Reshaping the channel funnel

Selling services means adapting - perhaps radically - to the way customers now engage with potential IT investments. Fleur Doidge reports

In a managed services and hosting-dominated world, the channel's sales are in crisis and need to change. If that means sacking your entire staff and starting again in order to get the right skills, so be it.

That is the sometimes strongly worded message from a veteran IT channel sales strategy watcher and distinguished research analyst at Gartner, Tiffani Bova.

Bova has never been one to mince her words - although, crucially, she did immediately explain that she certainly did not mean that channel companies will actually have to fire their sales staff.

Rather, the strong words were intended to emphasise that action is required; what is needed is a radical reshaping of sales behaviours, processes and perhaps even strategy, which will mean new skills must be nurtured and brought forward within those staff.

The channel has lost control of the customer journey and should adapt accordingly. If no action is forthcoming, the channel may well fail to combat an inevitable shrinking of deals that make it through the traditional sales pipeline.

Bova, speaking at an ITEuropa summit on managed services and hosting, said: "Customer behaviour is significantly different today."

Traditional sales "pipeline" meetings have become, she says, a complete waste of time, because they are linear, whereas customers are in fact cycling in and out. As a result, what is communicated in the regular meetings does not accurately reflect what is happening with the customers, with salespeople often "managing up" to protect themselves, rather than risk predicting a sale is closer to closure than things turn out in reality.

Bova (pictured, right) points out that IT channel prospects today have lots of information easily to hand before they even speak to the company - even if not all of it is accurate.

Most tend to research their problem and the technology available, and evaluate what they have found out, then speak to a vendor perhaps, then speak to customers, evaluate again, then speak to a supplier, and on it goes.

This means the channel has lost control of the customer journey - the very thing that resellers, services providers, and other technology providers have long held dear to their hearts and considered a major differentiator between themselves and the manufacturers.

"You don't own the customer," Bova said.

The industry generally is still segmenting customers for sales purposes the same way it did in 2000 or even before, she explained. That triangular sales funnel diagram remains popular and prevalent across many boardrooms, but no longer represents the sales pipeline per se.

"And you cannot simply add another triangle inside it," said Bova, meaning that a conceptual rethink of the customer journey, and where and how that customer can or should be influenced, is required.

Customers have moved on, and so therefore should the channel, if it wants to grow revenues and protect margins.

One key issue which is genuinely driving customers away is that salespeople must better understand what the customer has done so far in relation to his or her IT issues. They must take into account what each customer knows already - or thinks he or she knows - about the product, the services, and the suppliers.

This means working much more closely with marketing teams, who may have information stored in databases, for example, such as what the prospect's last contact with the company was, and what happened, whether they have met staff before or been a customer previously.

It is just not good enough - and merely alienates prospects - to give standard talks on brand and identical presentations to prospects today, many of whom have done a large amount of research and know quite a lot already.

Bova hastened to add that salespeople are only in fact responding to the way they themselves have been trained and managed. Salespeople tend to do as they're told - as they must if they are to keep their jobs. But Bova says that the sales function must be reconstructed so the processes and practices reflect what is actually happening and where the customer is on his or her journey.

Technical and tailored
Customers themselves have revealed in Gartner research that they would appreciate a more technical approach, and everything must be tailored according to how far the customer has already come on the journey towards a new IT investment.

If the required radical reorganisation cannot happen from the top down, if the chief executive or managing director does not understand the need, for example, salespeople themselves must lead the charge. They must themselves work to change things at grass-roots level, piloting and testing new, better ways of doing things.

"It means looking at how leads are currently handled. Today, leads are passed on, but not the details of what the customer has already done and what you know about them. All you get is the name," Bova said.

"And the customers go, ‘really, they [the salespeople] know nothing about me? They're idiots'."

Making these changes in channel sales will not be either easy or quick, she conceded, but taking action is nevertheless essential to address the current disconnect as volumes rise, outbound lead numbers shrink, and fewer deals are closed the traditional way in a services-led world.

Sometimes, she adds, it might be easier to hire new sales staff with the skills required - whether that be someone with a healthcare background instead of sales, to help sell into hospitals, or someone with a more specific range of relevant IT skills that can be introduced into the sales process earlier on to answer customers' questions.

Other speakers at the conference agreed with Bova. Tracy Staniland, vice president of marketing at cloud backup vendor Asigra, said: "Our sales are changing; we're taking a different view of sales so our sales and marketing team are aligned."

Rob Rae, vice president of business development at backup vendor Datto, said he was going to put some of Bova's perspectives into practice in his company.

"I'm actually going to change stuff now, based on some of Tiffani's (Bova's) information," he said.

"And I think there is more opportunity out there for a lot of services providers if they do it better. I'm seeing chief revenue officers (CROs) emerging as responsible for what you can take as the customer experience from start to finish. We are definitely seeing significant growth in sales but obviously there are better ways to do it."

Martin Saunders, corporate development director at cloud comms provider Claranet, hints that this kind of task could be an opportunity for smaller firms to excel and actually beat the big boys.

"In the past six months, we're now seeing many more smaller, very asset-light, very agile companies being our main competitors for the services that we offer. Every few months, a new company appears with a new offering - which keeps us on our toes," Saunders said.