Reference no: EM131303833
IBM Sales Force Sells Solutions
In recent years, IBM has worked hard to reposition itself from a supplier of information technology (IT) hardware and software to a company that provides business solution services. Although IBM is still the world's largest provider of IT hardware and software, its executives regard this as the means to an end and not the end. In their own words, ". . . we measure ourselves today by how well we help clients solve their biggest and most pressing problems." Obviously, successful problem solving leads to an increase in customers and an increase in goods and services sold. The company has relied heavily on its global sales force in making the transition from goods to a solutions service provider. Personal selling always has been a fundamental aspect of IBM's business philosophy.
Historically, it has been one of the foundations of the company's success. The enormous task of changing the company's focus from selling hardware and software to selling solutions cannot be overstated. IBM has customers in 174 countries who speak 165 languages. The company's sales force makes 18 billion client contacts a year and addresses 350,000 sales opportunities per day.
As in all organizations, IBM's change comes from the top. Samuel J. Palmisano, IBM's chairman, president, and chief executive officer, led a process of examining and redefining the company's core values. One of the first core values identified was "dedication to every client's success." From a sales perspective, this is achieved through consultative selling-also known as solutions or relationship selling-which brings all of IBM's resources and expertise together to solve customer problems. This requires that the sales force thoroughly understand their customers' business environment and deliver the correct answers to their questions. As Palmisano pointed out, the company's business model has changed.
It used to be: "Invent, build, and sell"-today it is "Craft, solve, and deliver the solution." Not surprisingly, solutions selling has brought new challenges to the sales force. IBM believes that salespeople are not born but trained. The company puts its salespeople through an extensive training program lasting over five months and encompasses three major areas of focus: IBM's commitment to its customers, techniques of collaborative selling, and techniques for gaining understanding of a company's resources and infrastructure. For large projects, salespeople often work in teams consisting of one sales leader and four to five sales specialists who have expertise relevant to the project.
For the most part, IBM salespeople use the Socratic method of selling, which involves asking open-ended questions to better understand their customers' problems, desires, and needs. As might be expected, solution (or pull selling) is more complex than product (or push selling). The salesperson's role in solutions selling is to gather information concerning the customer's business problem, provide a point of view, solve the problem (with the help of other team members), and determine the potential impact on the customer's business once the recommended solution is implemented. The most accurate and important indicator of the success of the solutions service is customer reaction.
An example of IBM achieving its sales objective of "ensuring our clients are successful" is the Sales Connections Program. Actuate, an independent software vendor and IBM customer, used the Sales Connection website to express concerns about a customer dragging its feet on an applications deal. IBM discovered that the person Actuate was working with lacked the authority to close the deal. IBM provided Actuate with the correct contact person, and the sale was closed quickly. Another example is IBM's Software-as-a-Service Program. Software-as-a-Service delivers software via the Internet. This eliminates the need for companies to buy, build, manage, and maintain applications such as accounting, human resources, customer relationship management, and enterprise resource planning. Companies benefit from this concept because it can reduce their operational costs and maintenance expenses, therefore increasing profits.
In an effort to sell this service more broadly, an IBM sales team designed a sales incentive that awards a 10 percent referral fee and additional marketing incentives to IBM customers that submit leads resulting in business for IBM. The marketing incentives include direct mail, telemarketing, advertising, and technical resources to help businesses generate leads. This program enabled one of IBM's customers to generate 800 sales leads in one year. With this kind of dedication, there is little doubt that IBM's solutions service will continue its success.
Questions for Discussion
1. What are the advantages for IBM in selling solutions rather than goods?
2. Why is solutions selling more complex than hardware and software selling? Identify the sales skills needed for each approach?
3. What are some ways that IBM can measure the effectiveness of its solutions or consultative selling?