Destined to fail: bank IT procurement for vendors
The increasing dependence of financial services on technology provides huge opportunity for IT vendors, but it also increases the supplier risk that these firms will carry, so it would be reasonable to expect the procurement process to become more rigorous, writes John Mitchell.
What does this mean for vendors trying to sell into banks and other financial services businesses?
When it comes to selling, the key area where salespeople struggle is failing to establish credibility with the customer during the buying process.
In the world of IT software and services, credibility can be established or destroyed by anything from the people, the marketing material, proposals, presentations, right the way through to tender responses.
Essentially, the buyers are looking at the risk of doing business with you. If some components during the buying process do not come across as credible then a seed will be sown that the end product may be equally deficient.
Having been a buyer for a long time it is easy to be over-critical, but I’ve seen and heard things that make me wonder about which sales school some people had been to (or not). From a fairly long list, I have selected five common issues that are, by their very nature, complementary.
Understand the buyer
Many salespeople are unable to put themselves in the shoes of the buyer because they do not appreciate or understand what buyers have to go through in order to buy something.
Banks and large corporates are very complex organisations: few people get the opportunity to work in many parts and therefore tend just to know about their silo and rely on others to do their bit during the very lengthy buying process.
This makes it difficult to manage the integrity of the whole piece as internal resources have to be obtained through a prioritised process, and frequently what you get is of a variable skill level. There are many stakeholders involved, all of whom may not have a vote but definitely have a say in the selection of a vendor. In the case of a bank buying a complex application package there could be as many as 22 people involved.
About the author
After a business and IT procurement career spanning three decades, John Mitchell set up sell IT better to help companies understand how to position their product and communicate that effectively to the potential customer from the perspective of the customer. His recently published book Fintech, Achieve Bigger, Quicker Returns is available on Amazon.
Additionally, there are cumbersome and lengthy processes that few understand the purpose of but still have to be completed. For example, project managers are measured on a milestone basis so the procurement process is date-driven not quality driven. It is more important to get the RFP out than whether it is fit for purpose.
The insane and self-defeating length of time vendors are given to respond is again due to there being a date for responses being received in the project plan. The fact that the responses are, as a result, not as good or helpful as they could be does not seem to matter.
There is also, without doubt, a culture of being risk averse whereby purchasers think ‘if it goes wrong it won’t be seen to be my fault’. This becomes clearly evident during the final vendor selection committees.
Would you like Added Value with that?
A lot of sales people use the phrase ‘we add value’ or something similar. They do this as a potential differentiator and also to justify their proposed costs. What most of them then fail to do is to bring that to life in terms that mean something to the customer.
To be different from your competitors you should analyse and describe what this value could be and establish what that might be worth to the potential customer. During this very interesting and rewarding exercise, it is worth remembering that companies do not exist to buy things – how can you assist their success in selling? How you can assist in taking cost out of their business. This could be an actual cost or the alleviation of some pain point.
For banks one of the largest costs and biggest pain is that of the end-to-end testing process. The thought then occurs that it might be of significant value to them if you could say and bring to life ‘our code is of such a good quality that you may not need all the testing cycles that you are currently planning’. With an internal team of around 40 people there may be significant savings to be had, but even if they don’t take you up on it you have made a powerful and empathetic statement.
If you are unable to find any tangible and meaningful added value, and therefore end up trading on price, do not be surprised when you are treated just like a commodity supplier.
Empathy for the buyer
A venerable and successful salesman once told me that he had never sold in his life, he had just had conversations. Whilst simplistic, it is true that successful sales people tend to be those that manage to establish an empathy with the buyer or buyers.
Through having a conversation, rather than a scripted sales pitch, it becomes easier to determine the buyer’s needs and pain points, and therefore establish an empathy or rapport. It is worth remembering that we are all buyers. We buy from pubs, restaurants and supermarkets. We buy from plumbers and builders for our homes. In fact, we probably buy something every day.
When buying, we have an expectation as to how we would like to be treated and what it is we want to know and hope that we get that from the prospective vendor. In fact, if we don’t get the information in a way that we understand or don’t like the people, for whatever reason, we tend to go elsewhere. Why is it then that when we become a ‘sales’ person we forget all that and do something completely different?
We launch into a sales pitch that imparts the information that we want to say, about what it is that we want to sell, completely forgetting to undertake the questioning and listening that would have actually told us what the opportunity might be. The upshot is that there is a complete mismatch of expectations and we go away thinking that ‘that was a good meeting, think I got my point across really well’ and ‘perhaps I should put something in my sales forecast’.
However, on the other side of the table the poor person who had to sit through it all just puts a cross in the relevant box. Salespeople who can present their products or service in the way that their prospect wants to perceive it will be more likely to make the sale.
It is always worth remembering that you are having a meeting with the customer because both parties agreed to it …
The failure to build on an initial sale
I think it is a great pity that when all the difficult customer engagement work has been done, the deal has been won and the project in delivery, so many companies take their eye off that ball in pursuit of new business opportunities. I can understand the numbers pressure of getting new customers but there is strong argument that says new business can also come from existing customers, particularly with large corporates and banks where there are so many disparate businesses.
To get repeat business across an enterprise requires that the empathy and added value generated during the buying process to be maintained on an on-going basis through an effective and committed account management model. This represents quite a commitment, especially for smaller companies, but there is no doubt that it repays itself many fold.
Those companies who succeed at this are perceived as a supplier of choice, which means business comes to you through internal recommendation as opposed to you having to bid for it. There may be occasions when for probity reasons you have to go through a tender process, but from that position of trust you may well be invited to write the thing in the first place. To me, this is relationship-led selling at its best and I do not understand why more companies do not exploit this obvious channel.
Mind you, I also don’t understand why companies promise the A team during the buying process and then deliver the C team. It sort of shoots yourself in the foot for future procurements as you may not be believed a second time.
There are some basic rules that vendors could follow as well as avoiding the above errors:
Firstly, research who you are going to see: simplistically, this is about trying to find out who it is you are going to see, and there may be more than one person. Try to find out what type of people they are, their age, character, attention span and, certainly, their role and responsibilities.
Then try to talk to someone who might know what all that may entail and what their business and organisational issues might be. The point being, all of this will enable you to hold a conversation about their issues and in their language.
In my experience, a good place to find out about the people is via their PAs who love to spill the dirt … but only if you are polite and ask the right questions
Secondly, put yourself in the position of these people: we are all buyers ourselves so if you were the buyer engaged with you during the buying process, what is it that you would want to know? Then prepare from that basis.