Four wins and a failure

There are times in sales when all you want to do is shout that word Hugh Grant uses multiple times in the first scene of "Four Weddings and a Funeral" (doesn't he look young in the picture?) Because stuff goes wrong all the time. Hopefully you learn from it - and sometimes you can even turn things around.

This is a story about two wins and a failure (not four wins but the headline ties in with movie much better - and you learn more from failure).

To be even more accurate its about three failures on my part, two of which were turned around, one of which was a total disaster and all of which taught me something.

The background

From 1994 to 2007 I sold ERP Systems. This wasn't easy, especially as it was my first proper sales job.

An ERP isn't an impulse purchase. For one thing, any company is already doing all the things an ERP does - warehousing, sales order processing, inventory, AP, GL, Accounts Receivable and so on. They may be doing it with Excel of MYOB but if they are a distributor (for example) they're already selling and shipping goods. so there's already some kind of incumbent in place.

In addition, not only is an ERP rather expensive, especially when you include hardware and implementation - the cheapest I ever sold, to a very small publisher, was well over $100,000 and some were in tens of millions - but implementing an ERP is a major disruption to your business, one that soaks up masses of internal resources.

It's also business critical - ERP implementations that go wrong have sent many companies broke.

And you can't exactly say "try it for a few weeks and give it back if you don't like it". Once the customer has bought it they're (usually) stuck with it.

So even deciding to look for an ERP is a big decision, one not to be taken lightly.

Just to make life even more fun, the ERP software I sold ran on the IBM AS/400 - later named the i-series. For those who don't know, it was an excellent computer in its day and was very easy to use but by the late 90s it was getting a reputation for being old-fashioned with no real future (it's still around today but it's far from trendy). So I didn't just have to sell our software, I had to overcome the "oh no, not the AS/400, that's dying" objection.

The cold calling

When I joined, the general manager who hired me said "we have this great ERP and we have some customers that are publishers and consumer electronics distributors. I'll look after them, you see who else we can sell it to".

(We won those initial customers because one of the founders had worked with a publisher and two with Sharp, a consumer electronics distributor, so the ERP was ideal for those two niches.)

So I got a phone, a list of companies and an early CRM (ACT) and hit the phones. I hated it but I forced myself to press on and I called car distributors, food distributors, clothes distributors, manufacturers.

And, the damned cheek of it, they all wanted stuff we didn't have. Food distributors wanted "use by" dates. Car distributors wanted to know if we could handle dealers. Clothes manufacturers and distributors wanted us to have size, style, fit, colour.

"We're software developers" I'd say, "We can put them in for you". But we were a 12 person company in an unfashionable part of Sydney competing with giants from the USA and Europe. Why would they buy from us when they could buy from someone two hundred times bigger when we didn't even have some of the basic functions their niche needed? We needed an edge.

So after six months where my sales were nil, zero, zilch, nada, nowt and nothing I went back to my boss and said "why don't we focus on areas where we have credibility and customers and we know we can win like - oh, I don't know - publishing and consumer electronics?"

He agreed and that's what we did. It worked. Eventually our Bookmaster ERP (which was pretty much exactly the same as our Powermaster ERP except for the terminology, the name and a few specialised modules for each) became the most widely used publishing specific ERP in the world. We also sold Powermaster to some very big names in consumer electronics in Australia.

But inevitably there were failures. I've discussed some of my publishing ERP adventures in earlier articles so here are the three failures - or two wins and a failure - in the consumer electronics niche and the lessons I learned.

The ambitious IT Manager and the $938,000 letter

In early 1998 I was talking to Sanyo - they had an old mainframe system they couldn't update to fix the Y2k "bug" so they had to buy and implement a new ERP before the end of 1999. The IT Manager was tasked with choosing the new system, he reported to the CFO and I asked both of them what their most important criteria were for the new ERP.

The answer was "low risk" - they couldn't afford to get it wrong and the timeframe was tight. And of course their budget was constrained.

"Great", I said, "our system is specifically designed for consumer electronics distributors, it's already working in several of your competitors. We know exactly how your business works and what your customers expect and we have specialised modules and features like Rebates, Spare Parts, Kits and Assemblies that we know you need.

"It will require virtually no modifications so implementation will be quick and relatively inexpensive."

In those days it was quite normal to offer big discounts on the software so we offered 25% off list price to come within their budget (I hate discounts but it was sort of expected).

But I'd reckoned without two things. The IT Manager had an anti-AS/400 prejudice and he wanted to work on the latest and greatest technology to pad his resume.

After a couple of months I got the call "We've chosen SAP."

I pointed out that SAP met none of their criteria. At the time it was quite new, it didn't have one single consumer electronics distributor as a client in Australia and it cost an arm, a leg and most of a torso to implement, plus it couldn't handle rebates, a critical issue for consumer electronic distributors.

"Oh, we've signed with consultants that have a rapid implementation methodology for SAP" they said and they were deaf to my entreaties.

Three months later they called back. "We've discovered it's going to cost a lot more and take a lot longer than we though." (big surprise there, not).

So they started the process again - and chose JD Edwards' new object oriented system OneWorld running on Microsoft NT. Now JD Edwards was a serious competitor - they had good software and lots of customers including some consumer electronics distributors in Australia.

Except - all their customers in Australia used - you guessed it - the AS/400. The NT version was their brand new, untested, "it will be here soon, honest guv" system and it dodn't have a single user in Australia.

I spoke to the CFO and pointed out that this was pretty much as high-risk as you could get. A brand new version of software written in a different language on a new platform without one single customer live in Australia - in any industry, much less consumer electronics. His answer was "it's the IT Manager's decision, if he's wrong it's on his head" (very mature response, I thought).

So I wrote the $938,000 letter. In it I said words to the effect:

"I believe you've made the wrong decision for the following reasons (then I listed them). However I hope I'm wrong and that you have a successful implementation and I'd like to wish you the best of luck.

"If by any chance you do run into any of the problems I mentioned please remember we can get you live within two months without modifications"

In May 1999 we got the phone call. The first version of the software had been late, it was missing a heap of essential functions, the new version wasn't due until 2000 and there was no way on God's earth they could go live before 31st December 1999. Could we help?

(And, surprise surprise, the IT Manager was no longer there).

We could help, at full list price. It took a week to sign the contracts and they were live and running successfully in October 1999. Goodness knows how much they spent altogether on the three systems they bought.

So that was a success, eventually, but I was comprehensively outsold - twice - by people selling inferior solutions.

Lesson: - don't take everything at face value and look for hidden motives (although I'm not sure if I'd have been able to overcome the anti AS/400 prejudice even if I had). And don't burn bridges if you lose a deal.

On the other hand, I am rather chuffed at the success of my $938,000 letter. (Although I don't really remember the exact amount, but $938,000 is close enough).

The "expert" management consultants

Round about the same time - 1998 - Pioneer Electronics had a similar problem - Y2k. They were running a heavily modified system bought from and supported by one of the big 4 consulting firms.

Famous, big and expensive though they were, the management consultants wouldn't have known how a consumer electronics distributor worked if it was spelled out in chalk on a massive blackboard. But they wanted to sell the new version of their software.

As an example of the gulf in knowledge about the customer's business, I met with Pioneer to discuss rebates - as I've mentioned it's a massive issue in consumer electronics. My conversation went something like:

"OK, obviously you have to give rebates to the big department and electronic stores like <insert names>. I guess you have short term and long term incentives that are based on the value of products sold, the mix of products and so on. Do you ever have the situation at the end of the year where they are just short of target but you want to pay the rebate anyway because otherwise you'll piss them off? Yes, I thought so. Well, our rebate system does all that and much more".

The management consultants said "We're business experts and we can design anything. Now tell us how these rebate things work."

I had met with Pioneer several times over two years (they were in Melbourne so I had to fly from Sydney), each time talking about their business in their terms. By the end they were convinced we knew our stuff - and more importantly, knew their stuff. But they were nervous and time was running short so they decided it was safer to get the management consultants to modify the existing system to handle Y2k.

I wasn't so much outsold there but overtaken by events. But it was still a failure - temporarily.

In 2000 the Australian government introduced a Goods and Services Tax (GST) - and the newly modified Pioneer system couldn't handle it. Rather than go through yet another expensive conversion they called us in, negotiated contracts, signed the deal and went live in plenty of time.

We had no competition at all - that's the kind of deal I like - because by then we knew them, they knew us and they trusted we could do the job. They didn't even look at the management consultants' new version. By speaking with them in their terms about their issues over a year or two I had actually become that rare of mythical beasts - a trusted advisor.

Lesson - if you understand your prospect's business, demonstrate credibility and build relationships it can work wonders. If you're patient.

The abject failure

Before I joined the company Panasonic had looked at the ERP system, liked it and wanted to buy it for their spare parts division (spare parts is also a massive issue for consumer electronics distributors). But they wanted to pay for it just for spare parts and use it for finished goods as well - in other words, they were offering to pay about 30% of list price.

My predecessor baulked at this and hung out for more - so they ended up buying a rival, non-consumer electronics specific ERP just for spare parts at a very low price.

I met with Panasonic many times to discuss them using our system for everything and they were very sympathetic. The spare parts system was so-so and they really liked what we had. It was just a matter of time.

Between 1994 and November 1997 I met them every six months and every time was assured they were just waiting for the right time and they loved our software. Then early in 1998 I called to discuss the Y2k issue and suggest they pull their finger out and they told me "oh, we were getting nervous and we didn't think you'd be able to get us live before Y2k so we're modifying the spare parts system to handle finished goods."

We could have done it in a flash. I'd lost a very big sale because I simply didn't keep in touch regularly enough. I assumed they would call me when they were ready. They didn't.

Lessons:

1. I can be a real idiot at times
2. Never assume anything.

Summary

I've learned an awful lot since those days, from personal experience, from courses, from sales experts, from successes, from failures and by making some really dumb mistakes.

I hope my stories, sad and glad, helps others avoid making the same mistakes.

I'd love to hear your comments and your own stories of success and failure and I'll respond to everyone.

================================================================

Steve Hall is co-founder of Executive Sales Forum International https://execsalesforuminternational.com - a resource to help Sales Leaders and senior sales professionals to overcome the many challenges they face in a rapidly changing world.

He's also MD of Executive Sales Coaching Australia where he helps his clients to sell at "C" level and to craft stories that sell.

He is a member of Sales Masterminds APAC and the Sales Expert Panel and is based in Sydney, Australia.

================================================================

If you find this article interesting, useful and/or amusing please help it reach a wider audience by "liking" it and ideally by sharing it - the LinkedIn algorithm gods give lots of points to articles that are shared and show them to more people.

I'll personally thank everyone who shares it of course. And I will answer any questions or comments you have below about the story and the lessons.

If you sell to senior executives, if you are a senior executive or if you help people who sell to senior executives please join my LinkedIn group, Executive Sales Coaching.

https://www.dhirubhai.net/groups/7049883 #stevehallsydney #SellingatCLevel