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Exercising the Power of Intimacy in a Sales Cycle: Part IV

2011-09-14T20:05:12Z

Part IV (Continuation from the Case Study in Part III)

Situation # 2: Overcoming Early Questions about Price

During the initial meeting with an executive, the question of cost comes up. The executive is still in the Whether to Act phase. The sales person knows the prices paid by past customers, but is afraid that if he/she says how much, the executive will get sticker shock and lose interest (and rightfully so). The salesperson is looking for ways to address the cost question without appearing evasive.

How should the salesperson respond?

The Response:

First, reply that the cost of services depends on the nature and breadth of work that is done. You don't know anything about their organization, their current state, or the information and knowledge that already exists. You have no idea what it would cost, but you do know that one of the first steps in any engagement is to quantify the opportunity so that program investments can be put into context.

Second, when one talks about cost, one has to take into account the total cost: investment of customer resources, purchased services, cost of new hires (if any), cost of developing and validating new protocols, etc. Every customer's implementation path is unique to them - with different balances of new and old processes, in-house and contracted work providers, manual vs. automated systems. Again, how can you know cost at this juncture?

Third, you're not trying to be evasive, it's just that at this stage with no goals and implementation path set out, it would be irresponsible to put something specific out there. This isn't a product or a piece of software; it's a change program (or solution or transformation or whatever). The first step is to explore with the executive team whether this program even makes sense given the company's strategy, resources, and current priorities. But, you can say, that if either the opportunity or the costs to realize that opportunity don't make sense, you'll be the first to say so because you don't want to waste their time or yours pursuing something that ultimately won't stand to reason.

Finally, if you are still getting pushback, say something like:

"...Look, companies that are serious about this consider it a strategic investment. That means in order to realize the vision, it takes both a significant management commitment and a significant financial commitment. You can't get there otherwise, at least not any time soon.

"The first steps are very low cost, and are designed to frame and quantify the opportunity, lay out the path to get there, secure the buy-in of the stakeholders, and define what it will cost all in all in to reach the desired state.

"Each step in the process is designed to inform the decision about whether or not to proceed to the next, as each step will involve more significant investment, inside and out. Getting started, if it makes sense to do so, it is typically a high-five digit figure (or whatever the range). Before that work is done, you'll have a sense of your current profitability for these procedures, how much opportunity exists for you to improve that profitability, and some insight into what it will take your organization - with your leaders, your docs, and your processes - to move the dial. If it's worth it, you'll continue, with or without us. Worst case, you'll end up with some short-term improvement opportunities that you can take advantage of to eek out some extra profits from your current processes."

And, lastly, remind them that all you're trying to do now is decide whether it's worth everyone's time (your executive team & theirs) to have a sit down meeting and explore the potential of the programs.

If the prospect is pushing back on the fact that you're not giving him a price, but not pushing back on the idea's relevance, the truly sophisticated sales person can employ reverse selling. It works like this:

"I don't sense your organization is ready for this anyway. Our work is transforming the economics of what is arguably the fastest growing service line in the hospital. Payment processes are on the verge of major change - which is going to cut the financial legs out from underneath the least profitable hospitals, but they won't know it until after it's done. Our clients seek to be leaders in their local markets; specifically market share leaders and financial leaders. They're smart business people. If it's this hard to even get a conversation about what's possible, I can't imagine how hard it would be to get people to actually do something, make a commitment, or drive change. It seems like there's too much inertia at this time, or too much focus on the little spending decisions at the expense of the big financial elephant in the room."

Granted - it takes a very confident sales person to use this approach. The point, however, is that the sales person has a lot more power in the early phases of the customer engagement cycle that they don't have to fall into traditional patterns of acquiescing and defensiveness. Your company is bringing an opportunity to the table and seeks only to be treated with respect and courtesy as you decide whether this opportunity is worth exploring further.

So by now you should have a good idea of how exercising the power of intimacy can benefit the sales cycle. Giving a sales person the tools and self respect to reframe questions about price, experience, and track record will give them the confidence they need to truly sell value, which is what True Solutions are all about.

Exercising the Power of Intimacy in a Sales Cycle: Part III

2011-09-14T19:50:51Z

Part III: A Hospital-Solutions Example

In this example, we tackle two customer situations that often pose difficult challenges to sales people chartered with selling True Solutions early in a company's transformation to a Customer-Intimacy Business Model:

Breaking out of the "Can't start because we haven't done it before" cycle. This is when sales people can't sell your newer, broader solutions because the company doesn't yet have a track record of experience and success.
Addressing Price questions raised in initial meetings and elsewhere early in the proactive sales cycle, before you know enough to give a good answer and before you have established enough credibility to justify whether or not spending that kind of money is a good idea.

Situation #1: The Early Reference Requests

A healthcare solutions company is positioning a new orthopedics patient-care model in with a prospective executive buyer - which in this case is the COO of a hospital system. The buying organization is in the Whether to Act Phase. The Entry Project would create a future-state vision and a high-level business case, and would tee up different approaches for achieving the future state vision (i.e., prepare them to enter the How to Act Phase). In going through the purchase approval process, the COO has asked some questions about the experience of other hospitals. The buying executive passes the questions along to the sales person via email and asks for an appropriate reply. The sales person is stressed because this is a leading edge solution and there really aren't examples where his company - or for that matter other hospitals - have implemented an entire solution before. They've done all the pieces, but never an end-to-end implementation.

How should the sales person respond?

The Response:

First, shift this dialogue to a "live" conversation rather than emails. Use the phone to ask some clarifying questions rather than dive into answers, even if the answers are unknown. The goal is to use clarifying questions to understand the COO's real concerns and educate him/her along the way. Ultimately, this process is used to instill confidence.

Second, and this is very important, don't answer the questions as if the buyer is vetting the people or your company. Answer them as if they are seeking to further understand how this solution might actually work and be applied to their unique situation. So, don't use phrases like "we never have..." Instead, use phrases like "so-and-so has done this..." Even if they're not your past clients, you've studied the market so you can speak knowledgeably. Remember, the customer is in the "Whether-to-Act" phase, and answers should address this decision.

Early in the discussion, the sales person could also offer to help introduce the COO/Executive Buying Team to others they could learn from - but the sales person must recognize that this is hard to actually arrange because references and contacts are few. Therefore, if such contacts are offered, the sales person should then use the process of talking through the concerns/questions in such a way as to leave the client thinking that ultimately making those contacts is an unnecessary step.

During the discussion, here are some other tactics that could be used by the sales person to redirect the inquiry and turn it into an advantage, possibly even building greater support for the initial work effort:

Suggest benchmarking and case study development as part of implementation work, i.e., you'll do the research for them (and build into the cost/price of future work).
Remind the customer that this is a leading edge topic, so the initiative needs to be dissected into pieces and lessons drawn that are specific to each piece. Some pieces have more track record than others. Some will be unique to them.
Pull from personal experience as much as possible when talking. "When we implemented a big change program through the doctors at Gotham City Health, we..." and "When the Metropolis Hospital System started their quality initiative, they had some rogue doctors and they did..." The individual experiences may be narrow, but the collective set of experience implies an overall capability and instills confidence in the buyer.
Cite freely other companies of which you have knowledge, even if you haven't done the work. It's your knowledge a client is buying, and that knowledge is born of both personal experience and studying the market.
Show that the risks are being managed at each juncture: every major step and decision in the process is only made after the sufficient information, and trust, have been developed to enable it. This is how True Solutions are designed.

Bottom line, the sales person should be addressing the COO/Buying Executive's underlying concerns. But it's impossible to be able to address all of them because there are circumstances that are unique to the buyer. So, as a supplier, you're not on the hook to know everything and have done everything. Rather, as their expert, you will bring them all they need to know.

Exercising the Power of Intimacy in a Sales Cycle: Part II

2011-09-14T19:44:47Z

Part II: Reframing the Sales Cycle to Lead an Executive Customer to a Decision

In the previous post, we talked about how the success of the Customer Intimacy solution is dependent on equipping your sales people to move early sales cycle discussions away from price and instead, establish, upfront, the value of your company, your people, and the potential solution/opportunity itself. Since this capability isn't easily put into practice by most sales forces, we'll now discuss how to do that.

To turn theory into reality, sales people need to be equipped with the talk track tools, not to mention confidence, to get through the many customer interactions that will occur when selling complex solutions. In short, they need ways to reframe conversations so they are not about price; that is, until the end of the process when the last thing to be decided upon is price.

Remember, we are targeting executives now, not Procurement. And, we are engaged early in the process, i.e., there isn't a mandate within the customer organization to buy anything, or even do anything, about the opportunity/topic that your solutions address. So given this context, the sales cycle needs to be approached with the mindset that there are three decisions being made throughout its duration, shown in figure 1, below. The sales person's role is to lead the customer organization through the process of making these decisions. Understanding what phase of the decision process a prospective customer is in helps determine the discussions that need to take place, as well as those that do not.

Figure 1: Three Phases of an Executive's Buying Decision

PHASE I: Whether to Act - in this phase, the discussion will generally focus on questions about the feasibility and impact of an opportunity:

Is the opportunity real?
Does it apply to me?
Is the implementation path practical?
Are the risks and effort worthwhile?
How does this rank vs. other priorities the executive might have at this time?

PHASE II: How to Act - in this phase, the discussion focuses on different paths to realize the opportunity:

What is the role of technology?
What various solution architectures should be considered?
What process changes need to occur?
Does outsourcing make sense?
How can we be sure the benefits are being realized?
How do we decide the best implementation path?

PHASE III: With Whom to Act - in this phase, the discussion focuses on the specific players to whom the executive will hand over implementation responsibilities:

Who will project manage this?
What partners will I use?
Whose technologies will we use?
Who is accountable?
What's the role of internal management vs. external providers?

For executive buyers, these decisions happen in sequence. Understanding where a prospective customer is in their decision process is vital to connecting well, or in other words, to building intimacy. As one converses with an executive prospect, one's talking points need to align with where the executive is in their decision process, else those points will come across as irrelevant or, worse, annoying. To a prospect in the Whether to Act phase, it matters not that your company has more experience than any potential competitor. To a prospect that is in the How to Act phase, it is already understood that the operational cost savings potential of the opportunities makes for a rapid payback on investment. Nothing discredits a sales person more than speaking to a decision that has passed, or making points that aren't relevant to the decision at hand.

By understanding where a prospective customer is in their decision process, a sales person can tailor the talk track to help progress the prospect through the current decision and onto the next. In so doing, they are better positioned to win the decision that matters most in the end: With Whom to Act.

Knowing which decision phase a prospect is in also helps guide a sales person's responses to various questions. Take the innocuous question, "Where have you done this before?" Depending on where a customer is in their thought process, the meaning of the question is different:

In the Whether-to-Act Phase: This question is most likely intended to probe on the feasibility of the opportunity. The more it's been done, the more real the opportunity and the lower the perceived risk. Follow-up questions are likely to probe the specific circumstances of previous customers and the applicability of their situation to the executive's situation.

In the How-to-Act Phase: This question is most likely intended to probe the different approaches used by others as a means to inform decisions about possible implementation paths. Follow-up questions will likely address the challenges faced in each of the different situations and how they were overcome.
In the With-Whom-to-Act Phase: This question is most likely intended to probe the specific experience and qualification of your company. Follow-up questions will likely address your success rate, and past customers' specific experiences. If references are going to be checked, this is when it would occur.

An analogous breakdown can be done on another innocuous question, "How much does it cost?" The answer depends on the phase of the decision process. In the early phases, the question is about the feasibility and the economics of acting relative to the potential impact. In later phases, it's about price relative to alternatives.

Of course, none of this matters if a sales person can't respond to questions in the right way relative to the decision phase. We've written up case examples for clients to put the theory into practical use and to help sale people prepare for situations they are likely to encounter when selling True Solutions and leading their customers through their own internal decision processes. We also place high importance on writing very specific talk tracks or dialogue maps to guide meeting flows, and provide some response pathways to questions a sales person is likely to get.

The point of all this theory, examples, and preparation is to give the sales force not just tools, but the confidence to leverage the real power they have in a proactive sales cycle. After all, they are bringing to the table real opportunity backed by know-how, resources, and the leadership to bring a customer's organization forward and realize the promise. This power is made possible by the Customer Intimacy Business Model.

Exercising the Power of Intimacy in a Sales Cycle: Part I

2011-09-14T19:09:24Z

Part I: Changing the Power Dynamics in a Sales Cycle

One of the most common challenges raised by many of our clients is the difficulty their sales forces have with engaging Customer Executives in discussions about opportunities to impact their business as business people. Much has been written in these pages about creating solutions and offers that truly impact a customer's business, and on the need to engage customer executives to sell those solutions. Now it's time to address the challenge of enabling the sales force to be successful in taking those solutions to the target executives.

To start, it helps to understand the nature of the challenge at hand, namely, moving beyond the experiences of your sales people themselves. In many industries - and especially at companies that have competed for a long time on the differentiation of their products and services - sales cycles have long since become "responsive" in nature. In other words, sales people were primarily engaged in responding to demand that had already been created in the buying organization through some other means. The buying organization had already decided to buy and was in execution mode (hence, the heavy involvement of Procurement). Whether on their own or with the help of others, the buying organization had already made decisions about:

the business needs they wanted to address
the actions to take
ownership of the initiative, and
the funding to make available.

In responsive sales cycles, all that's left for the buyer to decide is the final vendor and price. These, of course, happen in parallel. As a result, most successful sales people are adept at selling their company's differentiation and managing the discussion around price. Absent differentiation, or the ability to sell the differentiation, they are left with only price. In fact, a close look at the contract approval processes within many companies will show that most of the internal discussion is just about price - as in, how low are we willing to let it go?

By pursuing a Customer-Intimacy business model, and bringing True Solutions to market, one engages the customer much earlier in their decision process. It might be so early that you are discussing opportunities and impacts that the customer hadn't even considered yet. Or, it might be an area in which a customer knows they need to take action, but hasn't really applied any energy yet to figuring out what to do and how to go about doing it. These are what we call "proactive" sales cycles, because the sales cycle is about leading the customer organization through their own decision processes. Even if the customer eventually goes out to RFP, your odds of winning are many times higher because of the trust, mutual knowledge of each other, and the intimacy built during the work of making the case for action and developing the course for action.

Unfortunately, the experiences of successful sales people in the "reactive" world often leave them ill prepared to lead "proactive" sales cycles. This can be addressed, but it takes more than just equipping them with sales training and new value propositions and talk tracks. They need to retool the way they think about their role in the buyer/seller arena. In particular, they need to think of themselves as having much more power in the relationship than was possible in a responsive sales cycle. The power comes from the fact that they are bringing ideas, opportunity, know how, and resources to bear that will effect change for the buyer's organization.

The challenge is that most sales people have never had that kind of power in the relationship, and they either don't realize it or don't know how to use it constructively. To illustrate the challenge a traditional sales person will have in selling in a more consultative environment, consider this true story:

I once went on a sales call with one of the more successful sales people at one of our technology clients. The client had already developed and piloted some True Solutions. We were now in the mode of scaling the sales model out to the main sales force. I was coaching this sales person on selling solutions and, in particular, the sale of an initial Entry Project as the first part of a Service Chain. Those of you familiar with this blog will have read about such offer concepts before.

This was our third meeting with the executive prospect. The first meeting included meaningful discussion about the idea and opportunity underlying the True Solution being taken to market, and the second meeting involved a deeper exploration of that opportunity with a broader stakeholder audience. Both had gone very well and it was clear there was broad support for moving forward. After discussing the objectives and scope of the Entry Project, it was evident that our executive prospect was interested and ready to move forward.

"So, how much will this first project cost?" the executive asked.

"$65,000" the sales person replied, with the confidence of one who can sense a deal close at hand.

The executive did not reply right away. In fact, he sat motionless, with no discernible expression on his face. It couldn't have been five seconds, but must have seemed like an eternity to the sales person.

"But because you are an important customer we can do it for $50,000," the sales person offered unprovoked, as if responding to an inner voice chastising him for having been so bold. The executive agreed and they began discussing how to staff the team.

I have often shared this experience through the years because it illustrates a common challenge within our client companies: their sales force has been conditioned to believe they have little power in negotiation during the sales cycle and the best and only platform they have on which to win is price. While that no doubt brings dismay to many business executives and marketing managers who insist their sales force needs to sell differentiation and price premiums, to many sales people those concepts are just words; it's all about cost.

In fact, many buyers have been conditioned to push back on price, even if they're happy with it. History suggests there is more discount available to those who demand it. In fact, a common buying tactic is to get a price early in the decision process, and over the duration keep pushing back on it; the more iterations and time that passes, the more discount extracted.

For the seller, the whole reason to move to greater customer intimacy and higher-value solutions is to combat commoditization of their offers. The process by which True Solutions are brought to a prospective customer, by its very design, demonstrates the value of a potential solution - as well as the seller - early in the customer engagement process. Theoretically, this should reduce price pressure and the sales person ought to have much more leverage to push back on price-reducing demands, whether real or imagined.

That's the theory. But can it be put into practice? Only if sales people can overcome biases and behaviors stemming from their own past experiences. If they are used to selling on price, they will fail when selling solutions and programs because they will leave unanswered the many questions a buying executive has before he/she can make the decision to move forward.

Fortunately, we can equip sales people to see and address the total picture with a prospective executive buyer - with price in its proper context - giving the sales person the power, confidence, and tools to be successful in a proactive sales cycle.

We'll explore the concept of equipping the sales force further in Part II.

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Video: Getting Started on Customer Intimacy

2011-04-19T13:52:36Z

McMann & Ransford’s Christopher Fox explains how your company should approach the Customer Intimacy Journey™:

Developing Compelling Service Chain Linkages

2011-03-29T01:55:21Z

As we explained in an earlier blog post on service chains, a service chain is a pre-planned set of offerings that have an entry offering with linkages and methods that pull-through the other offerings. Service chains formalize implied client value propositions by providing a framework to aid in the transformation from an opportunistic selling approach to a pre-planned, deliberate selling approach that delivers to clients the total value proposition offered by your company.

Linkages are pre-planned connections from one offering that pulls through the next offering. The connections are made by carefully pre-planned and executed sales activities. Of course in reality, linkages do not begin at the end of one project and end at the beginning of the next. Linkages are positioning activities that take place during the initial sales process and during projects. The positioning may not only be related to the next project in the chain, but also can be made with regard to the entire chain.

For example, a business development or account manager might choose to paint the entire service chain picture in their first meeting with a client. The purpose would not be to begin closing deals for all projects in the chain. Rather, the purpose would simply be to position the entire value proposition up front and condition the client for future possibilities.

Linkages provide excellent integration points to other service chains. In fact, such linkages should be pre-planned in the service chain if it is likely that one chain could link to another.

In our experience, we see three types of linkages:

Organic Linkages
Organic linkages link natural follow-on projects. They are typically dictated by the methodology used in delivery of the work. These linkages serve as checkpoints for client review and approval before proceeding to the next project. The linkage is organic because it will naturally happen assuming good results are achieved in the prior project. Examples of organic linkages are architecture leading to design and design leading to implementation.

Proof Linkages
Proof linkages position the next project by proving a benefit or other projected result in the preceding project. The fact that a hypothesis is proven to be true creates a logical linkage to the next project to act on those results. Examples of these are assessments and feasibility studies. If an assessment proves out a weakness, there is an obvious linkage to a next project to fix the weakness.

Facilitated Linkages
These linkages should be designed into the service chain when it is believed the client will have difficulty understanding the linkage to the next project. In such cases, there is a need to educate the client on the merits of the following project. A classic example of a facilitated linkage is the creation of a Steering Committee. The official purpose of the Committee is to oversee the current project. The linkage purpose is to provide a forum to educate the client on the rationale for the next project in the service chain. This approach might be useful, for example, when a client is changing their go-to-market strategy to include partnerships, and needs to be educated on the benefits in an ongoing way.

I can't emphasize this point enough: service chains are opportunities to build long-term relationships with clients. They're the key ingredient in your Customer Intimacy Engine™ that will allow your services organizations to scale and gain the critical mass they need to become dominant leaders in the industry.

MORE INFO >> Download: Customer Intimacy as a Business Model by Dean McMann

Customer Intimacy: Messaging to Enable Sales

2011-03-26T13:30:31Z

Since it's so important to success, let's talk about messaging and the sales force. You must differentiate your business with clear messaging attributes which include:

An Idea Selling™ storyboard
Answers to key questions like:
- "Why" they should do this
- "How" they can do this
- "With whom" should they do this

The Idea Selling™ storyboard must be complete. Glean out a 2-3 minute explanation of why examining the Idea is so important for the customer group. If the story takes 15 minutes to explain, it is by definition not messaged well or too complex for this stage of your journey.

The early stage of the journey and the early stage of the portfolio are different from later stages of your journey, and later stages of your portfolio. Also, what you take to market and what you pull through is different from your solution set. Again, you must boil the message down into something that is clear, well defined and easy to talk about in 3 minutes. The rest of the messaging for the Idea Meetings and the Stakeholder Meetings can be created off the initial messaging, but the primary mistake is never getting a clear, concise message to begin with.

Now, let's discuss enabling the sales force. Please remember that by nature, salespeople live in a different world than everyone else. They have the need to be successful to support their families and much of their compensation is leveraged on success. They spend much of their effort minimizing the chances of failure by working internally in their organization and out to their customers. Over time, the tendency in the sales organization is to encourage the sales rep to do what he/she is good at, to stay with products and services they know really well, and to deal with those accounts and people they already have relationships with.

Therefore, to change that - i.e. to call on different accounts or different levels in the organization - will work against all their risk aversion habits. Thus equipping and enabling the sales force so they can be successful is a significant effort, and should be looked on as such. This begins with a game plan that fully explains the sales cycle for the offer. This will include: the storyboard; how the Service Chain™ will work; how the Idea Meetings will work; how the Stakeholder Meetings will work; what they're going to draw; and how they will communicate. The game plan must be complete, easy to understand, and supported with visuals and videos that can be repeatedly watched as they begin to learn the offer. The next step in the journey is to provide education on the offer. They will need direct educational support that is intellectual, including role playing opportunities, coaching, and probably someone to go to market with them to show them how it works by example.

In summary, I cannot stress enough the things that are necessary to create meaningful True Solutions™. If you do not pick the right offer and you cannot differentiate well, it is relatively difficult to make up for that without really good positioning documents and sales enablement. If you do not invest heavily and do everything right in getting the positioning correct, and you do not invest heavily in getting the sales force successful, then you run the risk of being unsuccessful and not knowing why.

In the end, you have to remember that customer intimacy is about business model transformation, and the sales team is a key part of this change.

MORE INFO >> Download: Customer Intimacy as a Business Model by Dean McMann

Ingersoll Rand's Larry Wash on Going Global

2011-03-25T04:36:56Z

MORE INFO >> Download: Customer Intimacy as a Business Model by Dean McMann

Developing True Solutions™ - Not Product Development

2011-03-22T12:47:33Z

The following guest post is by Mark Slotnik of McMann & Ransford.

If you have been following Dean's blog, by now you know how we feel about the importance of True Solutions™. Typically in the Form phase of building a Customer Intimacy Engine™ , you will develop the initial True Solutions™ sets and take them to market. Like product development, a framework and process exists to define, develop and take your Solutions to market in a deliberate and defined manner. This building block is key to your Intimacy Engine™ success, so it is important to recognize early on what is different about developing True Solutions™ compared to typical product development.

So what is different?

Let's answer this from two points of view: The Market, or external view and the Company, or internal view.

Buyers of True Solutions™ progress through a series of business decisions before deciding and committing to spend large sums of money to implement significant change to their business. I call this the customer journey and it is your job to provide everything they need along the way. Therefore, from the Market/Customer Point of View, solution development is driven by the following actions:

Interacting with the market (customers) quickly and spending less time defining it up front. In other words, define and validate the Customer Journey early in the process. To me, this is often the most difficult brick wall to break through for those companies in the Form Phase.
Understanding that your customer's Solution inspection is on the significance of the problem or opportunity, not what the product will or will not do (i.e. feature and functionality).
Designing Solution components to be modular to meet the needs of your customer's specific and unique problem/situation.
Designing Solution components to help your company understand the customer environment to better scope, design and cost the solution implementation and manage customer expectations.

Solution development process phases and activities are the same and repeatable, but the final output and who builds it is different per solution. Therefore, from the Internal/Company View - Solution development is driven by:

Cross functional teams that possess customer, industry, product, business management, and marketing/sales expertise. The intensity of resource involvement varies throughout different phases of development.
Piloting Solutions prior to a broader launch is the norm. The speed to pilot must be fast to get to market quickly to learn and make changes. Note that you might even "kill" the effort at this point, which takes discipline but is crucial so you are not wasting scarce, valuable resources.
Launch activities are primarily focused on training and coaching the specific solution aspects (e.g. who is the target buyer and what/how we communicate the specific Idea) to sales and delivery resources. Note this is not a "check the box" process of completing documents then throwing the book over the fence to sales.
True Solutions™ typically include products and services, but both are not always required.

In summary, a well crafted and defined solution development process allows for continuous improvement, incorporating both inward facing and market based criteria to ensure alignment with the target customer's buying decision process, your customer engagement model and solution delivery. It is repeatable and has objective toll gates along the way.

Lastly, speed and momentum matter - the window of opportunity for both you and your customers only stays open for so long. It's critical to instill a sense of urgency in the teams involved.

MORE INFO >> Download: Customer Intimacy as a Business Model by Dean McMann

The CEO and Customer Intimacy

2011-02-13T04:21:29Z

In senior executive circles, the idea that Customer Intimacy is a business model transformation initiative is often greeted with knowing smiles and nods, but little understanding of what's truly required. More often than not, the CEO expresses great interest in the Customer Intimacy Engine™ but then wants to implement it along with 20 other initiatives, assign it to some low level committee, and hopes to be done in a year.

I can tell you from many years of experience, it won't work and you will waste whatever time and money you put into it.

Company after company will tell me that "customer intimacy" is one of the most important challenges for them to solve and that they're willing to spend significant funds on the issue but, in the same conversation belittle the effort and attention required to move the dial.

Transforming your business model in any significant way requires significant senior executive involvement and the dedication to make it the way you do business. Just look back at the historical change programs at GE under Jack Welch's tenure. There was little doubt that he, Welch, was in charge of the transformation of GE.

Executive involvement and dedication means defining the success criteria and milestones appropriately, aligning organizational incentives, assigning and holding accountable a seasoned senior executive to lead the transformation and continually inspecting progress. In other words, it should be a top priority topic on every executive leadership team meeting agenda until it becomes the way your company does business naturally.

The Customer Intimacy Journey™ is a much larger transformation than a Six-Sigma initiative; it literally impacts every function in the business across all boundaries. I've seen companies embark on the transformation effort, only to see their staff functions fight each decision and action along the way. They cut off their noses to spite their faces, cheering that they were able to stop the journey.

We know from 17 years of experience that it is very difficult to change a major enterprise - look how long the car companies have been trying to change - and we know it takes top executive involvement and commitment to make the Intimacy Engine™ journey a success.

I understand that there is limited time for the leaders of a company to involve themselves in new things and it is difficult to know what's most important. Furthermore, without knowing a company's situation in detail, I cannot speak to how important the move to the Intimacy Engine™ model might be for them, but if it is strategically important, then the level of complexity of the journey must be well understood so that the entire senior executive team can see that their personal and passionate involvement is crucial to success.

It's all about priorities - better to pick the most critical initiative and execute it well, than to try to do too many things - all of them half-heartedly. I understand the pressure is to deliver instant results. But, can these results be sustained? And can you keep the momentum going?

MORE INFO >> Download: Customer Intimacy as a Business Model by Dean McMann

Talent Development & Customer Intimacy

2011-02-09T04:41:15Z

The following guest post is by Mark Slotnik of McMann & Ransford.

As I stated in my last post, talent is always important and is one of the key drivers of the Customer Intimacy Engine™. Your people will constantly be generating new ideas for True Solutions™, taking those ideas to your customers and delivering on the promises made. And let's not forget that these teams are also accountable for developing account intimacy. Therefore, most companies going to the Intimacy model make developing talent one of their key initiatives because in an Intimacy based business, the skills required to sell ideas, deliver projects, and develop account intimacy are different from traditional product and service company skills.

When considering talent development programs, most people ask, "Can we just get the few online courses we need to add to our existing curriculum?" and/or "We already have extensive product and technical training - isn't that enough?"

That's like playing the game of horseshoes such that close enough is still good enough to score and potentially win. So yes, both of these are important and useful but they are components of a well crafted program.

The talent base requires a mix of skills to yield well-rounded personnel to drive success as they progress in the intimacy model and their career:

In general, I find companies to have a very good handle on the Technical side of the equation. In addition, many people obtain their domain knowledge through their interactions with customers (i.e. the customer trains them). Where most if not all fall short is on the specific development of skills necessary for customer intimacy - those that are most closely associated with professional services skills, or "soft skills".

Successful talent development programs also incorporate the principles of adult learning. If you are like me, you no longer absorb/learn like a sponge all of the new, complex teachings like we did in school by sitting and paying attention in class (and we all did that, right?). Adult learning requires more than webinars and training guides - a successful talent program includes coaching, mentoring, training and self improvement to fully enable your teams for success. People must be given the opportunity to:

•    Participate in an intellectual forum to ask questions, share examples and learn from others
•    Try their new skills in a safe environment
•    Implement the new skills supported by experienced coaches
•    Demonstrate successful adoption

As I stated in my previous blog entry, most companies going to the Intimacy model make developing talent one of the key initiatives. Why? Customer intimacy driven companies benefit by improving their customer's business outcomes and additionally, more than most other business models, value knowledge. Developing talent benefits your company by accelerating learning of skills and abilities within the organization. It benefits your teams by making their work experience a positive one, and by helping them to reach their full potential.

Remember, in a Customer Intimacy business, the individual's success is the company's success. The company that provides the framework to develop its employees is the one that succeeds in the marketplace. And while the company provides the framework to develop your employees, in the end it is a shared responsibility, as the individual must take the initiative to ensure his/her success.

Customer Intimacy is not Engagement

2011-02-02T03:46:00Z

How do you explain customer intimacy?

The clichéd use of the term customer intimacy has led to its devaluation across all industries - both consumer and B2B.

The phrase is misused in far too many ways to mention. Here are some examples of so-called “customer intimacy” initiatives:

reaching out to answer questions and complaints using Twitter and Facebook
building an online community to help customers buy more
training to help the sales team become more consultative
online recommendations based on previous shopping patterns
a voice of the consumer program which asks for live feedback built into the product itself
a voice message that says “your call is important to us”
building customer experience scenarios with data gathered through observation

Each one of these initiatives has been tagged as a customer intimacy initiative, which isn’t an accurate reflection of what the phrase means at all.

Customer intimacy, as originally defined by Michael Treacy and Fred Wiersema in Customer Intimacy and Other Value Disciplines was all about choosing a value discipline - operational excellence, customer intimacy, or product leadership—and aligning your entire operating model to serve that discipline.

This is where the misuse of the phrase with today’s jargon gets in the way.

Too often, customer intimacy is sold as customer relationship management, or Social CRM, or even product co-creation and crowdsourcing.

Many are initiatives which listen to the voice of the customer - usually in the form of negative comments or product complaints, and then finding ways to mitigate the negative response.

Other initiatives, such as creating campaigns on Facebook and Twitter or building an online community to encourage marketing conversations, may be called “engagement.” Engagement - our buzz-worthy term of the month - has become something of a movement in itself. And I wouldn’t mind so much, if it wasn’t being used as a proxy for customer intimacy.

Still others are looking to improve customer experiences using surveys, feedback, and customer-driven feedback.

Even in B2B companies, which should know better, customer intimacy is often viewed as a sales initiative, as part of the global account management process.

Wrong.

Companies must view customer intimacy as a business model, not as a marketing or sales strategy, but as a transformative strategy for the entire business.

MORE INFO >> Download: Customer Intimacy as a Business Model by Dean McMann

The Software Industry: The Value of Customer Intimacy

2011-01-28T05:14:00Z

I wanted to take some time to discuss something I get asked a lot about - is the Intimacy Engine viable for software businesses, regardless of the Software-as-a-Service journey everyone is on and the Cloud impact?

The real issue they're worrying about is that a large consulting business will negatively impact the great margin that software has, thereby negatively impacting valuation. It does not work that way when done properly. Further, software-based businesses also have the problem of "where do I go from here", once the current product has been somewhat commoditized- i.e. other firms have moved above and below offering more or less price.

Traditionally software firms' options are to do a shift and become a suite of things, an infrastructure play, or find a new fresh home unrelated to the current space. All these require additional product, and more importantly, selling to new buyers higher up in the organization - this is where a strong Intimacy Engine comes into play.

It's much easier to go up the organization with your products if you have the ability to work with the executives on issues they care about.

Let's take the diluted factor of services to licenses sales. It's just not true that you should be selling more licenses. Let me provide a picture to assist. The buying cycle is as follows:

The challenge for a traditional sales only approach is that if you meet a customer in steps 1 or 2, you have little control and a long sales cycle, and the drivers often become features and price. However, if you lead with True Solutions™ during these steps, you can get paid for effort, control the process, and shorten time to product sales. Most importantly, you get more product sales!

Therefore the argument is null and void; you get more license-sales faster, and the magical break-down of 1/3 license sales, 1/3 service, and 1/3 maintenance is maintained.

Next, let's take the ability to move to expand the product offerings to maintain or re-gain momentum for a software business. The beauty of the software model is the margin it achieves on product sales. By the way, this is true of SaaS also, it just elongates the revenue and eventually increases the product value (people end up paying more over time, but it is accomplished a period at a time- think salesforce.com).

Every product market gets saturated eventually. Everybody has made their decision on who to play with, or the market is crowded and price pressures force looking at new virgin territory. Further, over half of all new product launches do not succeed in the time to market to get the revenue needed. This is almost always because companies must sell into a new environment and all their current abilities - marketing, messaging, sales - are used to the old environment.

The Customer Intimacy Engine™ business model does not have this problem. The Intimacy Engine sells by examining ideas, and ideas can easily (by adding new True Solutions™ to the solutions portfolio) move up the organization.

Let's say your current software works at the department level and you are going to increase your value by adding products that make your offering a suite of offerings that follow a life cycle - could be the supply chain, the product launch or other life cycles within your target customers. The ability to quickly move to and above above a new safety line is enabled by the Intimacy Engine, thereby eliminating the risk of being unable to change the entire business model to reach these new buying environments.

Let's say you are moving to a whole new space. Even more difficult! The same truth applies. You can add True Solutions for the new space and pull through your new products and minimize your risk of failure.

The real challenge is one faced by every business - how do I build an Intimacy Engine for my specific business?

In summary, the Intimacy Engine can enhance the current financials (within the model you wish to have) and can positively impact the largest issue facing a software business today (whether it is a standalone business or embedded in a larger company), which is how to move and grow into new marketspace.

MORE INFO >> Download: Customer Intimacy as a Business Model by Dean McMann

Mittelstand: A Lesson from Germany

2011-01-26T01:41:09Z

A recent post on the Economist blog suggests that despite high labor costs and a strong euro, Germany is the world's largest goods exporter after China. This engine is being driven by durable, focused businesses defined as Mittelstand.

Business Week tells us these are "family-owned companies with fewer than 500 employees and annual sales of less than 50 million euros"-- and, get this -- they employ over 70 percent of German workers and contribute nearly half of the country's GDP. And in the field of clean technology - in which Germany is a leader - more than 75 percent of German cleantech companies fall under this category.

The Germans themselves have been studying these Hidden Champions for years. Academicians Bernd Venohr and Klaus Meyer point out that while the same approach has been observed in a handful of other firms around the world, including the US, it is most pronounced in Germany.

How do they do it? Again, the Economist:

Mittelstandler have not only focused on sophisticated niches that are hard to enter. They have thrown their energies into building up ever more powerful defences. They constantly innovate to stay ahead of potential rivals. They are relentless about customer service. Their salespeople are passionate about their products, however prosaic, and dogged in their determination to open up new markets ... [They] typically have subsidiaries in 24 foreign countries, offering service and advice. Many get the bulk of their revenues from service rather than products. Hako, which makes cleaning equipment, generates only 20% of its revenue from sales of its machines.

In short, many of these companies are focused, service driven, customer intimacy businesses.

My belief is that future growth for the U.S. lies in pursuing true customer intimacy led by services or solutions. Yes, I do agree that we do need to build back a level of manufacturing here at home, but it is customer intimacy which will drive performance.

If you look at the remarkable successes of IBM Global Services or GE Health Care, you'll see they follow a customer intimacy model for service. I'd like to see our mid-sized companies follow this proven path to growth and profitability. It's a sustainable edge.

MORE INFO >> Download: Customer Intimacy as a Business Model by Dean McMann

Ingersoll Rand's Larry Wash on High-End Services

2011-01-21T06:21:41Z