Case 3: Targeting high growth opportunity!

Client: A division of one of India’s largest information technology companies offering a wide range of products and services in India and overseas.

Background:Principal customers of the client division have been early adopters of IT products and services. With growth of their IT investments these firms have acquired stronger IT skills and developed rigorous processes for evaluating and buying IT. The client has been well tuned to customers’ business practices and has successfully built up a sizeable and profitable business. Business in this segment has become large and highly competitive. Revenue growth has begun to slow and margins have shrunk even as the cost of servicing has risen.

The market had begun to grow much faster in the next tier of firms. Though their knowledge of information technology was less mature, they were investing increasingly large sums in IT. The client had been doing business with many customers in this segment but their methods of engagement were similar to those with much larger companies. The client’s Division Head felt they were poorly aligned with needs of these customers and ill equipped to exploit the opportunity. They needed guidance in formulating and implementing strategy for this high growth segment.

Task: Three tasks were defined through wide ranging discussions with the leadership team.

• Profile the target segment of rapidly growing tier two firms.
• Formulate the strategy of the Division for this segment and develop the client’s positioning.
• Carry out sales transformation. Develop and embed appropriate account and sales management methodologies on all-India basis.

Conceptual Foundation and Methodology:

Effective strategy is built on a firm’s unique strengths and resources. Only when products, services and business processes create compelling and unique customer value does a company create competitive advantage. Growth and profitability are the consequences of sustainable competitive advantage, not the other way around. This philosophy of the model Resource Based View of the Firm was used as the cornerstone for building client’s strategy.

The project was divided into three phases: Insight, Strategy Formulation and Sales Transformation.

Insight.

Extensive discussions with team members, review of customer experiences and analysis of how business was won or lost brought out buried knowledge of target segment. Half a dozen teams conducted a number of projects. They presented their study results and discussed collective insights with the leadership team to enunciate preliminary hypotheses.

Another team mined the experiences and feelings of their colleagues, senior managers of the Division and the top management of the company to uncover the firm’s strengths and key capabilities.

A series of depth interviews with top managers of select customer firms representative of the target segment were conducted to test and refine insights. We learned about their IT strategies, constraints and internal struggles in IT enabling their businesses. Customers shared their faith in the client company’s strengths and warned us about their weaknesses. They also dealt at length with their own behaviour in different buying situations. A fresh set of depth interviews were conducted, this time by client’s managers, to validate revised hypotheses. The stage was now set for strategy formulation.

Strategy.

The market of tier two companies was sub-divided on three parameters: the stage of IT lifecycle, buying situation and customer’s revenue. The client chose to target only a few sub-segments and ignore others. They selected slices where the client was able to offer compelling value. Chosen sub-segments also promised rapid growth and desired volumes. Target segment were then carefully profiled.

A specific methodology for customer engagement was proposed, discussed and adopted. It would enable account executives to profile prospects, match them to those of target segments and determine whether or not to pursue the opportunity. It would help them understand each customer’s requirements, underlying business issues and craft the most appropriate solutions. It would enable them to price offerings competitively yet profitably. Deep engagement with decision makers and influencers in the buying organisation would improve sales effectiveness.

A team of four managers was assisted to develop the positioning statement of the company. They answered key questions customers implicitly ask.

• Who are you?
• What do you do that others don’t?
• Why should we buy from you, how do we benefit?
• Why should we believe you?

The positioning statement reflected the true and abiding spirit of the company, their capabilities and value systems. By communicating it sales personnel would give prospects and customers powerful reasons to do business with them.

Sales Transformation. Execution of sales strategy began in February 2007 with two regional teams as pilots. Sales teams and managers have been put through a one-day workshop to familiarise them with their firm’s imperative to grow business with tier two companies. They have been briefed on strategy and the new sales methodology.

The pilot envisages extensive coaching of account managers in their preparations before a call and subsequent strategy formulation. It is being done while accompanying them on sales calls, observing them in negotiations, while handling enquiries and engaging with product teams in crafting solutions.

Successful implementation of sales strategy is heavily dependent on the way teams are managed. Account review and sales management practices are being aligned to the new sales methodology. In collaboration with regional managers and their superior officers new measures of performance and delivery on strategy are being identified. They will be built into the modified sales and account review programme. Sales managers will be coached to adopt the new processes to make sales management more effective.

As new processes take root in pilot regions, the transformation process will be extended to other regions and progressively scaled up nationally. This process is expected to take till March 2008.