The Outsourcing Institute hosted an industry wide day of ideas and collaboration last week at the generous accommodations of the Law Offices of Kelley, Drye & Warren, Manhattan.  The event attracted a well rounded consortium of outsourcing leaders; analysts and advisors; on-, near- and off-shore ITO, BPO and other providers; contract and negotiation experts; sales, marketing and branding specialists; relationship and governance leaders, and, of course, buy-side executives.   Despite the lingering economic challenges which frankly everyone is tired of discussing, this was an energized, dynamic and optimistic group.  

Current key buyer and market trends were presented by top researchers and analysts in the opening session, including the following.  Sole source activities are up markedly year-to-date.  Buyers are ‘trading’ scope increases with their incumbent providers in exchange for lower costs.  It is becoming a great time to be a Tier Two provider as some of the largest outsourcers are having trouble shedding cost fast enough to meet buyer desires.   This appears especially true for Tier Two’s who can exploit domain expertise in BPO solutions (an area it was suggested they can often out execute the larger players).

Hot industries for outsourcing include Government, Pharmaceuticals, Healthcare, and Consumer goods.   High activity functional areas are application development and maintenance, finance and accounting (particularly accounts payable) and IT.

Breakout Session at OI's Service Provider Summit

 A strong recommendation from the panel was for providers to concentrate on existing clients for revenue growth, especially where there are opportunities to provide client solutions that could create fast and measurable cost reductions.   Deploying a proactive, consultative selling model when taking this approach was highly advised, rather than waiting for buyers to see the opportunities and ask for proposals! 

There was encouraging news for emerging market providers as it was suggested buyers continue looking to these newer locales for solutions.  (Providers, make sure you are sales ready with a compelling value proposition and clear differentiators.)

Speaking of Sales Ready, 3forward president Dan Hudson ran an afternoon breakout on Sales Best Practices that drew many Summit attendees.   The topic, Old Rules, New Tools, generated some great dialogue with the many company and sales leaders on where they should focus their efforts.   The presentation is available on 3forward’s home page and even more recommendation are covered in Dan’s recent blog post It’s Not Too Late to Start 2010 (Sales) Planning. 

Of all the breakouts and topics of the day, the social networking panel that wrapped up the Summit seemed to be the hottest.  Three leading practitioners in the 2.0 technology and marketing world, Jennifer Naylor, Vidar Brekke and Jeremy Epstein, provided simplified but powerful explanations of what social networking for the business-to-business world “Is and is not.”   Each offered a number of examples of the tools and platforms and plenty of recommendations on where to start.   Their session concluded with these closing points:

ONE, the wave of change started by social networking has just begun and will flatten many industries, companies and processes – and dramatically transform many others – as it unfolds;

TWO, while many social networking tools do sit on top of ‘low cost platforms’ the process of participation requires a measurable investment in strategy, time and resources for it to succeed;

THREE, It’s not a question of if your company should participate, it’s a matter of when, where and how you decide to get started.

The NY Service Provider Summit was a great combination of skill sets, backgrounds, experience and chemistry.   It was very well choreographed and moderated by Frank Casale, CEO and Founder of The Outsourcing Institute (OI) and industry expert Jerry Durant of IIOM.   OI by the way has a newly established Facebook page where many of the Summit presenters and participants are continuing to share ideas and discussions.  Feel free to drop by to get connected with this group and many others in the outsourcing community.  We also invite you to browse 3forward’s Facebook page and encourage you to join our conversations.

Michael Ryan (Kelley, Drye), Kathryn and Frank Casale

To all our fellow Service Provider Summit attendees, last week was a great reminder of how many excellent ideas are out there and whatever help, guidance or advice anyone needs is simply a click away.  Don’t be shy!

Yes, It’s That Powerful

The Transaction video series, each segment lasts 8 to 12 minutes, should be watched by every sales manager, account executive and solution team member in the outsourcing business.   Where else will you have the opportunity to see and hear the uncensored comments from a hard-edged buyer team on what they love, hate and wish they heard, as they (sometimes ruthlessly) pepper presentation teams on their solution.   Some sales teams clearly have it together, prepare well and bring creativity to their solutions.  Others, well, please watch for yourself, but I will warn you the bad ones are painful to watch. 

Another Reason to Watch

The video is well done, edgy and fast paced.  OI founder and CEO Frank Casale explains, “We’ve taken a step past the mundane Powerpoints and whitepapers that are all too prevalent in our industry.  Video format brings the process to life in a unique and compelling way that acknowledges the complexities of outsourcing and the challenges it can create for the people behind the process.”   As Frank likes to say, “Think “The Real World” but substitute the slacker youth for highly motivated strategic executives with a hyper-aggressive timeline and minimal resources.”

Sales leaders, insist your teams watch The Transaction then gather them afterwards for a head to head session on what they learned.   Please share your results with us on The Sales and Marketing Times!

We have all watched company after company, industry after industry, make decisions to outsource functions previously considered too proprietary or critical to ever trust with outsiders (IT, HR, Payroll, CRM, etc…).   So we shouldn’t be surprised that sales and marketing is rapidly moving up the list of business processes now receiving that same consideration.

Sale and marketing outsourcing (SMO) is fast gaining momentum, perhaps because of challenges resulting from the economic downturn, but more likely because business, competitive and specialization trends continue forcing companies to find ever more efficient, scalable and effective solutions to generating revenue.   

When to Consider Sales and Marketing Outsourcing

·         Entering a new market, geography or industry segment

·         Launching a new company, division, services or products

·         Supplementing internal sales, marketing or solution teams to gain a speed to market advantage

·         Mentoring existing sales and marketing leaders during transitional periods

·         Developing and launching new sales strategies, go to market models and pursuit processes

These are excellent occasions to engage outside sales and marketing expertise and benefit from external perspective and experience.  Under certain circumstances it also helps companies avoid diluting the efforts of existing sales teams by overloading or defocusing them with new targets.   

Knowing Where To Start

With the general exception of start-ups or other new ventures, most companies will have some existing internal sales and marketing resource to factor into an outsourcing decision.  The place to start for most, therefore, is by assessing internal capabilities to confirm existing strengths and weaknesses and identify gaps prohibiting the company from achieving its revenue goals. 

Many templates exist for business process gap analysis and there are plenty of consulting companies to help with the process.  Look for firms with solutions specific to sales and marketing and the domain expertise to conduct the process.   3forward provides a sales readiness assessment which may be helpful and others are available by searching on the leading sales and marketing association sites, on-line forums and resource centers.  The Outsourcing Institute (www.outsourcing.com) and specifically their Access US program is also a great place to start for tools and to find leading professionals across many sales and marketing specializations.

Making the Decision

In sales possibly more than any other business activity time is an enemy of success.   A favorite expression we share with 3forward clients is “Time helps no sale”.  It is not a statement we created but we sure find plenty of opportunities to say it.  Boards, investors, presidents and owners set revenue goals for the companies they oversee and then (rightfully) expect the appropriate leaders to execute plans to achieve those goals.  Moving fast does not mean moving carelessly, so trust and follow a structured process to sound decision making – then follow through by making the decision. 

Execute

Of all the challenges companies face in outsourcing sales and marketing, the most overlooked is committing to make decisions and execute quickly.   To keep internal processes from slowing down this outsourcing evaluation it is best to keep decision teams small and committed to two deadlines.  The first deadline is to make the decision.  Create a “decide by” timeline then stick to it.  If a potential provider cannot meet the pace, drop them and move on, do not adjust the timelines.  Second, commit to a solution start date and hold everyone in the organization accountable to it.  This means the internal organization as well as the external provider teams.   Outsourcing sales and marketing is often done to achieve a speed to market advantage, but to be successful provider will need the support, enablement and participation of key client resources to achieve their mission. 

It is always a great time to sell, but in difficult conditions it may be the best time of all! 

More than ever, prospects need quality solutions that can improve their bottom lines and in a slow down many competitors are less active as they tighten down to weather the storm.   Providers that increase their sales efforts in difficult times, and sales and marketing outsourcing is a great approach to doing so, stand to enhance their market position and be the biggest winners in the market share and revenue competition.

This year’s OutsourceWorld conference featured several dozen individual providers from regions and countries worldwide.  As Esteban Herrera, the President and founder of NovaSphere Group LLC, a global sourcing consulting firm, said on his blog, we too were surprised by what appeared to be a light showing of buyers for such a dynamic, resource rich event.   Many of the attending providers possess truly unique and creative business models, legitimate BPO, ITO, LPO and other outsourcing specialties and demonstrate a real alternative to the well known Tier One players and regions which dominate today’s outsourcing provider landscape.  

Regrettably, as capable as these firms undoubtedly are in technical offerings, most were noticeably deficient in marketing and sales best practices.  In fact, most of our conversations with the provider community went something like this. 

“Welcome to fill in the blank Outsourcing.    We have all these skills and certifications and many more which are not listed,” the provider representative would say, pointing to the pre-printed signs of certifications and specializations affixed to the walls behind them.   Then they would add, “AND we are a U.S. based operating entity.   Our headquarters are in fill in the blank (NY, CA, DE, etc.).” 

“Great,” we would say to them, “But what does that mean for your customers?”   This is where they would really puff out there chest and proudly exclaim, “We are a legal US company, but all our teams are off-shore in fill in the blank (China, Vietnam, Poland, Ukraine, Mexico, Jamaica, etc.).”  

Most of these discussions ended here, with the providers telling us what they felt was their strongest differentiator, “So we cost less than India and we are fill in the blank (smaller, closer, easier to understand, less busy) than Indian ITOs.”

At this point we would thank them and move to the next booth where, with few exceptions, we heard the same message repeated again and again.

Selling Competencies are as Important as Technical Competencies

From the buyers we spoke with and those who presented, it is clear most feel a need to diversify their outsourcing engagements across some number of emerging providers and regions, but where they should look and what they will find when they get there is far less evident.   There was a lot of discussion and speculation about locations “other than India”, but the actual advantages of these geographies beyond geographical diversification are not so defined.  If labor cost arbitrage is truly becoming less of the driver than it used to be, then unique differentiators and value propositions for these emerging regions and providers are necessary to create a compelling reason for buyers to pay attention.

Here are our recommendations for the many emerging providers we spoke with who wish to improve their sales readiness.  Of course, feel free to comment or add to the list!

The Top Ten Marketing and Sales Ideas for Emerging (Market) Provider CEOs:

1.       The US business community is a multi-trillion dollar system, not a single, mass market.  Carefully choose the segments you can best serve.

2.       Think strategically about your sales model.  Maximize leverage and speed to market.

3.       Identify innovative and creative approaches to positioning yourself relative to your competition.

4.       Be unique in communicating your value proposition and the benefits your solutions provide.

5.       There is no stack of magic leads or secret Rolodex of buyers.  No one who truly adds value to your marketing and sales process will work for contingency fees.

6.       Buyers are looking for process improvements and innovation from outsourcing relationships, not just cost cutting.  Identify examples you can provide during your presentations.

7.       Stop worrying about whether a slow economy is good or bad for outsourcing.  Your own decisions and actions determine your success far more than the latest stock market headlines or buyer surveys.

8.       Do not ignore your existing customers in your efforts to grow your revenues.  Remember, they are your competitor’s prospect!

9.       Consider in-direct relationships (alliances, partnering, sub-contracting) as an alternative sales market. 

10.   Define a sales process for your company and follow it faithfully.

(This article originally published in the Global Services Oct 2008 issue www.globalservices.com)

Consider outsourcing certain sales activities.  Companies which outsource certain sales or marketing activities do so for the same reasons many other functions are outsourced – cost reduction, acceleration of results, and the benefits of performance-based agreements.   Circumstances when sales outsourcing can make sense include:

·         Entering new markets, geographies or customer segments

·         Creating or exploring indirect sales channels

·         Mentoring new sales leaders and business development teams

·         Supplementing existing sales, business development or solution teams

Under the right circumstances, outsourcing sales or market development is a very efficient, productive approach to quickly developing new sales opportunities and may be an option for some outsourcers to explore.

(This article originally published in the Global Services Oct 2008 issue www.globalservices.com)

Fine tune your value proposition.   Spend time analyzing and refining how you explain the benefits your products and solutions provide customers.   Marketers are taught to ask the question, “So what?”  Do you take steps out of a process?   Add features?  Provide capabilities that did not exist previously?   Those are great, but ‘so what!’   A strong value proposition takes these statements at least one more level and makes the outsourcing benefit tangibly evident to the customer.   In strong economic times or weak customers are looking for the same benefits from outsourcing: increasing revenues, reducing costs, improving market share, gaining competitive advantages and delivering improved service.   Outsourcing can definitely deliver these results, but it is each company’s unique value proposition that determines their opportunity to make the sale.

(This article originally published in the Global Services Oct 2008 issue www.globalservices.com)

Consider indirect sales channels.  For outsourcing companies trying to penetrate the US mid-size and small business market, an indirect sales strategy through the Value-Added Reseller and System Integrators channel is often the only viable approach because of the overwhelming number of SMB prospects.   Many VAR’s and SI’s focus on a particular geographic market or vertical and have extremely high credibility with those customers.   Selling through OEMs, other technology companies and even other outsourcers is another very strong indirect sales market for many niche ITO and BPO outsourcers.  These larger companies are a great way to penetrate the biggest corporations, the challenging US mid-market and even small business.  

(This article originally published in the Global Services Oct 2008 issue www.globalservices.com)

Intensify focus on existing accounts.   Even in healthy economies IT decision makers generally find their existing solution providers less risky than unknown vendors.   Two proven approaches to increasing outsourcing sales in existing accounts are portfolio expansion – selling solutions that are already in your portfolio but not yet being utilized by the target, and incorporating partner-delivered solutions for even broader capabilities.  The latter can also be a worthy defensive strategy to keep competitors from gaining access.  In either case, the sales cycle will be shorter and less costly than trying to win a new client and the revenue ramp up should also be faster.  An excellent example of this strategy is highlighted in Cognizant’s 2007 annual report (Management’s Discussion and Analysis) where they identify account expansion as a key driver to revenue growth in 2007:

“Expansion of our service offerings enabled us to cross-sell new services to our customers and meet the rapidly growing demand for complex large-scale outsourcing solutions.”

“Increased penetration at existing customers, including strategic customers. Specifically, 96.2% of our 2007 revenues were derived from customers who had been using our services at the end of 2006.”

“The U.S. Slowdown: Survive & Thrive” reads one headline while “Grim Outlook for IT Spending” reads the next.   “Outsourcing Takes a Hit” says a Wall Street Journal blog the same day CIO News posts TPI’s report of outsourcing’s best two quarters in ten years.  Although the headlines clearly disagree on the impact a slower economy has on outsourcing sales, there remains little argument that the US economy and many others worldwide continue showing weakness.

How is it with economic conditions the same for everyone are there such varying results across the service provider industry?  It is at least partly because successful firms are making better tactical adjustments to their selling and marketing strategies to accommodate for the economic changes.  So what did they change and where did they start?

Revisiting Sales and Marketing Basics

Regardless the level of business economic conditions, outsourcing sales success begins with an external audit of customer markets, including needs, trends, competition and product alternatives.   At the same time, an internal audit examines organizational capabilities, available resources, financial requirements, experience and offerings.  Strategic marketing plans are then constructed, including differentiation approaches and promotion, pricing, and channel decisions.  Good times or tough – all these elements work together to determine sales success for the outsourcing provider.   

The Impact of Slow Economies

It is a reality that slow economies make it harder for ITOs and BPOs to achieve desired sales results.   A few of the familiar reasons illustrate why:

·         Many sectors spend less on IT services in uncertain times and some stop spending entirely.

·         Competitors without plans for economic down-cycles often make desperate pricing decisions or agree to unrealistic contract terms that only make matters worse.

·         Outsourcing decisions take longer because more people share in the review process when cash is tight.  At any hint of risk the safe answer seems to be to delay the purchase.  

Challenges like these require different sales tactics and following are five of the best options to consider.   Depending on the outsourcer’s vertical expertise some may apply more than others, but the concepts can apply to most IT, software, business process and engineering outsourcing markets.