What the Practitioners Say -- The Uneasy Transition from Products and Services to Solutions

A trader works on the floor of the New York Stock ExchangeDue to the complexity of new issues and challenges that businesses face today, and the need to deliver offerings with greater value to customers, the bottom line is that many companies still have a difficult time developing and marketing the new solutions offerings that their customers need. As part of a recent project conducted by MBA students at the Hult International Business School, we interviewed nearly a dozen senior level B2B solutions marketers representing companies across various industries to get their perspective.  These companies included Schneider Electric, Orange Business Services, CapGemini, GE, Click Software, Capgemini and Optum. To a person, they all mentioned that the transition from products and services to solutions has not been easy.

Rating Their Abilities in Developing and Delivering Customer-Centric Solutions

Customer-Connection1We covered a wide range of issues in our discussions about their solutions business, including their processes around solutions development and implementation. One of our questions related to the complexity of developing solutions compared to products or services.  When asked to rate their perception of the relative level of difficulty on a scale of 1 to 10, (1 = they are equally complex, and 10 = solutions are much more difficult and expensive) the interviewees gave it an average rating of 7.2. Their comments covered a range of issues, from achieving organizational alignment to pricing.  However, one common challenge among many of them was that they often struggled to make their solutions directly relevant to their customers in a way that shows tangible ROI benefits.

While solutions marketers considered the process of developing new solutions to be more difficult than products or services, they felt that they have made great progress in implementing their solutions strategies. On the whole, they stated that they have been relatively successful in implementing solutions in their customers’ business environment .  While almost 85% of the solutions marketing executives considered that the challenge was much more difficult than with products or services independently, they rated their ability to develop, market and sell solutions  a 7.7 on a scale of 1 to 10 (1 = very poor and 10 = excellent). While the rating was reasonably high, it was clear that there was still significant room for improvement. Many of the companies indicated they needed to continue to emphasize understanding their customers’ needs and then developing solutions for them despite the difficulties they might encounter.

Selecting and Applying Solutions Metrics

In addition to the complexities that solutions marketers experience in managing the integrated  portfolio of products, services and solutions, and getting the sales force to competently and compellingly articulate the value of solutions,  another major challenge was being able to quantify and measure the performance of the solutions business. The interviewees stated that an increase in sales and margins, followed by customer satisfaction, were the most common methodologies to quantify the impact of offering solutions. There were however, different metrics being used to track their ability to sell solutions. For example, share of wallet, ability to cross-sell and time to market were some of the performance indicators being used.

Understanding and Addressing Customer Business Imperatives

shutterstock_63858637The interviewees observed that the complexity of their solutions offerings increased because the customer often had difficulty in understanding the breadth and depth of their own business imperatives – the strategic actions they had to take to overcome operational constraints and competitive pressures.  They knew they were underperforming, or were becoming increasingly noncompetitive, but didn’t see the path to improvement.. “Customers don't always know their needs", commented one interviewee. “For example, if you buy a product, you know the specifications and characteristics you need. If it is a service, you know the conditions and the time to get it. However, the challenge for the solutions that address broader and often cross-functional business issues is that customers sometimes do not know how to describe and quantify their own problems”.

Moving the Sales Force from Product to Solutions Selling

Another challenge faced by many of the solutions marketers was the fact that the sales force was not always effective at selling solutions. Even though the market leaders considered they have good strategies in place, they believed that they still have some room for improvements, particularly in communicating to clients. They identified sales team coordination as being most critical for success. Improving the skills and increasing the responsibilities of the Key Account Managers was one approach used by many of these companies to solve this issue.    One interviewee identified this position as similar to a “soccer midfielder”. However, finding these midfielders still remained a challenge due to the level of complexity that the position required in several of the industry domains in which they were selling.

Conclusion:   Solutions Excellence is a Marathon, not a Sprint

In conclusion, after interviewing these top solutions marketers,  it’s evident that solutions present a myriad of challenges that they still need to overcome. They all essentially agreed that even though they are getting better at developing and selling their solutions, there are still several elements in the development, marketing and selling processes that need to be improved.    To get to where they need their solutions businesses to be, the cold reality has sunk in – the process is much more like a marathon than a sprint!

However, at the end of the day, nearly all of them felt confident that they will develop the solutions that their clients need despite the difficulties earlier mentioned, and that moving to a more customer-centric, solutions model was absolutely the right move.  Our takeaway?  Developing and selling solutions is just a business fad – it’s the future of how B2B companies need to think and operate.

Authors:

  • Ignacio Sainz,  Business Relationship Manager,  Citigroup, Mexico
  • Jose Prado, Business Development Manager, UCB, Mexico

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