In today's economy, many large technology and professional services firms are failing. Monthly, you read about massive layoffs to meet pressures from Wall Street or milestones for Venture Capitalists. Even worse, you hear about two unproductive firms merging together to combine assets into one large unproductive IT firm.
These layoffs and mergers provide a quick adjustment to the firm's short term G and A (General and Administrative) overhead demonstrating their CEO's commitment to investors for lowering costs, but does it fix the primary business problem of not enough revenue to cover operating expenses?
No, it does not!
Look around, where are the successful IT firms?
Sure, there are a few still out there like IBM, Microsoft and Dell, but where are the rest?
OK let's blame the economy, let's blame the accounting firms, let's blame the sales team, and let's blame the marketing team. But, why are so many IT firms failing? Many large technology companies continue (and will continue) to fail because they have IT sales arrogance.
That's right . . . IT sales arrogance!
Instead of managing the buying cycles of IT products and services, as well as understanding why prospects buy from them, many large firms ignore the development of their sales model and spend a disproportionate time focusing on the stock and business valuations.
Many believe the sales methodologies that worked for them during the 90's (an inbound sales model) will help promote success in today's outbound sales model environment.
But . . . this is just pure IT sales arrogance.
During the 1970's and 1980's, large IT companies spent comparable amounts of funding to train sales teams as well as technology programmers. It was not uncommon during this time period for new IT sales reps to spend 6-8 weeks in product and sales training and then carry a "bag" as a junior sales team member subordinated to a senior account manager.
As we entered the 1990's, technology costs dropped, sales zoomed, IT CEO's ignored the concurrent development of their sales model, and IT sales become a commodity.
Today, most large IT technology companies are failing because they think an IT sales team is a commodity.
But, a good IT sales team is not a commodity!
The way to grow IT firms in a flat buying marketplace is through extending the existing product or service life cycle by using a stronger sales force. But, as large firms continue to experience massive employee layoffs and try to merge toward success, these firms are only fixing their secondary business problems (including high overhead) and are ignoring the primary problem of the business . . . a lack of sales strength.
The cycle of IT firm failure will continue until this primary business problem is adjusted.
So, how do you measure your large IT firm's potential to succeed in the future? How do you know if your senior management team believes your IT sales team is a commodity?
Take the IT/Professional Services Company Sales and Commodity Success Test below:
IT/Professional Services Company Sales and Commodity Success Test
1) Does your firm's sales message lead with your company name and use branding to sell? Yes . No 2) Does your firm spend more money per person on "technology training" for the development team than on "sales training" for the sales team? Yes . No 3) Does 50% of your sales team have 7 years or less of IT sales experience in which they received IT sales training after 1995? Yes . No 4) Are your IT sales quotas based on market demand by region? Yes . No 5) Is your firm's marketing budget more than 20% (including labor costs) of the total cost of the sales team? Yes . No 6) When your firm reduces payroll substantially due to a lack of business success, pressure from investors, (or both) does the firm reduce more people from the sales staff than from the programming and operational staff? Yes . No 7) Has your CEO ever sold technology or professional services and/or carried a sales quota? Yes . No 8) Has your firm developed and distributed written best practice sales methodologies since 2001? Yes . No 9) Does your firm segregate the sales teams into separate business verticals, such as manufacturing, retail, financial market sales, etc.? Yes . No 10) Does your sales team have to sell or pitch more than seven primary IT products or services at any given time? Yes . No 11) During the last 12 months, has your firm won more than 50% of IT deals by discounting from the suggested retail price? Yes . No 12) Are more than 50% of your sales coming from existing customers? Yes . No 13) Has your firm added any new IT product(s) or service(s) during the last 12 months to the portfolio of the sales team that is selling effectively? Yes . No 14) Are more than 80% of your sales executives currently on quota for year-to-date? Yes . No 15) Has your firm conducted a market gap demand analysis for your primary IT product(s) or service(s) during the last 12 months? Yes . No IT/Professional Services Company Sales and Commodity Test Scoring The higher a firm scores, the greater the percentage of success potential of the sales team in this economy. The lower the score, the more the sales team is being viewed as a commodity, and the lower the capacity for the firm to be successful. Correct Answer Guide 1) No 9) Yes 2) No 10) No 3) No 11) No 4) Yes 12) No 5) No 13) Yes 6) No 14) Yes 7) Yes 15) Yes 8) Yes Scoring • 4 Correct Answers or Less Your IT sales team is believed to be a commodity by senior management. • 8 Correct Answers or Less Your IT sales team is bordering the commodity stage. • 9 Correct Answers or More Your firm values the IT sales team. Remember . . . • PR is not revenue. • Advertising is not revenue. • Marketing is not revenue. • Branding is not revenue. • Technology development is not revenue. • Adding partners is not revenue. • Revenue is revenue!
