One of the biggest barriers to innovation in the traditional technology providers’ sales model is lack of flexibility to reinvent themselves without placing quarterly revenues at risk, according to Gartner, Inc.
“As technology has continued its unprecedented advance in recent years, the sales models used by providers to bring technology products to market have failed to keep up,” said Tiffani Bova, vice president and distinguished analyst at Gartner. “The greatest innovation challenge for providers today may be in finding the means to reinvent the sales organisation and go-to-market model to meet new market demands, while at the same time continuing to protect and defend existing customers and deliver net new revenue.”
One of the most consistent patterns in business is the failure of leading companies to stay on top of their industries when technologies or markets change. However, technology advancements are challenging the status quo in many ways. Because of this, the market will split into three types of provider that approach the market in very different ways — some clinging on to old models of selling to protect their installed bases, some evolving their products to compete better and some taking a revolutionary approach with radical new products and business models.
While there are numerous technology-related forces at work on sales models, the customer is also having a major impact on how providers take their products to market. Newly empowered and informed buyers are taking control of the sales cycle, which should be cause for concern for many sales leaders. Providers have long been accustomed to defining not only what customers will buy (the product), but also how they will buy it (the sales model). Where once their focus was pushing product to a large, loosely defined customer segment, now it needs to be redirected to connecting customers to their desired offering through their desired purchase experience.
“The existing ways of selling, based on specific segments, high-touch, often face-to-face sales, with a select few channels and heavy investments in lead generation marketing, are beginning to be less effective as people’s buying behaviour changes, and the expectations of IT shift,” said Ms Bova. “The key to moving forward is to take a customer-centred approach and adopt sales models that support customers’ new buying processes, rather than fight against them.”
As the market changes, to compete successfully, providers will have to base their growth initiatives around three key areas:
- The products and services they offer (and what need they fulfil)
- Their target customers (beyond standard segmentations)
- The sales models they deploy to sell to customers (a combination of direct and indirect activities)
Focusing too much on any one of these without considering the other two in the equation will reduce the overall impact of their go-to-market approach and sales performance.
It is relatively rare that providers consider all three elements when attempting to differentiate and compete in the market. By connecting them into a deliberate strategy, every crucial decision can be shaped by all three working together, and scenarios can be built to anticipate market changes and their subsequent impact.
“A connected sales model can’t be created overnight, nor will it be a one-off task,” said Ms Bova. “Making such, sometimes significant changes takes time and will continue to evolve with each new product introduction and new market considered. But, increasingly, providers that fail to make changes now could find themselves in a worse situation in two to three years, when technology and its buyers have advanced even further.”
Additional information is available in the Gartner Special Report “The Future of IT Sales” This special report provides tools and best practices for making go-to-market choices a source of differentiation and competitive advantage, instead of an afterthought. The special report can be viewed at http://www.gartner.com/
Ms Bova will provide additional analysis during the Gartner webinar “The Future of IT Sales” on 13th August at 4:00pm UK time. To register for this complimentary webinar, please visit http://my.gartner.com/portal/
A Gartner Statement