Ken Krogue

What’s the real value of what you sell? Of your expertise?

The reality is, it doesn’t actually matter what the “real value” is. What matters is, what’s the absolute, bottom-line, no-questions-asked lowest possible price you will ever sell your products and services for?

Regardless of the actual number, that’s ultimately its value to you.

I bring this up because I bumped into a link on Twitter to a blog entitled the Redhead Writing, where author Erika Napoletano talks about how too many businesses give away the “meat” of what they sell for free, then wonder why the client isn’t willing to pay more.

Be warned: the article, and much of her Web site uses language that, well, let’s just say that your typical sailor wouldn’t feel too out of place (at the risk of mixing metaphors, I realize for some of you that’s a feature, not a bug).

But in the midst of the article was this fabulous gem of wisdom:

“If you’re looking for something for free, you’re going to get a lot of 36,000 foot view information mixed with some 5,000 foot view gems. If you want ground level insight, that [crap, cow dung, poop] costs money.”

And the principle couldn’t be more accurate for high-touch B2B sales.

Why are we so willing to undercut our products and services’ value? Why are we so willing to give away our time and resources chasing after those elusive deal closes?

I know why the prospect asks for it: bargaining on price is leverage. They know it puts pressure on you, and it’s the most immediate win for them—it’s the fastest, simplest, most easily measurable way for them to minimize their cost of risk. In some cases it’s less about the actual dollar amount as it is about their own mental state—”Well, it wasn’t what I hoped, but at least I bargained for it at a good price.”

Don’t ever forget that when a prospect buys, it’s because they inherently value what you’re selling more than they value the things required to get it. The fact is, a sales transaction by its very nature ultimately generates more value for the customer than for the seller. As sellers we accept this fact because most of the time even getting the “short end of the stick” is still enough to be profitable.

Why are so many “bad clients” the most demanding? Because they know that they’re far and away getting more value than what they’re putting in to it, and they’re going to maximize that to the absolute limit.

Giving away stuff “free,” or “cheaper” is easy to do, just be aware that what you’re doing is merely increasing the relative disparity in value between you and the prospect. If you’re fine with that, by all means no one will stop you–but before you do, do some realistic thinking about what your real hard price cap is, and whether or not it’s what you really believe it should be.

Bumped into an interesting video interview, posted on The Brand Builder Blog about a new book buy Guy Kawasaki called Enchantment.

Anyone who’s spent any time in Social Media has probably at least heard of Guy through his voluminous Twitter account(s), as “one of Apple’s old marketing gurus,” or in his role as a venture capitalist.

I haven’t read the book, though it sounds interesting but the video itself had a fascinating take on building a business. In the video, Guy and the interviewer, Brian Solis, talk about the three pillars of creating a business that “enchants”: Be likeable, be trustworthy, and back it up with a competent (or better) product.

But here’s the interesting part: Guy says that to be an “enchanting” company, we don’t have to succeed wildly at all three. Using Apple as an example (based on his first-hand knowledge), he states that contrary to some people’s perceptions, Apple is in fact a very anti-social company. They don’t actively engage with customers, they don’t go out of their way to “listen” to the public.

In Guy’s mind, the reason Apple is popular is because they hit the product portion of their business so far out of the park that no one pays attention to anything else. The products provide such a great experience that no one pays attention to the fact that iTunes is actually a really clunky piece of software, that the iPhone was saddled for a long time to the worst U.S. domestic phone carrier (AT&T), or that the iPad doesn’t play Flash video.

He goes on to say, however, that other businesses compensate for less-than-perfect product with stellar “likeability” and trustworthiness. We go to restaurants all the time where the food is only “okay,” but we “enjoy” it because the experience and service are so great. Does Zappos really have the greatest selection of shoes, anywhere, ever? No, not really, but the level of trustworthiness is so high, that Zappos’ customers don’t even think about it. Their customers’ experience is based on something other than having every possible combination of boot, shoe, and color on planet earth.

So what does this mean for us?

It seems pretty obvious, but it’s about focus. There’s very few companies producing product at the level of Apple. If it was easy to build customer trust like Zappos has, more of us would.

So—do we know where we stand? Do we have any of the three right?

Every good business has to be competent, but to have any chance of “enchanting” our customers, we have to be excellent in at least one—and striving to build all three.

We forget sometimes just what exactly it is all this technology in business is supposed to be doing for us.

The point of it all is that ultimately we want to replace the aspect of human intuition….or do we?

On the surface you’d think that was it, right? If anything, we want sales to be predictable. It’s all the variables that get us tangled up, nervous.

Which source of leads is working? Which rep is doing the calling? Does that rep know the target market? Is the prospect really a right fit, or are they just a pie-in-the-sky, wishful thinking opportunity? Are we going too fast, too slow?

How do we sound to our prospects? What are they talking about behind our backs? In their budget meetings? Are we on the top-5 vendor list? The top 2? How’s our collateral look? Is our product demo up to snuff? Why’d they say that on our last call? Were they really looking for Feature X, or were they just feeling out our response? Why does it take X days instead Y days to close deals?

How much of a difference does technology make in answering these questions?

The answer, of course, can be “lots,” “none at all,” or occasionally both.

Sales technology is, and should be designed to replace guesswork. There’s dozens, maybe hundreds of points along the sales process where real, hard data makes a big difference. Knowing, for example, what your highest-converting pay-per-click ads are tells you where to focus energy, time, and money on your marketing. That’s hard metrics–”We convert 22% of clicks into contactable leads.” Then using your software tools, you track lead conversion: “We convert 55 % of contactable leads into opportunities within 30 days, and another 16% within a year.”

Here’s what the numbers don’t tell you:

How the prospect/customer perceives you in your market (though the numbers can be trailing indicators). Why you have a strong presence in a particular vertical. Which features of your product are most in need of update, which need to added, and which need to be dropped. Why you just lost a deal when the prospect was an ideal candidate. Why you just won a deal when the prospect is nothing like any of your existing customers.

Data is data, intuition is intuition. Data is only meaningful when interpreted, and that requires the ability to recognize the reality of what is being measured.

Technology produces data designed to answer classic If/Then statements: “If I do Action X, the data shows me Result Y should happen.”

It just won’t tell you why the prospect thinks Result Y is important, or if Result Y is even going to matter in 6, 12, 24, or 144 months.

Somewhere between 2008 and today, the phrase “Aligning Sales and Marketing” went from hot topic to overused buzzword. The last year especially it’s been discussed ad nauseum: online, in print, during webinars, trade shows, executive meetings . . . the list goes on.

But as Adam Needles at Propelling Brands reports, a 2010 research study by SiriusDecisions showed less than 10% of companies are deploying the right processes and technology to actually create the type of alignment needed for high-powered B2B demand gen.

Lots of talk, very, very little action.

There’s a host of reasons for the gap, a big one being that even in spite of the talk, many companies still don’t see the value of a true Sales and Marketing alignment. But I’m discovering that even if an organization understands the need, they often have a hard time “aligning the alignment”—in other words, they know what they need to do, they just don’t know how what they’re doing (or buying) is going to get them there.

Ultimately, regardless of avenue, there’s really only 4 ways to increase sales:

1. Greater lead quantity – Expanding into new verticals and markets, approving more ad spend to drive traffic, opening up more avenues, referral and affiliate programs.

2. Greater lead quality – finding better markets, better targets, better qualified prospects, and linking ad spend to actual conversions and revenue.

3. Greater sales rep effort – phone calls, appointments set, collateral delivered, etc., linked to management tools that show how the process is actually running.

4. Greater sales rep skill – coaching, scripting, needs analysis and qualifying approaches within each step.

Whatever it is you’re investing in, it should be designed to increase, monitor, and evaluate one of those four things.

CRM is about tracking and monitoring #2 and #3, and on some qualitative levels, #4. Marketing automation is about tracking #2, some of #1, and a tiny bit about #3. Lead Management and lead nurturing systems are about #1 and #2 (you get the idea).

The worst problems in sales and marketing alignment happen when a company invests in a technology, consultation, service, or product—but it’s not even in an area that the company was really addressing. Misdirected efforts cause pain and hinder growth, because everyone is chasing after results that can’t be had. Conversely, real growth happens when process changes and metrics are based on improvements that can actually be made—and the technology investments back it up.

Each of the four elements can increase sales depending on the actual need—just don’t invest in something that isn’t designed to fix your real problem. Making more phone calls doesn’t improve lead quality; tracking and managing the things that create better quality leads does.

By the same token, “coaching up” sales skills doesn’t increase your lead pool, setting hundreds of prospect appointments doesn’t fix poor sales skills, and getting amazingly high-quality leads makes no difference if your reps only make 3 total contact attempts to reach a decision-maker before they give up.

Saw that lead metrics guru Trish Bertuzzi posted an answer to question on Quora talking about the most appropriate way to do sales lead routing.

And I thought I’d quickly chime in.

In the actual Quora question, the person asks, “What’s the most effective way to route leads?”

One of the respondents immediately chimed in to say that simply doing it by region makes the most sense.

In our experience, this isn’t the case.

For outside sales teams (read: when the rep goes on site), regional divisions make sense to save travel costs.

However, if you’re not engaging in on-site sales practices (and let’s face it, even those who do spend 70+% of the time selling over the phone/remotely anyway), the net benefit of regional-based sales divisions is nil, and can actually be a detriment if you’re sending sales leads to reps who are unqualified to handle them, simply because the lead falls in the rep’s “region,” or because a manager wants to do it ad hoc just to make sure things are “fair.”

Skill-based and vertical-based routing has the highest net benefit in terms of lead qualifications and closes, because reps have a leg up in identifying true prospect needs and establishing a trust-based relationship. Regional routing can be appropriate, depending on other factors, but on a simple win/loss close ratio, it has no measurable impact on performance.

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A couple of years ago we hired what we thought was going to be a stellar sales rep. He appeared to be smart, well-spoken, and had the individual charisma that we thought was going to make him a star.

So when the numbers came back after six months, I was surprised that he was nowhere near hitting quota.

“Hmm, that’s interesting,” I thought. “I figured he’d be a star, let’s give him a little more time.”

End of the next quarter, same results. Now I was panicked. How could he have possibly been failing? What had I done wrong? What was wrong with our sales process? If this “superstar” sales rep wasn’t hacking it, surely we had to fix something, right?

I talked to the front-line sales manager about ideas. We went over sales collateral. We reviewed pitches and product demos. We mentored.

And what we discovered was that in spite of his evident natural talents, they never really translated into the rigors of his daily work. There was an intellectual laziness, an assumed air of success–”This is going to work simply because I’m the one doing it.”

Now of course some long-time sales professionals might argue the point. “Of course you have to assume success,” they’d say. “You have to have confidence that you’re going to get the sale. If you can’t be confident, you can’t succeed.”

Which I completely agree with, but with this rep it was different. His confidence was purely internal, not external. His confidence in himself never translated to confidence in management’s goals and directives. It never translated into confidence in our sales processes and technologies.

There was no question he wanted to succeed, but he wanted it to be on his terms, on “his watch.”

Needless to say, his close rate never improved. His pipeline was always full, but at the end of the month/quarter revenue was scarce.

And worst of all, the rest of the reps had picked up on the fact that he wasn’t really being a team player. They resented when he would get “hot” leads, because, they grumbled, “He’s never going to get anything out of them anyway.” Letting him go ended up being a double-positive, because the rest of the team worked harder, and we weren’t throwing good leads into a dead pool.

Ultimately I learned a few things:

1. Trust the numbers, not appearances. Baseline numbers are set for a reason, so unless they’re a complete sham, use them. If you don’t trust your quotas, why have them?

2. If you don’t trust the numbers, you don’t trust your process. If you can’t believe what the numbers are saying, it means you believe there’s a break in the system.

3. Employee failure is expensive, but the situation allowed us to get a fresh look at what we were doing. Stagnation is today’s ultimate business-killer, and while a total overhaul of a team or process isn’t always necessary, a minor “reboot” isn’t a bad thing. Embrace opportunities for change.

4. Reps need to be aware of the line between confidence and intellectual laziness. It’s okay to occasionally do an “end around” past company process if it’s going to make a prospect happy. But constantly justifying breaking the rules because “It’s the way I get success” should be a red flag that something is amiss.

Many of you may know that InsideSales.com and George Wythe University partnered to pull off the Glenn Beck at the Capitol black tie fundraising event on May 30th at the Utah State Capitol at $500 per seat.  We had over 400 dignitaries, executives, politicians, philanthropists, and supporters of patriotism, statesmanship, and good books there for an amazing night of great food and awe-inspiring entertainment.  It was all capped off by a video introduction by Mitt Romney and nearly an hour listening to the ever-amazing Glenn Beck.

What you may not know was that Glenn told the story of Rachell Harkey, the 14-year-old girl in the audience, who along with her friend Sara Patterson and a table full of kids under 18, raised their own $500 and more to be at the event.   They went door-to-door and raised pennies-a-page in their read-a-thon just to be there.

In the middle of Glenns story he paused and said he had gotten his wifes permission to donate $25,000 to these girls read-a-thon on behalf of George Wythe University.  Everybody was stunned, then broke into applause that ended in a standing ovation.  He challenged these girls to get reading quickly and said, “Only in America!”

Well I sat back and calculated how many pages they would need to read at 1 penny a page to earn $25,000… that’s 2.5 million pages.  And I smiled to myself and wrote it off.

Little did I know they would get busy that very weekend.  They started recruiting hundreds of kids including my own sons Jacob, Joseph, and Jonny.  Next thing I know they had finished their first read-a-thon by July 29th and read 1.5 million pages!  I was blown away.  The kids decided they wanted to try and raise another $100,000 besides the donation from Glenn Beck for a total of $125,000.

They got some parents and programmers from George Wythe to put together a website, they got the artwork donated from ForthGear.com and in just over a month had a first class webpage going, the only problem was they hadn’t figured how to get the donations to meet their goal.

They are asking for kids to start the 5-5-5 program where they:

• Read 5 books
• Get 5 friends to read
• Get 5 sponsors to pledge at least 5 cents a page

My three boys ganged up on me and my companies.  So Comanity, InsideSales.com and I pledged. 

I want to challenge everyone who went to the Gala and everyone who likes Glenn Beck or wanted to go to the Gala to join me in supporting these girls and my sons and hundreds of these kids in this great cause.  Join me in pledging a little, or a lot.  $10 or $1000.  Let’s help these kids make a contribution to the world of education, literacy, and statesmanship.  It’s a little thing, but it may be the most powerful thing we can do.  The pen may still be mightier than the sword.

Go to http://www.infund.org to help your kids or grandkids become readers, or better yet, sign up yourself first.  Then go to http://www.gw.edu to read more of the story and to see why Glenn Beck believed in this cause strong enough that he pledged to donate $25,000.

Begin with the end in mind.  How many times have we heard that?

Since I have been busy updating our reporting model for InsideSales.com and tying it to our new 7 Tier Consulting Model I have thought deeply and discussed reporting with many of our team and our customers.  The question is “which reports are really needed for the sales and marketing teams?”

In our industry you can do one of about four things to design reports:

1. Think about the logical categories in your software; like Leads, Accounts, Deals, Cases, etc.
2. Copy what everyone else is doing.
3. Respond to what your customers ask for.
4. Ask what questions your customers are needing answers to.

Which method would you choose?

If you Think about the categories in your software and write reports that work with each category you tend to focus on the product and the features of your product.

If you Copy what everyone else is doing you only do as well as as their best thinking and research and the entire industry seems to get tunnel vision.  (We shy away from this because we learned a long time ago to Zig when everyone else Zags.)

If you Respond to what your customers ask for you tend to go by the prevailing wisdom.  This may be a safe bet.  But what is the result if your customers are typically looking to you for best practices?  If you respond to them when they are really looking to you, this produces a circular loop of mediocrity.  In highly developed industries (of which we are not), the customer is much more educated on what they want and this works much better.

We have tried all of these methods… and each one has proven to miss the mark.

It is best to ask the customer the questions they are trying to solve, design a report that clearly answers as many of those questions as possible in one simple place.

What customers are really needing is answers to their questions:

1- Which lead source actually closes the most revenue?
2- Which campaign is converting the most leads?
3- Which sales reps is most/least effective?
4- Are my leads getting contacted?
5- Why don’t my sales close?
6- Why do my sales close?
7- Do my leads trend up?
8- Do I make money?

What are your key questions?

After careful analysis and lots of thought I have come to the conclusion that there are about 7 levels of reporting structure and value.  This model is quickly becoming part of our new book and more important the consulting model that will follow thereafter.

Level 1- Metrics: This is a simple number.  7 calls.

Level 2- Rates: This is a simple number over time.  7 calls in an hour.  This is the only way to actually compare people over time and especially helpful in comparing full time to part time reps where they work differing hours in a day.

Level 3- Ratios: This is a Rate over a Rate, like Contacts over Dials during the same period of time is a Contact Ratio.

Level 4- Trends: This is a Rate or Ratio over time.  Like Dials per hour for each day in a month, or revenue per week for each week in a quarter.

Level  5- Dispositions/Surveys: This is the only report that answers the key question of ‘Why?’ something happens.  If you follow up with every prospect that does not close and ask why they don’t, you will gain invaluable data to help you change your offering, approach, price, term, etc., based on their combined answers.

Level 6- ROI (Return on Investment): This is the number that owners and management really want.  This is cost compared to revenue.  Each dollar in buys how many dollars out?  This is most valuable for leads, sales people, offers, and marketing content because it focusses on what is most effective.  This report is very hard to get in real time when their is still time to make a difference.

Level 7-  Console/Dashboard: These are Rates, Ratios, Trends, Dispositions, or ROI in real time; while you can still do something about them.

Best Practices:

1- Strong companies invest in Level 3 reports or higher.
2- Managers or Executives think the holy grail are Trends and ROI reports in real time consoles or dashboards so they can do their jobs better and gain visibility over what their people are doing.  Wise companies give these consoles and real time dashboards to the front line sales rep so they can actually make changes during their day.

I just spent the afternoon of July 23rd and the morning of July 24th at parades.  One was Bountiful City where I grew up, and the other was the Days of ’47 Parade in Salt Lake City.

My family and I run a Hawaiian Shave Ice shack during the summer to teach our kids how to work and to help them make their own money.  We also pick some of the largest events in our area to bring a portable booth we bought at Costco and our Hawaiian Shave Ice machine.  We started this in the summer of 2008 and we have learned a lot of things real fast.  One is that you can lose money real quick trying to sell shave ice when everyone else is doing the same thing or when conditions are bad.  The other is the power of strong salespeople.

Most shave ice booths set up shop and wait for people to come to them.  They may put up a banner to get attention (advertising), or they might pass out 2 for 1 cards or buy 10 get 1 free (marketing.)  If the day is hot and there is lots of people then things work and they make sales and they will usually make a couple of hundred dollars more than the entrance fee and the health permit.  If it is rainy or cloudy you can count on losing money.

Having been in sales all of my career I immediately thought of taking our Shave Ice to the customer.  Last year we made three trays that strap over the neck and shoulder and around the waist to keep hands free and hold 20+ Shave Ice cups and syrup and we sent out two or three of my kids (and myself, I couldn’t resist) into the crowd.  We tripled our sales.  This year we wanted to expand two more.

So the question comes up, who do I hire?

In my years at Franklin Quest (now FranklinCovey) I learned that there is an extremely high correlation between successful sales reps and those who excelled in competitive athletics.  I wanted to know what made up the top 10%.  Most of them had excelled in competitive athletics or something else that was competitive.  There were two or three other significant correlations, but the athletics is the one most broad and the one easiest to apply.

The discipline of competitive athletics and the ‘will to win’ map onto sales.  I noticed this in my telecom days as a founder of UCN, Inc (now inContact).  My old football coach Mark Padgett was working at a competitive telecom company and so were Mark Blosch and several other athletes I was familiar with.  I played middle linebacker in high school and made the lightweight varsity football team at Navy (though my neck and shoulder injury that put me down my senior year reoccurred.)

The world of sales seemed to be populated with ex competive athletes from high school and college.

So I just looked around my neighborhood at the young men who I had always noticed were very strong in athletics.  I invited two of them to come sell for us at the parades.  One grew up from a family of athletes strong in baseball especially, and the other is the most intense basketball player in the area.  He lives and breaths basketball.

I then invited them both to learn from and compete with my own son, Jon.  Our business is named JonnyK’s, after my son Jon and my brother Jon (he has two shacks in Bountiful.)  I coached Jon up through the years of little league football and he is the hardest hitting middle linebacker pound-for-pound that I ever coached.  He then transferred his natural and learned athleticism to competitive rugby (he is on United Rugby, the team that placed 2nd nationally and is the only team that consistently gives Highland Rugby a run for their money).  He also trains throughout the offseason in boxing under Jay, Gene, and Don Fullmer.  He has sold Shave Ice for couple of years, but those two gave him some real challenge their first day.  Give them another year and they will be pretty good salespeople.

How did we do?  Amazing.  I won’t give numbers because I don’t want more competition in my Shave Ice business than I already have.  If you were at either one of those parades you probably saw us yellling, “Get your Shave Ice, fight global warming,” or something crazy.

My reps at InsideSales.com all seem to have excelled and achieved in their youth in the kind of things that can be picked out easily in resumes and interviews.  And whether it is weightlifting, bodybuilding, snowboarding, or ultimate fighting, they seem to continue their intense quest for personal achievement even today.

Gather Your Team’s Needs, Define an RFP

Now you should be at the point where you have analyzed your situation and have defined the right kind of dialer solution to gain the greatest leverage in your organization.  Now you should start researching specific solutions from the different vendors.  Developing a request for proposal (RFP) is a best practice that makes sure you and your team has clearly defined the requirements of your business.  With your goals and processes in mind you will be much more comfortable approaching the different vendors that are in the market.  You should request a response to your RFP from several companies that offer solutions that are known to offer the capabilities you desire.

Success during the negotiation stage comes from having carefully researched your options. This gives you greater confidence and often cuts the time to make a decision nearly in half.  The vendors will also have greater confidence in you and will put their best foot forward in presenting their solutions and negotiating terms and pricing.  Now you should go further and define your decision-making process, your project plan, your data formats, necessary deliverables, etc.   Set the agenda early on and pre-schedule meetings weekly or sooner to keep the project moving while you narrow down to a short list of potential vendors.

Encourage input, buy-in, and feedback throughout your organization during the entire process.  Gather the needs from your team and define a committee or group consisting of management, executives, technical personnel, and users from both marketing and sales.  Also make sure you have a finance representative involved early on as well.  Use a systems approach that includes a macro view similar to this model:

Analysis - Design - Implementation - Evaluation

Define all of your current processes and lead sources that will feed the dialer.  Then define the processes that the dialer will feed.  Flowchart the overall system and drill down as needed.  Brainstorm then prioritize your key requirements.

Here is a list of key question topics that may be helpful as you gather information from your team:

• Premise versus hosted
• Predictive versus Power Dialer
• B2B versus B2C
• VoIP versus TDM (Long Distance)
• Use vendors VoIP/TDM or provide own
• List sources
• Lead sources / source tracking
• Real time lead capture capability
• Skills/geography lead routing needs
• Lead transfer capability
• Lead duplicate check capability
• Time of day / time zone calling
• Call back event scheduling
• Interface design and features
• Remote agent / telecommuting capable
• Reporting and analytics
• Time card tracking / agent stats
• Data import capabilities
• Pre-import data scrubbing
• Maintenance and upgrade policies
• Customization capabilities
• Vendor time in business
• Contract requirements
• Payment terms / penalties
• Customer references (more on this)
• Implementation practices
• Additional modules and functionality
• Consulting and training capabilities
• CRM integration capability
• API / Web Services

Many companies intentionally package their products in a way to make it difficult for an easy ‘apples-to-apples’ comparison.  For example, some hosted dialer companies charge strictly by the minute by elevating their per-minute charge for long distance to include the telephony infrastructure and software costs.  Others break out their charges between dialer port infrastructure, software, and long distance or VoIP minutes.  You should run models by researching your current usage patterns and compare it to the cost models that are presented.

Another tactic that varies between dialer vendors is how they combine the features and functionality.  Some charge more but include more functionality, others break it out and charge for each individual module or feature.  By clearly defining your RFP, you will buy what you need and will avoid paying for things you have not defined as necessary to your organization.

The best vendors typically are very competent at driving the implementation process, but even the best vendors will not make up for poor preparation on your part.  Make sure you have all of the necessary approvals or buy-in from executives, management, finance, technology, and users that will allow you to follow this project through.

One best practice is to measure a baseline of performance in such areas as daily dials, phone time, contacts, qualifications, etc., for a sufficient time (3 to 6 months) prior to the purchase of a dialer solution so that there are clear metrics to determine the early success of the dialer.  Often the effort numbers are the earliest indicators that trends are moving in the right direction, this is not possible if a baseline has not been gathered.

Decision Point:
Define your goals and objectives clearly and well ahead of time through a clearly written RFP document.  Get input from everyone on your team who needs to be involved.  Get approvals and buy-in and set expectations with enough room to make up for delays that will inevitably happen.  And lastly, gather your baseline of performance for several months prior to installation of the dialer.  This holds you and your vendor more accountable to the effort and results you desire.

Research Credibility and Longevity of Vendors

Now it is time to lift the hood and see what is underneath as you narrow your vendors down before you make a final choice.  It is wise to keep two or three viable vendors in the race until the finish line.  Sometimes this isn’t possible because of technical capabilities but it is still wise to do so for as long as possible.  Vendors are more aggressive when they face a known competitor on one hand and a potential customer who has obviously done their homework on the other.

Ask the hard questions first.  How long have they been in business?  Are they profitable?  What background does their management team have?  What are their service philosophies?  How stable and redundant is their infrastructure if they are a hosted solution.  How fast can they respond to troubles if they are a premise solution?   Will they allow you to make a real-life test drive with full capabilities before you have to commit to a long term relationship?  Run the dialer with your live data and lead sources and with enough calls to get a good feel.  This is often difficult in a premise solution, so ask for on-site visits to a customer that is similar to your own solution.  Take the time to test different kinds of scenarios that exist within your own business.  Get managers and users involved to make sure the experience from their point of view is suitable.

Research the entire support package available from each vendor.  Talk to people in their organization besides the sales teams.  Often it is wise to talk to support and consulting personnel before you are committed.  Look for companies who clearly define the boundaries of their capabilities.  This is a much better approach than those who promise everything and can’t deliver.  Support personnel will typically give you a much straighter shooting series of responses than the sales staff.  Ask how they will handle you after you have bought.  Talk about upgrades, integrations, time frames, implementation, ongoing support, escalation procedures, etc.

Decision Point:
Be careful of talking only to the sales staff of a potential vendor.  Watch for vendors who are slow to respond to your requests.  Be especially careful of vendors who do not respond to each question or issue you bring up.  This is often indicative of how they will treat you later.  Larger and more establish vendors will typically have stronger processes but will be slower to respond.

Look at the Big Picture

Expect that every vendor you work with will have some room in their price.  They expect to go back and forth before they arrive at final pricing and terms.  It is in the terms that you will gain leverage on the overall package that you end up with.  Consider the entire proposal rather than just the pricing.  Some items to consider are:

• Onsite hardware
• Software
• Professional services
• Maintenance
• Upgrades
• Support
• Bug-fixes
• Enhancements
• Documentation
• Training
• Customization capabilities
• Integration capabilities
• Security
• Backup Capabilities
• Hosting infrastructure (if hosted)
• Source code ownership in case of insolvency

Support fees, professional services, and maintenance fees are key areas that are open to negotiations.  There is typically quite a bit of difference between premise and hosted solutions in this area of the discussion.  Industry standards for ongoing maintenance for premise software is just under 20%, while hosted solutions typically roll maintenance and support into their overall cost structure.  Work on negotiating this fee and ask for a ceiling to any rate hikes that surpass the retail price index (RPI) or the consumer price index (CPI).

Sometimes a ‘lite’ version will not include these fees and you have to pay for service and support as you use them.  Clearly define the response times that are included and the Service-Level-Agreements (SLA) that are included in your agreement.

Consulting and Implementation

This is a key area to a successful implementation.  The costs will go up dramatically for customized or integrated solutions, but the cost is often offset rapidly by increased overall productivity when you can automate additional processes and lower labor costs.  Often you can tie down lower costs of customization during the overall system negotiation period.  This is difficult later after you have made a purchase.  Get in writing the capabilities they have agreed to include with the initial implementation.

Be leery of an organization that doesn’t ask a lot of questions, and that doesn’t spend time with each area of your company that will be involved in the final solution.

Decision Point:
The time to include customization and to gain valuable discounts on consulting and implementation is during the initial process, these ‘soft costs’ often make a huge difference in the success of the project and are an easy negotiation point to help you gain more value when considering the overall big picture.
Run the Cost Model

Even the best planning will leave some questions unasked and costs uncovered.  Things like costs for additional lists or leads to keep the new dialer productive now that it helps your agents make three or four times more contacts than before almost always come up.  This, of course, is not the responsibility of your dialer vendor, but you must take this into account for a successful dialer project.

Hosted solutions cost significantly less initially, but may contain hidden costs and licensing agreements.  Hosted solution vendors in this area are being quite disruptive and aggressive as they gain significant market share against the more traditional premise solutions.

Some things that will probably come up with your dialer vendor and should be examined before you purchase include many of the following:

• data scrubbing
• lead import setup
• data storage
• monitoring and recording storage
• field or screen customization
• custom reports
• customer service and support
• escalated service
• emergency response
• termination fees
• integration costs
• onsite visits and travel costs

Premise solutions contain similar hidden costs and delays, but they are often in different places.   You will need to plan for your internal equipment hosting, power, backup, security, bandwidth, and fiber connections, which often take several months to plan and deliver, especially if redundancy is considered.

You should check references from current vendor customers in the areas of hitting deployment deadlines and responsiveness to onsite or remote support.

Decision Point:
Make sure you negotiate a trial period of 30 or 60 days where you can opt out of an agreement if the vendor you have chosen has not been able to deliver up to your expectations.  This is also a time in which you can fine tune your relationship and make sure things are working.

Anticipate Growth or Cutback

Very few organizations are able to plan effectively for one year, let alone two years into the future.  With this being the case, make sure that you negotiate for price protection and reasonable limits to increases in fee structures going forward.  And give yourself room to reset commitments on at least an annual basis if your situation changes.  This is much more difficult to accomplish for a premise-based solution than a hosted solution, but still you need to make sure that you are able to lock in your expectations on pricing going forward if possible.

If your business is growing, and even if it isn’t, now is the time to anticipate the potential for growth and negotiate tiered pricing and volume discounts.  Always leave the option in place that if the market drops future pricing below what you have negotiated, that you have the built-in option to go to the new market pricing with your next level of commitment.

Also take the time to clearly define:

• Price lock and excessive price increases with term renewals
• Pricing application to future growth and new users
• Long term contracts, commitments, and buy-out clauses.
• Service Level Agreements (SLAs), Warranties, and Guarantees:
• Training, Technical Support, and Professional Services:

Talk about future upgrades and product releases.  Make sure that you are well aware of platform changes and legacy technology issues.  This is almost a non-issue with hosted solutions, but is a huge issue that you had better address with a premise-based solution.

Decision Point:
This is an area of consideration that often adds greater advantage to a hosted solution.  Premise-based solutions reduce in value quickly once purchased, while part of the promise of a hosted solution is to always have the very latest and greatest advances in technology, interface, and capability.  This often makes a significant difference a year or two down the road when a premise customer cannot justify the cost of a new platform and has to compete with a hosted solution that offers the very latest innovations in productivity.  And if you decide to cut-back with a premise solution, you still own the extra capacity that now lies dormant.

Understand the Contract Details

Contract terms and definitions vary greatly between different vendors, but many things are fairly consistent.  Make sure you clarify exactly what the vendor means throughout each area of the contract.  As you go line by line with a vendor you will find many additional areas that you can clarify to greatly benefit your organization.  Make sure you understand rights of use as a key part of your negotiations.  Clearly define if there are limits financially or technologically around the number of users or concurrent ports.  Find out if you are charged by login users or concurrent users, by concurrent users or ports, is that in one area, the same server, or the same workstations?  These questions will help you.

Long Distance Billing Details Make a Big Difference

If you have a hosted solution that includes the long distance or VoIP, find out if you prepay minutes and if they ever expire.  If they supply the long distance make sure you have analyzed the billing increments and the decimal rounding on the bill itself.  Many vendors will charge 60 second call minimums and 60 second call increments thereafter unless you know to ask for 18 second minimums and 6 second increments.  Find out about the same questions for international calls.  These will almost always have a 30 second minimum and 6 second increments.  Dialers inherently make lots of short calls and you can find yourself saving 20% to as much as 30% on your long distance bill if you have been careful in your negotiations.  Ask to make sure that your invoice for long distance isn’t billed in 2 decimals, always rounding up to the next cent on every call.  This can cost you a bundle; always ask for 4 decimal billing.

Request the Right to Waive an Audit

This bit of advice won’t make any cost difference initially, but could make a significant difference to you down the road if you find that you or your IT staff has gotten lax in complying with licensing issues.  If a vendor audits you down the road you can be found owing a lot of money.  This usually isn’t an issue with a hosted solution, but even with a hosted solution it is wise to make sure you monitor your users and ports monthly to make sure you only pay for what you really need.

Decision Point:
We can’t stress this time-proven advice enough, get it in writing!

Perform a Background Check

One of the best places to start checking out a potential vendor is by looking at their press releases and their financial performance.  Ask to speak with their financial executive who will usually share more than you think they will, even if they are a privately-held company.

Things are much easier if they are a public company, but few dialer companies are.

Think like their sales staff thinks.  They have to continually improve sales.  So month-ends and quarter-ends are great times to get them to sharpen their pencil and ask for the pricing and terms they would probably never approve any other time.  And find out when the end of the fiscal year is coming up, if it is close you will want to consider using this time frame in your negotiations.  It probably isn’t wise to wait an undue amount of time if the dialer can make a significant impact on your company now, you would miss out on a lot of productivity while you wait to negotiate.

Press releases are a good point to steer by because they tell you a lot about the company.  If they are coming out frequently, then this company is growing and expanding and usually very innovative.  If they include hiring, product releases, partnerships, and awards, then you can rest assured that this company is actively growing and improving.  Look for companies that have a disciplined approach to publicity, this denotes steadiness and focus.

Decision Point:
Sometimes this extra research into financials, press releases, and company trends uncovers more information than you bargained for and will help you steer clear of companies who are struggling.  Watch for consistent growth and publicity for several years in a row to pick companies that probably are what they say they are.

References Offer Great Value, Yours and Theirs

References are extremely valuable in the process of purchasing a dialer solution, and in more ways than you probably think.  First, your reference is of great value to your vendor.  If you offer to become a reference that they can use fairly often, you will gain a great edge in obtaining more value in your negotiations.  Likewise, your vendor will also find them self going the extra mile with their staff to ensure that your reference is going to be a good one.

The best thing you can do is to offer your reference in printed form, but require in your agreement that if anything ever goes wrong in your relationship with them as a vendor they will need to guarantee to remove your reference statement from where ever they are using it in a reasonable fashion.  They will find themselves having to make doubly sure that you are always a happy and a valued customer.

Ask that they contact you and forewarn you before they actually use you as a verbal reference for a prospective customer to call so that you can be prepared and available.  This also dramatically increases your value to them and brings additional benefits to you.

Conversely, before you buy, ask for at least 2-3 good references of customers that are in similar situations to you.  The problem for you is that everyone has 2-3 good references and they will obviously give you their best.  The next request is the most powerful of all; ask for 2-3 BAD references also.  References of customers who had struggles with your vendor and can discuss how they were resolved.  Here you will still only get customers who now speak well of the vendor, but you will get a better picture than the first set of references.  Check them all and ask the hard questions.  Make a list before you call that comes right from your RFP document.  Be prepared and move fast so you don’t take too much time, remember, you may be on the receiving end of one of these calls soon.

Decision Point:
Offer to become a reference for your vendor, this gives you greater negotiation ability and leverage to ensure a better relationship over time.  Also ask to check 2-3 references that are good, and 2-3 that are bad, particularly references that had problems but that were resolved.  Be ready to bail if you uncover too many potential problems.
Invest in Your Own Negotiation Capabilities

Enterprise-class telecommunications vendors have long been known for their expertise in training their salespeople to negotiate to their benefit.  Even SMB vendors are very good at this.  They will have done this many more times than you.  But they often come up against buyers who have no idea at all how to proceed through a negotiation process.  When they meet someone who is obviously prepared to negotiate strategically, they will immediate recognize your skills, even if they are minimal and cut right to a better proposal for both of you.

This does not mean you need to invest in a month long course in negotiations, but you should review some of the ample materials just prior to moving into the negotiations process.  It is always best to have one more person with you in your decision making process with a solid commitment to carefully analyze decisions before they are made.

Contracts should not be intimidating.  Instead, look at them as the opportunity to finalize, clarify, and protect.  You can almost bring any form of protection in a contract to become a two-way or mutual barrier of protection by merely asking for it.  Don’t be afraid to redline a document and push for additional clarity.  Check with your key financial and technical personnel and forewarn them ahead of time so they can be expecting to put some time into the process of contract negotiations.

Outside firms will bring a fresh (but expensive) perspective.  If you opt to use one, it is wise to use them for the very first and last round for the perspective they can offer.  Do as much as you can of the busy work and research to save billable hours from an outside firm.

Decision Point:
Build a time right into your plan to refresh your own negotiation skills.  A simple book or Web site on the topic can be enough to dramatically impact the overall result when everything is done.  Mentally walk through the process and make a plan for what you will ask for in your negotiations so you will be prepared for when the time comes.

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