clients. Many IT companies spend far too much time on this and neglect the other two areas. They are focused on "hunt, chase, hound and pound" techniques to bludgeon prospects into submission and grab their money... as much as possible.

These salespeople's mantra is...

"Tear their doors down, barge in and hammer them until they give you money", "Don't take no for an answer!", "Keep harassing them until one of you dies", etc."

We all have met these "professionally" trained people, who may well be great folks in normal life, but were trained to be slimeballs in order to sell.

Actually, I attended a small business course in the mid 90s in the UK, and there was a counsellor in our class who was about to start her private practice. She spoke up when the sales trainer talked about objections, and why objections are really buying signals...

"So, essentially what you're saying is, using dating as an example, that the louder the woman screams 'No', the harder you work on raping her because 'No' really means "Yes", and really and truly she wants to be raped."

The instructor was a bit speechless. And the comparison made me think about sales objections.

Different people have different beliefs. I believe the "No" is "No", but I may be wrong.

But I believe if someone says "No" to my offer, I should respect her decision even if I go home empty-handed.

Service is about providing ongoing support for clients for long-term relationships. The problem is that in many companies these folks are minimum wage people from the bottom region of the unemployment line. They usually have minimum education, minimum loyalty and minimum commitment to doing a great job at what they do. So, just among sales folks, the annual attrition rate of service folks is very high too.

There are two types of service departments...

1. Mantra: "Our job is to react to our clients' problems in a knee-jerk manner whenever they come to us and patch up the symptoms." Do you know why most companies' service departments have "customer from hell" specialists? Maybe because only a "customer service from hell" department would accept "customers from hell".

2. Mantra: "Our job is to proactively control our clients' experiences, and making their futures as successful as we can." This requires an anticipatory approach and collaborative relationships, but most IT companies are not willing to invest in hiring good folks for this function.

Now let's see the individual segments...

  1. Here there are marketing and sales, but due to lack of client service there is atrocious client attrition. It is the typical revolving door syndrome: Clients come in through the front door and leave through the back door pretty quickly.

  2. Here we have sales and service, but because management skimped on marketing, there is a very low level of interest and selling is an uphill struggle. People just don't want to buy unknown bits and bobs. Especially when they are bloody expensive.

  3. Here we have good marketing and service. There is a problem though. We can't turn those prospects into paying clients. Typical examples are many Internet marketing and search engine optimisation firms. They pontificate how good they are at getting traffic to websites, but the only reason they can stay alive is because armies of their salespeople are knocking on doors and dialling for dollars almost non-stop. That's insane.

  4. This is how and integrated business development department operates. Everything is in place and provided that department has a good culture, these folks can really fly.

And Culture Is The Other Key

And with that we have arrived at management. Actually management is single-handedly responsible for 65% of employee attrition. Here are some of the reasons why people leave:

  1. Not being treated with respect

  2. Prevented from making a difference

  3. Not being listened to

  4. Not being given responsibility

  5. Low pay

As you can see, people are looking for more than money. To read more on this misbelief, read some of Dan Pink's books.

So, How to Build a Kick-Arse Business Development Team That Actually Works and Produces Results

We have to include a grossly overlooked element of the equation: The culture of the organisation and the attitude and atmosphere in the department. The business development department should be treated as a team with an independent leader and an independent budget. Integrated Business Development Continuum

Forget about sales, marketing and client service as separate silos. Make sure that these three functions are seamlessly blended into a conducive culture in which people are naturally inspired to do their best and beyond day after day. We know from the 11 September 2001 terrorist events what can happen when departments fail to communicate. Allegedly all major "security" agencies knew about the Al Qaeda attacks for some time, and lack of communication between those agencies was one of the causes of the devastation.

Change the whole culture from that of "sales reps managing accounts" to that of respected experts building relationships to improve their clients' businesses."

Just think about it for a moment. If I came to you and said...

"Hey, do you want to sign up to be my account? I promise I will manage you well."

Is this compelling? Not to me.

But if I said to you...

"Joe, you've said, including all the advertising-, travelling-, food- and hotel costs, it costs you about $45,000 to land a new client."
"Yes."
"I think we could reduce that to $14-16,000. Should we talk about it?"

Remember, the inside reality of your company becomes its outside perception. You can fool some people a few times, but not all the people all the time.

Using the analogy of a personal relationship, marketing can be seen as dating, selling as the wedding, and service as a long-term relationship.

Unfortunately, many IT companies' business development activities have a nasty resemblance to date rape. They have no marketing (courting) in place. They just want to sell right away at the first meeting. Reps go out, set up some "dates" and twist prospect's arms until they give in and buy.

IT companies also have to put large emphasis on creating the right culture and environment inside their operations. So, why is the environment important?

First, What is Culture?

According to Merriam Webster's Dictionary, culture is...

"The integrated pattern of human knowledge, belief, and behavior that depends upon man's capacity for learning and transmitting knowledge to succeeding generations; A set of shared attitudes, values, goals, and practices that characterises a company or corporation."

So, heed this: You can have the best office, the best products, the best services, best technology and best people (but the best people don't join crappy cultures), it ain't worth moose tits unless you also have a supportive culture to envelope all that.

Let's start at the beginning, and call it the Pygmalion Effect"...

...but feel free to call it management 101. Some day even schools will teach this basic principle.

In George Bernard Shaw's play, Eliza Doolittle married Freddy Eynsford-Hill because she recognised that in Professor Henry Higgins' perception she had always been and would always be a cockney flower girl and the professor would treat her accordingly.

She knew that the arrogant Higgins would never accept the changes in Eliza. She knew he would always treat her the same way regardless of what she achieves. As she said to Freddy...

"The difference between a flower girl and a lady is not how she behaves but how she is treated. I have always been and will always be a flower girl to Professor Higgins, because she treats me as one. But I also know that I will be a lady to you because you treat me as one."

Of course, behaviour matters a lot, but the treatment defines the behaviour. People live up or live down to the levels at which others treat them.

So, when you work on your company's business development, first make sure that you have the right culture which you can maintain and further improve. This way, whatever improvement you achieve, will last and people can further improve it.

So, then look at cultural ingredients like corporate and departmental vision, mission, strategy, alignment of personal goals with corporate objectives. The key is to empower and enable people to be the best they can be every day.

On Summary

Yes, it's possible to run a fragmented sales and marketing department. Many IT companies do that because it looks easier on the surface.

What's also easier than building a great integrated business development department team is setting up individual quotas for salespeople and pitting them against each other using some pay for performance scam.

A short while ago Michael McLaughlin of Management Consulting News did an interview with Dan Pink on motivation, and this how Dan summed up the problem...

McLaughlin: If you could give a leader just one piece of advice about managing the performance of others, what would it be?
Pink: My advice would be to remember that the individuals you're leading are not that different from you. Managers will say to me well, I have that desire to direct my own life, master things, and to be part of something bigger, but not everybody's like that; if you give some people autonomy, they'll just shirk.
First of all, I don't buy that because I don't think people are that much different from you and me. Second, if you think the only way some people will be motivated and accountable is if you bribe them, then why do you want them working for your organization in the first place?

Many years ago my dad was a master painter, decorator, and he taught me lots of things about painting and putting up wallpapers

The whole idea behind putting up wallpapers is that you want to make sure that when on the wall, the individual rolls look like one gigantic sheet of wallpaper. You can put up the roll in such a way that the bare walls are visible by the edges, and that "does the job" in a practical sense

Most of the wall's surface is covered. But how much does it add to the overall beauty of the room? None. Not a sausage! And how much does it take away? A lot. A helluva lot.

When you have sales and marketing folks, they can "do the job". They can look impressively busy achieve some success. But it still feels like driving your car in second gear and the handbrake half-on.

But when you have a seamlessly integrated business development team, then you can say you're on your way to some great success.

I also dare to say that good business development is marketing heavy. Your company provides great content, so as your prospects are digesting your content, they can conclude that you're the only serious game in town, and you're worth every penny you charge.

And now let's go back to Napoleon and Hitler and the grand total of their balls.

Similarly, a fully integrated business development team may well have significantly fewer balls than a legion-sized sales forces, but on the ground scale of things they can achieve more on a revenue per employee basis.

And this should be our guiding light. Let's forget about gross revenue. And let's focus on revenue or profit per employee. And since we're in the knowledge worker age, it's pretty much revenue per brain cell.

And in spite of their ballsiness, both Napoleon and Hitler had their miscalculations too. Well, we all do from time to time.

They both underestimated the notoriously harsh Russian winter, and caused their armies unspeakable losses.

Running a fragmented group of people called the sales and marketing may sound ballsy but it's a sign of underestimating the marketplace. Yes, it's doable but the losses can be significant.

And every lost person is costing the company 15 times of the person's gross compensation.

And that is worth considering when structuring your business development force.

Come and let's discuss this newsletter issue on my blog...


Attribution: "This article was written by Tom "Bald Dog" Varjan who helps privately held information technology companies to develop high leverage client acquisition systems and business development teams in order to sell their products and services to premium clients at premium fees and prices. Visit Tom's website at http://www.varjan.com.