IT Business Success Models are Changing... Are You?
As cloud technology purchases continue to increase in both the (B2B) and (B2C) marketplaces and the retail price of hardware, software and professional services continues to drop, high tech companies need to adjust their revenue capture models appropriately.
By minimizing corporate dependency on high priced outside IT salespeople and building scalable sales and engagement marketing programs using better trained and supported inside sales team members, executive management can increase sales and reduce marketing costs.
Today, the high tech sales and marketing success models are changing. Due to the continued expansion of SaaS, cloud technology applications, and the development of cross platform/mobile technology hardware options, the cost of software development and application retail pricing is dropping causing a disproportionate increase in overhead for sales capture expenditures.
This is the first time in the history of IT that business-to-consumer (B2C) high tech products are driving the business-to-business (B2B) high tech market. The iPad/iPhone and associated mobile technology business clones are now changing how businesses use technology. Technology used in global 100 firms as well as mom and pop businesses are all going to be managed by mobile systems. As this evolution takes place, IT sales expense cannot continue to support the same revenue capture methodology of today that uses teams of expensive outside sales account managers who don’t hunt for new business from new prospects.
High tech sales team members who can find new business, communicate value to C-level executives, negotiate contracts and close deals by themselves (called a full-cycle salesperson) is a shrinking pool of available talent. No one goes to college and says, “I want to sell technology when I graduate.” Instead, most IT salespeople fall into their current position of sales by chance and stay because their compensation is high and they have job independence.
An IT sales position is not seen as a career path by most but more as an alternative income option that supports an individual’s lifestyle goals or financial objectives. Due to this lack of career direction, the pool of IT salespeople who see their employment as a profession is a diminishing group.
Depending on the company size and sub-vertical industry market niche they operate in (professional services, Telco, enterprise, SaaS), base salaries of IT salespeople range from a low of $60,000 to $150,000 per year. This high compensation level (before commissions, bonuses, MBOs) creates an artificial crutch for sales team members to live off their base salary instead of actively pursuing sales quota attainment.
Best practices studies for IT sales quota success have identified that high tech salespeople need to spend at least .05% of their total annual income on continuing education and sales training to help them maximize their revenue capture potential. This career self-investment is minimal and expected in other industries (lawyers, plumbers, electricians) by career professionals whose average annual income is lower than equally tenured IT salespeople.
Yet most IT salespeople spend minimal monies on self-education, expecting their employer to pay for the career training. Technology salespeople actually self-judge their sales skills based on the current number of years of employment they have had as an IT salesperson and the size of the annual income they generated the previous year. Comments like “I have been an IT salesperson for 12 years” routinely are communicated during an interview process to inform the potential employer of their sales success capabilities but have no reflection of the actual sales skillsets the salesperson may have.
Managing salespeople by metrics and sales process consistency even with the deployment of CRM systems is a limited management model. Due to sales team members operating decentralized through virtual office locations, lack of consistent sales team member training and uncontrolled messaging and IT value communication by sales team members who operate independently in the field, outside high tech sales team members today have become customer facing brands that lack value uniformity.
Selling new business to new prospects is a key business driver needed to organically build a scalable and replicable revenue capture program for high tech companies. The foundation of any planned, business success model is having IT salespeople who hunt for new business from new prospects where new business capture is a strategic objective.
All technology salespeople say they are hunters, yet in most cases they are actually farmers who want to be paid as hunters and who want marketing to generate qualified business leads for them. These “half-cycle” farmers lack sufficient skills to understand sales process nuance or sales cycle step management and waste valuable company resources (sales engineers, operation team members, and qualified marketing leads) on unqualified sales opportunities.
The hunter sales skill is not only a psychological mindset focused on success, but a learned process which is held by few IT salespeople, thus reducing the growth opportunity for most high tech firms.
So What Can High Tech CEOs Do?
With few qualified IT sales hunters available in a diminishing sales team pool and sales and marketing costs increasing while simultaneously technology revenue per sale is dropping, what can a high tech CEO do? The future of building a scalable and replicable sales and marketing revenue capture process requires a paradigm shift on how you sell and market your high tech offerings.
As the technology market space moves through the next evolutionary stage of development from enterprise applications to cloud base hardware and software offerings, like past business model adjustments before (mainframe, mini-computers, network) the sales and marketing strategies need to be adjusted to build a scalable and replicable growth model that makes money and captures new business from new prospects. Sales and marketing 2.0 success models use an engagement approach where thought leadership, social media, automated prospect participation, and value communication methods are deployed as sales capture tools where the entire company participates in the sales cycle and contributes to revenue capture.
In the sales and marketing 2.0 business success model, sales account managers play a lesser role in sales process as the company in totality assumes the responsibility for revenue capture. Going forward marketing, strategy, sales and financial management departments must be integrated together into one outbound revenue capture program. Companies must holistically analyze their whole business process to understand their current prospect value and the associated drivers that will make prospects take action steps to buy. Once this is completed, growth directed IT firms need to create three-dimensional value programs and communication presentations that make prospects believe their perceived value of the IT offerings they sell.
By centralizing sales responsibility inside the company as a coordinated event, you reduce your dependency on continually trying to find an ever-increasing number of new, qualified outside IT salespeople from a shrinking pool of candidates.
Relationship selling is an antiquated sales concept promulgated by existing IT salespeople who are trying to convince their management team that they are busy… and salespeople who cannot sell. You cannot have a relationship with a prospect until they buy. Yet every IT salesperson believes that prolonged prospect interaction equals prospect purchases. In IT sales, relationships don’t start until after the second sale. Look at any sales pipeline and it is full of “qualified prospects” that the salesperson has a “relationship” with but they aren’t taking action steps to buy.
The key driver of any high tech success plan is to sell more technology or professional services to qualified buyers… faster. Once this truism is accepted, you can then start to build a new revenue capture model that is not dependent on IT sales staff perceptions of their relationships with prospects that have yet to buy. Today’s IT sales process models must be based on a business success approach that focuses on an integrated methodology called the 3T sales process. The three primary drivers of the 3T sales process are:
When linked to a sales and marketing 2.0 engagement model, this 3T sales process maximizes high tech revenue success and minimizes executive team management’s dependency on outside sales team members being the primary driver for revenue.
Selling 5, 6 and 7 figure IT opportunities as an enterprise software application company, software reseller, or professional service provider historically required “experienced” outside sales teams who built long-term “relationships” with prospects until they bought. In the new 2.0 success model, IT companies have fewer outside salespeople and use senior inside sales team members supported by interactive engagement marketing programs that position the firm as a thought leader that can be trusted.
In this operating model, inside sales team members and the marketing department become the dominant sales drivers and the core revenue capture team. Outside sales team associates are only deployed when the deal size or the customer demand requires an on-site presence.
By redesigning your revenue capture model centralized on a company responsibility approach and using well trained and managed inside sales team members and a trust-based engagement marketing program as the primary driver, you can build a scalable and replicable success system that will:
By assessing the potential of your business’s revenue capture success and then redesigning your marketing and sales process to focus on an engagement thought leadership approach attached to a transactional-based selling process, you will bypass the commoditization of the IT market space that we are going through.
To increase your sales effectiveness and reduce your marketing costs, elevate your inside sales teams’ skill sets and create a trust based marketing program that engages prospects.
To survive and prosper in today’s economy, high tech companies must deploy a sales and marketing 2.0 success model and bypass being held captive by non-performing, high priced IT salespeople who are currently responsible for a reduced revenue business cycle. In high tech, it’s Hunt Now or Be Eaten Later.
About The Author
Paul DiModica is the founder and CEO of Value Forward Group, a high tech revenue capture specialist advisement and management consulting firm. Paul is also editor of the world’s largest IT sales, strategy and marketing strategy newsletter called HighTechSuccess read by high tech executives in over 110 countries.
Additionally, he is the author of the books High Tech CEO Business Success Strategies, How to Sell Technology® and his new book being published this year called the Revenue Capture Scorecard®.
Prior to launching the Value Forward Group in 2001, Paul spent over 20 years in high tech businesses as a Senior Vice President of Sales and Marketing, Vice President of Strategy Worldwide (Renaissance Worldwide Inc.), Vice President of Operations, Chief Operating Officer and company Founder in private, family-run and public IT companies with annual revenues up to $900 million.
Paul has been featured or interviewed in hundreds of media outlets including the New York Times, Investors Daily, Fox News, Selling Power Magazine, Sales and Marketing Magazine, CIO Magazine, CFO Magazine, Entrepreneur Magazine, Training Magazine, Marketing Magazine, Computer World Magazine, Entrepreneur Radio, Chicago Tribune, Executive Travel Magazine, Value Added Partners and many others.
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