Hot Topic: Follow the money

Hot Topic by Mike Evans

In tough times, there are always winners as well as losers. Every business can organize its resources to find and convert the most attractive sales opportunities for its portfolio. Lawyers may not be writing contracts for property developers but their bankruptcy practices flourish. Of course, this continuing challenge should be met in good times too. However, the rapid rate of change of the last year means that past assumptions may be flawed and now more it is important than ever not to waste sales and marketing resources.

John Maynard Keynes said that he selected the most attractive investment opportunities from research. He was a well informed man who read the Financial Times every morning and networked with well placed friends in industry and commerce. We believe that he made sense of all these snippets of information by thinking through their cause and effect and built a mental model of how the economy worked and how each industry interacted with the economy. Today we are sure he would use a spreadsheet! By finding imbalances in the world economy, such as overvalued currencies or undervalued commodities, and identifying growing clusters of skills and expertise that could grasp the opportunities those imbalances created, Keynes selected promising investments.

We would suggest that a similar process would help decide how to allocate sales and marketing resources to sell ICT to industry. The essential skill is to understand the prospective customer's business, and even their customer's business, and how it is affected in the current unpleasantness. We advocate segmentation analysis to find the most attractive prospective customers. That means working out the factors that make a customer attractive for a particular ICT product in terms of demand, product fit, competition and channel to market.

Working out demand means considering the factors that would create the prospect's business case for your product. Each industry sector has a typical business model. They may sell to consumers, who may wish to conserve their savings. Consumer behaviour will differ from region to region. For example, in emerging economies savings ratios are high but welfare systems are poorly developed. The savings will be used, but only on a rainy day or as a kind of generational investment where they buy things that will create opportunity for their kids. In these economies companies that provide healthcare or products that will improve children's experience, from educational toys to computers, are likely to be better prospects than those selling luxuries.

They may sell to businesses, who will be working out how to conserve cash and exploit assets to the full. Most will need short term financial benefits in cash from any computing investment. Products and services that reduce running costs, perhaps by enabling the removal of layers of management or automating workflow, will be more attractive. Products and services that can measure and control the allocation of resources will be more attractive than those which extend operations.

Then there is the consideration of whether or not they can pay. You will need to think about the effect of tight credit on their business models. Businesses selling products normally bought on a lease, such as machine tools, face a more difficult sell. Companies with cash on their balance sheets and good monthly cash flow are good prospects. Credit worthy enterprises, which means most governments, are also good bets.

A spin off benefit of working like this is that it helps develop the value proposition and the marketing messages to reach out to the prospect.