Selling Tech Services Getting Harder and Easier

Selling technology services and solutions these days is a study in contrasts. Even as the market has picked up, the actual selling process remains difficult. Buyers continue to go slow, escalate demands, and bring in procurement specialists and financial officers to negotiate every purchase. Offshore competition is growing fast. And internal sales support is spread extremely thin.

On the brighter side, however, marketing and sales leaders have begun to reinvest in the types of programs most needed to increase productivity and effectiveness. Improvements in sales tools, training, and compensation all bode well for selling services and solutions in 2004.

A closer look at eight core aspects of sales performance illustrates the challenging dynamics that characterize the selling process today.

Is the glass half empty…

Measuring performance. Many firms today take a narrow approach to measuring services sales performance, stressing the basic measures of revenue, quota attainment, and the sales pipeline. As firms emphasize consultative selling and customer loyalty, however, they need to take a broader approach. Metrics in such areas as customer satisfaction, team selling, cross-selling, and customer referenceability are as important as traditional financial measures.

Utilizing multiple sales channels. ITSMA research suggests that the highest-performing firms rely on multiple channels to sell services, including field sales, telesales, channel partners, and delivery teams. Yet most firms only utilize one or two of these channels. Better leveraging additional channels can go a long way to improving overall sales performance.

Maximizing recurring revenue. Multiyear contracts and automatically renewing agreements are the cash cows of the services business. Over the last few years, however, recurring revenue has dropped dramatically as a percentage of total services revenue within many technology firms. Even when customers renew services contracts today, it is often at lower levels. This puts great strain on the sales force to find new sources of services revenue, which typically means longer sales cycles.

Aligning marketing and sales. The age-old conflicts between marketing and sales are less tolerated in theory these days but practice has a long way to go. Marketing still tends to operate at arms length from sales in the all-important areas of account planning, business development, and even sales support. Aligning marketing and sales more effectively around strategic and tactical priorities for growth is essential in 2004.

…Or half full?

Investing in the right tools. Notwithstanding the continued gap between marketing and sales, more firms are producing the sophisticated support tools that sales teams need to sell higher-value services and solutions. Healthy majorities of firms, for example, are now using or developing tools to help sales design custom solutions, generate solutions proposals, provide cost-benefit analyses, and analyze return on investment.

Providing the right compensation. The best plans, support systems, and tools mean little if compensation programs do not adequately reward selling the most important types of services and solutions. Fortunately, there are signs that technology firms are finally getting comp plans in line with strategic priorities. More and more firms now provide incentives for selling as part of a team, selling integrated solutions that cross organizational boundaries, and selling solutions with partners.

Improving account management. Sophisticated account management becomes increasingly important in competitive and maturing markets. Although daily practice remains uneven within and across technology firms, the foundation is being laid to improve performance in this critical area. Some three-quarters of all firms in ITSMAs recent sales performance study report having globally consistent processes for account management—a substantial increase from several years ago.

Investing in sales training. Training took a huge hit after 2001 as companies cut back on all activities not perceived to contribute immediately to revenue. As the market began to improve last year, however, firms wisely reinvested in sales training while also searching for the most effective training mix to support evolving needs for skills and knowledge. Sales training expenditures for 2003 were almost back to pre-crash levels, according to the recent ITSMA study.

The picture is far from clear, and whether the sales glass is half empty or half full depends on your perspective. If firms continue to invest in improving the selling process, however, they should well positioned to take advantage of the general pick-up in spending for technology services and solutions.

ITSMA’s latest Sales Performance Study, Turning the Corner: Selling Technology Services in a Recovering Market, provides detailed data, analysis, and best practices in eight critical areas, including sales coverage models, sales force productivity, sales costs and compensation, and more. For more information and to download a summary of the report, visit http://www.itsma.com/research/abstracts/s004.htm.

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ITSMA specializes in helping companies market and sell services and solutions more effectively. We work with the world's leading technology, communications, and professional services providers to generate increased demand, strengthen customer relationships, and improve brand differentiation. ITSMA annual program clients include business leaders such as Avaya, BT, Cisco, Deloitte, Hewlett-Packard, IBM, Microsoft, and Tata Consultancy Services, among others. Our comprehensive research, consulting, and training on topics including ITSMA Account-Based Marketing℠, Brand Positioning, and Solutions Development provide the insight and experience companies need to improve business results. ITSMA is based near Boston, and has offices in London and Tokyo. Learn more at www.itsma.com.