Selling solutions has become routine, delivering them rare

To boost sales and elevate their company's perceived customer value, many companies are transforming themselves from traditional product and service organizations into “solution” providers. In principle, this transition can create attractive outcomes such as minimizing competition, access to higher level decision-makers, and a higher top line. But there are significant hurdles to overcome along the way.

In this first of a series of articles, Tiversa COO Chris Gormley – a veteran of Ariba/FreeMarkets, McKinsey & Company, and GE – explores the essential concepts of a solutions approach and introduces a framework for solution planning. Later, he provides practical actions for product strategists in navigating this journey.

By Chris Gormley, COO, Tiversa and Contributing Writer 

Messages extolling the virtues of a company's solutions approach are frequently heard in the B2B marketplace. Claims like “we don't sell bolts, we sell fastening solutions” – reflect the shift from merely selling products to offering a solutions approach. Yet many times, solution claims are little more than empty marketing rhetoric. Even so, there is genuine substance behind the solutions concept, and a growing number of companies have started to apply and to profit from that substance.

What is a solution? For our purposes, it is a bundle of product and service offerings uniquely suited to solving a specific and highly valuable customer or prospect problem. The problem is one that speaks to a need which extends beyond anything that can be gained from the simple act of buying a service or replacing a product. The solution addresses a pervasive concern - one that affects multiple aspects of the customer's life or business – and is therefore multifaceted in its composition.

Adopting a solution strategy can be highly attractive to organizations which have struggled to create marketplace differentiation and whose revenue growth has slowed or declined. Initially, a solution strategy is often used as a superficial response: take the company's current products or services, re-package them, and press the sales team into selling them in such a way that old products and services will suddenly seem relevant, sexy, and clearly differentiated in the eyes of the customer. If it works, or so the belief goes, this approach could fetch higher prices and greater visibility with little additional cost.

But rushing into a solution strategy without carefully accounting for critical sales, marketing, design, and delivery issues can have precisely the wrong results: lower sales, lower margins, and deteriorating product and service quality. So, before you begin, it's critical to ask yourself a number of questions. For example:

1. What will the solution include? How many segments will you target with a solutions approach? Why? Who defines the solution (on paper and in reality) - sales, professional services, consulting, product management, marketing? What if you have partners or suppliers involved?
2. How will you promote the solution so that customers understand its unique aspects without letting your messages become overly diluted and confusing?
3. Who will make sure that the solutions promised to customers are delivered on schedule and with an appropriate quality level? And how will they do it?
4. How will you define pricing and address contracting and compliance issues so that the process remains flexible enough to address a diversity of solutions without bogging down the sales team, your partners, or your suppliers?
5. How do you ensure that the solution will, after all is said and done, realize an acceptable profit margin – not just revenue improvement?

Solutions Evolution Framework

To help frame our discussion, Figure 1 illustrates four stages of an organization's evolution from a purely product or services company. This so called Solutions Continuum begins with a company that markets, sells, and delivers innovative products using a conventional approach. From here, the evolution toward a true solutions model is illustrated in three additional stages. But while the stages are illustrated as discrete linear steps, actual practice teaches us that they are much more amorphous and overlapping.

Stage I: Product Centric – The company's approach to sales centers around its own product's attributes including features, functions, and price points. Product demonstrations and trials are common sales tactics. Customers compare the product to competing products and to substitutes. RFIs, RFQs, roadmap comparisons, and “bake-offs” are routine. Product management centers on bringing out new features that target the broadest customer base with little regard to product specialization by segment or industry.

Stage II: Solution Marketing – During Stage II, companies attempt to differentiate themselves through sales messaging and marketing tactics that address industry specific initiatives or compelling cross-industry issues – such as regulatory compliance. Very often, however, these superficial attempts to appeal to vertical industry segments or to claim leadership in solving cross-industry problems do little to show customers or prospects how a company's product will actually solve their problems. Target prospects, who are experts in their own industries, often view these claims and sales attempts as little more than “marketing fluff” exposing a disconnect between the marketing message and the ability of the company to actually deliver the promised solution. Stage II, however, is an important first step in a solution approach. Here, the organization begins to realize how it needs to invest in solving the real problems facing the different customer groups it hopes to serve and to understand that they need to rethink the provision of services as more than just installing or maintaining a product. In addition, the organization begins to sense the different segments of its markets. Segmentation is critical for defining a solution approach for the obvious reason it drives design and delivery, but also in that every segment may not economically justify a “solutions” approach.

Stage III: Solution Selling – Stage III represents a fundamental shift in the way the company sells. This stage requires a sharp focus on ascertaining the customer's needs through a consultative approach – one designed to profitably put the appropriate combination of products and services together to solve that customer's problem. This is an approach that can only occur with a skillful and well-supported sales force. During this stage, companies often add some kind of solution “architect” – highly skilled, cross-functional individuals who understand products, services, and the prospect's industry – who can design creative solutions and business cases for the customer. If done properly, solution selling can virtually eliminate competition. However, despite the competitive advantage, Stage III is a time when costs can skyrocket and customer quality can plummet as operations teams scramble to deliver on unique promises to customers. Finance and Legal also find it difficult to keep up with custom contracts and to manage gross margin targets. Product Management is often playing catch-up as commercial teams gain momentum and learn in the field – new deals rather than repeatable solution structures and profitability rule the day.

Stage IV: Solution Commercialization – This mature stage of the solutions evolution sees the solution selling process become more streamlined and its functional roles more clearly defined. Repeating patterns or segments of solutions begin to emerge and with them, a need to design more standardized operations and delivery approaches while still appearing as custom-designed solutions to the customer. This “mass-customization” approach balances the special needs of solution selling against the need to maintain profitability, timeliness, and quality. During stage IV, Product Management and Marketing achieve higher degrees of control over planning and designing repeatable solutions. However, product management teams that provide solutions require different competencies than companies which simply offer products and services, so they need to rethink the way they are organized and staffed. Legal creates modular contract structures that speed the sales process, while Finance develops flexible models based on more accurate figures. If done properly, Stage IV results in a blend of standardized features and custom elements providing a mixture that is highly unique, profitable, and of high customer value.

About the Author:

Chris Gormley has more than 15 years of experience building and leading technology, manufacturing, and services operations and companies across a wide array of industries. Mr. Gormley is currently Chief Operating Officer of Tiversa, Inc. - an early stage technology security company in Pittsburgh PA - where he is responsible for marketing, strategy, product management, service and sales operations.

Before Tiversa, he was Vice President of Marketing and Business Development for Haley Systems, a leading business process and middleware software provider, where he was responsible for guiding overall strategy of the company, building alliances, partnerships and channel relationships. Prior to joining Haley Systems, Mr. Gormley was Vice President of Product Management at Ariba/FreeMarkets, a world leader in purchasing and supply management technology and services, where he was responsible for worldwide creation and commercialization of $150 million of software and service-based solutions.  Mr. Gormley was also General Manager of FreeMarkets Asset Management Business, a global exchange for industrial goods and equipment, and an early employee who helped take the company through a successful IPO in 1999.  Previously, Mr. Gormley was a consultant with McKinsey & Company and held positions in engineering, finance, and marketing with the General Electric Company.

Mr. Gormley holds an MBA in Finance & Strategy from the Wharton School at the University of Pennsylvania and a B.S. degree in Chemical Engineering from Worcester Polytechnic Institute. He is a member of the Product Strategy Network and serves on the PSN Board of Advisors. He can be reached at: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .