Addressing Risk is Critical to Selling
Technology
Published in the Houston Business Journal in
July, 2004.
Authors:
Kevin B. Long, Regional Vice President, Sales, SBC
Global Services, Inc. (a subsidiary of the Fortune
50 ranked, SBC Communications, Inc.)
Ravi Kathuria, President, Cohegic Corporation
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Long |
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Kathuria |
Selling large or complex technology solutions to
businesses is often quite challenging. It is
unlikely for a technology sale to close unless the
risks involved are sufficiently addressed. The risks
involved affect both the prospect and the
salesperson.
For the salesperson the risks include complexity
risk, competitive risk and sales-process risk.
1. Complexity risk is high because technology
is difficult to understand. The primary prospect
contact often serves as an internal advocate and
sells the solution to non-technology savvy
departments and levels in the prospect's
organization. The internal selling can be very
difficult unless the message is simple and the
business benefit is easy to describe.
2. Competitive risk is high as it is
difficult for the prospect to compare technology
solutions. It leaves more room to be misled. The
salesperson must help the prospect identify which
aspects of the solution are important to their
situation and help them make an informed decision.
It is often more important to educate than to
impress - it builds trust. Without the benefit of a
solution-related education the prospect is more
likely to base the decision on price.
3. Sales-process risk is high because the
sales-process can be undermined by factors such as
the presence of an incumbent. It is difficult to
replace an existing vendor even if the client is
seeking a change. Consider the example of renewal
contracts involved in the case of monthly recurring
technology-related services. The salesperson must
coach the client to start the sales-process
(bidding/RFP process) early enough. Waiting until it
is too close to the renewal date can allow the
incumbent to put the client in a position where any
new deal becomes untenable.
For the prospect, the risks include performance
risk, transition risk, integration risk and
political risk.
1. Performance risk is of a higher concern to
the prospect if the concept is new, the technology
is unproven or the vendor has low brand awareness.
Helping the prospect become comfortable with the
performance risk may require money-back guarantees,
pilot projects and pay-as-you-go offers. Smaller
successive deals as opposed to a front-loaded large
deal may also help the prospect become more
comfortable.
2. Integration risk is a factor because
technology implementations are not done in a vacuum.
In the past, many companies have implemented
technology solutions and not integrated them with
other existing technologies - a phenomenon often
seen in the software space. However, more companies
are now recognizing the loss in efficiency and
agility due to poor integration. The salesperson can
gain an advantage over the competition by
highlighting the benefits of integration and
developing a prospect-specific roadmap for
integration.
3. Transition risk is potentially the biggest
business-related risk the prospect faces. A
mismanaged incorporation of the technology can
distract and possibly disrupt the operations and
revenue generation of the organization.
Technology-related expenses are typically small
compared to a corporation's overall budget and
revenues. Therefore, transition issues are always
far more critical than the price of the technology.
By addressing the transition issues, the salesperson
can prevent a decision based solely on price or
product features.
4. Political risk is the biggest personal
risk the primary prospect contact faces. The primary
contact cannot afford to have the solution fail in
any phase - proposal, transition, integration or
performance. This risk strengthens the prospect's
inclination to maintain status quo. The salesperson
must act as a coach and empower the prospect with
the tools and means needed to make the solution a
success in each phase.
Ignoring the risks and hoping to enamor prospects
into signing deals often results in lower sales
productivity. Keeping the message simple, tying to
business benefits and developing prospect-specific
roadmaps for transition, integration and performance
can help gain the prospect's confidence and
business.
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