How Do We Know If We’re A Replaceable Vendor Or A Trusted Technology Advisor And A Respected Technology Authority? Part 2

February 26th, 2011

In this month’s issue of Tomicide Solutions: “How Do We Know If We’re A Replaceable Vendor Or A Trusted Technology Advisor And A Respected Technology Authority? Part 2″

Today we continue our journey into Vendorville and Authority City trying to discover the main differences between replaceable vendors and respected authorities, their mindsets and their operations.

Last month we discussed 11 differences, and this month I’ll torture you with 11 more.

Some of the differences apply to your company in a positive way, that is, in that area your company is a respected authority, but we all have replaceable vendor characteristics.

And these are the little chinks we want to correct in our armours, so we can come across as the perfect authorities that buyers are looking for. Of course, we can never achieve perfection, but it’s worth travelling on the road that takes us closer to it.

And this is what we discuss this month’s horrifyingly terrific episode of Tomicide Solutions, entitled, “How Do We Know If We’re A Replaceable Vendor Or A Trusted Technology Advisor And A Respected Technology Authority? Part 2“, and if you feel brave enough, then hop over and check it out.

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How Do We Know If We’re A Replaceable Vendor Or A Trusted Technology Advisor And A Respected Technology Authority? Part 1

February 1st, 2011

Who the sausage is Jane Williams?

While Jane has nothing to do with making sausages, she may love eating them or even throwing them out of aeroplanes.

But in 1984 – BIG BROTHER IS WATCHING YOU! – Jane threw herself out of a plane but the shit hit the fan, and her parachute didn’t open.

As the saying goes “Flattery can take you pretty far”, but if your chute fails to open, no amount of flattery can save you from ending up pretty flat.

Anyway, Jane survived the fall by landing in three feet of water in a farmer’s pond.

The interesting thing is that many IT companies start hiking the steep and treacherous trails of trying to reach the glorious heights of becoming trusted information technology advisors, but they often lose momentum, come to a screeching halt on their climbs and then start rolling down the hillside faster and faster.

Some get up, dust themselves off, regroup, review their strategies and start climbing again.

Some declare defeat and give up IT altogether. They become chimney sweepers, spon runners or hell knows what.

So, what can IT companies do that instead of coming to a grinding halt and risking a spectacular downhill roll, they can keep climbing and reach the respected industrial authority stage.

And this is what we discuss this month’s stupendously inexplicable episode of Tomicide Solutions, entitled, “How Do We Know If We’re A Replaceable Vendor Or A Trusted Technology Advisor And A Respected Technology Authority? Part 1“.

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Round Peg Into A Square Hole: Integrating CRM With Marketing Automation

January 19th, 2011

Podcast version: MP3 Version

A few days ago, Marketing Automation Software Guide published an article by Mike MacFarlane on integrating CRM and marketing automation systems.

Mike raises a very good point because in most companies sales folks (the CRM users) and marketing folks (users of marketing automation systems) don’t see each other eye to eye.

Sometimes they are plain enemies and screw up each other’s work in any way they can.

And in my experience, the antagonistic relationship stems partly from the difference in expectations and compensations.

Let’s Look At Expectations First

In most IT companies marketing folks don’t really have many expectations. As long as they show up at work as expected, go through the day looking impressively busy and every now and then show some visually impressive stuff to their bosses, they are successful.

The fact that over 80% of the sales leads they generate and some 65% of the collateral materials they create are useless for the sales folks goes totally unnoticed.

All in all, in most cases, marketing folks are not for contributing to revenue-generation.

Actually, in most companies no one, besides the sales folks is responsible for revenue-generation. The funny thing is that at the same time, cost cutting is rewarded so generously as if it were the ultimate profit-improving solution.

Well, it’s not.

And what happens in the sales department? Salespeople waste a hell of a lot of their time and energy to generate their own quality leads and re-create useful collateral materials.

Although, in many companies it’s corporate policy not to allow sales folks to use anything but what marketing has created, even though it doesn’t work.

Anyway…

At the end of the financial quarter, if the numbers fall short of projections, some salespeople get fired and the rest get threatened with being fired next month.

And for those salespeople who reach their quotas, commissions and territories are reduced and quotas increased.

And what happens to the marketing folks who so effectively contributed to the underperformance?

Nothing. Not a sausage.

Some of them may even win some awards which come with financial rewards.

And this reminds me of a joke I read on British copywriting legend, Drayton Bird’s blog the other day…

The Marketing Departments of two rival American and Japanese companies decided to hold a boat race. Both teams practised hard and long to reach their peak performance levels until both teams felt they were ready to demonstrate their prowess.

The big day arrived, and the Japanese won the race by a mile. The American team was discouraged by the loss. Morale sagged. Corporate management decided that the reason for the crushing defeat had to be found, so they hired a consultant to investigate the problem and recommend corrective action.

The consultant’s finding: The Japanese team had eight people rowing and one person steering; the American team had one person rowing and eight people steering. After a year of additional study and millions spent analysing the problem, the consultant firm concluded that too many people were steering and not enough people were rowing on the American team.

So as race day neared again the following year, the American team’s management structure was completely reorganized. The new structure: four steering managers, three area steering managers, and a new performance review system for the person rowing the boat to provide work incentive.

Again the big day dawned, the race began, and the Japanese team won by TWO miles. Humiliated, the American corporation laid off the rower for poor performance and gave the managers a bonus for discovering the problem.

In this case, I would say the rowers are the sales folks and the steerers are the marketers.

And Now Look At Compensation

You can’t integrate two departments with two different expectations and compensations.

The company may focus on long-term success and encourages team work, but pays the salespeople based on short-term individual performance.

So, salespeople sell, even at huge discounts because their commissions are based on gross revenue not on net profit. So, in order to make the sale, salespeople often sell their stuff barely above costs. Or often below cost.

This is why semi-bankrupt companies, like General Motors car dealerships, have very well-paid salespeople.

People think since salespeople they make good money, they must sell a lot, and the company must be successful. But then why is GM on the brink of bankruptcy? Something doesn’t add up.

It’s the short-term focused salespeople who use CRM systems and the long-term focused marketing folks who use marketing automation systems.

Yes, technical integration is possible, but we have to integrate on a human level too.

So, how to pull that off?

We have to unite the sales and marketing departments into one seamlessly integrated business development department. This is the only way to run business development as one united team not as a bunch of individuals.

We have to develop one single compensation method for everyone in the department. And in my experience, this compensation can’t be commission or hourly wage.

Commissions promote peddler behaviour going for the quick sale and the hourly wage promotes incompetence.

So, what I suggest is a base salary and a bonus system based on total company-wide revenue.

In this system everyone knows that the team wins or loses together. That’s why it’s a team not a workgroup.

And what happens if some people don’t pull their weights?

The same what happens in the military. Team members visit the slackers and “explain” to them that either they pull themselves together or pull out. Yes, sometimes the explanation can be a bit more than the dictionary meaning of “explain” but it works and there is no need for the higher authority to interfere.

A Note For The Sceptics

Some people may say that unless there is a financial incentive, people will merely show up but won’t give their 100%.

That may be true for manual labourers, but knowledge workers regard their work differently. And sales and marketing folks are knowledge workers. The result of their work is the effective application of their intellectual property.

Just one point to consider…

Have you ever seen manual labourers take their work home and work on it over the weekend?

For most knowledge workers it is perfectly normal practice.

Jon Katzenbach has a great section in his book, The Wisdom of Teams…

“Pride is a more effective motivator of professionals’ talent than money. And you can motivate that with pride in more than just belonging. There is pride in the specific work product that you deliver to clients, pride in the kinds of clients that you serve, pride in the expertise that you can apply, pride in the values of your firm.”

And this is why companies with unethical practices and low quality clients very quickly lose their best people.

Knowledge professionals don’t work for money. They work for pride, fulfilment, joy and contribution. We know from David Maister that we can’t make money by chasing it.

Interestingly, the less chasing knowledge workers do, the more money they earn.

So Why Is This Integration Thing So Important?

Briefly, it is important because a well-integrated team of cross-trained professionals can far outperform an army of individuals.

And at the end of the day it’s not what you make (gross revenue) but what you keep (net profit) that matters.

More accurately, net profit per employee.

Look at it this way…

Based on data from Google Finance, at $1,080,914 revenue per employee and $209,624 profit per employee Google is the best performing high-tech company (19.3% pre-tax profit).

Hewlett Packard, a much bigger and older company than Google, at $368,735 revenue per employee and $25,947 profit per employee is pretty close to the bottom of the pile (7.03% pre-tax profit).

What we can also see is that Google ($33.51 billion in assets) is an asset-light knowledge-based company, while HP ($109.63 billion in assets) and IBM ($101.95 in assets) are asset heavy factory.

Let’s remember what Tim Williams writes in his brilliant book (Thanks to Ron Baker, founder of the Verasage Institute for bringing it to my attention), Positioning for Professionals: How Professional Service Firms Can Differentiate Their Way to Success: There is a difference between growing a business and enlarging a business.

Adding profit is growth. Adding headcount is enlargement.

And the purpose of integration is to produce maximum growth (profit) with minimum enlargement (headcount).

What do you think?

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How Can Marketing Automation Replace IT Salespeople

January 6th, 2011

Legend has it that Oscar Wilde’s last words were…

“My wallpaper and I are fighting a duel to the death. One or other of us has got to go.”

And although he fought bravely, the wallpaper eventually won. And good ol’ Oscar unceremoniously kicked the bucket.

Today, the same duel is taking place in many IT companies. History is forcing new sales and marketing practices on them, but they are bravely fighting for keeping the old practices.

They are still doggedly chasing after buyers with authorised and signed purchase orders in hot pursuit of the quick buck.

And one by one, those salespeople get their noses smashed by the brick walls buyers erect to keep salespeople out of their lives.

This proverbial wall is the purchasing department whose single most important task is to find tolerable IT service providers and beat them up on price.

And, as a result, IT companies are falling like flies. Here today, gone tomorrow.

But…

If you do “respected authority” type marketing and join your prospects’ buying cycles early enough, then what you find is that some 97% are not ready to buy when you make first contact with them.

And this is what we discuss this month’s neuron-itchingly exhilarating episode of Tomicide Solutions, cunningly entitled, “How Can Marketing Automation Replace IT Salespeople?”

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How Deming’s 14 Points Apply to IT Business Development Departments Part 2

December 6th, 2010

Last month we covered the first seven of Deming’s14 points for quality improvement in their business development activities.

This month we discuss…

1.   Drive out fear
2.   Break down barriers between staff areas or departments
3.   Get Rid of slogans, exhortations and targets for zero defects
4.   Abolish numerical quotas for the workforce and numerical goals for management
5.   Eliminate annual evaluations
6.   Institute vigorous education programmes for everyone
7.   Put everybody in the company to work on the transformation

So, go and read the next nerve-jinglingly exciting episode of Tomicide Solutions, entitled, “How Deming’s 14 Points Apply to IT Business Development Departments Part 2“.

For your enhanced education and entertainment, there is a podcast version as well.

And after reading this exciting topic or listening to it, feel free to hop back to here and let’s discuss this newsletter issue in some detail.

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How Deming’s 14 Points Apply to IT Business Development Departments Part 1

November 9th, 2010

In his book, “Out of the Crisis”, quality guru, Dr. Edwards Deming shows 14 steps of changing management approaches to achieve significant performance improvements.

It’s always hard to initiate improvements in IT companies. There are far too many people with vested interests in the status quo. And when we talk about 14 steps, the initiative can be harder to implement than steering a glacier.

So this change has to be approached with certain radicalism.

Just like the big traffic reorder, called H day (Högertrafikomläggningen means “The right-hand traffic diversion”) in Sweden on 3 September 1967, to change to right-hand side driving.

Imagine if you will…

On 3 September, the authorities banned all non-essential traffic from the roads between 1:00 to 6:00am.

At 4:50am all vehicles came to a standstill and changed to the right-hand side of the road and stop again before being allowed to proceed at 05:00am.

And the changeover took place without any serious problem. I could say, it was smooth as a baby’s arse.

So, while the 14 points may look a bit intimidating, it can be done with similar dedication the Swedish authorities had to change the driving side.

And this is what we discuss this month’s brain-fryingly exciting episode of Tomicide Solutions, entitled, “How Deming’s 14 Points Apply to IT Business Development Departments Part 1“.

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Bait And Switch In Business Development

September 20th, 2010

Liu Shuling, the winner of a women’s half marathon in Shandong, China has been stripped of her title when she was discovered to have brought in a ringer, be Wang Xueqin, to run for her.

Initially Liu Shuling was the winner of the 2010 Yellow River Estuary International Marathon, but video footage later revealed, that it was Wang Xueqin who did the actual running.

The Chinese Athletics Association has banned both Wang and Liu for two years, and it seems further punishment is in store for them.

But this wasn’t a special case for Chinese long distance runners.

It turns out that Chinese students obtain extra credit for their college entry exams if they excel in sports. So, some “creative” students bribed 30 runners at the Xiamen International Marathon. The ringers did the running, carrying the students’ time-recording devices, while the students disappeared to perform less strenuous activities. Then the students would return to claim their extra credit.

But this kind of bait and switch goes way beyond the Great Wall of China where the communist government has developed corruption, deception and the “taking-the-world-for-a-moron” attitude into an art form.

It’s pretty common in business development too.

Just imagine this situation…

You don’t feel well, so you go to your family doctor. You phone the clinic and set the appointment.

And then, horror of horrors, instead of your familiar doctor, you meet… the clinic’s salesman. Someone you’ve never seen. Someone who started medical school 20 years ago, but couldn’t handle it and dropped out. Then he sold bibles and vacuum cleaners door-to-door, dabbled into multilevel marketing and sold used cars.

And now, having previous medical experience, he is the salesman at a medical clinic.

You protest that you’ve set your appointment to see your doctor, but to no avail. First you have to go through the salesman’s pitch.

So, you agree.

Then the salesman asks a couple of leading questions and then starts closing you on a pair hip replacement prosthetics.

Why that? Because it’s expensive enough, yet, it’s reasonably easy to sell, so the salesman can make hefty commission on each deal.

But there is a problem. The salesman doesn’t know anything about medicine and he doesn’t care about whether or not the solution solves the patient’s problem.

Never mind that. He can make good money, and that’s what matters.

The patient can complain later, but first he must be relieved of the burden of his heavy bank account.

Realistically, buyers want to see subject matter experts, and do their best to avoid salespeople. Thanks to the Internet, buyers know almost everything about what they want to buy. They need to meet experts who can diagnose buyers’ situations and then together they can develop solutions. And most salespeople can’t do that.

Yes, conventional wisdom says you need to have great sales skills. Maybe. But if you do a kick-arse diagnosis, then you don’t need sales skills. Buyers buy from you because you are the person who’s diagnosed their situations, and the market’s perception is that he who can succinctly summarise the problem can also provide the solution.

So, if it all comes down to diagnosis, I think a doctor is the best person to learn the trade from.

So, enter the stage Dr. George Huang, the developer of “Client Conversion Mastery: The Self-Guided Program for Using Paid Introductory Sessions”.

It’s a step-by-step diagnostic-based process for how to efficiently handle initial contacts with potential clients, qualify their suitability for working with you, and showcase your talents and abilities; ultimately, once you master the process, you’ll see a jump in your conversion rates.

And the sooner you start, the sooner you see the improvement.

So, if you have a hard time to go beyond the first meeting, George may well have a solution for you. So, go and check it out before the next opportunity knocks on your door.

Go to “Client Conversion Mastery: The Self-Guided Program for Using Paid Introductory Sessions”.

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Tendering IT Contracts And Tendering Meat

September 2nd, 2010

Just this morning while shaving, I was thinking about the word and the concept of “tendering”.

In the late 80s, when I was laying the foundations of my English vocabulary, I knew one meaning of tendering.

And that was to make something, like meat, tender.

Later I learnt the other meaning that relates to contracts.

My distant ancestors, Attila and his Huns used to tender meat under their saddles. They would salt raw meat to prevent it from spoiling, and then put pieces of meat under their saddles.

Then they would ride on the meat for a few days, and the riding action and the heat from the horse would make the meat tender. Then they would spice the meat and eat it.

And from this method has evolved the Steak Tartar, which is raw beef tenderloin with all sorts of raw ingredients. I usually eat it on toast made of artisan bread.

But there is another meaning of tendering, and that relates to contracts.

The process is basically the same.

Buyers issue their RFPs and unsuspecting sellers respond to them. This is the equivalent of putting the meat under the saddle.

Then buyers sit on the submitted proposals for weeks searching for the lowest bidder. This is the tenderisation process, the equivalent of riding on the meat.

And after a good ride, the Huns would pull out the meat strips, spice them and eat them. In the contract world, after a few weeks, buyers would call the lowest bidder to discuss “some details” before awarding the contract.

Our unsuspecting seller goes to the meeting, and the buyer starts “spicing” him to make sure the contract tastes great for the buyer.

This is where buyers pressurise the lowest bidder to drop his fees and prices by another 10-20% to win the contract. And when the seller drops the price to the desired level and hopes for the signatures, the buyers brings in the next spice: You get paid net 120 days.

And just because this is not enough, the buyer brings in yet another spice: And you do the work as per our instructions.

Now, Steak Tartar is the closest equivalent of under-saddle tendered meat, and when you have good tenderloin (I almost always use organic free-range veal), it tastes amazing.

But unlike tendering for food, which is a good process, tendering for contract is a nasty process, and I believe IT companies should avoid it like the plague.

In my experience, top-notch buyers don’t tender because they are seeking top-notch experts not merely fungible vendors. They also know that only fungible vendors respond to tenders. Respected experts don’t.

The tendering process is in place to replace fair play between buyers and sellers. Buyers try to create an environment where they can pay as little as possible and treat sellers like some kind of servants. It’s a master slaver relationship.

Anyone who’s worked with government bureaucrats knows this.

So, on one side of tendering, go for it and try the Steak Tartar, but do your best to avoid the other kind of tendering. Tender-based contract work.

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10 Ways IT Companies Screw Up Their Retainer Contracts

June 30th, 2010

There are not many things in life that are worse than being forced to listen to Rimberger Zuzupimple’s 1st vuvuzela Concerto in B-flat at full 127 decibels without earplugs, but one thing that is definitely worse is when IT companies make a pigs ear of their retainer engagements and turn those great opportunities into temporary manual labour jobs.

Yes, when you listen to vuvuzela music, it sure hurts your ears like hell, and you may even go as deaf as a cannon more quickly than you could say Jemima Puddle Duck, but when your company’s retainer contracts are set up incorrectly, you may equally go deaf by repeatedly yelling at yourself…

“You see, you raving bloody lunatic! What have you done!”

And while I can’t offer any remedy against eardrum-cracking vuvuzela music, in this month’s issue of Tomicide Solutions we discover some profit-leaking mistakes many IT companies make about their retainer services.

Many IT companies set up their retainer contracts incorrectly, often murdering their bottom lines in the process by positioning themselves as temporary day labourers and fungible vendors, as opposed to respected, recognised and in-demand industrial authorities.

There are probably more causes for this error, but over the years I’ve identified the following 10…

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The Three Sides Of High Leverage IT Business Development

May 26th, 2010

Greetings on Sally Ride Day (26 May),

Sally Ride Day honours the first American woman in space, Dr. Sally Ride. She pulled this off as a mission specialist aboard STS-7, the second flight of the Space Shuttle Challenger on June 18, 1983.

And now for something completely different…

Do you know that blond people have the most hair? While the average human head has 100,000 hair follicles, blondes average 146,000 follicles. With about 86,000 follicles, nature is the stingiest to readheads, although, based on various psychological research studies, they make up for their follical shortcomings in temper.

While this is a bombastically splendiferous fact, especially considering that I’m a blond. Physically I used to be, in spirit I still am. Does that count? But the comforting part is that when it comes to business development, we have only three major aspects of business development to deal with, not thousands.

Yet, sometimes even these three aspects are too much to work on, and many IT companies choose to simply increase their raw efforts and leave the other factors alone. It’s like the fertility clinic encouraging the eunuch to gobble down more Viagra in order to start a family.

And while the clinic makes good money on the Viagra, the poor bastard’s resilient Viagra-munching keeps producing pretty soft results. And the soft results remain, even if he decides to attend a few personal development seminars with some of the best motivational speakers.

Similarly, when IT companies’ main strategy to beef up their business development is merely doing more of the same in a more resilient fashion, the end result can be pretty nasty.

And this is what we discuss this month’s stupefyingly exhilarating episode of Tomicide Solutions, entitled, The Three Sides Of High Leverage Business Development.

Enjoy the article and then come back here to discuss your thoughts.

Posted in Lead Generation, Lead Nurturing, Sales | View Comments