Management Consulting News

Management Consulting News - Vol. 5, No. 1 - January 3, 2006

In This Month's Issue:

Happy New Year!

Meet the MasterMinds: Jill Konrath Can Help You Sell to Big Companies

Memo to Strategy and Operations Consultants

The Best Kept Secret of the Selling World, by Jeff Thull

The Thinkers 50: 2005's Top Business Gurus

New and Noteworthy Books

Additional Articles

Coming Attractions

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Happy New Year!

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.

Mike McLaughlin
Editor, Management Consulting News

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Meet the MasterMinds: Jill Konrath Can Help You Sell to Big Companies

Jill Konrath is the President of LEAPFROG Strategies and the author of Selling to Big Companies and Winning More Sales. She's an expert in complex sales strategies and creating value for business-to-business sales organizations.

We asked Konrath to tell us her strategies and ideas for how to target prospective clients in large companies who need our help, break through the barriers that protect decision makers, and sell to them successfully.

MCNews: Why has it become more difficult to sell services to large organizations?

Konrath: Corporate executives, fearful of Wall Street's judgments, are constantly restructuring, reorganizing, and rightsizing trying to find the right formula for success. Staff has been cut to the bare bones. Employees are stressed out, overworked, and overwhelmed.

Executives have become fearful and risk averse. They don’t want to stick their necks out to make any decision that may be unpopular.

Time is corporate decision makers’ most precious commodity and they'll do anything to protect it. They let their calls roll to voicemail and often don’t return those calls. The last thing they want to do is talk with salespeople who won't stop blathering about their services.

Unquestionably, your toughest competitor is the status quo.

MCNews: Who is the toughest competitor for those attempting to sell to large companies?

Konrath: Unquestionably, your toughest competitor is the status quo. Corporate decision makers don’t want to create more work in their already busy lives. It takes time to determine if a change is worth it and would provide the appropriate ROI. Then they have to select a firm. Next they need to bring the consulting firm up to speed on their operation. Finally they have to implement the change—a job that is often fraught with systems issues, people problems, and more.

Because of all that, most decision makers would rather settle for the status quo. Even if it's not perfect, living with the hassles, bottlenecks, and extra costs often seems more desirable than the alternative.

MCNews: When consultants have difficulty gaining access in large organizations, is there a root cause for that?

Konrath: Inadequate strategizing and thinking. For a start, they're not able to clearly articulate the difference their services make. Then, trying to keep all their options open, they refuse to narrow their focus down to market segments that have a high potential for success.

They don't invest enough time researching targeted accounts prior to initiating contact. They can't identify which high priority business imperatives they could have a significant impact on. Nor are they aware of triggering events that occur in their prospects’ companies or industries.

Because consultants don't invest this time upfront, when they initiate contact with a corporate executive they're unable to come up with a compelling reason for them to meet.

It's going to take seven to ten contacts to set up a meeting with a corporate decision maker.

MCNews: What's the best way to get a meeting with an appropriate person in a big company?

Konrath: Think in terms of an account entry campaign. It's going to take seven to ten contacts to set up a meeting with a corporate decision maker. These contacts can include voicemails, faxes, letters, e-mails, invitations to seminars, white papers, and more. Each contact needs to focus on business issues—not the consultant's service offering. In fact, consultants need to realize that no one ever wants what they have.

I've never had a client say, "I would love some sales training because it would be enjoyable.” What they want is better sales results, shorter sales cycles, and increased profitability. Sales training is simply a means to that end.

Consultants need to realize that and drop all mention of their offerings in their "getting in" campaigns. Instead, they need to focus on business results related to priority issues or strategic imperatives. If they do, prospective clients will clear an hour on their calendars for them.

MCNews: Networking at local and professional association events is often held up as a great way to build your business with large organizations. Do you agree?

Konrath: In major metropolitan areas, corporate decision makers rarely attend local organization or chambers of commerce meetings. To them, networking is about interacting with their compatriots in other divisions in their company. Or, it means meeting with their colleagues in related business functions.

The best place to find corporate decision makers out of the office is at industry functions. These typically cost more to attend and are usually out of town. But that's about the only chance to find these people in open settings. Unfortunately when they go to such events, sellers who are trying to get into their organizations mob them.

MCNews: What’s the best way for a consultant to start thinking about selling to a big company?

Konrath: You need to think small, not big. Basically your goal should be to get an initial project that gives you a chance to prove your value and establish a relationship with someone in the company.

With that in mind, review your portfolio of services and ascertain which might be the easiest to get as a first project. It shouldn't have a huge price tag.

And, it's best if you don't try to immediately dislodge a consulting firm that has a long-term relationship with the company. Instead you need to think about a possible business issue that the incumbent may have overlooked and slip into the account under the radar.

MCNews: Consultants are often advised to have an “elevator speech” ready to quickly describe what they do. Are elevator speeches useful?

Konrath: Consultants invest way too much time fretting about elevator speeches that end up sounding something like this, "I'm a management consultant specializing in leadership development. We offer executive coaching and a wide variety of programs in the areas of x, y, and z."

These short spiels are absolutely worthless. They're a total turn-off to corporate decision makers who get hundreds of similar voicemail messages each month.

MCNews: What do you recommend instead?

Konrath: To be effective, consultants need a strong value proposition—a statement of the business outcomes that clients get from using their services. They need to use the language of business too, focusing on terms like "shortening time-to-revenue" or "increasing sales velocity."

To make their value propositions even stronger, consultants need to add specific percentages, dollar amounts, and time frames to make it more concrete. Lacking their own quantifiable business results, they can use relevant industry statistics to support the business case for change.

MCNews: What’s your view on the use of e-mail to get in front of a client? Does it work? What are the common ways to improve an e-mail message so it gets a response?

Konrath: E-mail is the preferred method of communication for many people these days, so sellers need to integrate it into their account entry campaigns. It works, if you do it right. In order not to be perceived as spam, you must immediately mention how you got the person's e-mail address and say something very specific about the company.

Initial e-mails must be brief—totally visible within the preview screen—which means about 100 words. Your whole goal is to engage the person in a discussion, so don't explain everything your firm does. Keep it focused, short, and sweet. Remember too, it's all about the client’s business issues, objectives, and needs.

MCNews: If you were to give a consultant selling to a big company one piece of advice, what would it be?

Konrath: Actually, I have two pieces of advice. The first is more of an overarching principle: Focus on making a difference for your clients and on helping them understand what that difference is. If you keep that in mind in all your communications, you'll increase your sales.

Secondly, preparation is absolutely essential in every step of the sales process. You can't wing it any more. You have to know a lot about your clients first so you can develop a customized approach.

You need to come up with ideas for improving their operations and helping achieve their desired business results. You need to be prepared for voicemail, gatekeepers, and talking to an actual decision maker. You have to be ready to handle the obstacles such as "We're already working with Generic Consulting" or "We're too busy."

While it's tough to gain access to decision makers in big companies today, it's not impossible. It takes tailored approaches to targeted accounts, multi-touch account entry campaigns, and a focus on business results and the difference you can make. That's what works.

MCNews: Thanks for your time.

To find out more about Jill Konrath, her book, services, and blog, visit www.sellingtobigcompanies.com and www.leapfrog-strategies.com.

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Memo to Strategy and Operations Consultants

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.

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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

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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Additional Articles

Staying Ahead of the Technology Curve, from The Economist
http://www.eiu.com/site_info.asp?info_name=eiu_Staying_ahead_of_the_technology_curve

Do You Really Want Relationships?, (PDF) by David Maister
http://www.davidmaister.com/pdf/DoYouReallyWantRelationships.pdf

2006 CFO Outlook Survey, from Bank of America's CapitalEyes
http://www.bofabusinesscapital.com/resources/capeyes/a12-05-316.html

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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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Management Consulting News ISSN 1539-2481, Washington, DC, USA