Spinning your wheels – the new reality in enterpise sales

I was in a board meeting yesterday reviewing the sales pipeline for a portfolio company walking through the wins and losses.  As I wrote in an earlier post, it is extremely important (to the extent you can), to get good data on your losses. Many times you learn more from your losses than from your wins.  We like to know who we lost to and why.  We keep a running tab of these losses so we can figure out some key trends, how our competitors are selling against us, and determine what sales tactics we need to employ to reverse the losses.  Interestingly enough, over the last year a trend I have been seeing is the "do nothing" trend from enterprise customers.  We find out that the potential customer has budget, we are selected as the winner, and then they do nothing.  Obviously, the earlier you can identify a potential for spinning your wheels the better off you will be.  Mike Nevens has a great post on SandHill.com outlining this new reality and ways to determine if you are spinning your wheels early in the sales process or methods to make your project one of the 5 out of 30 projects that actually get implemented rather than just approved.

The CIO of one of the largest retail banks in the US recently told me that he has about 60 new projects under evaluation. About half of them will pass technical, functional and investment hurdles. He will then fund 4 to 6 over the next two years.

That means that 25 or so projects that meet all objective criteria will not go forward.

Software vendors and investors need to understand and deal with this reality. 

This is the new reality in selling to enterprises - doing nothing may be a bigger inhibitor to sales growth than your competition!

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This post was written by who has written 358 posts on BeyondVC.

9 Responses to “Spinning your wheels – the new reality in enterpise sales”

  1. Stephen Larson Nov 10, 2005 at 4:01 pm #

    Here’s my comment on the “do nothing” trend: in the best case that is what they should have to do, nothing. If your product requires too much from the customer, you’ll have that the “do nothing” problem. If your defaults are good enough to generate value with no work, you won’t have this problem.

  2. Anton Chuvakin Nov 11, 2005 at 12:23 pm #

    This is actually a comment to the comment :-)

    “If your product requires too much from the customer, you’ll have that the “do nothing” problem.”

    How do you define this? A lot of enterprise software products are meant to customized, tuned, etc, implying that the “just use defaults” policy won’t fly…

  3. Stephen Larson Nov 11, 2005 at 2:07 pm #

    “How do you define this? ”

    It is just a statement that depending on customers doing much work is risky. I’ve seen the “do nothing” trend myself and concluded that it is best to plan on the customer doing very little because otherwise you’ll get exactly what was mentioned: customer selects you but the project dies because the customer has to do something significant to get started and they never do.

    Even if you get money up front, customers will sometimes not put in the effort to use the product or service.

    We handle this by minimizing what customers have to do and not assuming they will even do that.

  4. Anton Chuvakin Nov 11, 2005 at 2:51 pm #

    Thanks for the clarification.

    I undertand that this trend has increased recently (not sure why, maybe customers’ expectations are changing due to the proliferation of appliances…), but what can be done by those who sell large enterprise software, that, at the very least, will require integration (and not just a deployment).

    In other words, I am wondering how one can avoid the “do nothing disease” for things as big as, say, HP OpenView?

    How about this? If some features require customer effort, but will yield clear additional value to their organizations, what is the chance that they will do it?

  5. Justin Sullivan Nov 15, 2005 at 11:08 pm #

    I think the problem is much more fundamental than implementation.

    If you take a good, hard look at most post-mortems, you will find that there was never a real deal there to begin with. The sales guy was just hearing what he wanted to hear, and was afraid to ask the tough questions up-front.

    The killer is that startups do not have the resources to spin cycles on phantom opportunities, but they do anyway because their sales people do not adequately qualify the fundamentals -funding, timing and economic buyer.

    If deals are properly qualified up-front, you will find dramatically fewer ‘do nothings.’

  6. Ed Sim Nov 16, 2005 at 7:32 am #

    agreed-implementation is not the first major issue, qualifying and asking the hard questions early can help increase your hit rate at the end

  7. james haft (The US Condo Exchange) Nov 16, 2005 at 9:53 pm #

    I agree with the post above which states that if you end up with the “do nothing” paradox, then you are asking too much of your customer.

    Our company runs http://www.uscondex.com , an “ebay for condos.” We offer marketing programs and tools which integrate directly into our transactional platform. When a developer who seems like a win begins to slip into the “do nothing” phase, we have had great success converting by finding a way to entice action by providing a loss leader, simplified solution which pulls the developers content onto our site and entices an up-sell.

    As our inventory costs are essentially zero and the data on our site valuable without the developer’s particiaption, it is a win-win for us.

  8. john wiggins Nov 20, 2005 at 12:18 pm #

    I have read Justin Sullivan comment it was very refreashing a piece good old commonsense!!

  9. Martino Mingione Dec 2, 2005 at 3:15 pm #

    My experience is that products that require management to reengineer its business to gain competitive advange appeal to only a subset of the marketplace. Companies, like individuals, have limited bandwidth and can tolerate only so much simultaneous change and risk.

    I disagree with the thought that projects requiring ‘too much from the customer’ makes the difference. The differentiation of which projects get the budgetary green light and which don’t is whether the product/service meets the urgent business need that is shaping their industry (or at least the need that senior management thinks is going on).

    For example, cable companies see VOD as an urgent call to action because of competition from telcos and satelitte. A vendor that pitches an interesting topic (let’s say targeted advertising) is not as high on the list as a vendor who can bring content to the VOD servers.

    In my made up example, the targeted ad product is going to be adapted only by customers who are experimenting or looking to the future. Bottom line: products that fit the target industry’s story line have better odds of implementation than those that require bold leadership from within the customer’s management ranks.

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