Selling Complex Projects - Part 2: Types of Customers and Case Studies

In the last article, we went over the basics of what it means to sell large and complex contracts, especially in project-based industries. These include large infrastructure, systems for power supply & distribution, telecommunications, public transit and railways, etc. We will now dive a little deeper into the characteristics of the customers we usually encounter, and then look at a couple of examples of how SPIN selling ideas can applied in this context.

Differences of selling B2B vs B2G

Last time, I mentioned that selling these complex contracts is almost always B2B or B2G (i.e. we're selling to other corporations or government agencies). But are there any differences between them? You bet.

As a rule of thumb, we can say that selling to the government is always more complicated, since the procurement process is heavier and more stakeholders participate (at least that was always the case in the 9 countries for which I managed bids over the years). Nevertheless, there are many aspects and nuances to consider - here is a summary based on my own experience in transportation systems and on what I hear from similar industries. Note: in both cases, I'll be using the term RFP, which stands for Request For Proposal, the package of documents with directions to vendors about the solicitation, scope description, technical requirements, contractual terms, and any other relevant information.

Another point of attention is the possibility of special requirements for localization and disadvantaged business content. That's a very distinct feature of many governmental tenders (or any projects that receive government funds), although it's not always present and the details can vary a lot:

• Local content requirements (a.k.a. Localization): requires a minimum portion of the project scope to be manufactured locally. Usually, it's a federal law or requirement - In the US, the most prevalent local content regulation is the Buy American Act (BAA), which is applied to projects above a certain cost threshold, contracted by federal agencies or receiving federal funding (but there can be exceptions).
• Disadvantaged or minority-owned businesses requirements: some procurements set a minimum percentage that must be sourced from business that are certified as small or owned by minorities / specific groups. One of the most commonly applied category is DBE (Disadvantaged Business Enterprise), but there are other types. These requirements can come both from federal or local governments.

And here is a resource where you can find more details about the differences and similarities of B2B and B2G in the United States.

Down to business: Applying the techniques

Just to recap from the last article: the simpler / smaller purchases that we call "transactional" are defined by low price, low risk, one decision maker (or few), probably it's an one-off transaction... And nobody needs to know if it turns out to be a waste! There is a big difference in implications between buying a $1.99 mobile app to make your voice sound like Darth Vader, and signing a $100 million enterprise software contract that can get you fired (or even sued!) if you fail. The pressure is even greater when dealing with safety-critical systems, which can risk the lives of thousands or millions of users. And that's the kind of reason why there are so many rules and decision-makers involved in large and complex sales.

In the world of large project-based contracts, we apply techniques like Solution Selling and Consultative Selling. That means we go through a phase of exploring the context and the specific situation around the issue, then seek a deep understanding of the problem, to finally work on a solution (preferably in collaboration with the customer), and make the value to be delivered by it crystal clear.

The more traditional sales techniques focus a lot of closing, i.e. getting the customer commitment to buying or, even better, just write you a check immediately. But that's not how it works for complex sales - our cycles take months or even years, and you can't just force the customer to rush the phases. Our type of "closing" is much more gradual and intricate: although the end goal is the same (to get the order), there are many intermediary objectives to address before we can get there. During many interactions with the customer, each time with different stakeholders, we solve issues that will get us closer to winning the order, but indirectly - improving our chances by gaining and maintaining leadership in each phase of the process. Moreover, besides "just" winning the contract, we must keep in mind the added goals of increasing profitability and reducing risks (after all, nobody wants to celebrate a $500 million job that ends up being a time bomb for losing money - and, believe me, that happens a lot).

OK, I know this doesn't sound as exciting as the Wolf of Wall Street style of closing sales with big commissions in one phone call (and we definitely don't party as much!)… but it's an interesting and challenging process, that requires a lot of different skillsets working in coordination. More on jobs and skills in the next and final article of this series.

As I mentioned in the last article, one of the favorite methods is SPIN Selling, from Neil Rackham's book first published in 1988, but still very current (and there are other methods based on a similar philosophy). It's a very question-centric approach, and below are the 4 types of questions that form the acronym, along with my take on how they apply to selling large project-based contracts:

• Situation: understanding as much as possible the context around the target purchase. Again, this is a long-term game. Gaining information from customers in these industries usually takes years of knowing them, talking in conferences and other gatherings, or just stopping by for a quick chat, even when there's no imminent project on the horizon. Good salespeople will know almost everything about a customer (that's the advantage of having very few but big accounts to manage), like the systems they currently use, operational issues, who is who in their org, etc.
• Problem: what are the actual problems the customer is experiencing? Uncover both explicit and implicit needs.) In early stages (pre-RFP release), we deal with very big-picture, conceptual ideas. Later, during the procurement and negotiation phases, we get to details about certain constraints, required features, or the future execution plan.
• Implication: what are the consequences of those problems, e.g. extra costs, safety risks, uncertainty? Once you identify the problem or need, it's time to probe to find what practical implications it entails. Besides generating a better appreciation for the value of solving it, this type of question also forces the customer to articulate and be increasingly aware of the pain caused by the problem, and therefore be more willing to accept the proposed solution.
• Need Payoff: what would be the gains of solving the problems / addressing the needs? After bringing to the surface the pain of the problem and its implications, it's time to talk about the joy of solving it, by asking what would be gained if you could solve X by providing Y, like the magnitude of money and/or time savings, and what they could do with those savings. Besides reinforcing the value our proposal, we also want to understand the potential impact and, in some cases, decide between competing technical alternatives.

In SPIN selling, there are also four key stages. In each stage, a combination of more than one type of question (described above) can be employed. They are:

1. Opening
2. Investigation
3. Demonstration Capability
4. Obtaining Commitment

And now a couple of examples of how I've seen or applied those ideas myself. These scenarios are hypothetical, but heavily based on real-world situations that I've encountered.

Example Scenario 1

Our customer is a company that has the concession for building, maintaining, and operating a complex system - let's say, a telecommunications network. Since the contract would be with a corporate concessionaire, this is a B2B. They are planning a full upgrade of the core system, which is becoming obsolete. Before the RFP (Request For Proposal) is released, the company's procurement manager contacts the key competitors in the industry, and gives them a draft of the technical specification (Spec, for short) to review.

After reading the Spec, your technical team notices that, although the solution described is exactly what you company can provide, the reliability and availability requirements (basically, how much your equipment is allowed to fail over a certain period) are much higher than usual. In fact, it looks unreachable and will likely prevent your company from participating in the tender altogether.

Let's try to apply some of the SPIN methodology in a possible course of action: the account manager would contact the Procurement person in charge of this project and recommend involving the right people (e.g. Maintenance) to understand what's driving this unusual requirement. Knowing beforehand this customer's organization and the system currently in operation (Situation) helps her get to this point and ask the right questions. Moreover, with knowledge of the market, she confirms the top competitors would probably have a hard time complying with the requirement too. Then she probes what's driving the need for such high reliability target, and finds the current aging system was presenting a high failure rate (Problem) and is hard to fix, so they want to avoid that in the future. Next, she asks "And what were consequences of that? What other issues originated from all those failures?", and hears that they received several penalties from the granting authority (for exceeding the maximum total downtime per month) and damage to the company's image with the users (Implications). With this deeper understanding about the real problem, our account manager can now work with the product platform experts to address those needs, and they come up with a new solution: adding to the project scope a condition-based monitoring system recently launched, capable of providing predictive maintenance alerts. This solution allows to predict when a piece of equipment will fail based on abnormal behavior (e.g. by monitoring electrical current or temperature), which solves the issue by flagging the need for intervention before something fails, and improved the maintenance team response time when it does happen, solving the real issue of keeping the overall system downtime to a minimum (Need Payoff). With this, the customer now agrees to lower the reliability requirement on the individual components. Result: we would have increased scope and get more value to the customer, a typical win-win scenario.

Example Scenario 2

In this B2G case, we're dealing with a municipal transit agency. The project is to design and build a new Light Rail Transit (LRT) system that will connect a very dense area of a city with a few important destinations, including their main sports stadium and a university.

Although the tender documents were pretty specific with regards to the solution they wanted, the execution strategy was left open for the provider to propose. The only notable exception was the total project duration: it couldn't exceed 36 months. After defining all details of the technical solution and lay out the steps to design, procure/manufacture the equipment, install, and test everything, it becomes clear that this LRT line will take at least 45 months to enter revenue service.

Our sales leader knows this client and this project well enough (i.e. the Situation) that he know if we to bid non-compliant (deviating from the maximum duration requirement), the company will very likely be disqualified. Therefore, he reaches out to the responsible for this project to inquire who participated in defining this kind of constraint (still Situation), and finds a couple of important stakeholders. Now talking to the right people, he investigates what's driving that requirement (with Problem questions) - it turns out there will be a major sporting event in the city and this connection to the stadium must be ready and operational before that. What would be the consequences if it's not (Implication)? Public transport will probably collapse, jeopardizing this important public event and disrupting public transport in general throughout the city, with very bad repercussions for the administration.

Knowing the actual need and its importance, the sales leader goes back to the bid team and they generate an alternative exception plan that splits the line in two sections, inaugurating the first (which connects the dense area with the stadium) within 34 months, and the second section in 47 months. Going back to the customer, he presents this idea, exploring what they could do with if this critical connection was delivered even before the deadline: it would give some safety buffer and time for the public to get used to the new transit mode (Need Payoff). The customer stakeholders love the plan, and give a formal authorization to submit the offer with this deviation.

Conclusion

The particularities of selling large and complex projects make most traditional sales techniques and tips inappropriate for the task. We must turn to other approaches that focus on consultative and solution selling, to really deal with the kinds of situations we encounter.

In our business, customers are usually few in number, but also have their specificities. One of the main ways to segment customers, although not the only way, is between corporate (B2B) and government (B2G), which is a source of some key differences in the way they operate and evaluate offers.

Next time, in the last part of this series, we will finally analyze the kinds of jobs and careers that make all this happen.