It’s Time To Change Your Sales Model

John Scola

It’s a rare opportunity to find a customer who knows exactly what they want, when and how they want it implemented, and most importantly, with ample budget to get it all done. Of course, it isn’t surprising when you consider everything involved in today’s technology buying process. There’s a lot to think about, and if your customers don’t have the time for it, closing deals becomes that much more difficult.

Today, more and more solution providers are looking at pre-packaged solutions that include the technology, implementation, and ongoing support for a standard price. Customers love the responsiveness, visibility, and transparency that the bundles provide, accelerating a prospect’s response time and decision-making process.

Presence of IT, an Australia-based solution provider with three offices in North America, recognized several years ago that the company needed to evolve from its traditional project-based revenue model toward a more prescriptive, “packaged solutions” plan.

“We were telling the market how much it costs, how long to implement. If you drill that in, building a statement of work, the sales process starts accelerating,” said Gordon Laverock, managing partner, U.S.

Contradicting conventional wisdom to keep pricing quiet, the solution provider included packaged solutions pricing prominently on its website. Why? Standard pricing, scope of work and implementations become self-marketing collateral, Laverock said. Customers are more informed than ever, knowing what they want and with a preconceived set of expectations. Packaged solutions help set expectations from the get-go, eliminating drawn-out negotiations and decision-making.

Develop a plan, set it in motion

Evolving a partner business from project-based to packaged solutions isn’t done overnight. Moving from a model that closes a small handful of deals in a year to one that needs to close dozens of deals during that same time to retain profitability requires a fundamental shift in demand generation, sales processes, and marketing.

Packaged solutions bring predictability, transparency, affordability and accelerated time to value. A pre-defined scope helps drive repeatability and improves efficiency. Partners successfully selling packaged solutions can double margins compared to traditional on-premise, project-based solutions.

Also, packaged solutions are especially enticing to net-new customers that previously may not have considered an application or even a vendor as a viable option because of price or implementation concerns. As solution providers become more efficient, they can lower price points and be attractive to a lot of new customers. Having a large installed base built on a new customer generation engine also helps drive up the business valuations, making them more attractive to banks and private equity.

Partner perspective: Communication, transparency are keys

Due to the ease of shifting to a different cloud provider, subscription-based packaged solutions have the added benefit of forcing solution providers into regular communication with the customer, building trust and a rapport that is likely to strengthen the relationship.

It isn’t reasonable to call a customer a year after an implementation and expect them to renew. Quicker time to value is paramount. The benchmark is the first 90 days. If the customer doesn’t realize value within the first 90 days, renewal rates can drop by as much as 50%. It’s that important.

Packaged solutions also offer partners a foot in the door, opening opportunities for more—and bigger—business down the road. Our experience indicates that the third deal is the biggest deal. Don’t try to sell them everything on the first deal. Sell what they need at that moment in time. Demonstrate value, then go in and sell another. Once value is proven to customers and loyalty is gained, the third deal becomes a much larger deal.

It’s a model that’s worked well for Presence of IT, said Laverock.

“The first module gets us in front of new names, gets projects going. The sales team focuses on getting the first solution in, then the customer engagement rep goes in and talks more modules and develops a roadmap for the customer, which gets you into bigger deals,” Laverock said. “It’s increased our pipeline significantly, but our ability to convert pipeline is also better. When we started in cloud, we’d close one in five or six deals. Now we’re doing one in every two or three,” Laverock said.

John Scola

About John Scola

John Scola is Global Vice President of Cloud Channels and Transformation at SAP.