Who says “selling” hasn’t changed much in the last 30 years? For consulting, outsourcing and other professional services organization, nothing could be further from the truth. This is particularly true when you consider the impact of the come-and-gone ERP rage of the mid 90’s, the dot.com craze of the late 90’s, the market “free fall” and eventual market consolidation that this decade has brought, and now, the rapid growth of outsourcing demand. These changes, and others as well, have created an environment in professional services organizations that necessitates a reevaluation of the selling model for many firms. What has worked in the past may not work in the future and the implications are significant for any organization intent on double-digit growth amongst this changed landscape. Consider the following:
- Change in the market environment and, therefore, the selling environment is occurring at an exponential pace. There is rarely a day that passes that doesn’t include new announcements about technology advancements, new products, emerging and/or transforming competition, new channels of distribution, and even changes in the way business is transacted including barter agreements, auctions, equity sharing, and transaction fees. Strategic alliances, customer/vendor joint initiatives, and “co-opetition” also have served to make selling in today’s world more complex, involving more parties, and complicating the financial and contracting considerations as well.
- In the past, clients were often looking for a firm that could provide “end-to-end” capability to satisfy all of their business systems needs, for example. It’s one reason the “Big 5” became big! In the new landscape, a client is more likely to look for the specialist to provide the needed function. They are also increasingly hiring small or even individual contractors with specific expertise, even if it means they (the client) has to be the “integrator”. End-to-end providers will still be in demand but specialists will likely see even stronger growth opportunities.
- Client’s receptivity to considering an outsourcing delivery model to solve the business challenge is also at an all time high. The client is interested in evaluating providers whose business model is multi-dimensional – they can help solve the problem through a focused project engagement that the client runs; they can handle the entire “design-build-run” (i.e. outsourced) process; or, they can even provide a “rehabilitate and return” approach that many companies find most attractive. These myriad approaches obviously represent a more complex selling, contracting and delivery process for any company.
- There are fewer, more formidable competitors. The tough economy and industry consolidation has weakened, and in some cases, eliminated the smaller, upstart competitors. That’s the good news. The bad news is that companies like IBM, HP, Accenture, and Deloitte have weathered the storm and will be tougher competition for niche related firms that previously have had the luxury of competing with smaller, less sales oriented players. In addition, clients are more sensitive and concerned about the financial stability of the provider. This obviously favors the larger, historically profitable competitors.
- Most professional services organizations continue to struggle finding the best selling model because for decades they have been successful by having “practitioners” lead the selling efforts, whether lawyers, accountants, or consultants. The challenge with this strategy: while the practitioner’s subject matter expertise is a great strength, their lack of selling instinct and training can lead to lost opportunity pursuits – even if your firm has the best solution. Many “product heritage” companies like IBM have reasonable solution experts and strong selling skills – therein lies the reason that IBM Global Services has been so successful.
- Clients are increasingly demanding “business outcomes” based engagements, not deliverables-based engagements. A firm’s ability to define and measure the business outcomes will obviously be critical as this becomes more prevalent.
- For a variety of reasons, the decision-making authority has been centralized within many organizations to the CFO’s office. In the “go-go” days of the 90’s, decision-making was more decentralized, because there was less focus on cost containment – revenue ruled. How many times has your organization found that a compelling business case sold to a functional leader was killed when the CFO had to give his/her blessing?
These changing conditions in the consulting and professional services market have significant implications on how firms will succeed in this new selling environment. Through my work with many product, solution, and service based clients, we’ve identified the most common reasons that professional services organizations lose key opportunity pursuits – see if any of these sound familiar to your organization:
- Pursue the wrong opportunities with the wrong clients – opportunistic vs. strategic demand creation
- Spend too much time crafting the proposal, not enough time with the client
- Don’t understand or manage the client’s decision-making process
- Can’t determine if they’re winning or losing and don’t know what to do about it
- Don’t focus on individual stakeholders – try to sell to everyone the same way
- Don’t assess the competition and defeat their strategy
- Don’t translate their capabilities into benefits their clients really care about
- Sales cycle takes too long – creating high selling costs and deferred revenue
Lose to “no decision” more often than to a competitor
One way to categorize these common problems is within a “business development framework” that includes the following components:
- Account Selection – How the organization determines which clients they will focus their efforts on; how they will segment these client (serving them differently by segment); and how they will deploy their resources accordingly.
- Account Management – Developing long-term, increasingly profitable relationships with the firm’s current accounts and effectively penetrating prospect accounts
- Opportunity Assessment – Effectively determining the best opportunities to pursue and deploying the optimum resources in these pursuits
- Opportunity Management – Mobilizing an organization’s best selling resources to ensure success in the opportunities that you choose to pursue
- Closing and Contracting the business – Ensuring that the business is closed but also, that it is business that can be profitably delivered for both your firm and the client
- Transition to delivery and future opportunities – Effectively delivering on your commitments and finding additional ways to expand the account relationship
Our next Installment in this thought leadership series will begin to identify the “Key Success Factors” required to effectively optimize this framework.