This article originally appeared in the July 2013 issue of SD&I magazine.
Value is a subjective term — yes, it can be defined as what is created when you subtract the costs from the benefits, but it means different things to different people because costs and benefits are subjective. Each customer has their own set of unique needs and priorities, yet a common mistake made by integrators is trying to conceive an all-encompassing value proposition that is designed to sell a product or service to a wide range of customers.
Take, for example, the cloud. The most widely recognized value proposition of the cloud is lower total cost of ownership, or TCO. The benefits of eliminating on-premise proprietary hardware and software are easily quantifiable, and the return on investment associated with lowering TCO is very compelling for many customers. But try selling the virtues of TCO to a sophisticated Fortune 50 end-user with enterprise-class infrastructure and rigorous regulatory compliance requirements, and that person is likely to cut the meeting very short. TCO is just not a primary business driver in that market segment — it is important, but it is not the kind of impactful value proposition that will land you the deal.
A Fortune 50 end-user’s needs are most likely different than, for example, those of a small franchise owner looking to reduce operating expenses while remotely monitoring operations. The key is to recognize the unique business drivers of each customer and address them specifically in your value proposition.
The small and medium size business (SMB) owner tends to appreciate the economic benefits of the cloud, as well as the “worry free” nature of maintaining the system long after the sale. The enterprise-class user, however, typically puts resiliency, high-availability, compliance assurance and information security higher on the priority list than TCO. The cloud can accommodate all of these priorities, but it must be uniquely positioned in order to be effectively sold in either customer segment.
Complex solutions sales are predicated on a value proposition, which is developed in response to a specific customer problem or pain point. In order to uncover the pain point, either the customer must recognize and articulate it, or you will need to educate him or her on issues facing their business and thereby uncover latent problems that have not yet manifested themselves as bona fide pain points.
Gone are the days of pure consultative selling, which entailed asking probing, exploratory questions and hoping to find a problem that needs to be fixed. The consultative selling model has worked very effectively over the past 30 years, but is now becoming inadequate because it is based on the assumption that the customer understands his problems and has uncovered all of his pain points. In reality, many customers don’t fully understand their needs because they don’t appreciate that there is a better alternative to the way they are currently doing business.
Educate your customers
Given the rapid pace of security technology evolution, better alternatives are surfacing every day. For example, you could ask Corporate Security Directors questions all day long about the effectiveness of their contract guard services, but if they have used guards their entire career and are not yet aware that cloud-enabled virtual guarding is a viable and considerably less expensive alternative to their current model, they are probably not going to talk about guards in the context of a pain point. Their mentality is understandably, “if it isn’t broke, don’t fix it.”
In order to effectively sell value, you must first create value and this begins very early in the sales cycle by educating the customer, by challenging their conventional way of thinking, and by offering insights into better ways of doing things. This is the age of what some are calling insight selling, which entails uncovering (or creating) pain points by enlightening the customer on innovative and cost-effective alternatives. This approach requires a great deal of subject matter expertise.
Being an insightful subject matter expert requires a specialized knowledge of the vertical market in which the customer operates. Each market has its own set of unique demand drivers—risks, internal and external threats, regulatory issues, competitive dynamics and profit formulas—and even the most accomplished sales professional would be hard-pressed to understand these drivers in more than a couple of industries. Value creation requires that you go deep, not wide, into a customer’s specific business model.
Perils of an undifferentiated sales approach
I often hear integrators lamenting about being forced to compete on price, or about certain manufacturers selling around them directly to end-users, or about customers using B2B commodity auctions for the procurement of security products and services. The hard truth in these instances is probably that the end-user doesn’t see the value in consultatively dealing with the integrator. Doing so creates more costs than benefits and, as a result, a value deficit for the customer. In this instance, costs would include not only price, but also the customer’s time and expense associated with the sales cycle.
If integrators are not creating enough value during the sales cycle, it is often a result of an undifferentiated approach to selling. Their focus is likely on transacting and responding to sales opportunities rather than working hard to create them. For these integrators, value may be created over the long-term as a result of quality workmanship or reliable service, but they will probably have to win the business based on price. If they cannot effectively compete on price and they cannot create value up-front through insight selling, they may never get the chance to demonstrate the long-term quality of their service.
Systems integrators that are unable to create value through insight selling will likely soon be relegated to the role of contractor and be forced to compete purely on price, or, even worse, face potential obsolescence. Consider the disruptive nature of Travelocity, Priceline.com, Trulia, Zillow, LegalZoom.com, or iTunes for that matter. All these innovative business models have significantly marginalized their respective service providers: Travel agents, real estate agents, lawyers and brick-and-mortar record stores. The Internet caused commoditization and the service providers were unable to create enough value to justify their price premium. Don’t think this can happen in electronic security? Try Googling “IP video camera.”
In order to avoid obsolescence, systems integrators must create value by educating our customers through insight selling—not on the typical benefits of technology, but rather by explaining how security technology can solve their unique problems—independent of whether or not the customer knows they have a problem in the first place.
