The Problem with Sales
In many businesses, there is a glut of suppliers and more suppliers entering the market everyday, and thanks to the Internet, they are easy to find. Every customer has access to prices and specifications from suppliers anywhere on earth. The asymmetry, or imbalance, of information has been corrected. At the same time, customers are under enormous pressure to deliver value to their clients and their shareholders. They are compelled to use the newfound power of transparency and overcapacity to drive down prices, resulting in an unprecedented degree of commoditization with sometimes devastating effects on sellers. Customers can play one supplier against the other in online auctions that force prices so low the seller can’t make any money.
Under those conditions, long-standing relationships and good products are not enough. Sellers can have great strategies, differentiated technologies, faster product development cycle times, efficient operations, and good friends in the customer’s shop and still not get the sale, or not at the premium prices they deserve. Margins are often squeezed, sellers can’t retain customers, and top-line growth fails to materialize.
Fixing the Broken Sales Process
Fixing the broken sales process requires knowing precisely what the customer values: why he will prefer you over rivals and why he will continue to rely on you and sustain a trusting organizational relationship with you.
Lou Eccleston, the former president of global sales, marketing, and services at Thomson Financial and now CEO of Pivot Inc., argues that “making a sale is not the objective, it’s just a symptom of a successful communication. It’s a symptom that indicates you understand the customer and are measuring your success by your customer’s success. Your success is governed by how well you understand what you can do to create value for the customer. If you can’t impact the customer’s performance in a positive way, then you’re going to be a commodity product and you’re going to get commodity prices.”
How to Become Your Customer’s Trusted Partner
The better you understand and meet your customers’ needs, the more trusted you become. Over time, the barriers between your company and theirs drop and you become a partner they turn to for help. Your success is a natural product of the success you help them achieve.
To become a customer’s trusted partner, you must understand the following:
- The customer’s set of opportunities and the anatomy of the competitive dynamics
- The customer’s customers and the customer’s competitors
- How decisions are made in the customer’s organization
- The customer’s company culture, its dominant psychology and values
- The customer’s goals and priorities, both short-term and long-term, clearly and specifically.
Developing the Value Creation Sales Force
The best way to adopt VCS is to start by selecting a few salespeople who have the skills and personal attributes to understand and execute the new approach. They should be people who are willing to change their psychology and mind-set from “doing deals” to ensuring that their customer is successful. Great transactional salespeople are not necessarily the kind of businesspeople VCS demands.
The most promising individuals should be trained and assigned to a select set of clients that seem receptive to the new way of doing business. As this initial contingent begins to enjoy some early and visible successes, word will spread and other salespeople will become more enthusiastic about making the change. At the same time, those who are resistant to the change and either can’t or won’t embrace it will become more obvious. They may be susceptible to counsel and encouragement and eventually come around. If not, they will either opt out of their own accord or have to be moved to another position in the company or replaced.
Making the Sale
Once the sale is made and the delivery and implementation of the value proposition is taking place, your sales team should be working to identify the next opportunity to help the customer succeed. It may be something as simple as fine-tuning the solution you have already delivered or it could involve extending the value proposition you just sold to other products or regions or divisions. New opportunities will emerge as the sales team continues to meet with their counterparts in the customer’s shop in social or business settings. These meetings can and should include conversations that have nothing to do with selling your products or services. Instead, they should be used to brainstorm new ideas for the customer, to discuss what is changing in the external environment and what it means to both your company, your customer, and your customer’s customers. Everyone will benefit from exercising these mental muscles. When appropriate these sessions can be facilitated by the CEO of your company, who might invite a diverse group of people from the customer’s shop to spend the day talking about what the future holds for their business.
Sustaining the Process
VCS, closing a sale is just the beginning. The proof of the pudding is when the customer realizes the benefits you promised. Top management should create some means to measure success for each account, and get the customer’s concurrence on it. Teams should be rewarded each time the customer realizes the benefits proposed.
Make no mistake, implementing a value creation selling strategy is a long-term commitment. The companies that have done it successfully required around three years to become adept at it, and most continue to refine their processes. Success requires constant repetition of the principle that the company will prosper only if its customers prosper—a message that is easier to convey when you begin to score wins.
Senior managers must drive the adoption of value creation selling every inch of the way. They should create a dashboard, or set of metrics, to gauge progress and revisit it at every executive leadership meeting, whether weekly, monthly, or quarterly.
Taking Value Creation Selling to the Next Level
As you set off on your journey, you’ll no doubt encounter obstacles along the way. Senior management will be challenged to find the right compensation system to properly reward such sales support functions as legal, fi-nance, product development, and human resources. Sales leaders will have to find ways to develop relationships with people other than the gatekeepers in the customer’s shop. Your company will have to pinpoint the customers who are willing to develop a trusting relationship and find alternative ways to serve other customers. You will have to create and sustain an environment that encourages creativity and imagination in formulating value propositions.
All the while, senior managers must think hard and carefully about the future of their own company, what markets it will serve and what products or services it will develop. Committed leaders will find answers to the problems and ways around the obstacles.
The good news is that the journey is difficult and requires persistence and tenacity. That’s good news because it means not everyone can or will make that journey, and those who do will be amply rewarded.