strategy

Could a New Channel Model Lead to Sales Amplification?

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Over the years I have helped both successful companies and start-ups improve and strengthen their Channel and Strategic Alliances programs. Those companies do a great job closing deals but usually have concerns about not generating or receiving enough new business leads. Or, they develop strong relationships with one or two vendors, only to find later that a key vendor has been sending deals to a competitor. You may not have experienced this yourself, but if you have please read on.

Word cloud for strategic thinking.

Most traditional channel models support Distributors, Resellers, OEMs, and ISVs. Business mainly flows upwards to the main vendor. If that vendor has popular and widely used products then business can be good because there is sufficient demand. But when that is not the case your sales pipeline usually suffers.

Doing something the same way as everyone else may not be a bad approach when there is enough business for everyone and your growth goals and aspirations are aligned with your competition.

Sales Channel business is usually not the main source of revenue for most companies, but it does have the potential to become the largest and most scalable revenue source for nearly any business. Just think about the money that is being left on the table by not adopting a growth mindset and executing a new and better strategy.

In the summer of 2016 I attended the “Sage Summit” in Chicago. It was impressive to see the Sage Group’s efforts to build, strengthen, and protect their community of Customers and Channel Partners. They made the effort to foster higher levels of collaboration between the various types of partners – implementation services, consulting and staff augmentation services, complementary product vendors, etc. They had created their own highly successful Business Ecosystem, which is an excellent proof point.

When designing a channel partner program my personal focus has always been on finding the balance between promoting and protecting the business of partners with helping ensure that the end customers have the best experience possible (and have some recourse when things do not work out as expected). There are a variety of methods I have used to accomplish those goals, but the missing component has always been the inclusion of a systematic approach to seed relationships between those partners and facilitate an even greater amount of business activity.

Nearly a year ago I began working with a management consultancy run by Robert Kim Wilson, which has a business vision based on his book, “They Will Be Giants.” I will provide links at the bottom of the post for this book and other relevant resources. Kim asserts that Entrepreneurs with a Purpose-Driven Business Ecosystem (PDBE) are more successful than those without one and provides examples to prove his point. Having experienced Kim’s own PDBE I see how purpose fosters trust and collaboration.

As I did more research I have found that, especially over the past two years, there has been a lot of focus placed on Business Ecosystems and Business Ecosystem Organizers (such as Sage in the earlier example). Those findings reinforced the PDBE approach, and external validation is always a good thing.

Just as important from my perspective is that this concept applies to businesses of any size, and it is especially helpful to small to midsize businesses. The fun part for me is exploring a specific business, analyzing what they do today, and quantifying the benefits of adopting this new strategy.

So, how does this new type of Business Ecosystem work?

  • The Business Ecosystem Organizer expands the overall network, vets new “Business Ecopartners,” and provides a framework or infrastructure for the various Business Ecopartners to get to know one another, exchange ideas, and discuss opportunities.
    • This can become an incredible source of sustainable revenue for companies willing to invest in the necessary components to grow and support their own Business Ecosystem.
  • Business Ecopartners will have access to trusted resources that can augment existing business and take-on new, bigger projects by leveraging the available expertise.
    • Suppose that you have products or services that work with commercial CRM (Customer Relationship Management), ERP (Enterprise Resource Planning), or SCM (Supply Chain Management).
    • You have seen a growing demand for functionality that relies on highly specialized technologies like:
      • Cryptocurrency support.
      • Blockchain for both financial transactions and things like traceability in your supply chain or IoT data.
      • AI (artificial intelligence), ML (machine learning) to detect patterns and anomalies – such as with fraud detection, Deep Learning/Neural Networks for image recognition or other complex pattern recognition.
      • Graph databases to better understand a business and infer new ways to improve it.
      • Knowledge Graph/Semantic databases to assist with Transfer Learning and deeper understanding.
    • It would not be practical or cost-effective for most businesses to build these practices in-house so partnering becomes very attractive to your company.
      • This type of business can also be very attractive to a Business Ecopartner because someone else is handling sales, billings, account management, etc.
  • Other Business Ecopartners could leverage your products or services for their projects and engagements, thus becoming another source of revenue.
  • By leveraging this network your business can essentially compete on imagination and innovation – something that could become a huge source of differentiation from your competition.

Value realized from this New Business Ecosystem model:

  1. These new sources of business and talent can become a real competitive advantages for your business.
  2. This becomes the source for Sales Amplification because your business is extending its reach and expanding its growth potential – directly and indirectly.
  3. The weighted (based on capabilities, capacity, responsiveness, and Ecopartner feedback) Business Ecopartner network model could lead to exponential business growth over time – and that is a winning strategy for any business.

References:

What are you Really Selling? (prospecting tips included)

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It is interesting to see people in Sales and Marketing still focusing on features, performance, cost, and even value without creating linkage to what that means to a company from a business perspective. Once you understand what you are really selling, which means why people really buy what you are selling, it is possible to connect with prospects in a meaningful way that can increase your win rate.

Pot of Gold

There is a sales adage from the 1940s (source) that asserts, “No one wants a drill. What they want is the hole.” That basic understanding of why people and companies buy is still often lost in sales and marketing messages today.

Several years ago my team and I were selling a new Analytics Database that was truly different, but our message was identical to every other database vendor – “70% – 100% faster than every other product.” It is nearly impossible to differentiate your product with a non-differentiated message.

I flipped the messaging to focus on business needs. We created a weekly webinar focused on Why Fast Matters. Query response time is important, but being responsive to business customer requests is often more important. What if they did not need to wait a week or two to have new indexes created or a month to have a Star Schema updated? They could just run queries as-is, maybe wait a minute instead of a second or two, and have what they need then and there. That message resonated and we sold the first 50% of that product globally. When the Australian team began using our messaging their sales also increased. Funny how that works.

Effectiveness is all about results, and efficiency is all about achieving those results with the least amount of time and effort. This doesn’t mean that we are looking for a lazy approach to find a win. Rather, it is about identifying repeatable patterns of doing the right things that circumvent unnecessary activities, time spent, and associated costs. Being good at qualification doesn’t mean that you will be good at closing, but it is tough to become a good closer without having sufficient “at-bats” that good qualification leads to.

The way to help yourself understand what you are selling is to view things from your prospect’s perspective. What struggles are they likely facing? Where are the greatest opportunities to help their type of business? Are you analyzing data to attempt to assess their unmet needs? Your insight can become a huge differentiator, especially if you can teach them different and better ways to do something (ala the Challenger Sales Model).

What is the difference between your prospect company and its main competition? This analysis requires a general understanding of their vertical and more specific understanding of the prospect company, it’s history, and 2-3 of their main competitors. It also requires an honest understanding of how your company and products compare to the competition so that you can play-up your strengths and limit your investment in areas where you are less likely to win the business.

Now that you have identified an area where you believe there is a good fit the next step is to develop your target list for that profile. Much of the information you need can be found in Corporate filings (10-K and 10-Q filings for public companies, and Form 5500 filings for companies with a 401(k) plan – especially useful for private companies), websites like Owler.com and SimilarSiteSearch.com, and from social media sites like LinkedIn.com and Facebook.com). Then search for people in areas that are most likely affected and look for titles that are likely Stakeholders or Decision Makers.

The next item to focus on is messaging. Below are a few examples from my career –

  1. Analytics & Big Data – The focus here is often on data volume, the currency of the data, speed of queries, cost, maintenance, and downtime. Those things become important later in the sales discussion, but initially, companies want to know what problems your product or solution will solve.
    • Some of my fastest deals sold because I demonstrated ways to make better decisions faster and/or identify problems before they were had the chance to become major problems. Avoiding problems and unplanned outages were key parts of the messaging.
    • In one case I was able to close a significant deal in less than three months by focusing on how a company could provide five years of transactional data for their customers to use to make purchasing decisions in less time than it took the current system to analyze six months of data. Their sales increased after implementing the revised system. Helping their customers make better buying decisions faster was the winning message.
  2. Embedded Products – While many companies focus on APIs, features, or cost per unit, I would focus on how the product I was selling made things better and easier for Customer Support and Customer Satisfaction. Things like stability, lack of maintenance required, data integrity, performance over time, messaging when something abnormal or concerning was observed, etc.
    • I sold a $1.1 million deal in less than two months to a medical device company by focusing on the life of those devices often being 10-15 years and how their customers need to be assured that the results will be the same from machine-to-machine, even if one of those machines is much newer than the rest of the machines. Consistency over time was the winning message here.
    • After being approached by a Defense Contractor for a relational database product for a new Flight Simulator system I changed the discussion to the complexity of flight control systems, the need to correlate 30+ operational systems in real-time, and the importance of taking a verbal command and translating it to specific commands for each system. That led to the sale of a NoSQL product that was ideally suited for this complex environment. The idea of letting our software handle the really complex work helped win this deal.
  3. Consulting Services – This is not contracting or body shop services (commodities), but true Business and Technical Consulting services that were high visibility and high impact. In these cases expertise, experience, and having a track record of success in different but demanding scenarios provided confidence. Often these were multi-phase engagements to first prove our value before making a large commitment.
    • In a bid against two well-established competitors, we won a deal with a large Petroleum company that was nearly $500K. The proposal included information that we uncovered about the system and use case and later verified with the prospect, a section on our people and some past projects, and then a high-level project plan with firm-fixed pricing. We won the bid and I later found out that our cost was $50K higher than the largest competitor and more than $100K more than the other competitor. The customer told me that, “Your proposal demonstrated the understanding of who we are and what we need, and that confidence provided the justification to select your company and pay a premium to have the job done right the first time.”
    • My first million-dollar deal was with a company that we demonstrated our ability to solve problems. They knew they needed assistance but were not exactly sure where. I created a “Pool of Days” concept that provided flexibility in the work performed (task, deliverables, and scheduling) but had minimum monthly burn rates and an expiration date to protect my company. This led to many other deals of this nature with other companies. Flexibility and the ability to accommodate changing needs without introducing significant risk or additional cost was the winning messaging here.

As you see from these examples the common theme is helping companies solve their specific business problems. Even in cases where technology was central to that message the focus was always on better results for that prospect and their customers. Value is important but the results matter even more for most purchasing decisions.

Nobody wants to be responsible for taking a chance on a new vendor and be responsible for a high-profile failure. Helping instill confidence early on makes a huge difference and following-through to successful implementation results in happy customers who become great customers and provide important referrals.

It all starts by selling what you know you can do from a business perspective for your Prospects needs to make their lives easier and business better, rather than selling what you know you have from a technical perspective where you are far more likely to get lost in the noise of the messaging from most of your competition.

IoT and Vendor Lock-in

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I was researching an idea last weekend and stumbled across something unexpected. My personal view on IoT has been that it provides a framework to support a rich ecosystem of hardware and software products. That flexibility and extensibility foster innovation, which in turn fosters greater use and ultimately adoption of the best products. It was quite a surprise to discover that IoT was being used to do just the opposite.

My initial finding was a YouTube video about “Tractor Hacking” to allow farmers to make their own repairs. That seemed like an odd video to appear in my search results, but midway or so through the video it made sense. There is a discussion about not having access to software, replacement components not working because they are not registered with that tractor’s serial number and that the only alternative is costly transportation of the equipment to a Dealership to have a costly component installed.

Image of jail cell representing vendor lock-in
Image Copyright (c) gograph.com/VIPDesignUSA

My initial thoughts were that there had to be more to the story, as I found it hard to believe that a major vendor in any industry would intentionally do something like this. That led me to an article from nearly two years earlier that contained the following:

“IoT to completely transform their business model”   and

“John Deere was looking for ways to change their business model and extend their products and service offering, allowing for a more constant flow of revenue from a single customer. The IoT allows them to do just that.”

That article closed with the assertion:

“Moreover, only allowing John Deere products access to the ecosystem creates a buyer lock-in for the farmers. Once they own John Deere equipment and make use of their services, it will be very expensive to switch to another supplier, thus strengthening John Deere’s strategic position.”

While any technology – especially platforms, has the potential for vendor lock-in, the majority of vendors offer some form of openness, such as:

  • Supporting open standards, APIs and processes that support portability and third-party product access.
  • Providing simple ways to unload your own data in at least one of several commonly used non-proprietary formats.

Some buyers may deliberately make the decision to implement systems that support non-standard technology and extensions because they believe the long-term benefits of a tightly coupled system outweigh the risks of being locked-into a vendor’s proprietary stack. But, there are almost always several competitive options available so it is a fully informed decision.

Less technology-savvy buyers may never even consider asking questions like this when making a purchasing decision. Even technologically savvy people may not consider IoT as a key component of some everyday items, failing to recognize the implications of a closed system for their purchase. It will be interesting to see if this type of deliberate business strategy changes due to competitive pressure, social pressure, or legislation over the coming few years.

In the meantime, the principle of caveat emptor may be truer than ever in this age of connected everything and the Internet of Things.

 

The Downside of Easy (or, the Upside of a Good Challenge)

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Picture of a Suzuki motorcycle

As a young boy, I was “that kid” who would take everything apart, often leaving a formerly functional alarm clock in a hundred pieces in a shoe box. I loved figuring out how things worked, and how components worked together as a system. When I was 10, I spent one winter completely disassembling and reassembling my Suzuki TM75 motorcycle in my bedroom (my parents must have had so much more patience and understanding than I do as a parent). It was rebuilt by spring and ran like a champ. Beginners luck?

By then I was hooked – I enjoyed working with my hands and fixing things. That was a great skill to have while growing up as it provided income and led to the first company I started at age 18. There was always a fair degree of trial and error involved with learning, but experience and experimentation led to simplification and standardization. That became the hallmark to the programs I wrote, and later the application systems that I designed and developed. It is a trait that has served me well over the years.

Today I still enjoy doing many things myself, especially if I can spend a little bit of time and save hundreds of dollars (which I usually invest in more tools). Finding examples and tutorials on YouTube is usually pretty easy, and after watching a few videos for reference the task is generally easy. There is also a sense of satisfaction to a job well done. And most of all, it is a great distraction to everything else going on that keeps your mind racing at 100 mph.

My wife’s 2011 Nissan Maxima needed a Cabin Air Filter, and instead of paying $80 again to have this done I decided to do it myself. I purchased the filter for $15 and was ready to go. This shouldn’t take more than 5 or 10 minutes. I went to YouTube to find a video but no luck. Then, I started searching various forums for guidance. There were a lot of posts complaining about the cost of replacement, but not much about how to do the work. I finally found a post that showed where the filter door was. I could already feel that sense of accomplishment that I was expecting to have in the next few minutes.

Picture of a folded cabin air filter for a Nissan Maxima

But fate, and apparently a few sadistic Nissan Engineers had other ideas. First, you needed to be a contortionist in order to reach the filter once the door was removed. Then, the old filter was nearly impossible to remove. And then once the old filter was removed I realized that the length of the filter entry slot was approximately 50% of the length of the filter. Man, what a horrible design!

A few fruitless Google searches later I was more intent than ever on making this work. I tried several things and ultimately found a way to fold the filter where it was small enough to get through the door and would fully open once released. A few minutes later I was finally savoring my victory over that hellish filter.

This experience made me recall “the old days.” Back in 1989 I was working for a marketing company as a Systems Analyst and was given the project to create the “Mitsubishi Bucks” salesperson incentive program. Salespeople would earn points for sales, and could later redeem those points on Mitsubishi Electronics products. It was a very popular and successful incentive program.

Creating the forms and reports was straight forward enough, but tracking the points presented a problem. I finally thought about how a banking system would work (remember, no Internet and few books on the topic, so this was reinventing the wheel) and designed my own. It was very exciting and rock solid. Statements could be reproduced at any point in time, and there was an audit trail for all activity.

Next, I needed to create validation processes and a fraud detection system for incoming data. That was rock solid as well, but instead of being a good thing it turned out to be a real headache and cause of frustration.

Salespeople would not always provide complete information, might have sloppy penmanship, or would do other things that were odd but legitimate. Despite that, they expected immediate rewards and having their submissions rejected apparently created more frustration than incentive.

So, I was instructed to turn the dial way back. I let everyone know that while this would minimize rejections it would also increase the potential for fraud, and created a few reports to identify potentially fraudulent activity. It was amazing how creative people could be when trying to cheat the system, as well as how you could identify patterns to more quickly identify that type of activity. By the third month the system was trouble free.

It was a great learning experience from beginning to end. Best of all, it ran for several years once I left – something I know because every month I was still receiving the sample mailing with the new sales promotions and “Spiffs” (sales incentives). This reflection also made me wonder how many things are not being created or improved today because it is too easy to follow an existing template.

We used to align fields and columns in byte order to minimize record size, overload operators, etc. in order to maximize space utilization and maximize performance. Code was optimized for maximum efficiency because memory was scarce and processors slow. Profiling and benchmarking programs brought you to the next level of performance. In a nutshell, you were forced to really understand and become proficient with the technology used out of necessity. Today those concepts have become somewhat of a lost art.

There are many upsides to easy.

  • My team sells more and closes deals faster because we make it easy for our customers to buy, implement, and start receiving value on the software we sell.
  • Hobbyists like myself are able to accomplish many tasks after watching a short video or two.
  • People are willing to try things that they may not have if getting started would not have been so easy.

But, there may also be downsides relative to innovation and continuous improvement simply because easy is often good enough.

What will the impact be to human behavior once Artificial Intelligence (AI) becomes a reality and is in everyday use? It would be great to look ahead 25, 50, or 100 years and see the full impact of emerging technologies, but my guess is that I will see many of the effects in my own lifetime.

Ideas are sometimes Slippery and Hard to Grasp

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I started this blog the goal of it becoming an “idea exchange,” as well a way to pass along lessons learned to help others. Typical guidance for a blog is to focus on one thing only and do it well in order to develop a following. That is especially important if you want to monetize the blog, but that is not and has not been my goal.

One of the things that has surprised me is how different the comments and likes are for each post. Feedback from the last post was even more diverse and surprising than usual. It ranged from comments about “Siri vs Google,” to feedback about Sci-Fi books and movies, to Artificial Intelligence.

I asked a few friends for feedback and received something very insightful (Thanks Jim). He stated that he found the blog interesting, but wasn’t sure what the objective was. He went on to identify several possible goals for the last post. Strangely enough, his comments mirrored the type of feedback that I received. That pointed out an area for improvement to me, and I appreciated that, as well as the wisdom of focusing on one thing. Who knows, maybe in the future…

This also reminded me of a white paper written 12-13 years ago by someone I used to work with. It was about how Bluetooth was going to be the “next big thing.” He had read an IEEE paper or something and saw potential for this new technology. His paper provided the example of your toaster and coffee maker communicating so that your breakfast would be ready when you walk into the kitchen in the morning.

At that time I had a couple of thoughts. Who cared about something that only had a 20-30 foot range when WiFi was becoming popular and had much greater range? In addition, a couple of years earlier I had a tour of the Microsoft “House of the Future,” in which everything was automated and key components communicated with each other. But everything in the house was all hardwired or used WiFi – not Bluetooth. It was easy to dismiss his assertion because it seemed to lack pragmatism, and the value of the idea was difficult to quantify given the use case provided.

Idea 2

Looking back now I view that white paper as having insight (if it were visionary he would have come out with the first Bluetooth speakers, or car interface, or even phone earpiece and gotten rich), but it failed to present use cases that were easy enough to understand yet different enough from what was available at the time to demonstrate the real value of the idea. His expression of idea was not tangible enough and therefore too slippery to be easily grasped and valued.

I’m a huge believer that good ideas sometimes originate where you least expect them. Often those ideas are incremental in nature – seemingly simple and sometimes borderline obvious, often building on some other idea or concept. An idea does not need to be unique in order to be important or valuable, but it does need to be presented in a way that is easy to understand the benefits, differentiation, and value. That is just good communication.

One of the things I miss most from when my consulting company was active was the interaction between a couple of key people (Jason and Peter) and myself. Those guys were very good at taking an idea and helping build it out. This worked well because we had some overlapping expertise and experiences as well as skills and perspectives that were more complementary in nature. That diversity increased the depth and breadth to our efforts to develop and extend those ideas by asking the tough questions early and ensuring that we could convince each other of the value.

Our discussions were creative and highly collaborative as well as a lot of fun. Each of us improved from them, and the outcome was usually something viable from a commercial perspective. As a growing and profitable small business you need to constantly innovate to differentiate yourself from your competition. Our discussions were driven as much by necessity as they were by intellectual curiosity, and I personally believe that this was part of the magic.

So, back to the last post. I view various technologies as building blocks. Some are foundational and others are complementary. To me, the key is not viewing those various technologies as competing with each other. Instead, I look for potential value created by integrating them with each other. That may not always possible and does not always lead to something better, but occasionally it does so to me it is a worthwhile exercise. With regard to voice technology, I do believe that we will see more, better and smarter applications of it – especially as realtime systems become more complex due to the use of an increasing number of specialized component systems and sensors.

While today’s smartphones would not pass the Turing Test or proposed alternatives, they are an improvement over more simplistic voice translation tools available just a few years ago. Advancement requires the tools to understand context in order to make inferences. This brings you closer to machine learning, and big data (when done right) significantly increases that potential.

Ultimately, this all leads back to Artificial Intelligence (at least in my mind). It’s a big leap from a simple voice translation tool to AI, but when viewed as building blocks it is not such a stretch.

Now think about creating an interface (API) that allows one smart device to communicate with another in a manner akin to the collaborative efforts described above with my old team. It’s not simply having a front-end device exchanging keywords or queries with a back-end device. Instead, it is two or more devices and/or systems having a “discussion” about what is being requested, looking at what each component “knows,” asking clarifying questions and making suggestions, and then finally taking that multi-dimensional understanding of the problem to determine what is really needed.

So, possibly not true AI, but a giant leap forward from what we have today. That would help turn the science fiction of the past into science fact in the near future. The better the understanding and inferences by the smart system, the better the results.

I also believe that the unintended consequences of these new smart systems is that as they become more human-like in their approach the more likely they will be to make errors like a human. Hopefully they will be able to back test recommendations to validate and minimize errors. If they are intelligent enough to monitor results and make suggestions about corrective actions when they determine that the recommendation is not having the optimal desired results would make them even “smarter.” Best of all there won’t be an ego creating a distortion filter on the results. Or maybe there will…

A lot of the building blocks required to create these new systems are available today. But, it takes both vision and insight to see that potential, translate ideas from slippery and abstract to tangible and purposeful, and then start building something really cool. As that happens we will see a paradigm shift in how we interact with computers and how they interact with us. That will lead us to the systematic integration that I wrote about in a big data / nanotechnology post.

So, what is the real objective of my blog? To get people thinking about things in a different way, to foster collaboration and partnerships between businesses and educational institutions in order to push the limits of technology, and to foster discussion about what others believe the future of computing and smart devices will look like. I’m confident that I will see these types of systems in my lifetime, and believe in the possibility of a lot of this occurring within the next decade.

What are your thoughts?