The Potential (But Not Necessary) Evolution of Solution-Selling

So by now you probably have figured out that there can be a very fine line between solution-selling and selling solutions and that many people confuse and interchange the two phrases. While sales and marketing people can understand solution-selling (but I’ve always approximated that 1/3 of technology-drive sales people can intuitively understand solution-selling with minimal training, 1/3 with LOTS of training and 1/3 will never get it), there is still confusion over what a solution is.

Defining ‘solution-selling vis-à-vis a ‘solution’ can be a chicken and egg thing so let me start by including this picture that I believe is one viewpoint on how a solution-sell can evolve – but that doesn’t mean it has to in every solution case and/or for every software provider.

For example, many enterprise software companies and system integrators only ‘solution-sell’ and never evolve to the next level. Regardless of the number of installations and customer success stories, these organizations may never ‘publicly package’ an individual success – no matter how many times it is or can be repeated. Every implementation is a custom and potentially ‘one-off’ implementation. This is not to say that behind the scenes, these organizations aren’t using reusable or repeatable code for subsequent like-kind implementations but that is not advertised. The perceived value is strictly domain expertise.

Other software vendors evolve their solution-sale to a Level 2 – that is, they sell the value of domain expertise with emphasis on one or more customer references. These organizations may advertise “speed to implementation” by using reusable or repeatable code while also emphasizing personalization and customization. (Note: Service Oriented Architecture (SOA), Java, .Net Framework are examples of architectures and developer tools that are based on concepts of reusable services and code. Note: I chose links that can explain these terms to the non-technical individual - see other links below for more information.) The solution is typically demonstrable in some form – perhaps even as simple as a reference customer site visit. Many of these types of providers are “boutiques” typically specializing in selected segments or solutions. As with Level 1 providers/integrators, many of these organizations stay at Level 2.

Many enterprise software providers have tried to move to Level 3 with mixed success. The benefit of a ‘solution template’ is that it sends a strong message regarding domain expertise – Wow…this vendor has done this so many times!! . Typically, the template offers anywhere between 60-80% “standardized code” with the ability to customize. There are many reference customers to showcase, collateral, success stories, demonstrable ROI’s and a packaged demonstration and some technical documentation. In many cases, the template is not supported per se because of the amount of customization that is typically done by the customer or a 3^rd party developer.

Level 4 solutions are what I call ‘out-of-the-box’ applications that offer extensive documentation, training, upgrades, enhancements, domain expertise, many reference customers, collateral, success stories, on-going support, demonstrable ROI and a packaged demonstration for many different scenarios.

Deliberately evolving from a Level 1 or 2 solution providers to a Level 4 provider means that the initial implementations must keep repeatability, market opportunity and mass appeal in mind when writing initial requirements and code. This means that initial implementations will take longer vis-à-vis a ‘one-off’ implementation, using the first few charter customers as alpha/beta testers. Some providers encourage this by offering special discounts, royalties, special considerations, etc.

Bottom line is that a solution is not necessarily an ‘application’, nor does it ever need to be. What level a provider achieves or maintains can be different than another provider and both strategies can succeed. I have found that some technology is conducive to being ‘packaged’ as a ‘repeat performance’ while other technologies are not.

Some interesting links

http://hoskinator.blogspot.com/2006/06/10-tips-on-writing-reusable-code.html

http://searchsoa.techtarget.com/news/article/0,289142,sid26_gci968206,00.html

http://www.streetdirectory.com/travel_guide/148379/programming/repeatable_code___a_step_up_from_reusable_code.html

Part III - Tips on Segmentation, Solution-Selling and Selling Solutions

In order to address segmentation and answer the question: what am I selling to a given vertical that differentiates my product or service from what I sell to another vertical – I find it is good to talk about the concepts of ‘solution-selling’ (or ‘solution selling’) vs. ‘selling solutions.’

I remember working with one enterprise Software Company evangelizing solution-selling as I was working to expand this organizations brand from an infrastructure company to a “solutions” company. Since I had been an early advocate of (and thoroughly trained in) ‘consultative selling’, the notion of solution-selling was natural for me to embrace. I was very surprised about a year into this position when one of the most respected product marketing directors exclaimed: “Terry, when you talk about solution-selling, I thought you were talking about selling applications.” I then realized that I had some work to do to better explain myself.

Even as late as this past year, I’ve been asked the same question or something close to it – “What is solution-selling?”, “What is a solution?”, etc. Some years ago, it was rumored that IBM was asking similar questions and engaged SiriusDecisions to define a “solution”. A white paper on this topic can be found on the SiriusDecisions website (but you may need to have a subscription).

Here are my thoughts on solution-selling, what a solution is, etc.

Solution-selling is different than selling solutions. Typically, when selling solutions, the prospect tends to think you have an “out-of-the-box application” or something quite close to it. Selling an application can incorporate (and should incorporate) solution-selling concepts but solution-selling does not mean you are selling an application…is this confusing?

Solution-selling occurs when you position your marketing and sales message to address a “business pain” that a prospect is experiencing instead of merely selling technology for technology’s sake. In a good economy, such as what we experienced in the late 90’s, your prospect organizations were enamored with technology and were willing to spend big bucks just to have the latest and greatest technology “toys”. In most cases, it was the IT organization that made the buy decisions. When the .com bomb occurred, we saw the pendulum swing away from buying technology for technology’s sake - to the requirement for organizations to invest in technology when a line-of-business (LOB) executive indicated that he/she needed this technology to solve a strategic (or tactical) business problem. The challenge technology vendors had: convince the LOB executives that your technology could address their business pain. Hence, the language of marketing and selling had to change. This is what we call solution-selling.

So, instead of selling features and functions to IT (who could intuitively understand why a given feature/function was important), we had to sell benefits and return-on-investment (ROI) to the LOB executive. Technology vendors had to ‘talk the talk’ of the business executive. If you were selling technology to an insurance company claims vice president, you needed to talk about claims management and processing. If you were selling to a bank’s mortgage department, you had to talk about mortgage servicing and processing.

Since the beginning of time, technology organizations have been working to execute to a solution-selling approach. Even today when I speak to many software organizations, solution-selling is top of mind.

Here are some links to other blogs/articles defining solution-selling which offer similar points of views. There are also many books available that go into detail regarding solution-selling sales methodologies.

http://businessskeptic.firstrulecorp.com/2007/10/13/solution-selling-defined/

http://www.4hoteliers.com/4hots_fshw.php?mwi=3476

http://en.wikipedia.org/wiki/Solution_selling

Next posting, I will talk about my views on the evolution from solution-selling to selling solutions…..

How SMB enterprise software companies can better segment...

As a marketer, I am embarrassed that I haven’t continued blogging these past few months but family issues have kept me busy. Now that life has settled down some, I plan to focus on more timely blog entries. Over the next week or so, I’d like to focus on segmentation challenges and tips for SMB enterprise software companies.

In speaking with executives of SMB enterprise software companies (tech companies with less than $1b in annual revenues), one top of mind issue that prevails is how to improve messaging so that it better resonates with the audience. While some software companies have been temporarily successful staying with an extended horizontal play – one message for everyone – (e.g., Pre-Oracle Seibel for CRM), eventually even these organizations needed a segmentation approach.

Segmentation and targeting is not a cookie cutter approach. What works for one organization probably doesn’t apply for another. So here are some tips…

For most organizations, segmentation means “going vertical”. The reason is simple. If you are looking to refine messaging to identify business pain points, companies in the same segments have the same problems and pain. Other organizations tend to focus on what I call “cross-company segmentation” – focus on “like-kind” departments such as legal, marketing, finance, etc. regardless of the vertical.

Most of this blog series will address the “going vertical” approach although I’ll touch briefly on some lead generation tips for organizations that execute to a cross-company segmentation approach later on.

So how does a small enterprise software company go vertical? The answer is…slowly and deliberately. The first step - get agreement across the organization what “going vertical” means because there are different approaches and or phases:

(1) Segmented messaging: Collateral and online content are developed to address specific vertical market(s).

(2) Segmented marketing: Uses segmented messaging to execute marketing communication and/or lead generation campaigns.

(3) Segmented sales: Some or all of sales force and/or channels focus on specific verticals.

(4) Any combination of the above

Next blog: Choosing what verticals and how….