The new pitch is cash, not flash
By Dawn Kawamoto and Margaret Kane
Staff Writer, CNET News.com
February 13, 2003, 4:00 AM PT
If anyone is in a tighter bind than today's cash-strapped executives, it's Angela Hall.
Not long ago, the 11-year telecommunications sales veteran phoned a prospective customer, who promptly hung up on her. Hall, as resourceful as she is tenacious, called right back.
"'Oh, we must have gotten disconnected,'" she offered the flustered executive. "'See how bad your service is, and how much you need our company?' He laughed because he knew what he'd done and agreed to meet."
What a difference a few years have made in high-tech sales. With the boom in technology spending long gone--and easy money along with it--sales representatives must do whatever they can just to get the attention of frugal executives, let alone make a deal.
Long hours, endless e-mails and relentless phone calls are just the beginning for most. Some schmooze with security guards to get access to office directories, while others have gone so far as to follow a reluctant customer into the restroom. More important than any of these field tactics, salespeople are learning, is the work they must do before they even pick up the phone, researching companies and tailoring pitches to a customer's needs rather than relying on hype or competitive fears to push a product.
Al Hogue, a top-performing salesman with WebMethods, gleans information on prospective customers from Web sites, press releases and investor conferences, as well as friends, families and associates familiar with the targeted company. WebMethods, which makes software that integrates disparate systems, also maintains its own database to track customers. The company keeps data on customers' software purchases, the length of time it took to implement them and specific benefits they received.
"We sell software to leverage old investments," said Hogue, who has been working in tech sales for the last decade. "So when I pick up the phone, I need to be able to say, 'I know you're implementing the following systems' and name competitors or similar companies that implemented our software and the benefits they received."
Customers agree that persistence alone is a strategy of diminishing returns for salespeople. If customers are willing to listen at all, they are more likely to respond to sales reps who have shown that they have done their homework on a company's products, business objectives and even particular executives before making their pitches.
"As the current economic environment continues, vendors will have to marry their tech offerings with true demonstrations of value if they want to be successful," said Charles Smulders, vice president of hardware platforms at Gartner. "It's no longer enough to go in and say, 'we have this great new technology.' You have to demonstrate a clear return on investment on what the business will achieve with that technology."
Gartner is predicting that worldwide spending on information technology, including telecommunications services, will have dropped 0.2 percent in 2002 once the final tallies are in. Goldman Sachs says prospects aren't looking much better for 2003, when it expects average U.S. business spending on computer hardware and software to drop another 1 percent.
The slowdown is a result of several factors, including problems with the general economy and a back-to-basics conservatism among companies that has replaced the free-spending attitudes of the late 1990s. It may also reflect the fact that technology has become a larger portion of capital expenditures, and as such, is suffering from a "maturity" problem.
As technology matures, it becomes more predictable--and so do spending patterns. Operating a mature technology can then be like maintaining a building: Money is spent, but the people who control the purse strings start looking for ways they can save, not spend.
Moreover, an old axiom in the hardware world holds that technology gets cheaper as it improves. Newer software business models, which let companies "rent" software as it is needed, could cut costs. And developments like Web services, which are designed to easily connect to existing software applications, also reduce the amount of money necessary to offer a new application or service.
"It used to be if you wanted the latest application, you had to go out and invest in new hardware and all new software. Nowadays, companies are realizing that in order to make products palatable to customers, you have to make them accessible," said Dr. Amit Basu, chair of the IT and operations management department at Southern Methodist University's Cox School of Business. "Companies have deployed a model where you can use software without having to do the hardware deployment. That has an impact on how companies spend."
Even if the technology has proven its worth to businesses, it doesn't
guarantee continued spending. In many cases, companies are perfectly happy with their existing products--and, if you're happy with what you have, why change?
"There are applications such as (enterprise resource planning) that companies invested very heavily in during the latter part of the 20th century that are now mature and supporting their business. Those things are almost on autopilot from an IT spending perspective," said Steve Carter, vice president of management services at North Highland, an Atlanta-based management and technology consulting firm. "There are always areas for improvement, so there is some spending. But it's not that significant, particularly in this cost-conscious world."
No one knows that more than WebMethods' Hogue. "A couple years ago, I could close a deal within one business week and have a multiple six-figure check in my pocket," he said. "Now it takes maybe six months."
He's one of the lucky ones--some can't even get a meeting. "Back in the 1990s, I could make 100 calls a day and get 10 appointments to make a presentation," said Hall, an account executive with Yipes Enterprise Services, a metropolitan network operator in the downtrodden telecommunications market. "Now I make 100 calls and get three or four appointments."
In this climate, veteran sales representatives are all too familiar with such common refrains as, "If it ain't broke, don't fix it" or "I can't afford it--I don't have the budget." So just as buyers rely on their standard rejections, the pitchers have devised their own formulas to respond in kind.
"I tell them, 'Yes, I understand and can see how you may feel that way.' Then I ask them a lot of open-ended questions and draw out their concerns. For example, if a customer says the price is too high, I'll note how much money they'll save over time, and price becomes less of a barrier," Hall said. "In 75 percent of the cases, they'll take another look at the products."
Not everyone sees the maturation of technology as a bad thing. "People are scared stiff to use the 'M' word, because maturity is like doom," said Tad LaFountain, a former IT analyst with the research firm Needham & Co. "I would hold that maturity is wonderful here because what happened with IT spending was as much fad as anything else. As IT morphs from fad to tool, it gets real scrutiny and value."
That scrutiny, however, has become a frustrating obstacle for sales representatives, in terms of bureaucracy. "During the glory days, IT directors had a lot more permission to sign off on major purchases," Hall said wistfully. "Now, a deal may need five or six approvals."
The change means that much more time must be spent learning whom the players are at various levels at companies. "I can talk financials with a company's chief financial officer or talk technology with a developer," Hogue said. "I have to understand the different values each has at their various level. Everyone wants to be successful, so you need to know who's involved and what is the best story to tell them regarding what you do."
Yet for some of the more creative salespeople, the difficult market represents an irresistible challenge. "I was an infantry captain. You never assume there's only three enemies out there; you assume there's 100," Hogue said. "The Army teaches you to take a beating."
Hall, who used to work with a major security company that provides armored cars and other services, attends security guard conferences so that she can maintain ties to that industry--relationships that can come in handy when she needs access to a company's facilities. She also has been known to continue her pitches as a prospective customer dashes into the restroom.
"'No' means 'maybe'," a smiling Hall said.
Spoken like a true sales rep.