Complex selling in today's global economy.pdf'
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The document discusses the challenges that companies face in selling complex products and services in today's global economy. Specifically, it addresses issues such as sales channels struggling to understand complex products, the high costs associated with training sales reps, and heavy reliance on internal experts. It also outlines business drivers requiring companies to improve their front office functions, including cost containment pressures, increased competition, demands for customized offerings, and shorter product life cycles. The document evaluates some attempted responses to these challenges, such as simplifying product offerings, pursuing sales automation, and focusing on mass customization, concluding that these approaches are ultimately flawed and self-defeating.
Complex selling in today's global economy.pdf'
- 1. Complex Selling in Today’s Global Economy WHITE PAPER Cincom In-depth Analysis and Review S I M P L I F I C AT I O N T H R O U G H I N N O VAT I O N ®
- 2. Complex Selling in Table of Contents Today’s Global Economy Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Business Drivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Responding to the Challenge . . . . . . . . . . . . . . . . . . . . . . 3 Changing Routes to Market . . . . . . . . . . . . . . . . . . . . . . . 4 WHITE PAPER A New Channel Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Cincom In-depth Analysis and Review Opportunity or Threat? . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 The Bottom Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 About Cincom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
- 3. 1 Introduction Issues with Complex Selling Organisations selling complex products face some very Companies selling complex products and services have specific issues, which may include: always had their own very specific challenges as well as • Sales channels struggling to understand the products the wider issues that all industry sectors have to face. well enough to sell them fully and effectively. The changing business, economic and technology landscape has thrown these unique challenges into • Getting sales reps and channel partners up to speed sharp focus. on new and existing products is expensive and time- consuming. The global marketplace and the pervasiveness of the internet have, perhaps inevitably, taken longer to impact • Sales spending too much time on “non-selling” the world of complex selling than other sectors. But activities such as quotation preparation, chasing even companies in the most protected market spaces corporate resources, expediting and resolving can no longer ignore the changes brought about by problems with quotations and orders. these and other factors. • Preparing labor-intensive and time-consuming proposals and quotes. In this paper, we look more closely at the issues and opportunities that arise from these changes; in particular, • Heavy dependence on inside sales and other internal the challenge of capturing and deploying the groups—“Chasing the Expert.” knowledge that the “extended enterprise” needs to sell • Diverting key internal resources from more complex products and services in today’s global strategic/high-value activities. economy. • Errors in quotations and orders. • The desire to grow sales through new channels, partners Complex Products and the web. Complex products are largely, although not exclusively, • The need to assimilate product lines/sales teams from found in the high-tech and industrial product sectors. mergers and acquisitions. While there has been much activity in the development Examples of complex products include: and deployment of CRM (Customer Relationship • Network, communications and IT equipment Management) systems, the focus has almost exclusively been on the needs of companies selling standardised • Air and liquid movement systems products. The functionality has targeted areas of sales • Electrical power systems efficiency rather than effectiveness. CRM systems tend to look at the processes around the sale but do not • Motors, compressors and fans address the issues highlighted above. • Transportation equipment Although the fortunes and perceptions of the internet as • Industrial machinery a selling vehicle have fluctuated wildly, the fact remains that it offers an invaluable additional or supporting channel (and differentiator) for those companies that can Complex products are typically characterised by: address the specific challenges it poses for complex • High-end item value products. • Many features and options • Complex rules governing applicability and interoperability of options • A complex product structure and/or manufacturing process • A selling process that is heavily dependent on knowledge or expertise, frequently involving multiple “domain experts” • Being sold through direct and indirect sales channels
- 4. 2 Business Drivers Companies have spent considerable time, money and resources implementing enterprise backbone (ERP) systems to improve the performance of their “back office” processes (finance, manufacturing, purchasing, etc.). Companies selling complex products and services must now move their focus to the “front office” (customer sales and service). The need for this shift is driven by several trends: • Cost containment – The economic changes flowing from the bursting of the dot-com bubble and the aftermath of 9/11 mean that few companies are insulated from the need to contain or cut costs. • Increased competition – Technological or manufacturing excellence no longer guarantees competitive advantage. Innovative, fast-moving competitors who are more responsive to customer needs are challenging market leaders. • Customised products and services – Increased competition means more choice and increasing customer demands. Customers are no longer willing to buy “standard” products when they can have “exactly what they want, when they want it, for a fair price” from someone else. • Broader product offerings – Most companies are responding to these demands by extending product ranges and offering more variation and options within their products and services. But increasing product variety and complexity puts heavy demands on a sales channel that is probably already struggling to keep up with existing product and service offerings. • Shorter product life cycles – While product offerings are growing, product life cycles are shortening—a “double whammy.” Traditional product ROI models are invalidated as companies are driven to embrace the principles of Mass Customisation1. • The internet – The internet makes it possible for customers to rapidly assimilate information about products and services that might meet their needs, to match them against their requirements and to obtain prices—without ever talking to a salesperson. While sellers of more complex items have been relatively immune from this pressure, the expectations of buyers are rapidly changing. • Knowledge – Customers are more knowledgeable Selling has and they expect knowledgeable selling. Yet few companies can afford to involve their “experts” in never been every sales cycle. so complex. 1 Mass Customisation - The profitable delivery of customised products and services at mass-production prices.
- 5. 3 Responding to the Challenge To address the issues that we highlighted earlier and to keep up with increased competition and customer demands for personalisation of complex products and services, many companies have adopted some obvious (but ultimately flawed and self-defeating) responses. Simplify Your Offering Sales Automation One business response to the information-management Numerous sales automation projects have been and communication issues associated with complex targeted to improve “sales effectiveness.” In reality, products is to “dumb down” the product offering to however, a vast majority of these projects have focused some markets or channels. The supplier deliberately on making the sales channel “efficient” rather than restricts the product options available to lessen the “effective” and have frequently increased the non- information requirements. selling time required by the sales organisation. This may resolve some of the issues, but it is likely to lead A primary reason for this mismatch between to lost or lower-value sales because of unavailable expectations and results is that most sales automation competitive product features or the inability to sell add-ons. software packages are first and foremost sales administration systems and do little to improve selling effectiveness. Adopt the “Push” Model In addition, most software packages are designed to accommodate a direct sales organisation model but Another common “low-cost” response by suppliers is to cannot accommodate a complex sales channel issue secured information on CD-ROM. But, by consisting of both direct and indirect channels. definition, CDs can only be produced periodically and stock availability, product options and price changes occur by the minute, not by the week, month or quarter. The Real Solution A significant but often overlooked issue is that CDs are a one-way street, allowing the supplier to pump The real key to successfully selling complex products information into channels but offering no solution to the and services lies in addressing the underlying issue—the required exchange of information backward and forward. need to capture knowledge from wherever it is held in the organisation and making it available to whomever needs it, whenever and wherever that is.
- 6. 4 Changing Routes to Market Knowledge—a Core Requirement Direct Sales Today’s buyers demand personal, knowledgeable and The traditional sales arm, the field sales force, has responsive selling. Addressing these requirements is become increasingly frustrated with the difficulties of challenging for any company, but much more so for selling a broadening range of complex, customised companies selling more complex products and services. products and services in an increasingly competitive Traditionally, these products have been sold by a direct environment with inadequate tools. Typical frustrations sales force, perhaps supported by closely tied dealers are: and often in protected market spaces. • Incomplete product, price and customer information However, companies now need to reach their markets • Customers demanding more rapid, yet personalised both through direct channels, such as field sales and call responses, requiring frequent revisits to finalise centres, as well as through indirect channels, such as customer need and product fit resellers, remote sales offices and even self-service internet capabilities. Each of these “touch points” has • The need to “return to base” to complete customer specific support requirements. The challenge is ensuring proposals that the channels work seamlessly together and can • “Chasing the expert” to determine missing details for communicate common knowledge rapidly. product specifications or quotations Information about products, pricing and customers may • High potential for order errors have once remained static for long periods, but today changes constantly. More people need to understand the latest picture immediately, yet the pressure is on to Increasingly complex products, pricing and financing reduce the resources and costs required to provide this result in the salesperson selling “familiar” products—not information. To compete effectively, companies must necessarily those best suited for the customer or most become lean and agile in this area as in others. Shared profitable for the supplier. knowledge enables companies to implement rapid, coordinated action across the extended enterprise. To resolve these frustrations and to become more effective, the knowledge that is so often frustratingly Traditional support methods fail rapidly in today’s locked away elsewhere in the organisation needs to be competitive, faster moving, multi-channel, global made available to field salespeople. Solutions are market. A sales process relying on paper-based needed to help them close business (not just manage catalogues and frequent interaction with increasingly their contact lists). Salespeople need solutions that: pressured product, manufacturing or pricing experts will quickly fracture. • Are available at the point and time of sale—tools that can be used away from the office while face to face with the customer A major challenge is to ensure that all channels work • Provide up-to-date product, price, customer (and cooperatively, sharing and communicating knowledge other) information in a timely manner. • Develop a complete and accurate product offering to meet a specific customer requirement • Have “point and click” synchronisation with central enterprise systems • Enable them to rapidly assimilate new or upgraded products, revised pricing or other changes • Deliver true benefit (not seen as a hindrance) Of course, field salespeople can become more efficient by using a traditional Sales Force Automation (SFA) solution. However, SFA does not create more effective salespeople. Surveys show that increased effectiveness is the highest priority sales managers seek from selling systems.
- 7. 5 Telephone Sales and Support Indirect Sales The typical call centre is not often used to sell complex A network of dealers, agents, resellers, distributors and products. On the other hand, there will be many remote sales offices enables effective, low-cost, rapid occasions when information needs to be given or expansion into new and unfamiliar markets. However, received by phone. Some configured products such as the issues faced by the direct sales force are magnified PCs may use telephone sales and support quite for these indirect sales channels. Invariably separated extensively. from the parent organisation by distance and frequently by time, indirect sales channels surely present Internal sales and support people share many of the formidable communication and management challenges frustrations of their colleagues in the field and need to any organisation. These challenges are much more similar solutions. However, there are some specific issues demanding when those remote partners handle in dealing with complex or customised products products that require considerable sales knowledge. satisfactorily via the telephone. While communication may be two-way, we must make allowance for the Customers selecting products over the internet face limitations of a solely verbal interaction with the similar problems. Like a reseller, they will almost certainly customer where only the agent has the full benefit of have a good understanding of their needs and domain detailed system information. Therefore, a support knowledge. But even more so than the reseller, they are system for telephone users must be: unlikely to have a deep knowledge of a particular vendor’s products. Some concerns are very specific to • Simple to use this arena: • Able to present even complex products clearly • Protracted sales cycles because of the need to consult • Completely foolproof in taking 100 percent correct the vendor over many areas of detail. orders, every time • Security and geographic concerns can make it very • Able to promote up-selling and cross-selling difficult to distribute information and keep it current. opportunities • Because of product complexity, agents may choose or • Closely integrated with fulfillment and other may only be allowed, to sell a limited range of downstream systems products. For instance, companies may simplify their products through dealers to make them easier to sell. But as we noted earlier, this process almost invariably damages competitiveness and profitability. • Lacking the most current information, reseller quotations may be error-prone. • Dealer training is difficult and costly. • Generating forecasts for indirect business is notoriously difficult. A solution addressing these issues needs to: • Cover agents and remote sales offices as well as customers. • Help agents sell a particular company’s products in Companies selling preference to those of competitors. complex products • Deliver current product price and customer and services must now information that is always available. move their focus to • Help develop and close business by providing tools the “front office”— for lead management, quotation and forecasting. customer sales • Operate in multiple languages, currencies and and service. cultures. Communication is vital in any supplier/buyer relationship, even more so in supplier/indirect-channel relationships with complex products. Information exchanged between supplier and dealer must be two- way and above all, current if the relationship is to realise its full potential for both parties.
- 8. 6 A New Channel Model Companies must develop a new model to optimise The Internet information flowing between suppliers and their indirect channels. It must be: Clearly the World Wide Web provides the foundation to implement this new form of channel support. Internet • Cost-effective and easy to use support of indirect sales channels or direct to consumers has evolved through three generations. • Accurate and consistent • Secure and two-way • Immediately accessible and always available Generation 1 – Static Web Publishing Most companies have taken steps to publish information Three technologies have matured and converged to on a website and make it available on a 24-hour basis to resolve these issues: their prospects, customers and indirect channels. This information is typically “static” with periodic updates • The internet and may consist of marketing information, technical • Knowledge-based Configurators product information and perhaps secured pricing information. • Enterprise Relationship Management systems This “First Generation” web approach is primarily one- way communication where the supplier publishes information, but interactive sales transactions are not supported. Generation 2 – Selling Simple Products The growth of e-commerce, electronically selling over the internet, has been well documented with highly publicised “success” stories for companies such as Amazon. However, most high-profile e-commerce websites actually operate in the business-to-consumer market where the products themselves are relatively simple (books, clothes, CDs, etc.) and of low transaction value. Powerful search engines accessing product catalogues and links to credit card payment systems are characteristic of these sites. Transactions can be secured and encrypted as necessary. But there are few, if any, options associated with the selection and ordering of these consumer products and they could not be described as anything other than extremely simple in their technical specifications and pricing. The cost-effectiveness of internet selling cannot be disputed although its appropriateness for anything beyond selling simple products may seem open to question.
- 9. 7 Generation 3 Is Defined by Complex Configurators Selling The latest generation of configurators based on Expert The “Holy Grail” of electronic commerce—the ability to System technology is having a real impact in selling sell complex products with multiple variations through complex products. A good configurator package the web. captures the rules associated with product offerings and intelligently guides customers, dealers or salespeople Information flow needs to be bidirectional with links to through a selection process without the need for fulfillment systems in the supplier’s back office. Dealers supplier intervention. or customers need to identify themselves through log-in procedures and information is securely transmitted. Beyond product selection, the configurator must manage the business rules associated with pricing, This is the real requirement for industrial products in the customer terms and service requirements as well as business-to-business environment, sold directly or being able to generate personalised documentation for through dealers, resellers and agents. prospects, dealers and internal needs. Finally the configurator must translate the product into the format In this environment, the many rules associated with needed by the “downstream” users within the selling specifying and pricing a complex product must be made company itself. available through the internet. But how, when conventional catalogues or conventional programming In effect, the configurator captures and deploys the languages cannot capture and convey that knowledge? knowledge that humans bring to bear in a sales dialogue, acting as an intelligent agent in product The answer lies in a knowledge-based tool called a selection, pricing and technical specifications. configurator. If configurators are going to be useful, they must allow rules to be captured and published very easily (otherwise the rules will change before they are issued) and rule maintenance must be simple and quick. The ability for the configurator to be deployed across the internet is a must if up-to-date information is to be made available to the entire direct and indirect sales channel network at the “touch of a button.” Configurators present the product options available in terms understood and relevant to the buyer. The configurator will prevent the buyer from selecting invalid product combinations and will translate the buyer requirements into a technical specification for the supplier to fulfill. It is important that the outputs from the configurator satisfy the needs of both buyer and supplier. The buyer needs a quotation or proposal for a correctly specified and priced product. The supplier needs a specification that will allow the complete and accurate generation of sales and manufacturing orders within “back-office” fulfillment systems if the quotation is released as a firm order. The customer requirements and resultant product configuration need to be stored on the supplier’s database to allow retrieval and amendment by the dealer or customer if the requirements change. This database also gives tremendous visibility of the pipeline for forecasting purposes. Once the configuration rules are captured and deployed throughout the sales network, the need for order validation by the supplier is eliminated since the configurator will ensure that only valid configurations and specifications are generated at the point of sale. One hundred percent correct orders, one hundred percent of the time right across your sales and distribution network.
- 10. 8 Opportunity or Threat? The internet by its nature is a global marketplace and is increasingly viewed as the major enabler in allowing both central control of information and potentially unlimited low-cost access through browsers. Visionary companies are leveraging the internet as the means to make new sales channels effective quickly, significantly reducing training and information transfer costs throughout their sales network. The Gartner Group and other industry analysts consider technology-enabled selling to be the single, highest- impact investment companies can make in sales and marketing technology. Shared customer and market knowledge throughout the whole enterprise, along with optimal resource allocation, are key factors to surviving tough global competition. Automating these areas promises a huge return on investment by delivering a competitive edge whenever you interact with customers and prospects.
- 11. 9 The Bottom Line Selling complex products and services has always presented special challenges. These have been magnified by marketplace, distribution channel, technology and customer expectation changes. To retain a position of leadership, organisations need to understand the specific threats and opportunities for their products and markets and develop approaches that will allow them to become more efficient, more reactive and more effective. Software applications are now available that address the very specific issues of selling complex products and services and enable these new approaches to be implemented. The implementation of these applications is accelerating rapidly and a significant and growing number of companies have now delivered dramatic, quantified improvements in key sales-performance measures. Users have impacted performance, cost and time across the board reporting increases in sales revenue, reduction in time-to-quote, reduction in quotation and configuration errors and cost reductions in developing quotes and proposals. About Cincom Cincom and its partners deliver and support innovative Software applications are software and services to simplify complex business now available that address processes. Cincom Acquire® simplifies complex selling by delivering critical product, pricing and process the very specific issues of knowledge to the point of sale. For 40 years, Cincom selling complex products has empowered thousands of clients worldwide to and services and enable transform their businesses and outperform the competition by providing ways to increase revenue, these new approaches control cost, minimise risk and achieve rapid ROI. to be implemented. Cincom serves clients on six continents including American Power Conversion, Air Products, BMW, Boeing, Ericsson, Rolls-Royce, Rockwell Automation and Siemens. For more information and additional resources, contact Cincom by phone or e-mail at one of the regional offices quoted on the last page of this document. You can also visit the company's website at http://acquire.cincom.com.
- 12. Cincom, the Quadrant Logo, Cincom Acquire and Simplification Through Contact our European offices: Innovation are trademarks or registered trademarks of Cincom Systems, Inc. All other trademarks belong to their respective companies. Brussels, Belgium Culemborg, The Netherlands +32-(0)2 679 68 11 +31-345-471-050 © 2011 Cincom Systems, Inc. marketingbelux@cincom.com info_europenorth@cincom.com FORM QO030114-3-A4 1/11 Printed in U.S.A. Paris, France Madrid, Spain All Rights Reserved +33-(0)1 53 61 70 00 +34-91-524 9820 marketingfrance@cincom.com cincomiberia@cincom.com World Headquarters • Cincinnati, OH USA Schwalbach, Germany Geneve, Switzerland US 1-800-2CINCOM (1-800-224-6266) • International 1-513-612-2769 +49- (0) 6196- 9003-0 +41-(0)22-747 75 18 Fax 1-513-612-2000 • E-mail info@cincom.com • http://www.cincom.com infode@cincom.com infode@cincom.com Turin, Italy Maidenhead, United Kingdom +39-011-5154 711 +44-(0)1628-542 300 cincomitalia@cincom.com info_europenorth@cincom.com Monaco +377-93-10 01 20 cincommonaco@cincom.com