Cincom In-depth Analysis and Review

Complex Sellingin Today’s Global Economy

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SIMPLIF ICATION THROUGH INNOVATION®

Table of Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Business Drivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Responding to the Challenge . . . . . . . . . . . . . . . . . . . . . . 3

Changing Routes to Market . . . . . . . . . . . . . . . . . . . . . . . 4

A New Channel Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Opportunity or Threat? . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

The Bottom Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

About Cincom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Cincom In-depth Analysis and Review

Complex Selling inToday’s Global Economy

WHITE PAPER

1

Introduction

Companies selling complex products and services havealways had their own very specific challenges as well asthe wider issues that all industry sectors have to face.The changing business, economic and technologylandscape has thrown these unique challenges intosharp focus.

The global marketplace and the pervasiveness of theinternet have, perhaps inevitably, taken longer to impactthe world of complex selling than other sectors. Buteven companies in the most protected market spacescan no longer ignore the changes brought about bythese and other factors.

In this paper, we look more closely at the issues andopportunities that arise from these changes; in particular,the challenge of capturing and deploying theknowledge that the “extended enterprise” needs to sellcomplex products and services in today’s globaleconomy.

Complex ProductsComplex products are largely, although not exclusively,found in the high-tech and industrial product sectors.

Examples of complex products include:

• Network, communications and IT equipment

• Air and liquid movement systems

• Electrical power systems

• Motors, compressors and fans

• Transportation equipment

• Industrial machinery

Complex products are typically characterised by:

• High-end item value

• Many features and options

• Complex rules governing applicability andinteroperability of options

• A complex product structure and/or manufacturingprocess

• A selling process that is heavily dependent onknowledge or expertise, frequently involving multiple“domain experts”

• Being sold through direct and indirect sales channels

Issues with Complex SellingOrganisations selling complex products face some veryspecific issues, which may include:

• Sales channels struggling to understand the productswell enough to sell them fully and effectively.

• Getting sales reps and channel partners up to speedon new and existing products is expensive and time-consuming.

• Sales spending too much time on “non-selling”activities such as quotation preparation, chasingcorporate resources, expediting and resolvingproblems with quotations and orders.

• Preparing labor-intensive and time-consumingproposals and quotes.

• Heavy dependence on inside sales and other internalgroups—“Chasing the Expert.”

• Diverting key internal resources from morestrategic/high-value activities.

• Errors in quotations and orders.

• The desire to grow sales through new channels, partnersand the web.

• The need to assimilate product lines/sales teams frommergers and acquisitions.

While there has been much activity in the developmentand deployment of CRM (Customer RelationshipManagement) systems, the focus has almost exclusivelybeen on the needs of companies selling standardisedproducts. The functionality has targeted areas of salesefficiency rather than effectiveness. CRM systems tendto look at the processes around the sale but do notaddress the issues highlighted above.

Although the fortunes and perceptions of the internet asa selling vehicle have fluctuated wildly, the fact remainsthat it offers an invaluable additional or supportingchannel (and differentiator) for those companies that canaddress the specific challenges it poses for complexproducts.

2

Business DriversCompanies have spent considerable time, money andresources implementing enterprise backbone (ERP)systems to improve the performance of their “backoffice” processes (finance, manufacturing, purchasing,etc.). Companies selling complex products and servicesmust now move their focus to the “front office”(customer sales and service). The need for this shift isdriven by several trends:

• Cost containment – The economic changes flowingfrom the bursting of the dot-com bubble and theaftermath of 9/11 mean that few companies areinsulated from the need to contain or cut costs.

• Increased competition – Technological ormanufacturing excellence no longer guaranteescompetitive advantage. Innovative, fast-movingcompetitors who are more responsive to customerneeds are challenging market leaders.

• Customised products and services – Increasedcompetition means more choice and increasingcustomer demands. Customers are no longer willing tobuy “standard” products when they can have “exactlywhat they want, when they want it, for a fair price”from someone else.

• Broader product offerings – Most companies areresponding to these demands by extending productranges and offering more variation and options withintheir products and services. But increasing productvariety and complexity puts heavy demands on a saleschannel that is probably already struggling to keep upwith existing product and service offerings.

• Shorter product life cycles – While product offeringsare growing, product life cycles are shortening—a“double whammy.” Traditional product ROI modelsare invalidated as companies are driven to embracethe principles of Mass Customisation1.

• The internet – The internet makes it possible forcustomers to rapidly assimilate information aboutproducts and services that might meet their needs, tomatch them against their requirements and to obtainprices—without ever talking to a salesperson. Whilesellers of more complex items have been relativelyimmune from this pressure, the expectations of buyersare rapidly changing.

• Knowledge – Customers are more knowledgeableand they expect knowledgeable selling. Yet fewcompanies can afford to involve their “experts” inevery sales cycle.

1Mass Customisation - The profitable delivery of customised productsand services at mass-production prices.

Selling hasnever beenso complex.

3

Responding to the Challenge

To address the issues that we highlighted earlier and tokeep up with increased competition and customerdemands for personalisation of complex products andservices, many companies have adopted some obvious(but ultimately flawed and self-defeating) responses.

Simplify Your OfferingOne business response to the information-managementand communication issues associated with complexproducts is to “dumb down” the product offering tosome markets or channels. The supplier deliberatelyrestricts the product options available to lessen theinformation requirements.

This may resolve some of the issues, but it is likely to leadto lost or lower-value sales because of unavailablecompetitive product features or the inability to sell add-ons.

Adopt the “Push” ModelAnother common “low-cost” response by suppliers is toissue secured information on CD-ROM. But, bydefinition, CDs can only be produced periodically andstock availability, product options and price changesoccur by the minute, not by the week, month or quarter.

A significant but often overlooked issue is that CDs area one-way street, allowing the supplier to pumpinformation into channels but offering no solution to therequired exchange of information backward and forward.

Sales AutomationNumerous sales automation projects have beentargeted to improve “sales effectiveness.” In reality,however, a vast majority of these projects have focusedon making the sales channel “efficient” rather than“effective” and have frequently increased the non-selling time required by the sales organisation.

A primary reason for this mismatch betweenexpectations and results is that most sales automationsoftware packages are first and foremost salesadministration systems and do little to improve sellingeffectiveness.

In addition, most software packages are designed toaccommodate a direct sales organisation model butcannot accommodate a complex sales channelconsisting of both direct and indirect channels.

The Real SolutionThe real key to successfully selling complex productsand services lies in addressing the underlying issue—theneed to capture knowledge from wherever it is held inthe organisation and making it available to whomeverneeds it, whenever and wherever that is.

4

Changing Routes to Market

Knowledge—a Core RequirementToday’s buyers demand personal, knowledgeable andresponsive selling. Addressing these requirements ischallenging for any company, but much more so forcompanies selling more complex products and services.Traditionally, these products have been sold by a directsales force, perhaps supported by closely tied dealersand often in protected market spaces.

However, companies now need to reach their marketsboth through direct channels, such as field sales and callcentres, as well as through indirect channels, such asresellers, remote sales offices and even self-serviceinternet capabilities. Each of these “touch points” hasspecific support requirements. The challenge is ensuringthat the channels work seamlessly together and cancommunicate common knowledge rapidly.

Information about products, pricing and customers mayhave once remained static for long periods, but todaychanges constantly. More people need to understandthe latest picture immediately, yet the pressure is on toreduce the resources and costs required to provide thisinformation. To compete effectively, companies mustbecome lean and agile in this area as in others. Sharedknowledge enables companies to implement rapid,coordinated action across the extended enterprise.

Traditional support methods fail rapidly in today’scompetitive, faster moving, multi-channel, globalmarket. A sales process relying on paper-basedcatalogues and frequent interaction with increasinglypressured product, manufacturing or pricing experts willquickly fracture.

A major challenge is to ensure that all channels workcooperatively, sharing and communicating knowledgein a timely manner.

Direct SalesThe traditional sales arm, the field sales force, hasbecome increasingly frustrated with the difficulties ofselling a broadening range of complex, customisedproducts and services in an increasingly competitiveenvironment with inadequate tools. Typical frustrationsare:

• Incomplete product, price and customer information

• Customers demanding more rapid, yet personalisedresponses, requiring frequent revisits to finalisecustomer need and product fit

• The need to “return to base” to complete customerproposals

• “Chasing the expert” to determine missing details forproduct specifications or quotations

• High potential for order errors

Increasingly complex products, pricing and financingresult in the salesperson selling “familiar” products—notnecessarily those best suited for the customer or mostprofitable for the supplier.

To resolve these frustrations and to become moreeffective, the knowledge that is so often frustratinglylocked away elsewhere in the organisation needs to bemade available to field salespeople. Solutions areneeded to help them close business (not just managetheir contact lists). Salespeople need solutions that:

• Are available at the point and time of sale—tools thatcan be used away from the office while face to facewith the customer

• Provide up-to-date product, price, customer (andother) information

• Develop a complete and accurate product offering tomeet a specific customer requirement

• Have “point and click” synchronisation with centralenterprise systems

• Enable them to rapidly assimilate new or upgradedproducts, revised pricing or other changes

• Deliver true benefit (not seen as a hindrance)

Of course, field salespeople can become more efficientby using a traditional Sales Force Automation (SFA)solution. However, SFA does not create more effectivesalespeople. Surveys show that increased effectivenessis the highest priority sales managers seek from sellingsystems.

5

Telephone Sales and SupportThe typical call centre is not often used to sell complexproducts. On the other hand, there will be manyoccasions when information needs to be given orreceived by phone. Some configured products such asPCs may use telephone sales and support quiteextensively.

Internal sales and support people share many of thefrustrations of their colleagues in the field and needsimilar solutions. However, there are some specific issuesin dealing with complex or customised productssatisfactorily via the telephone. While communicationmay be two-way, we must make allowance for thelimitations of a solely verbal interaction with thecustomer where only the agent has the full benefit ofdetailed system information. Therefore, a supportsystem for telephone users must be:

• Simple to use

• Able to present even complex products clearly

• Completely foolproof in taking 100 percent correctorders, every time

• Able to promote up-selling and cross-sellingopportunities

• Closely integrated with fulfillment and otherdownstream systems

Indirect SalesA network of dealers, agents, resellers, distributors andremote sales offices enables effective, low-cost, rapidexpansion into new and unfamiliar markets. However,the issues faced by the direct sales force are magnifiedfor these indirect sales channels. Invariably separatedfrom the parent organisation by distance and frequentlyby time, indirect sales channels surely presentformidable communication and management challengesto any organisation. These challenges are much moredemanding when those remote partners handleproducts that require considerable sales knowledge.

Customers selecting products over the internet facesimilar problems. Like a reseller, they will almost certainlyhave a good understanding of their needs and domainknowledge. But even more so than the reseller, they areunlikely to have a deep knowledge of a particularvendor’s products. Some concerns are very specific tothis arena:

• Protracted sales cycles because of the need to consultthe vendor over many areas of detail.

• Security and geographic concerns can make it verydifficult to distribute information and keep it current.

• Because of product complexity, agents may choose ormay only be allowed, to sell a limited range ofproducts. For instance, companies may simplify theirproducts through dealers to make them easier to sell.But as we noted earlier, this process almost invariablydamages competitiveness and profitability.

• Lacking the most current information, resellerquotations may be error-prone.

• Dealer training is difficult and costly.

• Generating forecasts for indirect business isnotoriously difficult.

A solution addressing these issues needs to:

• Cover agents and remote sales offices as well ascustomers.

• Help agents sell a particular company’s products inpreference to those of competitors.

• Deliver current product price and customerinformation that is always available.

• Help develop and close business by providing toolsfor lead management, quotation and forecasting.

• Operate in multiple languages, currencies andcultures.

Communication is vital in any supplier/buyerrelationship, even more so in supplier/indirect-channelrelationships with complex products. Informationexchanged between supplier and dealer must be two-way and above all, current if the relationship is to realiseits full potential for both parties.

Companies sellingcomplex productsand services must nowmove their focus tothe “front office”—customer salesand service.

6

A New Channel Model

Companies must develop a new model to optimiseinformation flowing between suppliers and their indirectchannels. It must be:

• Cost-effective and easy to use

• Accurate and consistent

• Secure and two-way

• Immediately accessible and always available

Three technologies have matured and converged toresolve these issues:

• The internet

• Knowledge-based Configurators

• Enterprise Relationship Management systems

The InternetClearly the World Wide Web provides the foundation toimplement this new form of channel support. Internetsupport of indirect sales channels or direct to consumershas evolved through three generations.

Generation 1 – Static Web PublishingMost companies have taken steps to publish informationon a website and make it available on a 24-hour basis totheir prospects, customers and indirect channels. Thisinformation is typically “static” with periodic updatesand may consist of marketing information, technicalproduct information and perhaps secured pricinginformation.

This “First Generation” web approach is primarily one-way communication where the supplier publishesinformation, but interactive sales transactions are notsupported.

Generation 2 – Selling Simple ProductsThe growth of e-commerce, electronically selling overthe internet, has been well documented with highlypublicised “success” stories for companies such asAmazon.

However, most high-profile e-commerce websitesactually operate in the business-to-consumer marketwhere the products themselves are relatively simple(books, clothes, CDs, etc.) and of low transaction value.

Powerful search engines accessing product cataloguesand links to credit card payment systems arecharacteristic of these sites. Transactions can be securedand encrypted as necessary. But there are few, if any,options associated with the selection and ordering ofthese consumer products and they could not bedescribed as anything other than extremely simple intheir technical specifications and pricing.

The cost-effectiveness of internet selling cannot bedisputed although its appropriateness for anythingbeyond selling simple products may seem open toquestion.

7

Generation 3 Is Defined by ComplexSellingThe “Holy Grail” of electronic commerce—the ability tosell complex products with multiple variations throughthe web.

Information flow needs to be bidirectional with links tofulfillment systems in the supplier’s back office. Dealersor customers need to identify themselves through log-inprocedures and information is securely transmitted.

This is the real requirement for industrial products in thebusiness-to-business environment, sold directly orthrough dealers, resellers and agents.

In this environment, the many rules associated withspecifying and pricing a complex product must be madeavailable through the internet. But how, whenconventional catalogues or conventional programminglanguages cannot capture and convey that knowledge?

The answer lies in a knowledge-based tool called aconfigurator.

ConfiguratorsThe latest generation of configurators based on ExpertSystem technology is having a real impact in sellingcomplex products. A good configurator packagecaptures the rules associated with product offerings andintelligently guides customers, dealers or salespeoplethrough a selection process without the need forsupplier intervention.

Beyond product selection, the configurator mustmanage the business rules associated with pricing,customer terms and service requirements as well asbeing able to generate personalised documentation forprospects, dealers and internal needs. Finally theconfigurator must translate the product into the formatneeded by the “downstream” users within the sellingcompany itself.

In effect, the configurator captures and deploys theknowledge that humans bring to bear in a salesdialogue, acting as an intelligent agent in productselection, pricing and technical specifications.

If configurators are going to be useful, they must allowrules to be captured and published very easily(otherwise the rules will change before they are issued)and rule maintenance must be simple and quick.

The ability for the configurator to be deployed acrossthe internet is a must if up-to-date information is to bemade available to the entire direct and indirect saleschannel network at the “touch of a button.”

Configurators present the product options available interms understood and relevant to the buyer. Theconfigurator will prevent the buyer from selecting invalidproduct combinations and will translate the buyerrequirements into a technical specification for thesupplier to fulfill.

It is important that the outputs from the configuratorsatisfy the needs of both buyer and supplier. The buyerneeds a quotation or proposal for a correctly specifiedand priced product. The supplier needs a specificationthat will allow the complete and accurate generation ofsales and manufacturing orders within “back-office”fulfillment systems if the quotation is released as a firmorder.

The customer requirements and resultant productconfiguration need to be stored on the supplier’sdatabase to allow retrieval and amendment by the dealeror customer if the requirements change. This databasealso gives tremendous visibility of the pipeline forforecasting purposes.

Once the configuration rules are captured and deployedthroughout the sales network, the need for ordervalidation by the supplier is eliminated since theconfigurator will ensure that only valid configurationsand specifications are generated at the point of sale.One hundred percent correct orders, one hundredpercent of the time right across your sales anddistribution network.

8

Opportunity or Threat?

The internet by its nature is a global marketplace and isincreasingly viewed as the major enabler in allowingboth central control of information and potentiallyunlimited low-cost access through browsers. Visionarycompanies are leveraging the internet as the means tomake new sales channels effective quickly, significantlyreducing training and information transfer coststhroughout their sales network.

The Gartner Group and other industry analysts considertechnology-enabled selling to be the single, highest-impact investment companies can make in sales andmarketing technology. Shared customer and marketknowledge throughout the whole enterprise, along withoptimal resource allocation, are key factors to survivingtough global competition. Automating these areaspromises a huge return on investment by delivering acompetitive edge whenever you interact with customersand prospects.

9

The Bottom Line

Selling complex products and services has alwayspresented special challenges. These have beenmagnified by marketplace, distribution channel,technology and customer expectation changes. To retaina position of leadership, organisations need tounderstand the specific threats and opportunities fortheir products and markets and develop approachesthat will allow them to become more efficient, morereactive and more effective. Software applications arenow available that address the very specific issues ofselling complex products and services and enable thesenew approaches to be implemented.

The implementation of these applications is acceleratingrapidly and a significant and growing number ofcompanies have now delivered dramatic, quantifiedimprovements in key sales-performance measures. Usershave impacted performance, cost and time across theboard reporting increases in sales revenue, reduction intime-to-quote, reduction in quotation and configurationerrors and cost reductions in developing quotes andproposals.

About Cincom

Cincom and its partners deliver and support innovativesoftware and services to simplify complex businessprocesses. Cincom Acquire® simplifies complex sellingby delivering critical product, pricing and processknowledge to the point of sale. For 40 years, Cincomhas empowered thousands of clients worldwide totransform their businesses and outperform thecompetition by providing ways to increase revenue,control cost, minimise risk and achieve rapid ROI.Cincom serves clients on six continents includingAmerican Power Conversion, Air Products, BMW,Boeing, Ericsson, Rolls-Royce, Rockwell Automation andSiemens.

For more information and additional resources, contactCincom by phone or e-mail at one of the regional officesquoted on the last page of this document. You can alsovisit the company's website athttp://acquire.cincom.com.

Software applications arenow available that addressthe very specific issues ofselling complex productsand services and enablethese new approachesto be implemented.

Cincom, the Quadrant Logo, Cincom Acquire and Simplification ThroughInnovation are trademarks or registered trademarks of Cincom Systems, Inc.All other trademarks belong to their respective companies.

© 2011 Cincom Systems, Inc.FORM QO030114-3-A4 1/11Printed in U.S.A.All Rights Reserved

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