The Expanding Purchasing Power of the Non-IT Buyer in Technology Purchase Decisions

How to Adjust Your Sales Strategy for More Complex Terrain

In our recent executive brief, “Six Ways to Shorten the Sales Cycle,” one of the prime takeaways is the importance of tailoring your technology sales and negotiation process to the increasingly complex customer decision landscape. In great part, this is due to the expanding involvement of multiple people (and functions) in the decision process.

IDC underscored an important sub-trend to this reality in their Spring 2018 update to the Worldwide Semiannual IT Spending Guide: Line of Business: “Businesses are forecast to spend $1.67 trillion on technology (hardware, software, and services) in 2018. Roughly half of that spending (50.5%) will come from the IT budget while the other half (49.5%) will come from the budgets of technology buyers outside of IT. The former includes IT-funded purchases as well as joint projects funded by IT. The latter includes business-funded purchases as well as joint projects funded by line-of-business (LOB) buyers and “shadow IT” projects funded by the LOB without IT involvement. LOB technology spending has been growing at a faster rate than IT spending for a number of years. The compound annual growth rate (CAGR) for LOB spending over the 2016-2021 forecast period is predicted to be 6.9% compared to the 3.3% CAGR for IT spending.” Read more

Musical chairs in negotiation.

Why “Musical Chairs” in Your Sales Organization May Be Eroding Your Negotiation Capital

(This post is adapted from K&R Negotiations’ Six Ways to Shorten the Sales Cycle, a complimentary executive brief.)

Sales organizations often reorganize customer or territory responsibilities at the beginning of a fiscal year.

If your product and sales process is so simple that salespeople (and customer relationships) are as interchangeable as Lego blocks, then frequent reorganizations are unlikely to hamper you. But if you are trying to sell value in complex landscapes to companies with unique business problems, the reshuffling can be terribly disruptive.

In our previous post, we highlighted the fact that sales (buy) cycles are getting longer as customer’s buying habits change.  We also discussed one of the ways companies can shorten those sales cycles by factoring in the customer’s approval process. Unfortunately, with most reshuffles, you unilaterally extend the sales cycle. If you are in a “high value” industry, this could be an unforced error.

You’ll have to wait as the new account owners pick through their predecessor’s notes on your CRM platform, introduce themselves to key accounts, get familiar with the customer’s business — all of which is deadly in an era where the most successful salespeople are de facto consultants who are deeply immersed in and highly valued by their clients’ businesses.

It’s a Matter of Principle: Negotiations Are Continuous

In the most lucrative partnerships or buyer-seller relationships, a deal is not a discrete process. It’s part of a tapestry of interactions, which is why one of our Six Principles™ is “Negotiation is a Continuous Process.”

In other words, if you are skillful in building a good negotiation process, negotiations with your client should never end because you’ll be doing repeat business.

If negotiations are a building block for successful relationships, then they must be seen as a form of interval training, not a single sprint. Since negotiation work can result in a long-term future (or no future), success in that work will create business relationships that make doing business easier and more rewarding for all parties.

Negotiations do not end with the contract signing. In fact, some of the most difficult negotiations may begin after the initial contract is signed. This is particularly true in the technology industry, where many contracts are drawn up before implementation takes place, before any service has been performed, and even before all requirements are known.

These types of contracts guarantee that there will be yet more negotiation.

Some of the most difficult negotiations occur in this execution and revision period. Most contracts have an amendment process, evolving statements of work, change control procedures, engineering change mechanisms, or provisions for out-of-scope requests.

Another key point: The continuous nature of negotiations is that in each negotiation cycle, the parties will call upon what happened before as a model – sometimes of what they want, and sometimes of what they don’t want. But memory and impressions from earlier concluded negotiations will always be factors in the next round. Of course, if any sequence of negotiation is a complete failure, there may not be a next round. We often hear, in sessions around the world, a vendor say, “I’m in the penalty box with my client.” What they really mean is that because of a delivery problem, or a bad negotiation, they are paying the price in their current negotiations. It’s continuous.

We also speak and teach about “negotiation” capital: a “bank” of credibility earned by demonstrating value and managing the negotiation process wisely. This credibility is the foundation of your leverage with the client. Your “fresh new face” means that hard-won capital can reset to zero.

Discussions between customers and suppliers should never end, especially if the relationship is good. An end usually means the relationship is over and only the “survival” terms of the agreement are being implemented.

 While there is a value to reorganizing in order to gain fresh thinking and enthusiasm, we encourage our clients to approach reorganizations with circumspection. In the event that a reshuffling of chairs is critical, the company should encourage and compensate current sellers working on major deals to continue with those deals until an orderly handover is possible or until the deals are closed.

Download your free copy of Six Ways to Shorten the Sales Cycle.

Sales Negotiation

Business Negotiation: Three Questions that Will Shorten Your Sales Cycle

(This post is adapted from K&R Negotiations’ Six Ways to Shorten the Sales Cycle, a complimentary executive brief.)

Perhaps your strategy-level sales conversations have centered on how to shorten sales cycles. Many companies find themselves mired in protracted sales negotiations, driven in part by the expanding involvement of multiple people (and functions) in the decision process.

A recent article (The High Cost of Buying Complexity) cites CEB (now Gartner) research when saying that the customer’s own expectations of the buying process are exceeded by 97%, i.e., taking 97% longer than expected by those requiring the sought goods or services. This seems true whether the ultimate purchase decision is made or if the process results in no decision. In our experience, this is a result of changing priorities or organizations due to passage of time.

Decision to Purchase vs. Decision to Wait

Sellers and sales organizations are often their own worst enemy in this process.

 

Factor in the Decision Process – Make It Easier for Your Customer to buy

One of the most obvious errors we see is the lack of knowledge of the customer’s decision process. This falls on the seller; however, just as often, we see that buying organizations that need the goods or services don’t have a firm grasp on how to navigate their own processes. This is where a knowledgeable seller can help. They need to ask their counterpart at least three questions in the interest of realistic expectations.

 Three Questions Sellers Should Ask Buyers

“WProcess Iconhat is the process you will need to go through to get a decision?”

 

Length of Process“How long does it normally take?”

 

Decision criteria

“What criteria will be used to make the decision?”

 

We recently advised a client that projected a major deal to close in 90 days. The value proposition was compelling – the buyer would save millions of dollars per year in running their core banking system. When we asked about the process, this was the conversation:

Them: “The CIO will need to go to the board to get approval, but that is just a formality.”

Us: “How will the CIO decide whether or not to go to the Board?”

Them: “If we demonstrate we can actually do this and the savings are compelling. The business case on savings has already been discussed and we have a proof of concept running.”

Us: “Good! When is the PoC supposed to be completed?”

Them: “In one week.”

Us: “When is the meeting with the CIO to discuss the outcome of the PoC scheduled?”

Them: “The week after that.”

Us: “How often does the Board meet? When is the next meeting?”

Them: “Once monthly, however, due to a national holiday, the next monthly meeting will not take place. So, in about 6 weeks.”

Us: “And once the Board approves, will procurement issue a PO?”

Them: “No, they will issue an RFP.”

Us: “And how long will that process take?”

Them: “It has never taken more than 2 months from the RFP request.”

This team was taking an incredible risk and would likely be frustrated, along with the CIO. So, we discussed what could be done to compress this process in a collaborative way with the CIO’s organization. These included steps like:

Collaborating with the CIO’s Organization

CIO Collaboration Steps

Relentless and thorough preparation is where negotiators on the vendor side shortchange themselves. It’s a major point of focus during our negotiation training, and one of the most critical aspects of this is considering the various groups of stakeholders across the table that need to understand and buy your value argument.

The thought process for you as a negotiator is similar to that for your internal negotiations: Identify goals by individual, using their measurement systems as appropriate. Remember that the higher you go in a customer organization, the greater the span of control. As a result, getting sponsors at those levels gives you greater leverage in closing agreements. Research shows that senior executives get very involved in the decision process for major purchases. But that involvement is typically early and late in the cycle.

Asking the right questions and managing the negotiation process with key roles in mind will lessen the likelihood that your deal languishes on the buyer’s side of the table.

Download your free copy of Six Ways to Shorten the Sales Cycle.

BATNA (best alternative to a negotiated agreement) Woman tears agreement documents in front of agent who wants to get a signature

Why You Need Better than BATNA: Formulating a Defensible “Walk Away” Rationale in Negotiations

Either through becoming emotionally invested, getting pressure from leadership or being unable to analyze key factors that should indicate retreat, business negotiators often find themselves spending long amounts of time on deals of diminishing — or even illusory — value.

One of the cornerstones of negotiation theory is BATNA (best alternative to a negotiated agreement), advanced by Roger Fisher and William Ury of the Harvard Program on Negotiation (PON) in their book, Getting to YES. Read more

How Sales and Negotiation Skills Training Can Fail the Front Line

I recently noticed and greatly enjoyed Dave Stein’s LinkedIn Pulse post, “If I Have to Sit Through One More B.S. Sales Training Class…” Dave discusses the major pet peeves of a sales “heavy hitter” who bristles at the thought of sitting through sales training meetings conducted by people who have never sold, don’t know sales’ specific challenges or how to have sales people leave the session with clear steps that will help them sell more.

Stein identifies a number of root causes for why sales leaders bring in the wrong training at the wrong time. If you have ever had a hand in sales training procurement at your organization, I highly recommend reading the post to see if you are walking into any of the pitfalls that Stein illuminates. Read more

Best Practices: Territory Business Management

Recently our friend and colleague, Jim Hale, published a blog on territory management and the art/discipline of applying multiple resources and time to effectively generate sustainable sales. In the end, winning Territory Action Planning (TAP™) results in increased customer satisfaction and relationships, higher win rates and overall better revenue and profit results. Because this is such an important subject, we reprise some of the best practices associated with TAP in this blog.

High performing sales teams manage territories like they are individual businesses to build strong sales pipelines, advance their sales opportunities and grow relationships with selected accounts. They have realized through experience that the sales territory is the superset of our sales assets, and that without the proper care and attention, we can put these assets at risk. Read more

Curiosity Killed the Cat (But It Made the Sale)


By Jim Hale, VP of Business Development, K&R Negotiations

In my work with sales teams all over the world, I am often asked about what is the most critical trait for a successful sales person. My answer is always the same: “Genuine curiosity.” Curiosity is like a Swiss Army knife with all the attachments. It gets the job done in nearly every situation and is easy to access once you’ve got it in your tool kit. Curiosity helps you:

  1. Build customer relationships. You will notice a different level of respect from your clients when you show an authentic level of interest in them as individuals and their company. Humans respond extremely well to this almost without exception.
  2. Read more

It’s not the ROI that Drives the Buy!

 

You may think arming yourself with facts and data will help you convert prospects into customers, but it’s more important that prospects believe you truly understand their business, the industry, the company, the LOB’s and the Individuals within the organization. This issue comes up time and time again in our interviews with clients, they want their solution provider to understand their business.

This is hardly surprising, since you can’t add value without having a clear picture of the business and the client’s position in the industry. Once you understand their business you can better understand the core business issue. The three critical components that drive the sale:

  1. Demonstrating that you truly understand what their business issue is, and how it negatively impacts the company’s performance (current state)
  2. Knowing what their desired outcome will be, and how that will improve their overall success (future state)
  3. Knowing the prospects “measurements for success” (not yours)

Read more

Why Disruptive Deals Are So Difficult (And Why Yours Can Work)

In a 2012 Harvard Business Review article titled “The End of Solution Sales,” authors Brent Adamson, Matthew Dixon, and Nicholas Toman identified a new way of selling being practiced by the cream of today’s sales professionals—usually B2B salespeople attempting to land complex deals.

These prominent authors identified a small percentage engaged in what they call “insight selling.” In contrast to the classic “solution sale,” in which salespeople engage with purchase agents to discover salient needs and align their solution with those needs, this new breed of insight seller identifies needs that potential buyers may not even be aware of yet. They identify opportunities in areas of flux, offer “provocative insights” about the customers and their business models, and become “buying coaches” for their clients. Read more

Do You Want to Be Successful? A Better Negotiator? Break These Three Bad Listening Habits

Forging a winning deal depends largely on your ability to gather as much information as possible about the other side’s market position, motivations and goals. This holds equally true at the organizational, departmental and personal levels. Better information means a more finely tuned value argument and increased credibility, both of which mean more positive leverage that will help you close.

Behind-the-scenes research with your team as you prepare to negotiate is a vital aspect of information gathering; the rest is gleaned from how you engage the other side in conversation. This may seem almost too basic to mention, but we are still surprised to see how many seasoned professionals fail to listen and thus don’t gather valuable information from conversations with potential partners, vendors or customers. Read more