Why a True Solutions Focus Benefits the Organization as Much as the Customer
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As part of our Solutions Marketing MBA course at Hult International Business School, 12 student teams were assigned an experienced Solutions Marketer to guide us through an analysis of their solutions business. We had the opportunity to explore how solutions marketing has driven an internal and external transformation at companies such as IBM, GE Healthcare, Xerox, SAP, Ericsson, Nokia Siemens Networks, as well as a number of other prominent companies.
In our efforts to better understand why and how these companies have made the transformation to a solutions model, we asked each of our Solutions Marketing mentors two questions:
Our Mentors’ responses clearly indicated that tailoring their offerings around their customers’ needs has led to an ongoing, organization-wide commitment to change how they fundamentally had been doing business. All of the companies were compelled to develop a solutions approach because their portfolios of discreet products and services did not satisfy their customer’s expectations or needs. This led to a number of internal as well as external challenges.
Internal Challenges One of the principles that we learned in our course was that transitioning to a solutions-based company requires most customer-facing employees to make a more concerted effort at understanding customer needs. In fact, many of the organizations interviewed said their number one challenge was sales’ lack of customer knowledge. Sales teams tended to have the biggest difficulty with this transition because, in spite of their immense product knowledge, they were weak at appreciating how their solutions benefited the customer. Without an intimate understanding of the customer’s problems, they couldn’t effectively communicate how their solutions could change processes, re-align resources and improve their customers’ performance -- resulting in significant financial savings.
Thanks to our mentors, we now understand that the sales team is where the rubber meets the road in terms of communicating and providing value to the customer. Effectively conveying a solutions value proposition means sales needs to be 100% committed to understanding the customer’s business model, what their goals and objectives are, and how they can support and assist their customers in reaching these targets.
Because solutions are inherently different for each customer, the sales team must be particularly sensitive to the needs of every individual account. This proved so difficult for one of the companies we talked to that they had to outsource their entire solutions selling function.
Internal Alignment and Communications We discovered that solutions marketing and selling is particularly challenging for large companies. Having a plethora of Business Units (BU’s) has made communicating the purpose and benefits of solutions particularly difficult. For one of the companies, the lack of buy-in from the CEO brought their solutions creation capabilities to a standstill. The missteps made by another company indicated that big, well-known organizations often have a culture that is more resistant to change. One conclusion that we came up with as a result of our Mentors’ experiences was that bigger organizations may require creative internal communications programs and a steady stream of messaging to drive a cultural shift keen on adopting a solutions business model.
Installing Different Systems and Processes
Solutions may demand a change of company culture and the tools it uses. A professional services company that we interviewed indicated that moving to solutions required an internal integration of all software and IT that backed up their company operations to assure proper data management. Pricing the solution also presented a new challenge because previously they were only used to pricing products and services separately. Solutions required more value-based pricing which required new quoting tools.
External Challenges For nearly all of the companies we interviewed, adopting solutions inherently put added pressure on them to over-deliver for partners and customers. One of the Mentors acknowledged that they needed partners who were more committed to delivering the expertise that their solutions demanded. Rather than simply up-selling, companies that were committed to delivering real solutions had to adopt a more consultative approach based on identifying the specific challenges and business priorities of the customer. Shifting to solutions meant constantly asking how their assets – their full portfolio of products and services -- could make the customer’s business more productive and profitable, then selecting the ones to capture that productivity.
Another major external factor that was mentioned by some of the companies we talked to was that stronger competition put added pressure on them to anticipate industry trends and distinguish themselves through thought leadership creation and dissemination. Through its thought leadership initiatives, for example, one of the companies we interviewed kept a pulse on how their markets were evolving, and then planned accordingly so that they could maintain long-term client relationships and develop new ones.
Shifting to solutions also meant changing external communication channels. One of the largest companies in our study found it particularly challenging to communicate their wide portfolio of solutions as a complement to their products and services. Most companies interviewed also faced complex challenges in rethinking their go-to-market strategy. An easily overlooked but vital part of this challenge was choosing the right vocabulary because customers were often not aware of the implications and meaning of the term “solutions”.
Conclusion: It’s Hard Work, but it’s Worth It
The underlying conclusion from this project was that the path to solutions implementation puts many new demands on a company. Solutions force you to evolve externally in terms of partnership development and a more intimate, customer focused go-to-market strategy as well as internally in terms of BU alignment and defining the added value you can bring to the customer.
However, we discovered through our interviews that in the process of restructuring to be able to add more value to their customers’ businesses, the companies themselves became more mission/vision focused. Through successful solutions campaigns, they have been able to break down silos and create more focused employees and partnerships. This internal shift has created more useful and “stickier” products and services which have resulted in happier customers.
Authors: Mohammed Alkhudair, Daniel Katz, Edward Farraye - MBA'13 Hult International Business School.