I do a lot of meetings with vendors. A lot of meetings. And, as you'll know if you've been reading here for any amount of time, I'm of the view that many of these meetings are (frankly) a waste of time. Not all of them, by any stretch, but a very sizable percentage.
I'm beginning to come to a realisation about this. Vendors who have always been vendors (i.e., they have never worked customer side) are usually quite poor at understanding the real issues customers face. They say they understand, but I don't think they really do.
I have no other way to explain the behaviours you get from them otherwise.
Anyway, I also do quite a few speeches to vendors giving the "customer perspective". Almost always, people come up to me afterwards to say that they didn't realise X, or hadn't considered Y, and that my material was really interesting. I like to be candid in those talks, so I usually don't pull punches.
Anyway, since I completed The Little Innovation Book I thought I'd try to do something constructive about the vendor thing. Therefore, I've paused One Big Thing (my next innovation book for people who have only one shot at getting things done) and decided to write an insiders view of the enterprise sale for vendors. I don't really have a good title yet (suggestions welcome).
It'll be another short, 30k word work, split into commute-readable chapters.
So you can get an idea of where I'm going, what follows is an excerpt from Chapter 2, which is about the falsity of the relationship selling model.
I open the chapter by reproducing an exchange between an Account Director and myself in one company I worked for. It was a technology vendor, one that mainly sold bits of commodity tin. Here is part of the analysis I follow this with:
I'm beginning to come to a realisation about this. Vendors who have always been vendors (i.e., they have never worked customer side) are usually quite poor at understanding the real issues customers face. They say they understand, but I don't think they really do.
I have no other way to explain the behaviours you get from them otherwise.
Anyway, I also do quite a few speeches to vendors giving the "customer perspective". Almost always, people come up to me afterwards to say that they didn't realise X, or hadn't considered Y, and that my material was really interesting. I like to be candid in those talks, so I usually don't pull punches.
Anyway, since I completed The Little Innovation Book I thought I'd try to do something constructive about the vendor thing. Therefore, I've paused One Big Thing (my next innovation book for people who have only one shot at getting things done) and decided to write an insiders view of the enterprise sale for vendors. I don't really have a good title yet (suggestions welcome).
It'll be another short, 30k word work, split into commute-readable chapters.
So you can get an idea of where I'm going, what follows is an excerpt from Chapter 2, which is about the falsity of the relationship selling model.
I open the chapter by reproducing an exchange between an Account Director and myself in one company I worked for. It was a technology vendor, one that mainly sold bits of commodity tin. Here is part of the analysis I follow this with:
The second point of note from the exchange I had was the Account Director, whether it was deliberate or not, was setting up an adversarial situation inside our organization.I'm planning to have the full book out in about 3 months. I'm still looking for any vendor horror stories - from either the buy or sell side - which can add some spice. I'll keep your identities and organisations confidential if you wish.
When IT (for example) has made a decision on something that is disadvantageous to a vendor, it is a fairly normal reaction to scramble to find someone with more power that will re-balance things back in the vendor’s favour. There are strong economic motives for doing this, of course.
When a deal goes the wrong way, the potential loss of revenue can be huge. That is revenue that has to be made up elsewhere, and means that new deals have to be put on the table quickly if the Account Director is to make up their number at the end of the year.
From the perspective of the Account Director, trying to stop this happening makes excellent economic sense. For most selling organizations, the number of opportunities to make the number is essentially finite. Wasting any of them can have drastic consequences for end of year compensation.
Then, too, it may be that there is a real belief that the customer is making a mistake. In this case, in the name of the “doing the right thing for the customer”, you often see this behaviour occurring.
Whether or not the vendor is actually attempting to set up an internal confrontation, doing so is another example of the falsity of the relationship sales approach. In a true relationship, vendors would never dream of putting their partners in a situation where they are in the middle of a fight. Friends don’t do that to each other.
But the economic basis of relationship selling makes it very difficult to avoid. Faced with the certainty of a significant loss of money, or possibility of putting a relationship into a place from which it cannot recover, most Account Directors are forced to choose the latter.
After all, if they are good enough at their jobs - acting (that their primary concern is customers, not their targets) - it will be possible, given enough time and effort, to convince the customer that they really do have their best interests at heart. A brilliant Account Director can make the choice of money over relationship time and time again and get away with it. Poor Account Directors, on the other hand, do so only once before they get thrown out by the customer.
Setting up adversarial relationships in accounts is an overt case of a much more common behaviour, known internally to the buy-side as “divide-and-conquer”. Vendors, usually with pretty good intentions, go around to as many people as they can making their pitch.
There will be a pretty varied reaction to this. Some people are open to a new proposition, and will be supportive. Most will be disinterested. And some will be openly dismissive.
By seeing as many influential people as they can, vendors are able to maximize the opportunities they have to create a groundswell of demand for their offer. Indeed, this truly is a numbers game, because with enough meetings, it is possible to sell anything to a large organization by virtue of the fact that sooner or later, there will be enough people wanting it that a purchase is inevitable.
Divide and conquer is hated by the buy-side, because it creates a situation where things happen that are outside the strategic frame. The result is many smaller deals going on, which can add up to significant overspend over time. In one company I worked for, there were twice as many software licenses purchased as there were people in the organization.
This is demonstrably bad for the customer, and demonstrably very good for the vendor, of course. It is yet another example of where a decent account director will almost always trade relationship for revenue.
I have a vendor horror story. It's called "The Blown".
Are you aware of it James?
Posted by: Sam | May 19, 2010 at 09:20 AM
I am very, very aware of the Blown and your interactions with it.
And I would like to use it in my book. Would you be willing to be a
case study?
Posted by: James Gardner | May 19, 2010 at 09:22 AM
The "Blown", by the way, dear readers, is a model of how a customers'
business works that was put together by a particular vendor. It was a
highly simplified group of boxes, and the vendor thought it was
fantastic, and the customer thought it was rubbish. Officially, neither
side told the other what they thought about it... leading to a massive
disconnect.
Posted by: James Gardner | May 19, 2010 at 09:24 AM
Of course I would love to be a case study. It would give me great joy to re-visit my experience having to endure "The Blown" in our previous organisation :)
Posted by: Sam | May 19, 2010 at 09:31 AM
As a vendor, a question I always struggle with is how to avoid the show-and-tell.
I want meetings to be about listening and to then be able to contextualise our offer in relation to the issues that need to be solved. But the expectation seems to be for a show-and-tell, presumably expected to be the quickest way to qualifying you as a vendor.
Nowhere it seems is this worse than in the public sector, where probity controlled tender processes are the norm. At a large department in Queensland our audience was actually instructed not to speak, that somehow this might negatively influence the process! And you can forget about working with your buying influences to solve their issues, it's closed door.
If there's a need for an education process it needs to be on both sides. Buyers have to be prepared to talk as much as Vendors have to be prepared to listen.
Posted by: Andy | May 20, 2010 at 02:23 AM
James - I enjoy reading your blog but your centralised "strategic frame" sounds a very different beast from the collaborative, across-the-organisation, decision process for IT that you seem to be encouraging. Innovative vendors, one thinks of salesforce, would have got nowhere without trekking around to potential customers across the organisation and bring some pressure to bear on IT to change the "strategic frame". Many people in IT seem to forget that IT is a support function, an important one, but no more than that. If a profit making division of a company wants to buy some service IT should concern itself with supporting the goals of that division (which may include pointing out the pitfalls) and not with finding ways to stop providers of services hawking their wares.
Posted by: Chris | May 20, 2010 at 11:29 AM
Thanks for your comment.
I accept, for now, your remark that vendors have to troop all over the
place to get things done. What is impossible, however, is to accept
that just because a vendor *can* troop everywhere and create demand,
that this is a good thing for everyone. IT is *not* simply a support
function... that thinking is very 90s and way out of date. We are equal
partners in the business, as are most other support functions these
days.
Anyway, the point is that vendors who are "hawking their wares" are not
doing so becuase they care very much about the strategic objectives of
an organsiation. They are doing it to make money. That sets up an
incongruity which its necessary to address somehow. I'm trying to find
a solution with this project I'm presently engaged in.
Posted by: James Gardner | May 20, 2010 at 11:33 AM