Thursday, August 15, 2013

How to Sell to the CIO, Part 2: The Sales Process


This post was published in the Wall Street Journal's CIO Journal.

After almost two decades of selling enterprise infrastructure to IT organizations, I have spent the last two years on the other side of the table as the CIO/CTO of CBS Interactive. This is the second of a three part series on how to sell to CIOs.

The tips I laid out in part one helped you get into an account. But getting the meeting is just the beginning. Now it’s time to sell your product.

Sell the ROI

The question enterprise IT has for the salesperson during a sales meeting is, “Will your product save or make us money and does it have low risk?” As Founder and CEO of Upstream Group Doug Weaver writes, “They’re not thinking about helping you out or what kind of day you’re having. ‘What’s in it for me?’ is the order of the day.”

A vendor needs to have a very clear and verifiable return on investment (ROI) story with measurable metrics. There are times when companies buy software or services without evaluating ROI, such as during the e-commerce push in the dot-com boom and the social craze of the past couple of years, but these are the exceptions.

An ROI story should use the right numbers. I have experienced several instances where vendors offer ROI examples that don’t add up. For example, a database-as-a-service solution that is deployed on-premises and is pitched as cheaper than Amazon.com Inc.’s Relational Database Service. The comparison leaves out the cost of the database administrators needed to run the solution on premises. Also, many vendors don’t take into account the difference between capital expense and operating expense, a distinction that should always be included in ROI calculations.

There is generally a significant transition and maintenance cost to adopt new technology that IT organizations consider before starting a new vendor relationship. Numerous vendors have pitched us on “reporting in the cloud,” but never consider the cost of copying vast volumes of our data to their system or the compliance and regulatory headache that comes with having our proprietary data in their hands. The reporting features need to be morethan an on-premises solution for us to even entertain the concept.

Product Fit

It is critical for vendors selling a product to an enterprise to have people with domain expertise on their team.

Vendors should be very careful about “vaporware,” products that are announced but not yet implemented. For example, once a vendor showed screenshots and demonstrations of their product working in a certain way, but when we trialed the solution, we found that the software was missing several key features. The vendor then acknowledged that the features would be coming out in six months. Unfortunately, after wasting my team’s time, we will not give them another chance any time soon.

While it’s important to cater to the customer, make sure other enterprises also need a product feature before adding every feature a company requests. One approach for vendors is to have a blanket policy that three customers must request the same feature before it is implemented (but be careful when wielding that stick as customers often do talk to each other). There are, of course, certain products that inherently need to be customized and should include a set amount of professional services. Finding the right balance will result in a product fit that works for both the vendor and the customer.

Go to the Right Person

To sell to an IT organization, convince the person who actually has the problem. When someone three levels down in my organization comes running into my office and proclaims that they found a great product that pays for itself in six months, will save us money, and that they have already trialed it and it works well, there’s a great chance that deal is going to get done.

Get the attention of the database manager, the networking director, the system administration manager, the procurement director or whoever is the appropriate person and convince them to try the product. The best way to sell to people on the software side is to have a product that they can find, deploy and use on their own without needing to talk to anyone at the vendor.

MySQL’s Marten Mickos perfected this strategy with his “15 minutes to delight” philosophy, previously unthinkable for a product like a database. Subsequent products from Atlassian Inc., New Relic and Splunk have adopted this business model, and their growth reflects this philosophy’s focus on delivering a killer product.

Once a product has already been tested, the sales process becomes much smoother. Vendors can direct their salespeople to focus on learning the organization and helping to navigate finance, legal and stakeholders’ agendas to ensure that required features are added to the roadmap. Once a product sells itself, the sales organization doesn’t waste time chasing down leads and requesting face-to-face meetings.

This advice does not apply to companies selling deep workflow solutions like order management software that requires a lot of analysis, buy-in from multiple stakeholders and has a long implementation time. These types of solutions still require “traditional” sales techniques and cycles. The best way to close a deal like this done is to understand that it will take a long time and to identify an executive champion that will help push it through.

I will explain more about how to close a deal in the final part of this guide on selling to the CIO.

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