The technology industry is renowned for innovation, disruption and the fast pace of change. And yet, an old approach to sales lingers after almost 30 years. Fortunately, solution selling is in its twilight years. It’s dying. And so will any technology vendor that persists with solutions as its primary focus.

A new generation of technology vendors has moved past solution selling. They’ve learned that solving a problem doesn’t guarantee the business result the customer needs. They’re focusing their considerable skill on enabling that business result, not just solving a current problem. This is the third generation of technology sales.

The First Generation was Crushed

The first generation of technology sales began in the 70s as software packages appeared. Customers would evaluate software packages using long lists of features and functions they thought they needed. The package with the most ticks would win the deal. Sadly, the correlation between the number of ticks and the ability to deliver business results for the customer wasn’t strong.

Software packages matured over the next decade or two. The features and functions became more similar in each package. It became more difficult for vendors to win deals based on their features and functions.

The Second Generation

In the late 80s, the second generation of technology sales appeared. Vendors asked customers about the problems they experienced. The vendors then showed customers how they could solve those problems. And because they had solved the same problems in other companies, they could often provide insight. They could show new ways to address the problems.

Customers started to buy from vendors they felt could best solve their problems. This second generation of vendors crushed the generation one vendors. Demonstrating features and functions just didn’t stack up against a competitor that zeroed in on customer pain points and showed how they could be solved. The technology industry rapidly adopted solution selling. Lots of different sales methodologies appeared. Strategic Selling, Solution Selling, SPIN Selling, Target Account Selling and many more were launched. More recently, The Challenger Sale has become popular.

Why the Second Generation Will be Crushed

The Pace of Change

An implicit assumption underpinned the solution-selling approach – if the customer solves their current problems, they’ll achieve the business results they need. The third generation of technology vendors knows they can no longer make this assumption.

The pace of change in business has had a profound effect. Few people doubt that business changes more rapidly than ever before. And that the pace of change will continue to increase. The technology industry itself has been a major driver of this rapid change. The problem for customers lies in the time it takes for a second-generation approach. It takes too long to analyse current problems, evaluate alternative approaches, evaluate different vendors, implement the vendor’s products and wait for the positive effect on business results. By the time this process is finished, a whole new set of problems has arisen. The customers remain in catch-up mode.

Customers need to focus directly on the future business results they need to achieve. And they want a vendor who can show them how to get there.

Failed Implementations Cost Vendors More than Ever

Other factors affect the achievement of the customer’s business results. The quality of implementation leads the list. Failed implementations leave the customer with significant expenses, poor results and deep anger. The vendor usually has some culpability. But, so does the customer. Lots of factors affecting the implementation are owned by the customer. The quality of the new processes the customer wants, for example. Or how the technology will be used. For the project itself, the quality of the customer’s project team, the amount of resources committed, the involvement of senior executives, the decision-making process and the quality of change management deeply affect the results. The customer decides on all these things.

But, a big problem has emerged for vendors. Subscription pricing means a failed implementation has a major impact on future revenue. The customer may cancel their subscription. Or, they just don’t grow their usage because of the poor results. Either way, the vendor’s revenue suffers.

The third generation of technology vendors has learned they can no longer leave those other factors up to the customer. There’s too much risk to the vendor’s revenue. The vendor needs to play a proactive role on all factors affecting the customer’s business results.

New Insights

The third generation of vendors can provide new insight. The second generation provided insight on problems, helping customers see issues they didn’t realise they had. The third generation can provide insight on business results the customer didn’t know were possible. They can describe a new to-be state or ongoing business result. They have insight into results achieved by other companies and into the ability of technology to enable these new business results.

These vendors attract the attention of customers with their insights. And they win deals by selling their ability to enable them.

Characteristics of the Third Generation of Technology Vendors

They Focus on Customers’ Business Results

These vendors are crystal clear about the business results needed by their customers. And in many cases, they provide insight into a new to-be state or business result the customer can aspire to. They’re thriving because they build their business around enabling those business results.

They Leave Less to Chance

Subscription pricing means a failed implementation has a much bigger effect on future revenue. These vendors have become experts at everything required to achieve the needed business results. And they proactively help the customer with all of them.

They Sell Differently

The second generation of vendors sold their ability to solve a set of problems. The third generation sells their ability to enable the customer’s business results. And they differentiate by providing new insight into what results are possible.

How to Move to the Third Generation

It starts by developing crystal clarity about the business results you can help your customers achieve. And, like Steve Jobs, don’t ask the customers first. Work out what they need, tell them and then see if your new insight resonates.

Next, work out how to sell the business results. Your methodology may not change much, but what you’re selling will be different.

Then, work out the other things you need to do to enable the business results you’re selling.

Finally, develop a plan to evolve to your new model. Just as the move from generation one to generation two did not take place overnight, the move from generation two to generation three will be more of an evolution than a revolution. It will take some time.

There’s a good chance you’ve already started this journey. But you don’t want to be like the generation one vendors who didn’t evolve to generation two – and were crushed!

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