Posted tagged ‘contracts’

Megatrends 2010 – TSO

January 22, 2010

This morning on ESPN, I saw that the New Orleans Saints sent an copy of their entire playbook to the Minnesota Vikings.  They were quoted as saying that they felt they were so far superior to the Vikings that they really didn’t think it mattered.  In fact, they are considering telling the Vikings defense exactly what play they are going to run in this weekend’s NFC Championship game right before they snap the football, more or less daring the Vikings defense, which demolished the Dallas Cowboys last weekend, to stop them.

Of course, you shrewd football fans (and devoted ESPN watchers!) know that’s insane and they would never do that.  Why?  Because:

  • they really want to win
  • they realize sharing their playbook would give the Vikings an unfair competitive advantage
  • they are not stupid

And so I read with some surprise this week that a new trend in business efficiency is KPO – Knowledge Process Outsourcing, which is defined as:

Knowledge process outsourcing (KPO) is the allocation of relatively high-level tasks to an outside organization or a different group (possibly in a different geographic location) within the same organization. KPO is, essentially, high-end business process outsourcing (BPO).

Most low-level BPO jobs provide support for an organization’s core competencies. Entry-level prerequisites are simply a command of English (or applicable language) and basic computer skills. Knowledge process outsourcing jobs, in comparison, are typically integrated with an organization’s core competencies. The jobs involve more complex tasks and may require an advanced degree and/or certification. Examples of KPO include accounting, market and legal research, Web design and content creation.

I can only assume that the next step will be TSO – Trade Secret Outsourcing, where a company will find a service organization, ideally located far away in another area of the globe, send them all their trade secrets and entrust them to keep them safe and improve them over time, while they continue to focus on their day to day stock price, investing in risky derivative securities to bolster their bottom line, and wondering why their customers no longer seem willing to pay a premium for their product, saying they can get the same products elsewhere, but with higher quality…  Go Vikings…

How much would YOU pay??

June 25, 2009

I went to my car mechanic the other day.  I said, “Fritz, my car isn’t running right.  I am not sure what the problem is.  Can you fix it for $400?”   Fritz said, “I’m not sure – mind if I take a look at it, run some diagnostics and see what the problem might be?”  I immediately suspected Fritz would use the diagnostics not to hone in on the problem, but to justify charging me more money.”  “No way,” I said, “you either guarantee me that you can fix it for $400 no matter what the problem is, or I am going to another mechanic.” 

You can only imagine what Fritz reaction might have been.  It’s extremely likely that he would have said that he couldn’t help me without being sure of what the problem is and what the likely cost of parts and labor might be to get it running smooth again.  Or MAYBE, if he was really desperate for some cash, he might take the gamble that he could fix it for less than $400 and pocket the rest as pure profit.  But I seriously doubt it…

And isn’t that what we, in the consulting business, do every time we bid on a fixed price project without the proper time, insight, and validation for what the scope of the project is??  I am not against fixed price contracting any more than I am against a car mechanic taking my tires and brake shoes off and then telling me I need new rotors, that it’ll be $300, and when I go to pick the car up, it’s exactly $300.  But I am vehemently against being so desperate for revenue, any kind of revenue, that you will bid a fixed price on  a project based on a set of vague requirements and then spend the next 6 months either trying to nickel and dime every change order you can think of, argue about what’s in and out of scope and/or hope that you can claim you’re “done” before you find yourself wildly upside down on your P&L.

Next chapter, coming soon to a blog post near you…  What to do instead… 

Solution Selling – the final chapter

June 12, 2009

Let’s wrap up our little journey into the land of Solution Selling by covering the big three: Pain, Budget and Decision.  And rather than bore you (too late, you say??) with lengthy descriptions of these key steps in solution selling, let’s “cut to the chase” and hit on one myth and reality of each, shall we??

Pain

This is, for some, the granddaddy of them all.

Myth – no pain, no sale.

Reality – no value, no sale.

Think about it.  I’ll admit that pain is the lowest common denominator of the easy sell.  My water heater broke on Christmas Eve – I’ll pay anyone any amount of money to come to my house RIGHT NOW and fix.  OK, we get that.  If that’s how you want to sell, become a dentist.  But what if someone who you trusted said, “I just talked to Martha Stewart and I know a stock that is going to double in price in the next two weeks.  Are you in??”  Maybe a bad example, but you get my point.  You’d spend/invest money if you were confident your investment would yield value that made your choice worthwhile.  Here’s how you know this is true. Because once you doubled your investment, you’d tell everyone.  People are proud of value.  So look at your company’s offerings and find some, or quit and find a new company that has some…

Budget

My personal favorite

Myth – Expend as much energy as you can to find out what your prospect’s budget is and then craft your proposal to be $13 less than that.

Reality – It’s not your money.  Create a compelling value proposition and true differentiation that shows you’re better than your competition and your prospect will find the budget.

I just sat in a meeting this very day where there was a proposed $35,000 change order to a project I am involved in.  Granted, this is a big project.  But still – the discussion about the change order, and ultimately the decision whether to do it was based ENTIRELY on value.  No one said, “wow, that’s a lot of money.”  Because everything is relative…  And budget is relative to value.

Decision

Myth – whatever energy you aren’t spending to find out the budget, expend finding out who the “decision maker” is, and then make it your life’s work to focus all your annoying attention on them.

Reality – you will NEVER understand the inner machinations and politics of your clients and prospects.  You will pretend you do, because it makes you feel like you’re in control.  Instead, treat everyone with respect and focus on things you can control, like the quality of your proposal and presentations.  Oh yeah, and the quality of your product, reputation and offerings too.

You know how this is true?  Because we’ve all gone shopping for cars with our spouses.  And in many cases, especially way back in the day, car salespersons might have a tendency to focus on “the guy” assuming that the guy was the decision maker and that he knew more about cars.  And how many times, after you left the showroom, did your spouse turn to you and say, “you’re not buying a car from that salesperson – he/she ignored me.  What a jerk…”

Mo Thoughts on Sales

May 28, 2009

I got some pretty direct feedback last week from a “traditional sales” consultant that I have a lot of respect for who, after reading my last blog post, interpreted it to mean I think he’s useless.  Nonsense, I said.  You buy beer!

But it did make me reflect on where folks in business development can add the most value and how.

So here are a few “off the beaten path” phrases you should try on some of your clients, as well as some you should never say.  All in the spirit of building trust, since we’re talking “bonding and rapport.”

Things you can say if you want to build trust

  1. No, I don’t think we do that, but let me refer you to another company that we’ve worked with in the past that I think could help.
  2. Let me take the time to sit down with you and walk through the whole contract, including the terms and conditions, because I won’t feel right about signing it or asking you to sign it until I am confident you know exactly what’s in there.
  3. I noticed you didn’t pay your last invoice on time.  You’ve always been good about being prompt. There must be some aspect of our services that you have a concern about.
  4. I want to take the time to develop a proposal that will match your needs and budget.  That may take a few days, but it’ll be worth your patience.

Things you can say if trust matters just slightly less than your month’s quota

  1. That’s what you’re looking for?  What a coincidence!  That’s exactly what we do!
  2. I need this signed by 5 PM today so our VP of sales can count it toward her April numbers.  Don’t sweat the detailed language.  We never enforce that stuff anyway.
  3. You were late with your last payment.  I am sorry, but we have to stop work on your project this coming Monday if we don’t receive full payment by close of business today.  You read our contract, right??
  4. I’ll have a proposal for you by 9 AM tomorrow.  I am going to grab a proposal that we did a few months ago that seemed more or less like the same thing, change your name, the price and the dates, and hope you’ll sign it fast.

And if you’re all being honest with yourselves, you can’t tell me you’ve never heard some variation of the last four phrases.  Conversely, it’s all too rare that we hear any of the first four.  And the casualty of that is trust…

The end of an era

May 7, 2009

In my continuing mini-series on sales, I think we need to start with a recognition, long coming in my opinion, that traditional sales models are about as alive and well as the Boston Globe.  And I realize that this will offend many deep believers in sales.  But don’t despair!  I didn’t say “Sales is dead.” I just think it needs a makeover.

I had a mentor at Xerox who used to say, “Execution eats strategy for breakfast.”  How true!!  Here’s my corollary:

“Product (or service) quality eats sales like a tapeworm”

What the heck does that mean?  Well, what I really mean is LACK OF PRODUCT OR SERVICE QUALITY eats sales like a tapeworm.  Why a tapeworm?  Because it happens slowly, over time, and for much of the process you don’t even realize it’s happening, because there are always new opportunities (real or imagined) to drop in the top of the funnel, just like there’s always more food you can eat to counteract a tapeworm in the short run.   And just because you all know I LOVE to belabor an analogy, the weight loss you start to see with a tapeworm can be compared to the loss of revenue from repeat business.   Both are very real signs that something is not right.

Sales fact #1 – for every client who relishes playing 5 vendors off each other and spreading work among them in some bizarre form of ‘fairness’ there are 20 clients who prefer to trust and work with the same vendors time and time again, if the quality of your work merits the repeat business.

So as we start to consider what is different about sales these days, I would offer this advice:

If you are fanatical about client service and/or product quality, sales becomes as easy as connecting what you do well with real needs in the marketplace.  To do that, remember that even for a salesperson, the engagement BEGINS when the deal is inked.  If, on the other hand, you are fanatical about closing any and all deals at any cost, believing that the hard work on the engagement ENDS when the prospect becomes a client, you should head to Costco and stock up on bulk carbohydrates, because that tapeworm is going to eat you slowly but surely…

I hear sirens, don’t you??

April 29, 2009

Allow me to shift gears for a while and talk about sales.   And please indulge me while I quote from a recent article I read in Entrepreneur magazine… [May 2009 issue, for the terminally curious]

“Many entrepreneurs mistakenly think that making the sale has to do with using the consultative selling approach, special listening skills, likeability or any number of popular questioning or closing programs.  Sure, they’re all important aspects of selling.  But the granddaddy of them all – the one factor that guarantees your sales success more than any other and the one method top producers have in common – is a sense of urgency.”

I am going to try hard not to take issue with about 30 different aspects of that opening paragraph and just focus on the overall message and ask a simple question:  “WHOSE urgency??”  If it’s yours, as in:

  • I have to make my number for this quarter or
  • my sales manager is all over me to close something, anything, in the next 30 days or
  • I really think this company needs our product/services/crap

then I would have to strongly disagree with the author.  In his defense, he does go on to suggest that maybe you could focus relentlessly on the product or services division and ensure they get the quote together on time, write a compelling proposal, send their best consultant for demo, whatever.  But then it all falls to pieces when he says, “But the real reason was that I wasn’t leaving him until he did buy from me.”  No kidding.  Have any of you ever had the “pleasure” of having a salesperson tail you like the Feds, or lock you in a room until you relented and bought something from them?  I have good money that says that if you did buy, it was to make them go away and you swore to yourself you’d never buy anything from someone so heavy handed again as long as you lived.

Do yourself a favor.  Let your prospect’s sense of urgency dictate yours.  If they say they won’t be ready to make a decision or move forward for 3 months, LEAVE THEM ALONE for at least two.  If they need a proposal tomorrow, GET THEM ONE TOMORROW.  But whatever you do, don’t try to impose your ‘urgency,’ whatever that is, on them.  Remember:  if your prospect doesn’t hear sirens coming, neither do you…

Client Satisfaction?

November 30, 2008

I have worked for several organizations in my career who swear by two of the most dangerous words in consulting – client satisfaction.  It seems to me that some of those organizations really meant contract satisfaction, but perhaps were too shortsighted to recognize the difference.  A good way to tell is to ask yourself after a particularly difficult client engagement, did your leadership team go back and revise the terms and conditions or assumptions in your boilerplate contract, avowing “we’ll never let that happen again…”  If that sounds vaguely familiar, you may be in contract satisfaction mode.

I have two thoughts about that. First, it’s OK to be focused on contract satisfaction. Legally and ethically, that’s what you’re likely bound to in any engagement.  Just don’t kid yourself into thinking that your mantra is client satisfaction – not only is that very different – but it will confuse your teams as they try to manage expectations, control scope, make hard choices and deal with your clients on a daily basis.

Second, if you decide you REALLY are about client satisfaction, then recognize that it is something delivered emotionally, with passion and commitment and a tendency to go ‘above and beyond.’ Also recognize that it’s a business strategy that is typically employed by service providers who believe that reputation, referrals and repeat business are the core of their brand.

It’s not an easy choice, so make sure you involve everyone who interacts with clients when choosing your approach. Get consensus and commitment, and then stick with that strategy when things get tough, rather than revising contracts. To use a mixed metaphor, that’s a bandaid after the horse is out of the barn…




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