It's difficult to imagine life getting any tougher for today's sales professional. Competition has intensified. Sales cycles have expanded. And sales commissions have eroded as customers assert their newfound pricing power.
Unfortunately, life will get harder -- unbearably so -- for salespeople who continue to embrace the status quo. Even as the market continues to rebound, the structural changes now sweeping through the economy promise to utterly transform the sales profession in the coming years.
The sales force of the future, in other words, will look dramatically different from the one that seems most dominant today. The companies, sales executives and sales professionals that will thrive in this new era will be those that are quick to recognize and address the powerful forces now reshaping the marketplace.
Jeff Thull, president, CEO and founder of Minneapolis-based Prime Resource Group and author of Mastering the Complex Sale, contends that the twin forces of increasing complexity and rapid commoditization are leading to a "deadly spiral of shrinking profit margins." Given the confusion, mistrust and anxiety associated with today's complex offerings, Thull contends that the success of sales professionals increasingly will depend on accepting responsibility for the success of their customers.
It's a simple point that could have massive implications. Instead of pitching products or even pre-packaged "solutions," sales professionals must collaborate with their clients to "diagnose, design and deliver" solutions that match a particular context and set of objectives. They also must collaborate with their team members -- in marketing, professional services, technical support and elsewhere -- to ensure that value propositions they have promised are effectively met. Indeed, they must become fully accountable for the results and experiences of their customers.
Four dimensions -- segmentation; structure; systems and support -- must be carefully addressed if sales professionals are to "win" in tomorrow's hyper-competitive markets. Leading by example, several progressive companies give us a glimpse of things to come.
Cisco Systems capitalizes on executive rainmaking
Structure is the organizational arrangement by which accounts are cultivated, developed and managed. The trouble companies are now encountering is that sales people generally lack the credibility and experience to sell at the executive level where high-impact decisions are made.
"Few companies make building relationships with customers a top priority for the whole organization," write Tom Stevenson and Sam Barcus in their recent book The Relationship Advantage. "Rather, most delegate it to the area in their organization that experiences the highest level of employee turnover-their sales force."
If companies want to sell differentiated, high-margin offerings, they should model themselves on the professional partnerships, such as consulting and accounting firms, that have long made their most senior executives -- their "rainmakers" -- accountable for building client relationships, the authors say.
Stevenson and Barcus contend that senior executives should take responsibility for engaging customers at executive levels through "peer-to-peer match-ups," and then, take ownership of the outcomes. Salespeople, they say, then can assume specialized, consultative and process-oriented roles to ensure that relationships are well-managed and expectations are met.
Cisco adopts new approach
Cisco Systems, the San Francisco-based $19 billion networking and communications giant, is one company that has applied this approach to great effect. In 1999, Cisco introduced an executive sponsorship program that assigns account involvement responsibility to each of its vice presidents and directors. Critical to the success of the program, which involves executive briefings as well as a rigorous schedule of customer calls and on-site client meetings, is the fact that Cisco executives are compensated based on their own personal involvement in customer-oriented programs.
Stevenson, who previously ran Cisco's worldwide channel operation, worked with Barcus to introduce this approach to the company's channel partners. What Cisco's partners discovered is that they also could build more profitable, service-driven relationships with clients if they shifted account responsibility to their most senior executives and began calling on clients at executive levels.
"Every channel partner I met with asked for bigger discounts, but experience showed us that, given more discounts, these same partners would simply pass it along to their customers," says Stevenson. "They weren't keeping the added profit. I reversed this trend by holding our prices steady while offering to teach them how to sell our products at a higher margin. It worked."
Diagnose and collaborate to win
One of the most troubling fallacies in today's marketplace is the assumption that customers are in a position to make complex decisions about sophisticated products, and then manage the difficult change process that ensues. In recent years, many companies have packaged intricate offerings and released them on unsuspecting clients. Little thought was put into the organizational and cultural challenges that would arise, and sellers took no responsibility for the results. Not surprisingly, dissatisfaction ensued.
If companies are to sell successfully in this environment, they must develop a rigorous system that not only facilitates complex decisions and changes, but ensures that all participants are effectively collaborating, says Prime Resource's Thull. He believes it will take much more than keynote speeches and two-day sales workshops to realize this objective.
Success, he contends, increasingly depends on an organization's willingness to engage in a far-reaching "transformation" in the way it interacts with customers. Companies must embrace dramatic, demanding and systemic change in "the sales approach, the service approach, and the way products are developed and delivered," he says.
Motive uses a diagnostic selling approach
Austin, Tex.-based Motive, a $100 million software company that makes technology products and services "self-managing," has initiated a transformative strategy that it considers to be a key competitive advantage. Working with Thull's team, the company has instituted a "diagnostic selling" approach that enables more in-depth conversations and information exchanges with customers, facilitates greater access to team members in the customer organization, and reduces the length of sales cycles.
"Most sellers just want to talk about the beauty of the future," says Jeff Bolke, Motive's vice president of worldwide sales. "They are unable or unwilling to take the time to carefully diagnose a customer's problems and challenges. Our approach enables us to be more collaborative with the customer. It takes more preparation, but it leads to a more successful outcome."
Rather than insisting on "perpetual licensing" agreements that require up-front payment for software, Motive offers its customers -- including 3Com, AT&T Broadband and Lawson Software -- the ability to purchase its solution on a subscription basis. That reduces the "barriers to exit," aligns the interests of all parties, and encourages Motive to think in terms of customer success and lifetime value.
This is a transformational time
Salespeople, who have been manipulated with carrots and sticks for many years, are free to cast a cynical eye when it comes to the next new sales approach. The introduction of trendy, new sales initiatives at every corporate off-site meeting certainly doesn't help matters. But those salespeople who stop exploring new ways to enhance sales performance, do so at their own peril.
The smart money no longer rides on sales "performers" who give great pitches and presentations, but rather, those who listen carefully to their clients, ask "diagnostic" questions and actively facilitate difficult changes. As Stevenson and Barcus say, it is much more important to be "interested" than "interesting."
At the same time, we are shifting from sales as an individualistic and creative art form to a collaborative and methodical process. To succeed, it's critical to analyze customers, diagnose problems, determine treatments, measure outcomes and continually improve relationships in a disciplined fashion.
Copyright © 2004 Carlson Marketing Group, Inc. All rights reserved. Peppers & Rogers Group is a Carlson Marketing Group Company.