Relationships Sell Custom Development
Organizations that leverage sales teams with existing relationships increase close rates while cutting sales cycles.
Organizations that rely on other methods perform worse.
As an organization that was built up from scratch twenty years ago, and which operates based on revenue as opposed to investment funding, we have seen every go-to-market strategy that’s out there. Resoundingly, if you want to land custom application development sales there’s been only one way that stands above the rest; build and leverage direct customer relationships.
There is something inherently scary for a customer about engaging in a custom application development project.
It could be their own internal doubts and fears about scope. It could be internal politics around someone taking responsibility for all of the variables of this type of project. And more than likely it probably has something to do with the well documented rates of failure of these types of projects. In fact, according to Standish Group’s CHAOS report, only approximately 1 in 3 projects meet any definition of “success”. So it makes sense that customers would be extremely wary of taking on new projects.
And our experience bears that out. Prospects who are in a stable situation in terms of budget, IT staffing and general IT competency simply don’t hand out projects to organizations with whom they don’t have a relationship. It happens, but it’s very rare. If the “closing ratio” metric is important to you, then our experience predicts cold calling mature IT organizations for custom application development will not yield your highest numbers.
So who does purchase custom application development projects outside of pre-established relationships?
Generally, these purchases are made by organizations that have a less mature IT function, or who have some particularly unique need that they are struggling to satisfy. For example, a partner of ours secured a custom application development project from an organization with whom they had no prior relationship, but only because the need was incredibly strong for a very short turnaround time, which CitizenDeveloper is uniquely situated to deliver. In that case, there was no pre-established relationship, however, the client was essentially desperate to get a solution in a matter of days. A very unusual situation.
It’s not just pre-existing relationships that experience these increased close ratios and decreased sales cycle times. Requests for Proposal (RFPs) also tend to be awarded more consistently and more quickly when the winning bidder is an organization with which there was a pre-existing relationship. In one test we conducted, we responded to hundreds of RFPs to offerors with whom we had no pre-existing relationship. Our closing rate was 0%. This is in stark contrast to the RFPs we pursue leveraging existing relationships, which have an impressive closing rate by any standard!
So why not focus cold selling efforts on organizations with less mature IT competency?
That can work, but unfortunately the prospects with the mature IT capabilities are also the best prospects to have as customers, because they tend to have a larger project pipeline, a mature understanding of scope, change orders and budget, and they tend to purchase from other practice areas, thus resulting in making them overall much better customers. Conversely, organizations with less mature IT competency tend to be more difficult to work with, less profitable, and need fewer products or services from other practice areas.
So what then is the problem? Why don’t we just work with organizations with whom we have a relationship?
Well, putting aside the massive expense of building and maintaining those relationships which not every organization can do, we see one primary reason, which is sales team discomfort with offering the historically challenged offering that is custom application development. At issue, the sales team has developed these important relationships over a long time, and usually by selling something that is NOT custom application development. Staff augmentation and hardware are two good example areas where an existing sales force may have built strong relationships and generate strong revenues and therefore is hesitant to bring in no-code custom application development. For them, custom application development is perceived as a risk. In other words, the existing sales infrastructure fears “upsetting the apple cart”, and may resist adding no-code custom application development to the offering, however advantageous it may be, for fear of hurting core sales in other areas.
Okay, so you have a sales team that has strong relationships with mature customers but they aren’t selling custom application development… now what? Well, finally some good news… you have a huge opportunity in front of you. If you want to see closing ratios go up and sales cycle times go down, you need to motivate those sales teams to leverage their relationships. How do you do that? Well, you start by embracing these two truths about successful sales teams; (1) they won’t sell what they don’t want to sell, and (2) they don’t want to be the only ones not selling something that is working. In other words, you need to show them successes. In our experience, winning begets winning.
- First, get an early advocate on that sales team.
- Second, talk through all their accounts with them to identify low hanging fruit (which they DEFINITELY have).
- Third, glean some early wins.
- Fourth, deliver the professional services with excellence.
- Fifth, capture customer testimonials, and make sure the rest of the sales team hears them.
The sound of those wins will resonate and reverberate throughout the hesitant sales organization. We’ve seen first hand how the sales team members start to fall like dominoes as they realize how much low hanging fruit they also have in their own sales relationships.
The bottom line is that existing relationships with mature organizations are where the fast closes and the longer term dollar volumes will come from…without the challenges of dealing with less mature organizations. To get there, you have two obstacles; the client organization itself, which is slow to change, and frequently you also have to overcome the sales team itself, who doesn’t want to jeopardize their golden goose just to try something new. But, if you are patient, and if you can find an early advocate on the sales team, and if you deliver on your promises, you can push through.