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The Two Market Forces That Killed Solution Selling Forever (Part 1)

- October 8, 2012 - 6 Comments

This post is the first in a series we’ll be featuring from David McNicholas, Director of Strategic Business Development at Comstor US. Comstor is a recognized global leader in Cisco product distribution and an established provider of networking and advanced technology solutions. David is a recognized keynote speaker in the field of the financial impact of technology, executive strategic selling and the creator of ERS (Executive Relevance Selling) – a Cisco endorsed program (more on that below). David has trained and consulted data center, contact center, customer service operations professionals and specialists, as well as Fortune 1,000 Executives all over the world on this methodology and discipline.

The world has forever changed and how technology must be sold has, too.  Solution selling is dead because the major foundational assumption of solution selling is that a budget exists. Now the VAR must create the budget. The two market forces that killed solution selling are the same forces that require budget to be created by the VAR.

So, what are the two market forces that killed solution selling? 

Ongoing Global Economy: The world is economically connected and what ails Europe will ail many. What happens in China unfortunately doesn’t stay in China. As the largest foreign holder of United States Treasuries at 23.8 percent, China pegs its currency lower than the US Dollar thus offering prices for goods and services that are virtually impossible to compete with in the United States. It’s a statistical certainty; there will never be a time when the entire world is simultaneously prospering economically. If it does, it will be fleeting. As such, corporations and organizations are forever weary of the certainty that there will always be a country (or countries) somewhere that has fallen down and is trying to get back up to some degree. This overarching dynamic will have a permanent restraining effect on the way companies deal with capital expenses.

Investment Centric Buyers: As a result of global weariness, many companies have a strong cash position. Confidence to invest outside the company in equities and the like are viewed as too risky for the possible paltry return. All decisions are being made in the executive suite. EVERYTHING must pass executive investment scrutiny. In executive speak this means:

  • What are the hard measureable cash flows this purchase will drive?
  • For the required investment:
    1. Will it cover the corporate cost of capital?
    2. What is the internal rate of return?
    3. What is the payback period?

As a technology solution VAR, this means you must be able translate your solution into predictable quantifiable cash flows and business results.

Have I got your attention? Then stay tuned for more on the demise of solution selling. I will cover why old school solution selling no longer works in an investment centric risk adverse market place. Until then, check out this video to learn how Comstor Executive Relevance Selling (ERS) can help you change the way you sell and gain a competitive edge in the marketplace.

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  1. David- thought provoking as usual. Though I am not a selling process expert, I will say that the way IT is viewed needs to change even faster than it is. Traditional views of IT are creating investments that can bring companies to their knees before decisions are depreciated. The element of "what else could I do with this money" vs. the "technology refresh" line item is game changing, as are the business people driving more technology decisions. Great read.

  2. Tim Sullivan, while I do agree that David McNicholas did inadvertently mischaracterize the formal, trademarked Solution Selling process, this is little doubt that the traditional "solution selling" model, as practiced in the vast majority of sales organizations has worn out its welcome. In fact, Harvard Business Review just published this article in their July-August 2012 issue, "The End of Solution Sales". That being said, I also find flaws in David's fundamental assumption that the numbers will drive and create the sale. In a world where buyers were all completely rational beings, yes, ROI calculators could win the war...if you always had the numbers in your favor. Hell, we wouldn't need salespeople if that was the case. In the real world where buyers typically buy for emotional reasons and then use numbers to justify the decision, a business case can close the sale. However, it simply can't create the sale. I would like to suggest that all of us in the sales profession need to start re-examining our base line assumptions from Technology Push to Business Outcome Pull. Why? Because the buyer is in control now. Not the vendors. It's as simple...and that.

    • Great conversations, glad to see the experienced battle field tested veterans weighing in. I agree that it is not JUST the financial numbers. In fact coming with only financial numbers can run counter to the goals and agenda of an organization in spite of how dramatic they may be. That is why the stake I am putting in the ground is: "Improving business processes that drive the executive agenda defined by hard cash flows" I will get into more detail on my next blog on this definition and understanding the profound power of fiduciary responsibility. Hope you all stay tuned.

  3. ...David, I agree with you...I had read it already. Good post, and very interestig comments. Regards for both of you, from PR...

  4. With respect, David, you have mischaracterized Solution Selling badly. Your postulation that "the major foundational assumption of solution selling is that a budget exists" is in error. Solution Selling begins with understanding the state of a potential buyer's vision of how they may solve a problem - they may have a complete vision, one that is not completely formed, or no vision at all. The seller can then assist a customer in improving their envisioned solution, or in helping them to see one where none previously existed. This is not dependent on whether a budget exists - in fact, Solution Selling can help create sales opportunities based on the value of addressing the customer's problem in a new or previously unforseen way. In other words, Solution Selling PROVIDES the ability to "translate your solution into predictable quantifiable cash flows and business results" - and I agree that this is now essential to VAR sales success today.

    • Tim, Thank you for your thoughts. I would encourage you to read the interview with Suzanne Kosub, Senior VP and CIO of Concentra, this Fall's cover story and feature article in "Unleashing IT Magazine "Getting Real With ROI". She discusses the server virtualization journey of Concentra Urgent Health Care. Concentra is one of the largest urgent Health Care providers in the US. (article url at end of my response) The solution sell was so overwhelming in this case it was self-evident and also executed extremely well by the VAR. Despite the fact that Suzanne and the other top executives completely agreed that the solution would do things better, make their IT staff more efficient, productive and allow the hospital to be more nimble the proposal got shot down and killed. Why? The "solution sell" simply could not get to the heart of the matter for the executives which is "will it drive my executive agenda defined by hard cash flows and meet my discounted cash flow measurement criteria?" This is the problem of our age that executives are looking for help with. It means being able to accurately monetize the business model and process model around their current solution state and the hard cash flows changing to yours will bring. Solution Selling flat out can't do this. Getting Real With ROI: For further insight and detail here is a 6 minute testimonial from the VAR sales leader on this deal: