Part I: Changing the Power
Dynamics in a Sales Cycle
One of the most common challenges raised by many of our clients is the difficulty their sales forces have with engaging Customer Executives in discussions about opportunities to impact their business as business people. Much has been written in these pages about creating solutions and offers that truly impact a customer's business, and on the need to engage customer executives to sell those solutions. Now it's time to address the challenge of enabling the sales force to be successful in taking those solutions to the target executives.
To start, it helps to understand the nature of the challenge at hand, namely, moving beyond the experiences of your sales people themselves. In many industries - and especially at companies that have competed for a long time on the differentiation of their products and services - sales cycles have long since become "responsive" in nature. In other words, sales people were primarily engaged in responding to demand that had already been created in the buying organization through some other means. The buying organization had already decided to buy and was in execution mode (hence, the heavy involvement of Procurement). Whether on their own or with the help of others, the buying organization had already made decisions about:
- the business needs they wanted to address
- the actions to take
- ownership of the initiative, and
- the funding to make available.
In responsive sales cycles, all that's left for the buyer to decide is the final vendor and price. These, of course, happen in parallel. As a result, most successful sales people are adept at selling their company's differentiation and managing the discussion around price. Absent differentiation, or the ability to sell the differentiation, they are left with only price. In fact, a close look at the contract approval processes within many companies will show that most of the internal discussion is just about price - as in, how low are we willing to let it go?
By pursuing a Customer-Intimacy business model, and bringing True Solutions to market, one engages the customer much earlier in their decision process. It might be so early that you are discussing opportunities and impacts that the customer hadn't even considered yet. Or, it might be an area in which a customer knows they need to take action, but hasn't really applied any energy yet to figuring out what to do and how to go about doing it. These are what we call "proactive" sales cycles, because the sales cycle is about leading the customer organization through their own decision processes. Even if the customer eventually goes out to RFP, your odds of winning are many times higher because of the trust, mutual knowledge of each other, and the intimacy built during the work of making the case for action and developing the course for action.
Unfortunately, the experiences of successful sales people in the "reactive" world often leave them ill prepared to lead "proactive" sales cycles. This can be addressed, but it takes more than just equipping them with sales training and new value propositions and talk tracks. They need to retool the way they think about their role in the buyer/seller arena. In particular, they need to think of themselves as having much more power in the relationship than was possible in a responsive sales cycle. The power comes from the fact that they are bringing ideas, opportunity, know how, and resources to bear that will effect change for the buyer's organization.
The challenge is that most sales people have never had that kind of power in the relationship, and they either don't realize it or don't know how to use it constructively. To illustrate the challenge a traditional sales person will have in selling in a more consultative environment, consider this true story:
I once went on a sales call with one of the more successful sales people at one of our technology clients. The client had already developed and piloted some True Solutions. We were now in the mode of scaling the sales model out to the main sales force. I was coaching this sales person on selling solutions and, in particular, the sale of an initial Entry Project as the first part of a Service Chain. Those of you familiar with this blog will have read about such offer concepts before.
This was our third meeting with the executive prospect. The first meeting included meaningful discussion about the idea and opportunity underlying the True Solution being taken to market, and the second meeting involved a deeper exploration of that opportunity with a broader stakeholder audience. Both had gone very well and it was clear there was broad support for moving forward. After discussing the objectives and scope of the Entry Project, it was evident that our executive prospect was interested and ready to move forward.
"So, how much will this first project cost?" the executive asked.
"$65,000" the sales person replied, with the confidence of one who can sense a deal close at hand.
The executive did not reply right away. In fact, he sat motionless, with no discernible expression on his face. It couldn't have been five seconds, but must have seemed like an eternity to the sales person.
"But because you are an important customer we can do it for $50,000," the sales person offered unprovoked, as if responding to an inner voice chastising him for having been so bold. The executive agreed and they began discussing how to staff the team.
I have often shared this experience through the years because it illustrates a common challenge within our client companies: their sales force has been conditioned to believe they have little power in negotiation during the sales cycle and the best and only platform they have on which to win is price. While that no doubt brings dismay to many business executives and marketing managers who insist their sales force needs to sell differentiation and price premiums, to many sales people those concepts are just words; it's all about cost.
In fact, many buyers have been conditioned to push back on price, even if they're happy with it. History suggests there is more discount available to those who demand it. In fact, a common buying tactic is to get a price early in the decision process, and over the duration keep pushing back on it; the more iterations and time that passes, the more discount extracted.
For the seller, the whole reason to move to greater customer intimacy and higher-value solutions is to combat commoditization of their offers. The process by which True Solutions are brought to a prospective customer, by its very design, demonstrates the value of a potential solution - as well as the seller - early in the customer engagement process. Theoretically, this should reduce price pressure and the sales person ought to have much more leverage to push back on price-reducing demands, whether real or imagined.
That's the theory. But can it be put into practice? Only if sales people can overcome biases and behaviors stemming from their own past experiences. If they are used to selling on price, they will fail when selling solutions and programs because they will leave unanswered the many questions a buying executive has before he/she can make the decision to move forward.
Fortunately, we can equip sales people to see and address the total picture with a prospective executive buyer - with price in its proper context - giving the sales person the power, confidence, and tools to be successful in a proactive sales cycle.
We'll explore the concept of equipping the sales force further in Part II.