I've recently been doing some consulting work for a large multinational, helping them select a CRM product and vendor. In the interests of confidentiality, I won't say too much about the client or the vendor, but I hope the following inside view might help startups working on B2B sales. Mostly this relates to large scale software sales (supported by services), but much of it will apply to smaller scale items and pure services too.
Timescale and budgets
Almost everything in large companies takes a long time. Enterprise sales is no exception. In particular for significant expenditure, departments need to include it in their budget, which may only be set yearly. Additional spend not on the budget will always be a harder (but not impossible) sell. Depending on the overall amount, various levels of approval need to be sought, potentially up to board level. Breaking up your sale into smaller pieces may avoid some of this. For initial one-off costs you may also be able to get money from budgets set aside for discretionary spending.
TCO
Total Cost of Ownership (TCO) is the name of the game. Whilst you might be focussed on your per-seat price (which is of course important), the buyer is really focussed on the total cost. In particular this includes the cost to implement, cost of maintenance and support costs. Customers can be paranoid about "hidden" costs that become significant over the lifetime of the project. Typical enterprise systems are expected to have 5-year lifetimes, and it's the TCO over this period that is relevant. Costs will also need to be broken down to help determine what can be capitalised, what can be re-charged to departments/subsidiaries etc.
RFPs/RFIs
Usually seen in a competitive tendering situation, Requests for Proposals (RFPs) and their pre-cursor, Requests for Information (RFIs), are often a necessary evil. Ideally you want to be able to avoid these altogether, but often for any large scale purchase, governance requirements mean that you will have to deal with them. In some cases these can be a bit of a sham, where there is a strong "default" decided in advance and the rest are just there to make up the numbers and provide negotiating leverage. In the case I was working on, the entire vendor selection process was taken very seriously internally, with the decision still open right to the very end. As a vendor it's hard to know which of the two situations you're in so best to always take it seriously until you get a definite signal (inside knowledge etc) to tell you otherwise.
In the worst case the customer produces a heavy document laden with unrealistic expectations, and the respondents answer "yes" to every requirement whilst shovelling in a good dose of marketing and sales copy wherever they can. There are usually faults on both sides, but on the sales side I would suggest
- Understand that answering "no" for things you just can't or won't do is perfectly fine and comes across as much more honest than somebody that says they can do everything (unless of course they can, say in the case of a relatively simple RFP). Feel free to suggest alternative options and 3rd party partnerships if appropriate.
- Don't cut and paste irrelevant marketing blurb. We understand that you have stock answers to questions that you see all the time, and copying answers from a previous RFP response is perfectly fine - if they are relevant. Also have the decency to check it once over and remove any mention of the previous client's name that made it through the cut and paste. I've seen this happen more than once and it looks pretty unprofessional.
- Know who your competitors are, and position your answers accordingly. However don't make the mistake of trying to be something you're not and be wary of actively trashing the opposition - it rarely comes across well. It's generally better to play to your own strengths rather than your opponents weaknesses. Try not to overdo it with the sales patter.
One throat to choke
Often companies want to contract with just a single party who is then responsible for all subcontracts (integration partners, additional 3rd party software etc). It's best to be flexible on this in case they want a mixture of the two approaches.
Users are not always the buyers
In our case, one of the vendors had a product which had a more attractive UI. If it were down to just the users, they would have picked this one. Ultimately this vendor wasn't selected because the another solution had a good enough UI and did much better on other fronts. Not to say that user opinion didn't matter - ease of user adoption was a success criteria for us, but it's important to understand all of the decision criteria involved.
Price negotiationsEnterprise buyers always expect a discount. We had a procurement department involved that was responsible for the commercial negotiation. Typically the way it works is that vendors show their prices at a "Card rate" and then offer various discounts. The client will then negotiate further discounts over the offered discounts. If it seems like a silly game, it is. But unless you have market power and the client has no alternatives (e.g. you are Microsoft), you will have to play by the rules of the game.
Several books have been filled with advice on negotiation. So I won't go into this in any more detail beyond recommending that you go in well prepared with a negotiation plan.
Cloudy skies
Companies are paranoid about data being in the cloud, but there is a gradual acceptance that this is the way things are going. If you're peddling a SaaS product, anything you can do to allay fears will help. Expect questions about your data centres and SAS70 compliance. In particular European companies can be wary of having data hosted in the US, even with the Safe Harbor agreement in place. Customers may request data centre visits/audits.
Also think about how integration will work through firewalls and how you will deal with authentication (single sign-on with MS Active Directory etc).
Know your product
Enterprise buyers are used to dealing with salesmen and will spot when you don't really know what you're talking about. Nobody expects salesmen to know every facet of their product, but customers will expect to be able to talk to somebody who can fill in the holes where necessary. Bringing in somebody from product or engineering who really knows the nuts and bolts demonstrates the substance behind the spin. Live demos are great too.
Reference customers
Reference customers are an incredibly powerful sales tool. If you can present customers that are evangelical about your product and services, this goes a long way. Ultimately this relies on you building good product and providing great customer service. Getting new customers to agree to be future reference customers (case studies, joint press release, reference calls etc) is a good negotiation ask which comes at zero cash cost to the customer.
Current big name customers, or customers from the same industry will help inspire confidence, and possibly even a fear of being left behind. If your company or product is new to the market, this will help re-assure potential customers that they are not taking a huge gamble.
Contract negotiations
Once the deal is sealed and you've agreed key commercial terms, there's usually a period of detailed combing over of contracts. It's unlikely that this will uncover a deal breaker - usually by this time the customer has mentally committed to selecting you so just bear with it and get through to the other end.
Whatever happened to the consumerisation of IT?
Yes, I know Salesforce.com managed to get into organisations by getting users to whip out their credit cards and buy the product themselves. But this really isn't a strategy you can rely on, and even Salesforce still go through the whole rigmarole outlined above when dealing with big sales. If you're selling e.g. a tool for developers then the process should be much less complex, but for anything that will affect large numbers of users, I'm afraid IT procurement really hasn't changed much in the past 20 years. Ben Horowitz has a great blog post on this here.
If any of you have stories or advice on the enterprise software sales process (from either side of the fence), I'd love to hear them.
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