Product Failures Create Great Sales Opportunities

Late last month, an IT failure crashed the administrative systems at agencies across the state of Virginia. Prisoners at state facilities couldn’t be released, drivers couldn’t renew licenses, and the state department of taxation couldn’t access accounts. The Virginia Department of Motor Vehicles alone estimated that 35,000 to 45,000 customers were affected, making it necessary to grant temporary amnesty for driving with an expired license. At least some customers weren’t complaining.

The state’s $2.4 billion IT services contract with Northrop Grumman was placed in the center of the blame game, which wasn't hard to do, given the number of zeroes in billion. Hardware vendor EMC was drawn in because a pair of their memory cards contributed to the outage. According to an article in The Washington Post (Computer Crash has Tech World Watching, September 2, 2010), Virginia Governor McDonnell “is now grappling with the worst network failure since (Northrop) took over the state’s technology overhaul in 2003.” One state legislator said “We’re paying Northrop to run modern, quality service—and they have failed to do it every step of the way.” A quote you won’t find on Northrop’s home page. Off with their heads!

Such shrill, social-media enflamed negativity could send the most brazen, battle tested Northrop and EMC salespeople scurrying back to the office, tail tucked between the legs, until the uproar abates. When the news broke, I visualized thousands of Post-it notes newly affixed to their sales proposals, with the words, “postpone this decision.” They might as well say “radioactive.” “It’s a selling point for (EMC) when they talk to a major organization, that this stuff never goes down,” according to Bill Kreher, an analyst who follows EMC for investment firm Edward Jones. I’ve experienced the pain myself. Product failures are about as welcome as a root canal.

Or not. While it’s probably too early for Northrop and EMC salespeople to begin snapping up new Bimmers, they are likely winners. In discussing last month’s incident, David Bergert, CEO of Tessaraic, a Virginia-based IT services firm, said “if you’re a CIO and not aware of the associated risks (of an IT implementation), then you’re an idiot.” Bergert doesn't recommend running from Northrop or EMC, and I don’t anticipate him combing Virginia’s IT vendor directory for other suspect companies to pillory. In fact, Bergert sees opportunities for salespeople to reach out and discuss Virginia’s problems—and solutions—with prospects and customers alike. Bergert sees the big picture. With his extensive public-sector IT experience, he understands that backup, disaster recovery policies and state IT contract management have as much to do with system uptime as do components like EMC’s memory cards.

Art Stewart, a communications strategist, agrees that good outcomes can result from bad events. He sees high-profile failures as “transformational moments” for corporations. “There is a fork in the road, and you can choose which path to take,” he said. Stewart recommends selecting the road in which a vendor takes a leadership role in solving the problem, and making sure communications about the crisis from field operations and salespeople are congruent with those from corporate executives. The worse road for a vendor includes finger pointing, blaming others, and litigation, which Stewart says corrode brand equity and undermine trust. Nothing new if, like me, you’ve bypassed a BP station recently in search of search of more politically-correct fuel.

Good ideas, but in IT, identifying who is obligated to solve problems, and who is accountable proves increasingly difficult. After all, the term stand-alone system has become a quaint artifact of a kinder, gentler time when data was transferred on floppy disks. Complexity grows with companies running multiple operating systems, open-source middleware, and home-grown applications coded in offshore facilities. Jeff Baker, an enterprise sales executive with Hewlett-Packard says “a minimal QA (Quality Assurance) effort may have been done and . . . vendors are reluctant to dive in and take responsibility. So it can be a mess.”

Still, Baker finds opportunity in disaster. “It could be presented as a potential proactive notification or a lessons learned discussion, with the support teams engaged…and if skillful, could lead to the TCO (total cost of ownership) discussion and facilitate the enterprise sales strategy. A good job in responding will provide closer ties to executive management at the customer, better ties into the support organization and an impending event from which to build an enabling enterprise sales strategy.”

What should salespeople do in the event of a high-profile product failure?

1. Don’t duck the issue with customers or prospects.
2. Assume a leadership role in solving the problem, and demonstrate that your company is doing so.
3. Immediately ensure that adequate resources are assigned, and maintain those resources until the problem has been resolved.
4. Communicate the causes of the problems and the steps toward resolution internally and externally.
5. When done right, feature how the crisis was managed and mitigated.
6. Remember that excellence and commitment in resolving difficult customer situations is a compelling competitive differentiator.