Decision Engine for Sales
Decision Engine for Sales: Sales Management 2.0, Optimizing Sales Performance 2012 – Volume 8, CSO Insights , 03/22/12, Pages 1, 21-30, By Jim Dickie and Barry Trailer, Managing Directors, CSO Insights.
…Decision Engine for Sales: Mr. Roger Koenig, CEO and Founder, Carrier Access;
“When you are selling through a channel, you need to understand that your ‘sales in’ is a result of your channel’s ‘sales out’. If you want the channel to sell, you have to go beyond providing them a great product and value proposition—you also have to make it easy for them to sell these values”.
Roger Koenig, A CSO Insights Classic Interview:
When I interviewed Roger Koenig in 2002 for our book The Sales & Marketing Excellence Challenge, he was CEO and Founder of Carrier Access (a firm that is now part of Force10 Networks). At that time Roger was a leader in the communications and electronic equipment industries, known for his expertise in business leadership, executive management, product development, and building successful companies. Prior to Carrier Access, Roger founded Koenig Communications and he also held engineering and management positions for ROLM and IBM Europe. Over the years Roger has won many awards, including the Esprit Entrepreneur of the Year, the Ernst & Young Entrepreneur of the Year, and a seventh place ranking among the 200 Best Small Companies as selected by Forbes magazine. Roger has a Master of Science degree in Engineering Management from Stanford University, and a Bachelor of Science degree in Electrical Engineering from Michigan State University. Since many firms are still looking to crack the code on how to effectively sell though channels, I thought that republishing this CSO Classics interview would provide solid lessons from the past that can be applied today.
—Jim Dickie, Managing Partner, CSO Insights
When you are selling through a channel, you need to understand that your ‘sales in’ is a result of your channel’s ‘sales out’. If you want the channel to sell, you have to go beyond providing them a great product and value proposition; you also have to make it easy for them to sell these values.
At Carrier Access, we manufacture equipment that enables our customers—including many incumbent carriers and wireless service providers—to expand service revenue, lower operating costs, and extend capital budgets. By reducing capital expenditures, customers are able to deliver more network functionality and service for the same amount of money. As you can imagine, this has a very positive impact on capital constrained telecommunications businesses.
To give you an example without getting too technical, a major component of a wireless carrier’s operating expense is the cost of connecting cell sites that are all over the landscape, back to the switching offices so it can in turn route calls and connect people.
We’re in the process of delivering new equipment for nationwide deployments in the wireless business that consolidates the number of transport lines—T1s, DS3’s, etc.—needed to make those connections. Providing the same service with fewer lines will result in a significant improvement to that wireless service provider’s bottom line.
Since we started in 1995, our company has consistently raised the issue of capital savings. We promised our customers that we would provide systems that did a superior job of communications service integration, at a lower cost.
We delivered on that promise and then waited for the orders to come in. To be honest, the volume was not what we expected. We went back to our customers and said, “We delivered a killer solution for digital Centrex desktop services. We overcame a huge capital expense challenge. We overcame the operating cost problems of actually getting this installed. Why aren’t you selling a lot more digital Centrex subscribers?”
We felt we had delivered a solution to a universal problem, but our concern was that the only markets that seemed to be getting any traction were government applications, such as the state of Pennsylvania, and federal government agencies. We wanted to know why they were not taking this offering out to a much broader user base.
The answers that we got back from our customers were surprising in their consistency. While the products we delivered were great, they were too complex for our telecom service providers to easily sell to their end-user business customers.
WHEN VALUE PROPOSITION IS NOT ENOUGH
We’re proud that our solutions can handle a multitude of situations, but we found that the flexibility of our offerings were often intimidating to the sales people working for our telecom customers. For them to effectively represent our products to their customers, they first needed to determine what the needs of that individual client were, and then work through a network proposal. Once that was defined, they then needed to develop an accurate quote for the cost of the system.
So, while we offered a strong value proposition to the firms we sold to, in the end that was not enough. We were expecting the channel sales people to invest too much time and effort to get to the point where they could close a deal.
As a result, we realized we had a critical training problem that we needed to overcome. Up to that point, the focus of our sales process was on the steps that we needed to go through to convince our customers of the value our solutions represented to them. We decided we needed to go beyond that and determine ways we could help their sales people translate and apply those value propositions to their customers.
THE REALITIES OF YOUR CHANNEL’S WORLD
Yet, at the same time, we knew we also had to work within the realities of today’s marketplace. The first reality was that end user customers, the people ultimately using a telecom service provider, really want solutions to their specific communications needs. They want to communicate with other people—not all other people, just the business associates, colleagues, or family members they choose—when they want to talk to them. And if that person is not available, then those customers want to be able to leave a message, so the recipient can call back at his or her convenience.
From the end user perspective, this appears to be a simple objective. But as you start to view the whole world of telecommunications you quickly realize that ours is a very technology-encumbered universe. End users find they need multiple phone numbers: office, cell, even home. Each has its own voice mailbox, and each mailbox may have different methods for retrieving messages. They don’t want to deal with all of this; they want to purchase services from a provider who can make the complexity go away.
The second reality was that these end users work for all different sizes of companies, from Fortune 1000 firms spending millions per month on services, to mid-sized companies spending thousands or tens of thousands a month, to very small firms spending just hundreds a month. Obviously, solutions for a Fortune 1000 company will need to take into account many more variables than those for a ten-person firm.
The third reality was that the sales people calling on these accounts are often much more product focused than solution focused. Over the years we have created silos of sales expertise. Today, there are sales people who are great at selling voice, but are weak at selling data, or vice- versa. This situation is in direct conflict with the goals all carriers strive for today, which is to blend a combination of voice and data services that work on a variety of software and hardware systems, so they can create a differentiation in the marketplace.
A perfect example is Virtual Private Network voice services, where companies put their enterprise voice connectivity on their data networks. For an end user firm, this saves money; it provides better efficiency and has great bottom line value. But for the service provider, it is still a specialized craft to sell and deliver these solutions. This product orientation will change over time, but in the near term we cannot count on these sales people to be able to single-handedly manage the entire front-end of the process for a solution sale.
It would be great if these sales people could turn to their systems engineers (SEs) for help. But the fourth reality of the marketplace is that those people already have more than they can manage today. In our current soft economy, and the subsequent cost cutting atmosphere, the ratio of sales people to SEs has gone from two or three sales people to one SE, to as high as 15 to one. To expect a fewer number of SEs to learn all the intricacies of selling more complex solutions is simply too much to ask.
FOCUSING ON YOUR CHANNEL’S SALES PROCESS
It became clear that in order for us to grow more quickly, we needed to enable a service provider’s sales team to simply and quickly analyze the needs of their customers, then communicate what a solution would look like and how it would benefit them.
We focused our thinking on ways we could take responsibility for the front-end of the sales process for our customers. Ideally, it would have been great to have a Carrier Access person available to go on every end user customer call, but for financial and resource availability reasons that was impractical. Yet that idea did help set the stage for our initiative to reengineer the sales process. Our task was to determine how we could provide our customer’s sales people with access to the wealth of knowledge our company had, so they could easily do the front-end sales tasks themselves.
The answer we came up with was to create a web-based expert sales facility that would focus on two goals. The first would be a detailed needs analysis capability. Our objective here was to enable any sales person, with a minimal amount of training, to leverage our sales support system. They would walk their customer through a structured series of questions that would identify the end user firm’s communications needs, and match those needs to one of our service offerings.
Our second goal was to have the system generate a detailed proposal based on those end user needs. This would start with a plain English description of the problem that needed to be solved, followed by an overview of how we were going to deal with those issues. Our objective here was to take over the responsibility for generating the proposal, building a detailed view of how the network would function, spelling out all the hardware and implementation costs, and so on.
We felt that if we could achieve these two goals, we could take out a lot of the pain and frustration associated with selling our solutions, and also help the service provider’s sales people become much more productive at delivering digital services. As their ‘sales out’ increased, our ‘sales in’ would go up correspondingly.
TECHNOLOGY ENABLES THE CHANNEL’S EFFECTIVENESS
To accomplish this, we first started looking at the complexities of the detailed business discussions taking place between the service provider sales person and the prospect. To do this, we actually sat down with our customers and jointly walked through the process.
Through these discussions we realized that during this customer interaction several steps needed to be completed in order to determine the client’s needs. We also needed to educate them on the idea that new solutions may exist to meet those needs and then motivate them to do something about those issues now.
The needs analysis was the first hurdle to overcome. Today, when you walk into a retail store and start to talk to the owner about their communications needs, they’ll say, “Well, we have a point-of-sale network, and we can’t impact that because it is backed up and is redundant. Then we have this for our voice communications, we have that for sales people, and another system for the warehouse.” As you can see, things start getting very complicated, very fast. But this is typical in business environments today.
We really took the time to understand all the issues that could come up in these customer conversations and then looked for ways to optimize that process. Our goal was to provide a tool for service provider sales reps that would guide them through a simple, easy process for conducting a comprehensive needs analysis.
What we came up with is a very streamlined process that is based on 14 questions at most, in plain English, that the sales person needs to get answers to in order to cover all of the cases that could come up. Behind these questions is a sophisticated model that understands all the implications, co-requisites, and prerequisites for dealing with the prospect’s communications environment.
The system is designed so that the rep could record the answers during the conversation and enter them into the system later, or actually use the system interactively during the call.
The next step was to have the system take the customer’s input and build a comprehensive proposal for the sales person to present. Based on the answers to these questions, the system creates network diagrams, overviews on all the equipment and part lists, and all the relevant pricing data. The proposal also covers the implementation plans.
OPTIMIZING THE SALES CALL
Now, compare this selling approach to how these sales people had been working. Prior to this, to ensure they got all the information they needed, they would often have to conduct the needs analysis process through multiple calls that could take hours. Now they can do it in minutes, with a single call.
Next, in the past, lacking the full product line knowledge themselves, the sales person would have to farm out parts of the data to various expertise silos within their company to attempt to understand what the customer told them, and then what they could do to improve that communications environment. Again, this typically involved getting access to those SE resources that were already stretched to the limit.
Now that expertise is available to the sales person literally at his fingertips, and that knowledge base is always current. As things change—prices, features, compatibility issues, etc.—those new data elements are updated in the central system. This process ensures that sales people are working with the most current information available.
Finally, again looking at how things were once done, when sales reps had an idea of the various technologies that needed to be integrated, they then faced the task of translating those concepts into a business language that the customer could understand. They needed to create proposals that translated technology into plain English answers for their customers. They also needed to spell out the business value that would be created by making these communications changes.
Today, our system completes that process automatically. When channel sales people use the system, it creates the proposal verbiage, network diagrams, and the implementation plan for a given customer’s situation. Since this information is based on the knowledge elements in the centralized sales expert system, the consistency and accuracy of these documents is significantly improved as compared to the past ‘one-off’ proposal approach.
We named the system WICK (WAN Integrated Connection Kit). It is actually an application we developed in-house and is very cost effective because we built it using generally available web-based software development tools.
The response we have received from our customers has really exceeded our expectations. The first thing they say is that they have never seen anything like it. The next thing they tell us is that they feel appreciated and that their success really matters to someone else. Because we developed this tool for their use, we’ve demonstrated that we understand the sales challenges they are facing.
To maximize the acceptance of the system by their sales people, we have designed the application so that it can be integrated directly into the service provider’s existing Internet site or sales portal. It can also be branded with their company name, versus appearing to be a separate program from Carrier Access.
THE VALUE OF OPTIMIZATION
The value of WICK is evident the very first time you use the system. When we demonstrate the application to service provider sales people, their jaws drop open. They see that they can go through the needs analysis, solution creation, and proposal generation steps of the sales process in 10 to 15 minutes, and actually can leave the customer with a very detailed 35-page proposal at the end of the call.
This changes the entire sales process. The first benefit is that it facilitates the sales person in making the transition from selling products to selling solutions. And, sales reps do not have to spend months becoming experts on all the intricacies of the technologies involved. This shift increases the value of these reps in the eyes of the end user, because they are now more knowledgeable and professional compared to their product-focused counterparts.
Secondly, this system collapses the front-end of the sales process down to its absolute minimum. Now in the course of a day, a sales person has time to see more customers and easily generate more high quality proposals. More times at bat translates into more sales, for both our channel partner and us.
A third benefit, tied to the collapsing of the sales process, is that new markets are now open to the service provider. It has been interesting to watch the telecommunications space develop over time. Most firms segment the market into large accounts (Fortune 1000 or 2000), mid-tier firms, and small accounts.
Because of the economics of sales—cost versus revenue potential—most companies target their selling activity towards the larger accounts. So you have thousands of sales people targeting the Fortune 1000, and only a few calling on the rest of the world.
However, if you are able to make a single call on a mid-tier or smaller firm, and complete a full sales process during that call, now you change the economics and make those accounts more attractive targets. If you dedicate part of your sales force to this portion of the market, you are tapping into a much less competitive environment, where often your sales person may be the only rep that company encounters.
The fourth benefit, which we achieve jointly, is the movement towards becoming stronger business partners with our customers. When they see us come in the door, they don’t automatically see us as a vendor. Instead, they see Carrier Access as a company who is genuinely interested in their business, and willing to make the investments needed to help ensure they are successful in the marketplace.
CREATING A WIN, WIN, WIN ENVIRONMENT
Ultimately, to be successful in sales today you have to understand what the ‘win’ is for all the parties involved in the process. Make no mistake; our objective at Carrier Access is to sell more products. But that need has to be blended with the objectives of others.
The service providers we sell to want to get beyond commoditization of telecommunications services and create real value-added solutions that will meet the needs of the marketplace and create more customer loyalty.
Their sales people need to be able to achieve the sales volumes their companies expect. In order to achieve their goals, they need help and services that fundamentally increase their effectiveness and also support them in making the transition to solution sales.
Our success depends on our ability to help the service providers we work with, and the sales people that work for them, meet their goals. We think the WICK initiative goes a long way towards that, and in doing so creates a final win for the end user firm, as they get the value they really wanted to buy-in in the first place…
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