Gartner says Buyers Have Changed. IT Sales and Marketing Strategies Are Lagging

According to Charles Darwin, “It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.” If this is the case, Gartner’s latest research indicates that many IT Sales and Marketing leaders may end up on the “endangered species” list, unless some serious realizations and changes occur sooner versus later.

According to a new research report, IT buyers have dramatically changed. Gartner indicates that” Newly empowered and informed buyers are taking control of the sales cycle, which should be cause for concern for many sales leaders.”

Tiffani Bova, vice president and distinguished analyst at Gartner indicates that IT sales and marketing has struggled to meet the change, "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."

Although most of the sales and marketing executives may recognize the issue, change will not be easy. “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).”

Looking at past strategies, products were pushed to a large, loosely defined customer segment. Their advice now is to redirect efforts towards connecting customers to their desired offering through their desired purchase experience.

It is good to see Gartner finally illuminating an issue that has been fourteen years in the making, starting with the tech bubble burst and reinforced substantially with the Great Recession. The Teutonic shift that is occurring in the IT marketplace is based on a condition we have coined Frugalnomics, where buyers have substantially and fundamentally changed:

More Empowered – buyers are clearly more informed, leveraging the Internet and social media to research potential solutions, you and your competitors extensively. As a result, CEB and others report that sales reps are being invited later and later into the decision process, when some 2/3rds of the buyer’s journey is already complete. This at a time when Forrester reports the spoils going to those who can engage earlier, with 76% of all deals going to those that can help the buyer establish the need and define the buying agenda, while only 24% of deals went to those winning the “bake-off”.

More Stakeholders – IDC reports that there are now 40% more decision makers involved in each IT purchase decision compared to just three years ago, growing on average from 5 to 7 per deal. With ready availability to cloud solutions and more consumer-like IT expectations, there are more business stakeholders involved in each decision – including the heavy hand of CFOs, Finance and Procurement. And this trend is accelerating, with Gartner reporting at last year’s that a whopping 90% of IT decisions will be controlled not by IT, but by the business groups before the end of this decade.

More Frugal – In the new “Do More With Less” economy, most buyers have less budget, little resources and a low tolerance for risk. As a result, most are forced to deal with “business as usual”, and cautiously approach any new proposals. In order to even consider your offering, these frugal buyers need to first know that the cost of “do nothing” is significant, convincing them that staying with business as usual is untenable, that the investment requirements are reasonable and low risk, and that there is a significant and fast payback. Almost 60% of all deals are now stalled, and of those that move towards close, 95% of these deals now require financial justification.

As a result of “Frugalnomics”, Gartner implores sales and marketing to rethink their entire go-to-market strategy, whereby "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 behavior changes, and the expectations of IT shift".  According to Ms. Bova, "The key to moving forward is to take a customer-centered approach and adopt sales models that support customers' new buying processes, rather than fight against them."

Here are our three step recommendations to help you address the issue and support this new buying process:

1)  Facilitate buyer’s decisions – with buyers so much more in control of the buying process, instead of trying to wrest control, you need to empower buyers even more. Investing in more provocative, relevant content is essential to helping the buyer recognize their issues and facilitate their decision-making process, as well as enabling sales reps to engage earlier and deliver insights to make them a valuable part of the process, and to help stalled deals move forward.

2)  Value in the “eye of the beholder “– different stakeholders perceive value in different ways. What is valuable to an operations person, is not so important to a CFO, who certainly has different pain points, solution requirements and perceived value than an IT manager. With so many more stakeholders in the decision process, particularly business executives, it is essential to communicate your value messaging in relevant terms to each distinct stakeholder in the decision making process.

3)  Financial Justification – with less appetite for risk and more business and finance stakeholders involved in the decision making process, it should come as no surprise that financial justification is a requirement. Interactive tools can be leveraged by prospects to diagnose issues, quantify the cost of “do nothing” and calculate potential benefits from your solutions. More advanced tools can be used to empower sales-led workshops, collaborating with prospects in the financial justification process and delivering CFO ready business cases.

It is important to remember that financial justification early in the engagement is different than the justification the buyer needs in later stages. Here is how financial justification should unfold to help facilitate the buyer's decision making process:

Quantify the Pain - Early, the project itself needs to be justified, answering the question “Why Change?”, and proving that:
  • The issue that you can address is a costly one for the buyer
  • The issue should be a priority amongst all the other opportunities they can address
Justify the Gain – In the middle of the decision making process, the financial justification moves to your proposal, proving that your solution is “investment worthy” and should be a priority (Why Now?):
  • Quantifying the proposed savings, productivity and process improvements, risk reduction and revenue benefits.
  • Comparing the proposed investment versus the benefits, including a tally of key financial measures especially: return on investment (ROI), payback, and net present value (NPV) savings.
Prove You’re Not the Same - And finally, you need to quantify the competitive advantages of your solution versus alternatives, answering “Why You?”:
  • Tally your lower total cost of ownership (TCO) compared to alternative solutions
  • Prove the incremental value you can deliver versus competitive offerings.

The Bottom-Line

Gartner research confirms that IT buyers have significantly changed, a condition we call “Frugalnomics”, forcing IT sales and marketing strategies to change in order to remain effective and competitive.

We recommend that you leverage three steps to help address this challenge today:
  1. Providing provocative content to help buyers overcome “do nothing” and facilitate the decision making process
  2. Align messaging and solutions with the pains and “point of value” of different stakeholders
  3. Deliver financial justification to answer “Why Change?”, “Why Now?” and “Why You?”.
As Gartner concludes, "The greatest innovation challenge for providers today may be in finding the means to reinvent the sales organization 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."

Gartner Says Go-to-Market Sales Models May Be a Bigger Competitive Advantage Than the Product Being Sold - Gartner Special Report Examines the Future for IT Sales Strategies


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