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| Happy
New Year! |
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You
might be interested to know that in the last week or
so, roughly 100 million (yes, 100 million) Americans
followed a tradition that dates back to 153 B.C. and
made New Year’s resolutions for 2006. The most
common resolutions are to lose weight, quit smoking,
and stick to a budget.
I’m
only ahead of this game because I don’t smoke.
I’ve
decided not to make any more New Year’s resolutions.
That’s one resolution I’m sure to keep.
If
you’re resolved to be more effective at selling
in the next year, be sure to read this month’s
issue. We start with an interview with Jill Konrath,
a sales strategist and author of Selling
to Big Companies. She has an interesting
perspective on how to open doors in client organizations.
We’ve
also got an article from Jeff Thull, a frequent contributor.
Thull reveals what he calls “the best kept secret
of the selling world.”
I
guess the Holidays are really over, and it’s time
to get back to work.
Enjoy
the issue. If you have any comments, please send me
an email.
Mike
McLaughlin
Editor, Management Consulting News
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| Interview:
Jill Konrath |
 |
Why do some consultants generate leads and win project
work with ease, while others wait for an eternity just
to get a response to an e-mail or a voicemail sent to
a prospective client? Jill Konrath, sales strategist
and author of the new book, Selling
to Big Companies, has the answer.
Her advice is practical, relevant, counter-intuitive,
and it works.
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| Memo
to Strategy and Operations Consultants |
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Your
clients could be in for a tough year in 2006.
In
their recent global survey of business executives in
134 countries, McKinsey & Company consultants report
on a sticky problem facing companies of all sizes. When
asked about their expectations for the rate of inflation
in the coming year, almost half of the survey’s
respondents forecast it to increase by 1% or more, while
almost 60% of the respondents believe they have little
power to raise prices in the current environment.
Executives
facing rising costs without the ability to raise prices
will be under pressure to operate more efficiently and
focus on high profit markets. If you offer services
in the area of operations improvement, price optimization,
or market planning, you should find clients willing
to listen to your ideas.
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| The
Best Kept Secret of the Selling
World |
 |
 by
Jeff Thull
Problems
cost money! More often than not, however, the only cost
that clients and salespeople focus on is that of the
proposed solution. The cost of the problem is more critical,
and that cost remains the best kept secret in the selling
world and certainly the most overlooked.
We
define a problem as an undesirable, or less than positive,
situation your client is experiencing. The cost of the
problem is the financial impact that situation has on
the client's business due to the absence of the value
your solution could bring. The cost of the problem is
the financial impact of staying the same, and the cost
of the solution is part of the pain of changing. When
clients do not have a clear picture of these two cost
groups, the timing and quality of their decisions are
guesswork.
Sales
professionals frequently ask me two questions: "How
can I speed up the sales cycle?" and "How
can I protect my pricing from last minute negotiating
pressures?" It’s amazing to see what happens
to timetables and priorities once clients truly understand
the cost of the problem. Their perceptions of value
change their thinking.
Here's
an example of how it works…
One
of our clients provides management software to hospitals.
Several months ago, they proposed a $700,000 solution
to a hospital. The hospital’s executives agreed
to the purchase and included the $700,000 in the budget.
The
executives did not calculate the cost of the problem
that the software could resolve. The decision to purchase
the system was driven by the desire to keep up with
the latest technology, which I call the "nice-to-have"
motivator. It soon came out that the purchase of the
new system had been delayed from the first quarter to
the second quarter and then to the following year. The
funds planned for the software purchase had been allocated
to another hospital project.
When
the solution providers found out about the second delay,
they requested a meeting with the hospital’s CFO.
The purpose was to determine if the CFO knew the financial
impact the project delay would have on hospital reimbursement
revenue.
During
the meeting, the CFO asked the salesperson what he thought
the financial impact of the project delay would be.
The salesperson replied that in the rush to get the
project into the budget, the impact had not been calculated.
He asked if the CFO would like to work with him to put
together the numbers, which would allow the CFO to judge
if the delay was the correct course of action. The CFO
agreed and they met the following week.
As a result of their work, the cost of the problem was
estimated to be $220,000 per month in lost revenue.
The financial impact of delaying the software purchase
was significantly more than the impact of the hospital’s
alternative project. As a result, the hospital changed
its priorities and requested that the new system be
installed within 90 days.
There
are many initiatives begging for funding, especially
in complex business environments. Managers can get so
caught up in trying to address those issues that it’s
sometimes simpler to do nothing. But if they have the
tools to do a thorough financial impact analysis, they
can prove how much money a problem is costing. Response
and action may be immediate.
The
cost of the problem influences the decision process/sales
cycle like nothing else. If you get a handle on the
cost of the client’s problem, the sales cycle
can shrink dramatically and your credibility will rise
exponentially. The fact that you are able to help clients
determine the severity of the situation and address
their concerns and expectations positions you as a very
credible and valuable advisor.
What
Happens Once You Know the Cost of the Problem?
Once
you have diagnosed a client's situation and defined
the financial impact on the business, there are three
possible outcomes:
- The financial impact is great enough to justify
the investment and you move forward.
- The financial impact of the problem you’re
addressing is not as great as that of other issues.
In this case you plan when your project will move
to the top of the client’s priority list.
- The financial impact is not enough to justify your
solution. Given this situation, you may have to scale
back your proposed solution to match the financial
impact, or you may want to look for an opportunity
elsewhere.
The primary question most often in your client's
mind is: "Why should I invest my limited resources
in your solution?" |
The
primary question most often in your client's mind is:
"Why should I invest my limited resources in your
solution?" If the only way you can answer that
question is by talking about the features and the value
of your solution, you will not be responding to the
client's real concern. You must help your client understand
what it costs NOT to go forward your proposal.
Ignoring
the Cost of the Problem Can Be Fatal
Ignoring
the cost of the problem results in two critical errors
in the seller’s judgment:
- The salesperson assumes that the client knows the
cost of the problem and will use that knowledge in
the decision-making process.
- The salesperson assumes that the client has the
ability to do a proper self-diagnosis of the problem.
If that were true, then all the salesperson would
have to do is present the solution.
Even if both of these assumptions are correct—which
is rare—the greatest error made by the salesperson
is the failure to collect and analyze the relevant financial
information.
|
Developing a mutual understanding of the cost of
a critical issue or problem is a mark of a true
professional salesperson. |
Here's
the point. The client who does not go through this justification
process on a regular basis will not be as thorough as
you can be. As a trained professional, you can bring
many more cost factors into the client's equation and
thus enhance the quality of the decision process.
Developing
a mutual understanding of the cost of a critical issue
or problem is a mark of a true professional salesperson.
It's the best way to prevent stalls and handle price
objections before they ever come up. It clearly separates
the amateur from the professional.
`````````````````````````````
Jeff
Thull is President and CEO of Prime Resource
Group, and a thought leader in the area of sales and
marketing strategies for companies involved in complex
sales. He’s the author of the bestselling book
Mastering
the Complex Sale: How to Compete and Win When the Stakes
are High and the newly released, The
Prime Solution: Close the Value Gap, Increase Margins,
and Win the Complex Sale.
For
more information contact: Prime Resource Group, support@primeresource.com,
www.primeresource.com.
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| The
Thinkers 50: 2005's Top
Business Gurus |
 |
Who
is the most influential living management thinker? The
Thinkers 50 is a bi-annual, global ranking of business
gurus published by Suntop Media. With the passing of
Peter Drucker, the brain at the top of the 2005 list
is Harvard Business School professor, Michael Porter.
You
can find commentary and bios of the gurus by visiting
the Thinkers 50
site. And if you want to vote for your favorite, the
voting for the 2007 list has begun. Cast your vote.
Here
are 2005’s top ten business minds:
- Michael Porter
- Bill Gates
- CK Prahalad
- Tom Peters
- Jack Welch
- Jim Collins
- Philip Kotler
- Henry Mintzberg
- Kjell Nordstrom & Jonas Ridderstråle
- Charles Handy
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| New
and
Noteworthy Books |
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As
the New Year kicks off, it’s a great time to dive
into the latest offerings from some of the best business
authors. Here’s a short list, in no particular
order, of some new and noteworthy books on the shelves
today.
Executive
Intelligence, by Justin Menkes
It
Takes a CEO: It’s Time to Lead with Integrity,
by Leo Hindery
Ten
Rules for Strategic Innovators: From Idea to Execution,
by Vijay Govindarajan and Chris Trimble
Results:
Keep What’s Good, Fix What’s Wrong, and
Unlock Great Performance, by Gary
L. Neilson & Bruce Pasternack
Spark:
Be More Innovative Through Co-Creation,
by John Winsor
Contagious
Success: Spreading High Performance Throughout Your
Organization, by Susan Lucia Annunzio
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| Coming
Attractions |
|
 “We
have a $10 trillion US economy based on free enterprise,
and we have a $2 trillion socialist, Byzantine economy
called the healthcare industry. It operates virtually
outside of the US economy with its own rules.”
- Paul Zane Pilzer
Paul Zane Pilzer doesn’t mince words. He’s
looked carefully at the US health care system and come
up with some innovative ideas that anyone can use to
find affordable and high quality health insurance.
Pilzer,
an economist, bestselling author, and advisor to two
White House administrations, explains how business leaders
and individuals can wake up from the healthcare nightmare.
Join us as we talk to Pilzer about his latest book,
The
New Health Insurance Solution.
Look
for the interview with Paul Zane Pilzer in the next
issue of Management Consulting News
on February 7, 2006.
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