It’s impossible to pick up a technology paper today without reading about the growth of Cloud and the fact that everyone will only buy technology “as a Service” in the future. Despite the fact that I disagree with that statement (I think there will always be people who will want to buy products outright) there is no doubt that this is the fastest growing segment of the market and will certainly make up a much larger piece of the pie in the next 2-5 years.
But what I want to talk about today has nothing to do with technology or vendors or customers. I want to talk about your people. Your salespeople in particular. They may be good at what they do. They may even be great at what they do. But not all of them will be good when it comes to selling Cloud.
A Different Type Of Sales Person
When I first entered this industry many years ago, services were bundled with the product. You bought a server or storage for example, and services like installation and support were included in the price (at very high margins of course).
But as the high volume/low margin players entered the market and products became more commoditised, it became obvious that resellers couldn’t operate on a 30% margin when their competitor was selling the same product (without services included) at 10% margin. So we separated the product from the services.
And something else became obvious.
Product sales people were different to Services sales people
They didn’t understand the heterogeneity of selling services vs the homogeneity of selling products. They struggled with the intangibility of services compared to the tangible nature of products. They felt uncomfortable charging for something that was being delivered by people who were already on staff (and were perceived to be effectively “free”).
So we hired consultants who knew how to sell services. We productised our service offerings. We reduced our price on products and increased it on the services. We educated customers that services weren’t free. And slowly, we changed the industry so that a sales person today wouldn’t think twice about creating a quote for services.
But now as we move to a Cloud world, we’re about to discover another reality.
Product sales people are different to Cloud sales people
The skills are different. The customer conversations are different. The people that make the purchasing decisions are different.
Selling Business Solutions Rather Than Technology
The difference between buying a product, and buying that same product as a Service, is not a technology decision – it’s a business decision. The people making that aren’t IT – they’re the Finance folks.
And that means your sales people need to feel a lot more comfortable having a business conversation rather than a technology conversation. They need to be able to interpret what the Finance Director is saying and whether the money is going to come from Opex or Capex. They have to have a feel for whether a transaction is going to impact the P&L, the Balance Sheet or both.
How good are your salespeople’s business skills? In the training workshops that we run, our experience is that about a third get it, a third can muddle through, and a third have no idea. And is it any wonder – most of the training they would have received is from vendors or product managers, and focuses on technology. But while business skills were a “nice-to have” previously, they will be crucial in a Cloud world.
Driving Usage Rather Than Implementation
The other area that will come as a surprise to many sales people as Cloud matures even further is who they sell to and how they sell to. As Cloud evolves towards “Utility Computing” – ie. where users only pay for what they use, like other utilities such as electricity – we are faced with another challenge. IT won’t drive usage.
Many industry analysts are predicting that non-IT Departments (Marketing, HR, etc) will be the big drivers for technology adoption over the next 12-24 months. IT may recommend technology, but the people who use it (and therefore drive our “utility” revenue) will be the users.
Which poses two questions:
- Do you have relationships with other lines of business outside IT?
- Do you have people in our organisation who can drive usage, rather than implementation?
Rewarding A Different Behaviour
One last thing. Sales people don’t wake up each morning wondering how they’ll achieve your company’s objectives. They wake up thinking how they’ll make their commission. And with a well-constructed Compensation Plan, the result is synonymous. However, poorly constructed plans can produce “unintended consequences” that will leave you wondering if your people are deliberately trying to sabotage your company.
This has never been more true than in the Cloud model. Organisations that don’t find ways to reward their people for selling training revenue will find (as some already have) that their sales team will actively discourage their customers from going down the “as a Service” path. In extreme cases, we’ve even seen the Product sales people actively poach existing Cloud customers by giving them a special deal to purchase everything this quarter.
So, in summary, yes I know you need to sort out your technology offerings, your vendors, your billing systems, your pricing model, and a raft of other things too numerous to mention. But don’t forget the core of what makes any business … its people.
- Train them to sell business solutions not technology
- Educate them to drive usage (or establish a support infrastructure to do it)
- Review your compensation plan to make sure it’s driving the behaviour you want