Tomicide Solutions, June 2012

Who Is In Charge Of Business Development?

By Tom "Bald Dog" Varjan

Synopsis

For most IT companies it's always a dilemma whom to appoint as head of business development. Should it be someone from sales or marketing?

The problem is that marketing people tend to play down the importance of salespeople, and salespeople do the same to marketing folks.

So, let's have a short discussion on who should be at the helm of business development.

Podcast: MP3 Version

Over the last few decades, EON and the Broccoli brothers have thought pretty seriously about who should play James Bond. Considering Bond's accumulated fame and notoriety, that was a serious question. The wrong choice would ruin the whole 007 enterprise.

Ian Fleming originally wanted David Niven, but he was dropped. Then Fleming suggested his own cousin, Christopher Lee, but that was considered a conflict of interest. It also seems to me that Christopher was always more comfortable to play villains.

Then Patrick McGoohan turned the opportunity down because he thought Bond was "too promiscuous." So did Gerard Butler because he thought it would ruin his career. Rod Taylor considered the role "beneath him".

Then both Burt Reynolds and Clint Eastwood turned the offer down because they thought a British actor should play Bond.

At one point even veteran singer, Tom Jones was considered. And then came Daniel Craig, and the producer crew settled with him.

So, it's not easy to decide whom to put in such an important position.

And it can be equally important to decide whom to put in charge of your IT company's business development.

Should it be a sales-savvy person or a marketing-savvy person?

This is the dilemma I had with Erik, a client a few months ago.

His company had always been a hunter in terms of client acquisition, but Erik realised that the hunter approach was dying out. But they had never done marketing, so it was natural to appoint the fiercely competitive sales manager to run business development, that is integrating sales and marketing.

And that's when the problems started. Well, a bit later.

Liz, the new business development director's idea was that marketing was for wimps who were too lazy and too stupid to sell. Based on that, she presented her "manifesto" to the board, emphasising that based on those principles, she intended to shake up the company.

Since I think there are some lessons in her "manifesto", I've decided to share it here with you with some of my comments. Many of her Manifesto items are based on the old Mckinsey fallacy...

"If you can't measure it, you can't manage it."

Sales Is A Number's Game?

Many years ago when I was studying for my horse-and-cart driving licence in England in order to drive a horse-drawn hearse, I realised that just because you double the number of horses and the number of cracks of the whip, the cart is not going to move twice as fast as before.

Optimum speed is achieved by selecting horses of the right character and properly maintaining the cart. Both have measurable elements, but at the end of the day, both the horses and the cart required judgement and discernment.

Cold calling is a retarded practice to acquire great clients, and no matter how many calls we make, we can never reach the cream (top 0.5-2%) of the market that can become the best clients. Clients that pay fully and promptly and have the potential for repeat and referral business.

Sales is not about doing more of the same, but doing less of something drastically different. But this goes against conventional sales wisdom.

Focus On Your Numbers And You Will Succeed

This is similar to the nonsense promoted in the movie "The Secret"...

"If you think of what you want, it'll fall into your lap."

The interesting thing is that clients can feel what salespeople focus on. Most salespeople focus on their own quotas and commissions, that is, what's in it for them. And as a result, quite correctly, most clients don't trust them.

But this is not salespeople's fault. Most IT companies pay their salespeople for short-term individual performance. That achieves two things. Most salespeople resent long-term profitability and teamwork. The two main criteria for lasting success.

I know many people spit on teamwork, but only because they don't understand it.

Anyway, buyers are not idiots, and they know that due to the retarded compensation system, salespeople focus on their own numbers not on how they can help clients.

But...

If you want to lose weight, what should you focus on? On the number of pounds to lose (end) or the on your training, nutrition and lifestyle (means to the end)?

If you fulfil the means, you are almost guaranteed to lose the desired weight.

So, if salespeople focused on their clients' success, they would be more trusted, more respected and would make more sales.

Why is this so hard to understand? I don't know.

Excellent Salespeople Are Born

Well, so are excellent dodo trainers, disco singers and turntable mechanics. The problem is that they are gone the way of, what we can only call in plain English, the dodo bird.

Since the birth of those salespeople, both the sales terrain and the overall buy-sell dynamic have changed quite a bit.

So, whatever excellence those salespeople were born with, it's just a temporary measure. Life goes on and the world changes. And every change requires different behaviour both from buyers and sellers.

And now we're at sales education as a never-ending practice. And at that moment all genetic knowledge of the born salesperson is useless.

And one more thing since we're here. What skills do salespeople actually need to sell complex, high-ticket and hard-to-explain solutions to sophisticated buyers?.

Not sales skills that's certain. Not the traditional nonsense of persuade, convince, present, handle objections and close the sale. No. What they need is general boardroom-calibre business savvy, understanding of the prospect's business and the industry and kick-arse diagnostics skills.

And all that can be learnt and practised almost to perfection.

Have A Great Elevator Pitch

But what the bloody hell for?

This is what people call a unique selling proposition (USP), that is, what differentiates you from the competition. It's nice, but without explicit problems and needs to solve them, the USP is useless.

It's far too early to trumpet what makes you a better husband than your girlfriend's five other lovers, if she has no intention to marry at all. If you're a dudess, just reverse the roles.

The other problem is that most people with whom you can use your elevator pitch are not real decision-makers, but lower-level opinion-makers. After telling them what you do, they go to their bosses and make a pig's ear of trying to represent your business.

Hint: Real buyers hardly ever go to places where there is a danger of low-flying elevator pitches.

So, what to say when asked "What do you do?" I think the least phony answer is "The best way to explain it is by telling you a short story about one of my clients".

The reptilian brain, the ultimate decision-maker in humans, can relate to stories but not to abstract descriptions. Provided the stories consist of the six ingredients the reptilian brain needs to make decisions.

Run A Proposal Factory

Most meetings of most salespeople end in salespeople's volunteering to submit elaborate proposals, which often escalate to the level of the proverbial War and Peace, full of useless self-aggrandisement and implementation minutiae.

I've read somewhere that the average proposal for a high-five or low-six-figure project takes 143 person hours. This is almost a full month's work of people who are on six-figure annual salaries.

So, sellers are now in heavy-duty proposal production mode, although the only reason buyers agreed to the submission of their proposals is to get rid of salespeople.

Now imagine that those super-busy executives or procurement agents get on with their works, and one day a proposal shows up.

What happens?

Nothing. Not a sausage.

In the best case they throw it away. But in the worst case they start cherry-picking the best ideas for internal implementation.

Look at proposals as marriage proposals. Men propose to women when there is a 99% chance of getting a resounding "yes". They know when the timing is right.

Some buyers may say, "Submit a proposal and then we can talk." In most cases it's just a covert way of getting rid of you.

Make sure your buyers jump through some qualifying hoops before you submit proposals to them.

Also, keep your proposals short and strategic. It must be a written documentation of what you've already verbally agreed to.

You can also consider charging a nominal fee for the proposal. Then on acceptance, you credit this fee back to the client on the project fee.

Unless You're A Born Salesperson, It Takes Years To Become Great Salesperson

Well, not so much in terms of years, but what sort of practice you pack into your years. Practising handling objections and closing is useless no matter how long you do it. Only peddlers and hucksters do that, and buyers do their best to avoid them like the plague.

Using obsolete techniques, it can really take many years to learn something useful and to become a profitable salesperson.

Note profitable. The key is NOT to make dozens of sales at 30-50% discount, but to make a few sales. And in those sales, to capture the value to be created for clients, to get paid for that value and then create and deliver that value. A drastically different approach.

Unfortunately, obsolete sales tricks get salespeople relegated to purchasing agents and then the price war starts. And regardless of the demanded discount, most salespeople are simply unable to walk away from done deals.

So, they happily accept deals that walk their companies one large step closer to the bankruptcy court.

All We Need Is Just To Get Face-To-Face With Buyers

The idea here is that once salespeople are in front of buyers, they can manipulate them or even twist their arms to hand over some money. This is why many sales trainers still teach that first salespeople have to sell appointments, and once with buyers, they can push and cajole buyers to buy something.

Well, this approach doesn't work anymore, simply because instead of buyers' meeting salespeople, buyers instruct purchasing agents to organise bidding wars and see who is willing to do the job cheaper.

We can say that in response to retarded pushy and manipulative selling practices buyers had created manipulative buying practices. And by today, it's become a full-blown pissing contest between buyers and sellers to out-trick and out-manipulate each other.

But buyers have got fed up with the process, stepped back and built strong peddler fodders around them, called purchasing and procurement departments, to protect themselves from the barrage of commission-hungry peddlers and their idiotic sales managers.

So, sellers have got stuck outside their markets' peddler fodders, speechlessly staring out of their heads like a herd of urinating hogs.

And after many years, they have started realising that by attacking peddler fodders using old methods all they achieve is that they collect more broken bones, bumps and bruises.

They know they have to use more brain, not more brawn, to entice buyers out from behind the peddler fodders using valuable content and a totally new sales approach.

Some sellers learn; most of them don't.

As German physicist, the discoverer of quantum physics and 1918 Nobel Prize winner, Max Planck said many years ago...

"Progress happens funeral by funeral"

Lots of peddlers and their sales managers have to die before selling in general becomes more buyer-friendly. Oh, well. Gravediggers need jobs too.

I don't mean to be cynical. I'm merely expressing a little sympathy for my former profession.

We Are The Best Choice

This is something everyone and his kitchen sink claims. Especially marketers and copywriters are notorious for calling themselves "America's best...", "World's best..." or "world-renowned", but IT companies stay close too with their unsubstantiated claims of "robust", "bleeding edge", "world-class", etc.

Yes, in every industry there is a best choice, or rather a seemingly best choice. Well, George W. Bush was the seemingly best choice for the US presidency in 2001, but turned out to be a disaster.

And Bernie Madoff was a seemingly best choice guarding people's money. After all, as the past president of Nasdaq, he really was the best bet to invest with.

Was Bush or Madoff really the best choice?

Based on a 2008 study by Broderick & Company, here is a breakdown of what buyers are looking for when they want to engage external professionals and find the best for company the project.

Criteria For Hiring Consultants

Can you see that winners and losers select external professionals based on drastically different criteria?

Winners select industrial expertise. Losers select low price. Is it surprising that most winners remain winners and most losers remain losers. What makes a company a winner or a loser? The leaders' mindset. What else?

What makes a seller the best choice in buyers' eyes?

Blair Warren explains it in his e-book, "One Sentence Persuasion"...

It may seems simple, but he might just be right. If you manage to demonstrate those five points, your company becomes the default best choice.

Summary

So these were some points of Liz's manifesto about increasing sales. The good thing was that Erik, the big boss saw the problem with her approach right away.

The problem was that Liz's approach would have increased short-term gross revenue at the expense of long-term net profits. And Erick was smart enough to forego short-term revenue for long-term profits.

And what happened to Liz, the new sales director? Well, based on her behaviour, after leaving the company, I think she became a ward in a prison. Her idea of threatening and intimidating her people to perform better made her the perfect choice for that job.

And I think Erik learnt it once and for all, that business development in the 21st century was a far cry from hard sales in the 20th, and doing hard sales in the 21st century was a recipe for disaster.

Today the company has an integrated business development team run by a marketing veteran with a pretty impressive track record.

But what's even more important than her track record is her attitude about business development. It's about gently compelling buyers to do business with the company, rather than mercilessly bludgeoning them with sales pitches, like a pirate gang, until buyers surrender and hand over their money.

Yes, this sophisticated approach takes a bit more thinking and planning, but also creates better relationships with clients and those clients are willing to pay for the value of their projects.

And in my view, these two benefits alone make the second approach more viable in the long-run.

What do you think?

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.