Transitioning from sales to client value
Denise Freier, director of sales programs and execution, global sales operation at IBM, on what pharma firms can learn from IBMs transition to value selling
By Andrew Tolve
Denise Freier, director of sales programs and execution, global sales operation at IBM, will be presenting at eyeforpharmas upcoming Selling Pharmaceuticals in 2015 Executive Forum. Freier, who played an integral role in IBMs transformation from a selling method to a value method that prioritizes customers needs, offers insight to pharma companies considering a similar transition.
eyeforpharma: In the past few years, IBM has undergone a vast transformation from focusing on sales to building client value. What made the light bulb go off that this wasnt just a good idea but something that was essential to tackle right now?
DF: You really do need a reason. You have to admit you have a problem, that you have an addiction before you can actually change it. There are two phases of this for IBM. Our first sales transformation was in the early 90s and we did have a crisis. We certainly had a financial challenge to ensure that we were going to be successful, or for that matter survive. We had a real challenging burning platform back in the 90s. The marketplace was changing; it became very competitive. So that caused the first workthe sales transformationreally getting to be customer-centric, knowing our clients, segmenting around the clients, integrating our individual product lines, which we call silos, and trying to truly pull the pieces together. So the first set of challenges would be considered more around solutions and integration.
Now fast-forward to a couple years ago. We didnt have the same financial crisis. However, there were still challenges. We needed to sustain growth and it was getting more and more difficult with the economic environment and absolutely more difficult with the strength of competition. Now competition shows up as offshore firms and companies like eBay and Google and competitors that were never in the business of providing services a decade ago. So competition changed, we couldnt sustain the growth, and we had to determine our differentiating factor. That became our challenge. When we decided to go after this, we needed to take an outside-in view. So we went and asked our clients and our employees and leaders in the industry what we needed to do.
And here we uncovered a couple of things. We were not consistently meeting client expectations, or at least certainly not exceeding client expectations. We really uncovered that for the client it wasnt about making the sale, it was about the value they got after the sale. So we needed to figure out how to meet and exceed client expectations after the sale. Our employees told us we were so internally focused on our processes that it was more about what did we do to make our process efficient than what did we do to resolve the clients issue. So we were optimizing around our efficiencies and products but not around the overall IBM or the overall client. We were also inconsistent in our ability to deliver quality services to our clients. Although we had many successful relationships, we had some inconsistencies that could impact our good reputation.
So what was your solution? How does your new value method work?
If I had to boil it down, I would say its about trust and value. And I hate that that might sound a little fluffy, but at the core its really about gaining that trust with the client; to truly be their business adviser and then deliver what that client needs delivered. As clich as it sounded for us, we actually made a big deal about the sale doesnt end when you get the contract signed. We looked back, and when we started to be introspective, we realized that our messageour training for our sales people and the methods that they go towas all about leading up to getting the contract. And of course it was about our clients needs. Weve been a customer service company for years maintaining hardware but still, it was building up to the sale, when for our clients the value only starts then and goes until they achieve their value. So we truly had to step back and say this isnt about pushing sales messages and it isnt about one-way communication. Its about what we can do for you, the client. Its really about engaging the right client at the right time and with the right people and ensuring that the sale continues beyond closing the sale. And I think theres some relevance for the pharmaceutical industry here and all industries: After the health providers are using a drug, are they getting continued value and research from the pharma company? And it may be more than patient results data. Can you assist your client, the health care providers, to provide even more insights and value to their clients, the patients? So the point is to be focused on the needs of the health care providers and when they see value.
As for what we did and how it works, explaining that would take a long time. But there are four key pieces. The first piece was we really looked at understanding the clients buying behavior. Meaning whats important to the client. They all buy differently. Different things are important. Sometimes its cost, sometimes its value, and sometimes its intellectual property that they want to get at. So lets understand how the client is buying and then develop the value proposition around that uniquely.
The second piece is what do we need to do to design a solution that fully meets their needs, which is likely cross-product line. We need to get out of our silos. The client doesnt care if its this division or that division, or this product rep or that product rep. The customer just wants to make sure that theyve got a single integrated solution.
The third piece was on delivery integration. How can we now plan (during sales cycle) for delivery? How do we engage our delivery people in services, long-term contracts, earlier in the process? Could we engage them early so theres a consistent feel for the client and a solid transition from sales to delivery?
And then the last piece is closed loop with the client. Are we really getting the feedback from the client about the value achieved? And here I mean much more than a customer sat survey. We have done that all the time. We are now using our surveys to determine how we met their expectations and if they achieved value. Beyond surveys, we expect our sales teams and management to engage the client personally for this ongoing feedback.
What metrics do you use to measure client value and to determine how successfully youre catering to it?
We do measure whatever we can. There are two things to think about with metrics: tactical metrics, how are we doing along the way and what can we see near-term, that we can get our hands on to show were making progress, but then also strategic metrics. Its really all about return on investment. Are we getting the turn-around in client loyalty and in sales growth? Both need to take place. So what weve had to do is establish a scorecard. Some of them are internal metrics that help you along the processare you really adopting it? Are sales field teams really engaging? Also, there are metrics that look at results, e.g. have we improved the win rate? And while its still internal, we will look at process results, such as how many integrated solutions weve had, or are we winning more than we have previously in the process. We record all of our sales opportunities in a database and we then track its progress in whether we won or lost. We have the ability to go back and see if our win rate is increasing. We learned after we implemented this new Client Value Method that those sellers who are recording their buying behavior have about one-and-a-half times or better a win rate than those who have not. So we do think that there are some indicators that would say this is the right path to be on.
Externally we would look at the Client Value Assessment results. We have begun to look thoroughly at the client responses. We do that both blindly, of course, but we also do direct interaction with our clients. As I mentioned earlier, we question not just about satisfaction, but with the degree the client experienced value. I think the key is to get our learnings local enough so it is actionable. This is the hardest thing, because if you dont find some metrics, even if theyre surrogates, it wont take hold in your company. We can compare results across different geographies in the company, and you can really see those areas where theyve got strength in their scorecards. The executive team really walks it, talks it, asks about it, uses it in their meetings, and it gets much more traction. So we use both internal and external metrics.
And Ill tell you, theyre not perfect, but if you wait for perfection youll never get it.
What have been the challenges in shifting to a value-based sales methodology?
Ive been thinking a lot about this. Adoption of any new change is probably the number one challenge. You can figure out what to do, and you can educate your team and promote it and all that stuff, but youre not holding their hand when theyre out there with their clients. So adoption is the number one challenge.
Now that, of course, is too broad, so I would say one of the big areas we still struggle with is our product lines continuing to operate in silos. This might be very relevant to the pharmaceutical industry. We measure the success of our business by how well a particular hardware product line is doing, or how well is this software product line doing, or how well is this services practice doing. So everybody is looking to gain success in their silo area. Absolutely you want to know the product line success. But it continues to be a challenge to go outside of that, to really look at overall value to the client, overall value to IBM and move beyond your particular individual product success. Weve tried incentives for our sales people. Weve certainly done teaming challenges that we will continue to do because all these little things help, but I actually think its got to be something thats innate. I think its not just one thing that you can fix to make that problem go away. It is several things, including a change in your values.
You would think if all the silos are performing wonderfully, it would be best for the company. What about that is inhibiting?
If we get right down to a seller level, our business and certain products could overlap. So there could be multiple solutions to meet a clients needs. A seller may not reach out beyond his product area since it doesnt help his silo, or they may not have time to pursue a more integrated solution. Everyone is busy with resource reductions and taking on more workload, so they may hear of something that may be applicable to another product line, but they might just ignore it. Integration can slow down the process, and it makes the decision bigger and harder for the client. These are legitimate issues, yet we have to balance the clients needs for solutions and speed.
It seems theres an obvious analogy to sports here. Inevitably teams that pass well perform better, but breaking out of the individual mindset is difficult.
I think thats a great analogy. Its hard to do, especially with the pressure in the business today on quarterly results. And I will talk about this in my presentation, this balance between strategic and quarter-to-quarter focus is not fixed. We have a heavy quarter-to-quarter focus. And I can say that in our senior executive team meetings, they have allocated time to meet strategically (aside from tactical results). So theyve had to separate the dialogue, enforce the strategic dialogue, because if you didnt, it would all be about, Did you close this big deal at the end of the quarter?
That really is the second major challenge, even though we have had senior commitment to this client value transition, and we had top senior executives full time driving the change, even with that it has been a challenge in the culture. Multi-year versus quarter-to-quarter, hard benefits versus soft benefits, and the change is not always tangible. We try to make this as tangible as you can, but still some of it is how you behave and those not-so-tangible pieces of this are very difficult.
So if you were to give a lessons learned talk to the pharmaceutical industry, what would it look like?
If I think about the advice in transformation, I would say you really do need strong C Suite commitment. Your senior executives have to buy in and really believe that this transformation to delivering client value, being the trusted advisor, is really where they want to be. And theyve got to stay on it.
The second thing that I would advise is that this really is long-term. You cant be half pregnant. You are either in or youre out. Youre going to sustain this change or youre not. I would almost have them not bother if theyre not going to be in it for the long haul since its quite distracting to go through a transformation but fail.
I would also recommend that even though external help is great, the operational driving of the transition needs to be internal. I would staff it with internal staff. I would still use external project leadership so that you gain their lessons learned and speed the project details, but the transition must be internally driven by respected executives.
So would you advise hiring new staff to drive this internally?
Well, yes for certain roles but this really is about culture change. Its not that hiring new blood isnt great. But I would suggest that you do that for different reasons. I would maintain that hiring new blood is required for business health. And, you may need to put somebody new into a leadership role. But I dont think you need to hire new staff in order to run the transformation. Whoever is in the leadership roles in their day jobs have to run the transformation. When I walk in as a sales person and Im speaking to my manager and that manger is speaking to his manger, those are the people who have to want the transformation to happen. If you just stick it off on a new team that you hired to do the transformation, no one will do it. So thats where the cultural change has to be: those people who are running the business.
Now, I do think that for some roles, a little external support is still helpful. Its hard to tell your line executive whats wrong. Maybe you have a culture in your business that really allows for this innovation, but at larger companies its not always as free-flowing. You can optimize your use of external resources to learn from them, use their out of the box thinking, yet keep the leadership internal.
On a theoretical level, what does it mean to build value?
We really believe that this client-value focus will make a difference to our business. Certainly I can see our sales executive team asking questions about what is the value to the client more than they might have before. But what is client value? I would say it is whatever the client tells you it is. I do think its different for different businesses and industries. Were finding that its different for different clients. Heres a really simple example. We have several clients who would say, Right now all I am interested in is the cheapest hardware you can provide me with to do this work. So, we might want to come in and say, Oh, but let me tell you about all the bells and whistles, and how we can manage or outsource it for you. But thats not what the client wants. All it does is frustrate them. You could have another client thats looking for the same solution but theyre looking for, I need to optimize my business environment or my IT environment. I need the brains behind the offering. If we go into them and say, Heres the cheapest set of products and somebody else comes in with a holistic presentation about how much more they could do, you lose. Knowing the difference is the key. Its really whatever the client needs it to be.
What weve tried to do is give indicators to our sales team. Ill talk about how do you recognize buying behaviors. What should you be asking so you really understand client value? Thats at the front end, and then, knowing that, your entire strategy should be customized to meet whatever that client value is. Because were making it so client-centric, you want to get to the point where you really are the trusted advisor and where you really can live in their shoes. And by the way, I dont even mean to say that client value is at an account or company level. For the pharmaceutical industry it could be a hospital, where there are different departments, different divisions, different people, who all might see things differently. So even though account segmentation is important, were onto the next phase, which is where the individual value is.
IBM is a technology company. Why should pharmaceuticals follow a similar path?
I absolutely think the focus on Client Value should have universal appeal. I do. I thought long and hard and even asked our own Pharmaceutical consulting teams. You know, there are some complexities that technology and pharmaceuticals share, such as the commoditization of the product, the complexity of the business, and pharma has some additional challenges like the different angles of clients, whether they are payers or patients or providers or employers, and government regulations. Theres a lot of things that come into play, but I think thats more the reason to really look at how do you focus on client value.
The what you do may be different if youre in Pharma or transportation or distribution. You might find a different action that makes more sense. But the theme of providing client value I believe is universal. Its about finding whats going to give you the best client loyalty; its about finding whats differentiating you in the market place; and its about finding what impacts ROI. And now youre differentiating yourself not just in market segments, with the one-way messaging, youre differentiating yourself where the decision is being made. So I do think it has universal appeal but not in a one-size fits all approach. Focus on the theme of Client Valuelearn what that means to your business and your clients, then make the changes needed.