Imagine a market in which virtually all of your potential customers already own one or more of your products. Imagine further that most of these customers have plenty of cash to spend, and a demonstrable need for many of the other products you manufacture but that they don’t already own.
In that kind of situation, wouldn’t it make sense to have a sales strategy focused on customer development instead of market development? And if you manage a business that sells indirectly, wouldn’t it make sense to develop well-defined relationships with your channel partners? After all, they often serve as the front line of your sales effort and, more likely than not, believe they “own” the relationship with the end user.
You don’t have to look far to find examples of organizations with broad share of market but superficial share of customer. The banking, telecom, travel and energy verticals are littered with bloated giants struggling to prevent their margins from dropping – even as their market penetration continues to grow. Watching these flailing behemoths wallow from one misbegotten marketing strategy to another is indeed a sorry spectacle.
Fortunately, more and more organizations are discovering the value of strategies designed to increase margins by constructing deeper relationships with their customers and channel partners. A good example of a customer-focused enterprise is Bentley Software Systems in Exton, PA. A privately held maker of highly sophisticated 3D modeling software for architects and engineers, Bentley has annual global revenues of $150 million. Bentley’s marketing chief, Yoav Etiel, uses the analogy of a checkerboard to illustrate the company’s philosophy of favoring customer penetration over market penetration.
“In our universe, every square on the checkerboard is already occupied by a piece. So our strategy is to see how many of those squares we can fill with multiple pieces,” says the Israeli-born executive. “Five years ago, the situation was reversed. We had only a handful of products and relatively few clients, so it made sense for us to concentrate on customer acquisition and market development. Now we have 85 products and thousands of users – most of whom use only one or two of our products. So it makes sense for us to optimize our existing customer relationships.”
Account management is a priority at Bentley, which has mapped all 85 of its products to 11 “account scenarios,” which have been carefully formulated to dovetail with the needs of specific user sets. “Ninety percent of our sales map to these scenarios,” says Etiel. Grouping product and service offerings by user needs – instead of simply by product lines – makes it far easier to automate aspects of the sales operation. For example, Bentley field reps can dial into the company’s intranet to access richly detailed sales templates, enabling them to generate customized – and highly accurate – proposals for clients on the spot.
“The pre-written templates allow account managers to create proposals on demand,” says Pat Elnicki, the Bentley manager who created the template system. “Because all the language and pricing have been pre-approved, the account manager needs only to customize the document and it’s good to go. You literally can have a proposal on a client’s desk in minutes, instead of days.”
Bentley’s channel partners also have access privileges to the templates, which greatly reduces the chance for errors or misunderstandings that could derail a sales opportunity. The idea of making the templates available to intermediaries as well as to the direct sales force might seem risky at first glance, but it’s a risk that Bentley has grown comfortable with.
“Bentley is unique in that our sales effort is a hybrid,” explains Etiel. “We sell direct and we sell through intermediaries. In that sense, we’re a little bit like the insurance business. The large underwriter provides security, reliability and stability. The independent agents provide the local service component. To extend the metaphor, we’re the large underwriter and our channel partners are the agents.”
Working closely with channel partners has become a keystone of the Bentley sales strategy. In some instances, Bentley will take an equity position in a reseller.
This has two positive effects. First, it creates an even tighter bond between Bentley and the reseller, which sends a strong signal to potential clients.
Second, it eliminates the reseller’s natural anxiety about possible competition from Bentley’s direct sales force. “Instead of an `us against them’ environment, it’s a `we together’ environment, which I have to believe is going to result in better and more profitable sales,” says Etiel.
One such channel partner is ModernTech SI, a Knoxville, TN-based systems integrator with annual revenues of about $6 million. Joe Kirby, ModernTech’s CEO, explains the benefits of the relationship: “When I tell a prospect we’re partly owned by Bentley, that helps us exponentially. And there’s another advantage: We get terrific resumes now from people all over the world – people I never guessed we would have gotten resumes from. Why? Because they like the idea of working for a small company that’s got a big company behind it.”
All of this circles back to Bentley’s focus on the end users, the architects and designers running Bentley programs such as MicroStation or TriForma to create new skyscrapers or highway systems. Until recently, such design projects required hundreds – sometimes thousands – of drawings. Even minor changes could result in weeks of redrafting. Paperwork, while essential, became the bane of every architect’s life. The introduction of computer-assisted design and 3D modeling now promises to revolutionize the industry.
“The new technology allows architects to spend their time and energy designing better buildings for their clients,” says Huw Roberts, a former architect who now works for Bentley as a product manager.
The technology also offers Bentley an opportunity to capitalize on the reality that buildings aren’t built just once – they tend to be refitted, remodeled and redesigned several times over a lifetime of many decades. And each of those events presents an opportunity for profit – if the relationship is managed intelligently and with an eye toward strategic gain rather than quick hits.
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