How To Sell In Tough Times
VARs say sluggish economic climate is a teaching moment
By Scott Campbell
If your business isn't booming right now, don't blame the economy. There's plenty of opportunity out there, say solution providers that are thriving in today's business climate. In fact, some VARs say a sagging economic climate can actually spur IT sales, especially if you can prove a quick return on investment or increase operational efficiencies for customers.
The IT industry is relatively sheltered from larger economic troubles because technology can still help businesses operate more efficiently and drive their value proposition out to the marketplace, said Greg Paetow, Director of Mid-Atlantic business development at Melillo Consulting.
Moving away from a products-based model, increasing your focus on managed services, diversifying your portfolio and customer base, and offering the latest technology are great ways to keep your revenue pipeline flowing through turbulent times, solution providers said.
Added Paetow, if your customers aren't buying now, it's up to you to show them how IT can help them be more productive, more efficient and ahead of their competition.
Several Melillo Consulting clients are now in "a holding pattern," said Paetow, yet he said he is still working with them regularly to build the relationship. "It is still very important to at least stay in front of customers in these tough times," he said.
Melillo Consulting offers assessments and other road-mapping tools to get customers to think of the big picture, Melillo said. To help in the new and emerging technology educational process, Melillo Consulting does 40-minute Webinars for customers or invites them into its New Jersey data center to test-drive the latest products.
The live demos have proven "very beneficial" in drumming up new business, Paetow said, and the close rate on the Webinars is about 70 percent.
That kind of proactive approach for Melillo Consulting, and other other solution providers, is the difference between surviving and thriving when a down economy hits customers hard.
Services, Not Products
Solution providers have long heard the mantra, "Don't sell products, sell solutions." That probably rings more true now, when the economy is slumping, than at any other time. Customers aren't going to buy new technology for its own sake. They simply can't afford to. It's up to VARs to package products with the appropriate services to make customers feel that they're getting a good bang for their buck.
Simply put, a services focus is more recession-proof than a products-based model, said Ken Lamneck, President of the Americas at Tech Data.
"Once you get that services entanglement, you become a little more in control of the spend and you can really show the customers the true value of technology," he said.
The more focus on productivity gains that offset costs, the more likely that customer is not going to delay IT spending, Lamneck added. Technologies such as virtualization and VoIP are ripe for that conversation, he said.
"In tough economies, end-user customers are focused on return on investment. If you can show a tangible decrease in their SG&A costs because of this implementation, those [solutions] have a much greater likelihood of going to the front of the priority list," he said.
Every end user has some applications that are so mission-critical that their implementation simply cannot be put off, Lamneck said. Smart solution providers focus on those technologies, especially security and storage.
"You've got to look at product segments that are difficult to delay. The more you can focus on those areas that are difficult for customers to put on the back burner, the better off you're going to be," Lamneck said.
Hitting for the (Sales) Cycle
Some VARs look for unique ways to provide incentives to sales staff for bringing in new business. Incentra Solutions, provider of storage, networking, security, and server products and professional services, this year launched a base ball-themed sales contest to win new customers.
The contest rewards sales personnel for bringing in clients that haven't worked with Incentra or its vendor partners before, and for signing customers up for Incentra offerings, such as professional services and managed services.
Participants accumulate points based on the offerings they sell. Some sales are designated as singles, doubles, triples or home runs, based on the importance of those sales to Incentra's business. The bigger the hit, the bigger the point reward, explained Tom Sweeney, Chairman and CEO of Incentra.
"We've seen a strong response from our sales team after the first three months, with 90 new customers added," Sweeney said. More than 80 professional services contracts were signed, he added.
Sweeney said one important feature of the contest is that the sales engineers are included and receive an equal amount of the reward as the sales professionals. "I believe this has further aligned our sales team with our engineering professionals," he said.
Managed Services
Taking services a step further, many VARs find that it often makes economic sense for customers if the solution provider becomes their outsourced IT department. Say hello to managed services. By remotely managing and monitoring your customers' PCs, networks, storage, printers and more, you provide yourself with a recurring revenue stream and end users with a fixed IT budget. Everybody wins.
Greg Starr, COO of IT Works, a solution provider, said his managed services business is doing so well it's hard for him to even admit times are tough.
"Are the sizes of projects smaller? We're seeing some of that. But overall we're seeing a lot coming through," he said. Longtime VARs have survived enough economic rollercoaster rides to know that quick turns are tough on everyone involved. The ability to strap in and hang on tightly by quickly adjusting to economic slides is all part of maintaining a successful business.
For IT Works, having a managed services practice gets Starr's company more ingrained with the customer, which helps insulate both parties against a depressed economy. Managed services brings IT Works a steady revenue base, while also helping customers reduce their own IT costs, he said.
"If you're busy with managed services, you're not waiting for the phone to ring in that environment," he said.
Diversification
Wall Street fortunes have been made through keeping diverse stock portfolios, and the same can be said for solution providers. Although it's true that many VARs find success with niche markets or technologies, that model can be more risky over the long term, especially if you're new to the game. Sometimes the key to selling in a tough economy is to keep all your options open.
Global Technology Resources, a solution provider, has grown to $180 million in part because it serves six or seven different markets instead of two or three, said Glenn Smith, Executive Vice President of Operations and Co-founder of GTRI.
If one vertical market isn't buying, there's a good chance one of the others is, Smith said. The cyclical nature of many markets allows the solution provider to get through times that prove tougher for competitors.
"We've been able to diversify across so many different market segments," he said. For example, a new customer base for the company is oil and gas companies. "Our eyes have opened in new places, not only where to take wireless, but other practices as well."
Another factor for success that solution providers should take advantage of are policy changes. For example, the federal government's recent approval of wireless connectivity should lead to a bounty of opportunities, said Charlie Franco, whose company Anyware Network Solutions, a wireless specialist, was recently purchased in August by GTRI.
With the new approval, the wireless opportunity "will be huge," Franco said.
Latest Trends in Technology
In many cases, solution providers have been selling "green" for years, through server consolidation, virtualization, etc., but highlighting the environmental aspect of a solution helps the marketability of a solution, VARs said.
"We see the movement largely starts in the data center. It's all about real estate and floor space, air conditioning, cooling, power consumption," said GTRI's Smith. "A lot of what we see going on with green initiatives are rack-oriented, server-oriented. We incorporate that into our data center practice."
The solution provider held an open house for customers earlier this summer. GTRI invited a few vendors to showcase their technologies and talk about how they address environmental issues. The event generated some great leads that will keep the company busy into the fall, said Sam Anderson, Manager for marketing programs for GTRI.
"It's something our customers have been talking about and they were interested in what we were doing from a solutions perspective," Anderson said.
Melillo Consulting also works closely with major manufacturers to generate proof-of-concept solutions around new technologies on behalf of its customers. For example, the solution provider may drop a blade enclosure into a test environment and do a proof-of-concept demo to drive home the long-term value in infrastructure consolidation, Paetow said. Other new technologies the solution provider showcases include management consolidation, storage strategies for archiving, backup and recovery, disaster recovery and
business continuity.
"You don't need to implement immediately," Paetow said. "Now is the time to do the planning, to get customers and their IT departments educated on new technology."
Melillo Consulting provides customers with a road map to appropriately budget and implement a cost-effective solution, Paetow said. Taking that approach will benefit solution providers when the wallets do open up again, he said.
If customers already understand what they need, it translates into a quicker sale and a more loyal customer. |