SALES IS CHANGING



IntersellDon’t get left behind | by Owen DowdenCelerant Consulting Holdings LimitedSALES IS CHANGING INTRODUCTIONThe IBM sales transformation story is a compelling one to highlight the radical transformation that has started to take place in the front end of many organisations. IBM under the leadership of CEO Sam Palmisano refocused the sales towards customer needs, placing emphasis on the strategic role of the sales-force creating customer value. This involved transforming from a fragmented organisation driven by maverick, product focused sales teams towards an integrated global organisation, with cross divisional teams that aligned and mobilised resources to create bespoke enterprise customer solutions. The result was a turnaround from being depicted as a ‘Dinosaur’ on the cover of Fortune magazine in the 90’s, to a top ten for Innovation and business solutions in 2008.Other companies including HP, P&G, many of the Pharmautecal Companies have started similar re-organisations in an attempt to keep pace with rising customer expectations and find new sources of competitive advantage in increasingly competitive markets. Nigel Piercy from Warwick Business School a leader in the field of Sales and Strategic Marketing presented a compelling vision of the transformation starting to take hold of the sales function is similar to the transformation that raised the profile and strategic nature of purchasing and the human resource functions over recent decades. A transition he defines as a move towards ‘strategic customer management’. 2In this white paper we discuss the new strategic significant of the sales organisation in light of new customer relationship strategies and the increasing academic view that the sales organisation may be the only place left for some organisations to find competitive advantage. We also highlight the new competencies required of salespeople and how this new profile is more aligned to a ‘strategist’, requiring much broader business acumen. We identify a number of sales transformation priorities to successfully meet the challenge of this new sales era and to fully leverage the potential of the sales-force to become a dynamic source of value creation. THE STRATEGIC IMPORTANCE OF SALESThe sales organisation has never been more strategically significant. The challenge of rising customer expectations, the high cost of sales activities and the realisation that in many organisations sales may be the only place left to add value, has raised the sales profile and increased the focus on sales effectiveness. Customer relationshipsBuilding strong relationships with customers is recognised as a top management priority by academics and executives. Building customer relationships is the most important source of competitive advantage in the 21st centuary according to Human Capital consultancy Mercer.But customer expectations are becoming increasingly demanding. Availability of information on the web and sophistication of procurement departments means it is not uncommon for buyers to know more about the market than sales people. Globalisation, shorter product life cycles and the rapid pace of technological change has increased complexity and customers want solutions to match.Increasingly customer expectations are exceed salesperson knowledge, speed, breadth and ability to customise solutions. This gap presents a serious threat to achieving sales organisation effectiveness and developing customer relationships. The World Class Sales Excellence Report (H.R. Chally Group 2006) outlines the new expectations of the salesperson. Personal accountability for the buyers results Understanding the customers business (competencies, strategies, challenges and culture) Customer advocacy (be the customers advocate within his own organisation) Designing the right applications (thinking beyond features into implementation within their business) Accessibility (constantly connected and within reach) Problem solving (able to diagnose, prescribe, and resolve customer problems) Creativity in responding to customer needs (expect innovators, creativity to solve customer problems)If CEO’s are to be successful in their customer relationship strategies, sales-force transformation is a priority. The sales organisation must transform to adapt to the new market realities. High Cost of salesMany sales departments have managed to avoid the brunt of cost reduction initiatives but it is the logical next place to look for efficiency improvement. Sale’s is a high cost function, and in B2B environments can cost up to 20% or more of total revenues. New technologies have already offered opportunity to reduce sales overheads, through the development of direct channels and automating processes. However, many sales functions would benefit from further process scrutiny and leveraging the latest advancements of the digital age.The only place left to add valueNigel Piercy & Nikala Lane in his excellent book ‘Strategic Customer Management’ discusses how many large organisations have followed similar improvement initiatives to re-engineered processes, lean supply chains, outsource non-core activities and adopted the same technologies. The result has left organisations with similar cost structures, similar products and consequently increased the pressure of commoditisation. There is a strong argument therefore, that for many organisations sales may be the only place left to add value. Firstly, research has shown that research has shown that sales person effectiveness can account for up to 40% of the B2B customer choice of supplier, simply because technology has made the products themselves increasingly substitute. The sales person is increasingly becoming the added value component in the sale. Secondly, the opportunity for the sales-force to enhance business strategy through market sensing capabilities is unexploited in many companies. The sales-force can become a valuable source of real time insight into customers, competitors and changes in the market that enables the business to perceive and react to opportunities and threats more effectively than the competition.SUMMARY: Sales is a strategic issueThe importance of meeting rising customer expectations and successfully executing customer relationship strategiesThe high cost of the sales function and its ability to impact top and bottom line growthThe realisation that for many organisations it be the only place left to add value THE NEW SELLING IMPERITIVESMOHR Inc studied over 1000 sales people and identified 7 competencies that the 21st century salesperson must master.Aligning?customer/supplier strategic objectives to identifying opportunities that create mutual value for the customer and the firmGathering information to understand customers business strategies and view of market opportunitiesStaying up to date with new developments and innovations in marketsKeeping current with emerging trends and initiatives of customer’s competitorsListening?beyond product needs to identify business process improvement potential and value adding opportunities?along the supply/value chainKeeping customers regularly updated with information and changes that might be importantSuggesting ways the sales person can ring add value to the customersHelping customers think differently about their future needsUnderstanding the financial impact of decisions on the customers organization and my organization and quantifying theseLooking actively for ways to contribute to the customers profitabilitySearching actively for more cost effective ways to serve customersFocusing on the financial consequences of approaches to meet customer needsOrchestrating organisational resources by identifying key contributors, communicating relevant information, and building collaborative, customer focused municating customer needs, suggestions, and concerns to appropriate resources in the organization.Working co-operatively with people in other parts of the organization who can be useful sources of ongoing information, resources and support.Ensuring that the product, sales and service units work together to deliver valueConsultative problem solving to create new solutions, customized products and services, and paradigm changes while being willing to work outside the norm when necessaryAnticipating possible problems and inviting discussion about how they can be overcomeDetermining the cause of a problem and identifying constraints before recommending a solutionProposing innovative solutions that go beyond the immediate application of product or serviceEstablishing?a vision of a committed customer/supplier relationship by identifying value adding?procedures, processes and serviceCreating a relationship that supports the goals and values of both organizationsDeveloping relationships that recognize the needs of all contributing functions in both organizationsCommunicating objectives for the relationship that are achievable and challenge the creativity of both organizationsEngaging?in self appraisal and continuous learning by securing feedback from customers, colleagues and managersDemonstrating an understanding of what’s working, what’s not working and how sales people can do things differently.Staying up to date in their field of expertiseAsking for and welcoming feedback to assess a salesperson’s performance and the degree to which he or she is meeting expectations.The role of the salesperson has become more of a ‘strategist’ than a ‘seller’, someone blessed with the entrepreneurial flair to identify and capitalise on opportunities, the diplomatic skills to find consensus that balances the needs of different functions and the influence to command internal resources and changes in pursuit of customer success. Effective selling is no longer about ‘salesmanship’ but about ‘strategy’ ‘leadership’ and ‘insight’.This implies a very different agenda for the recruitment and development of salespeople, something senior executives must think carefully about. To date most have failed to successful develop a sales-force that can live up to this new vision of success. High performing sales people of the future may not fit the ‘stereotype’ or characteristics that have determined past success. Understanding the customers strategic objectives, supply chains and value creation is more important that sales tactics, overcoming objectives and closing techniques (the domain of traditional sales training) Selling methodologies and influencing techniques are not now obsolete, but their relevance is being superseded by new requirement for broader and more advanced business skills; strategic literacy, analytical skills, leadership and change management skills – closer to the domain of the MBA. An MBA is a bit extreme and unrealistic as a training investment, but a scaled down version that develops a broader cross functional understanding of business and value creation could be one mechanism to support the development of existing sales teams. SUMMARY: The new core competencies of the 21st Century sales-forceAligning customer/supplier strategic objectivesListening beyond product needsUnderstanding the impact of financial decisionsOrchestrating organizational resourcesConsultative problem solvingEstablishing a vision of committed customer/supplier relationshipEngaging in continuous self learningThe roles of the salesperson has become more of a ‘strategist’ than a ‘seller’, someone blessed with the entrepreneurial flair to identify and capitalise on opportunities, the diplomatic skills to find consensus that balances the needs of different functions and the influence to command internal resources and changes in pursuit of customer success. Effective selling is no longer about ‘salesmanship’ but about ‘strategy’ ‘leadership’ and ‘insight’.THE SALES TRANSFORMATION AGENDA“Today’s competitive environment demands a radically different approach. Specifically, the ability of firms to exploit the true potential of the sales organisation requires that company executives adopt a new mindset about the role of the selling function within their firm, how the sales-force is managed, and what salespeople are expected to produce. The sales function must serve as a dynamic source of value creation and innovation within the firm” The Sales Educators.Developing a strategic sales-force is a challenging journey but the rewards are significant. Those who successfully transform will distinguish themselves in the eye of the customer and benefit from new sources of competitive advantage.TRANSFORMATION AGENDAMarket IQStrategic Customer ManagementSales ManagementAlignment & IntegrationTechnologyPurposeMarket IQDeveloping market sensing and learning capabilities, to improve strategic effectiveness and sales effectivenessThe more you know about your customers, competitors and markets, the more likely you will be to develop a winning business strategy. Some academics argue that achieving competitive advantage may well be based on the asymmetry among firms in their “Skill in collecting, filtering, and interpreting the information about the value of future resourced” Madock & Barnet. Effective market sensing and learning enables companies to become more self conscious and aware than their competitors which enables them to perceive and adapt to change more effectively. However, understanding markets has never been more challenging due to the speed at which customer preferences and market dynamics are changing ‘companies are failing to response to fast changing markets because they are unable to understand and adjust to what their customers want … business are struggling to meet demands of increasingly competitive international markets and sophisticated clients’ BPM ForumThe significant role the sales-force can play in market sensing and intelligence gathering is often overlooked and unmanaged. But with the appropriate direction, motivation and support, the sales-force can provide a rich source of real time insight into customers, competitors and market changes and assist the company in becoming more strategically effective. The key is ‘understanding’ not ‘information’. The ability to ‘understand’ how customers and markets are changing is where the competitive edge lies. Focusing on how things are changing is more important that analysing the traditional market structure and comparing to established competitors, which is the focus of much traditional market research. It is new business models and technology that kill businesses, consider the impact of i-tunes and digital downloads on the music industry.The strategic sales organisation must adopt a culture that places intelligence as the heart of the sales approach and business strategy. It starts by developing a culture of disciplined curiosity that consistently asks questions to unearth a deeper understanding of customers value drivers and the market place in which you operate.What are the critical success factors in this customers end market?How are the preferences of our customers customer’s changing and how will this effect our customer?How can we make the customer more competitive in their end market?How can we accelerate the achievement of this customers strategic goals?What economic value can bring to this customer?How can we help this customer prepare for future market changes?What value do we offer that our competitors cannot? What new technologies, business models and competitors are developing in this market and how could this affect us?How is the market structure and channel preferences changing?How are customer preferences changing and how will this affect our current strategy?What opportunities and threats do market changes create and what are we doing to capitalise on opportunities and manage threats?These insights must be effectively linked to strategic planning to support the development of effective competitive strategies, new product development and breakthrough innovations. In addition, a deeper understanding of customers and markets will enhance the effectiveness of the sales force. Without a deep understanding of the customers’ business and markets it is very difficult to identify relevant value or to quantify the advantages that you can bring to the customer. Customers want salespeople who can bring insights to the sales process. They don’t want to be asked about their problems or what keeps them up at night. They want sales people to highlight new opportunities for them to become more competitive, showing them things that they had not yet thought about or were not aware off – they want insights. The way you sell is becoming more important that what you sell. Customers often perceive products and services to be lot more similar than sellers do and the value the sales person adds to the sale by educating the customer is increasingly the distinguishing factor in the sale. Strategic Customer ManagementFocusing on long term customer relations, but also assessing customer value and prioritising the most attractive prospects. ‘Improving customer relationships’ is the new mantra at board level it was not surprising to see it headlining in the 2012 IBM CEO survey. Customer relationship management has been identified by academics as a new core strategic process of a firm. But equally it is suggested that customers are selected carefully to better manage profitability and enterprise risk.Many companies have invested in key account strategies (KAM), prioritising large strategic customers. KAM has resulted in mixed results, largely due to poor customer selection and the mistake of taking a one dimensional view of the attractiveness of customers (i.e. size of the account) and not accounting for risk and dependency.KAM can be counter intuitive as often the largest clients are the least profitable and becoming too dependent on a handful of large key accounts can create strategic vulnerability. KAM can be effective, but needs to be based around a more realistic view of:The value you can offer the customerThe life time potential of the customerThe level of commitment from the customer The level of risk with the customer Organisations must become much more adept at actively managing the customer portfolio like an investment matrix to better manage profitability and enterprise risk. The goal should be to ‘balance’ risk and reward across the customer mix (Strategic, Major, Middle Market and Transaction / Direct customers) and to use portfolio analysis to: Identify and mitigate risks, for example and over dependency a small number of large but high risk customersIdentify and capitalise on opportunities i.e. a highly profitable middle market accounts that demonstrate strong future growth prospectsContinually assess and reshape the portfolio to maximise profitability by moving investment towards prospects and away from over demanders, as seen in fig XFig XIntensity of relationshipStrategic account migrationHighBusinesspotentialLowLowHighIndirectaccountsRoutineaccountsMajoraccountsKeyaccountsAccounts withdevelopmentpotentialOver-serviced accounts If strategic accounts are the least profitable and pose highest risk, it may be wise to reach out to new prospects to develop higher levels of profitability and reduce levels of dependency. Even thought the implications of the customer portfolio can have a dramatic effect on business performance, they are often overlooked in the strategy development process. The recommendation is that the customer portfolio and its implications should become central part of the strategic planning and decision making process.Sales ManagementDeveloping the capabilities of sales management and shifting from ‘command and control’ to ‘coaching and facilitation’It is well documented that front line managers are the critical lever for effectively implementing strategy and improving performance. They provide the link between leadership aspirations and what actually takes place on the front line. However, research suggests training of sales managers is neglected in many sales organisations and needs significant attention and investment. Often sales managers are promoted into management and leadership roles based on sales success and possess qualities, attitudes and skills which do not always play well into management roles. Any organisation serious about improving sales performance, must take a critical look at its sales management. Management control style is an area which has attracted considerable research interest. Traditional sales control frameworks have focused largely on outcome based control i.e. Revenue and profit targets linked to financial reward systems. Where outcome based control is favoured, managers tend to take a laissez faire approach to management, giving salespeople freedom to approach the task in their own way, but focusing closely on financial outcomes and coming down hard on shortfalls. Research has demonstrated that focusing on behaviour control (inputs) can be more effective at improving sales performance than traditional outcome (incentive) based controls. The relevance of the behavioural performance construct is based on logic that salespeople have more control over their activities and strategies than over the outcomes. Therefore a manager can have more impact on performance by helping them adopt successful behaviours and routines (coaching). Practically, what is often required is a balance of both behavioural and outcome based control, the degree and nature of which will depend on the selling environment and levels of complexity. As businesses attempt to become more agile and adopt flatter business structures and empower employees, the ability to move from ‘command and control’ towards ‘coaching and facilitation’ is a critical to success. The effectiveness of sales manager coaching is widely accepted, but in reality it is often lacking in quantity or quality in most sales environments.Manager’s need to determine the most importance behaviours (inputs) for success, which will vary according to the nature and circumstance of the sales role. Once understood, a sales management system must be developed that defines, directs and reinforces successful behaviours in a consistent and discipline manner. Effective management systems review both qualitative and quantitative measures. For example, measuring the number of sales calls made with customers and shadowing sales calls to observe the sales meeting dialogue.New research provides some insight into some generic macro sales behaviours that are important for success. Adaptiveness Team working, Sales Planning and Sales Support have been clearly linked to higher sales performance while more traditional competencies like sales presentation and technical skills are show to be less important. Alignment and integrationDeveloping a cross functional sales process and increasing sales person commitment to customer resultsIn today’s competitive environment where so such much hinges on developing long term customer relationships, it is essentially that you deliver on your promises to customers. The sales-person is depositary of wider competencies of the firm, and central to 21st century selling is the ability to mobilize and align firm resources to deliver the value proposition to the customer. The sales organization must become more accountable for the customers results, using internal influence to get things done, fighting internal battles behalf of the customer and educating and aligning other functions towards the things that matter to customers.Far too often business are fragmented, working in silos with individual objectives which contradict the value drivers of customers. Organisations need to get their act together and take a more end to end view of their processes and get themselves aligned around customer value drivers.Use technology appropriatelyApplying new technologies appropriately to make more effective use of scare sales resourceTechnology continues to revolutionise industries, functions and societies. It has made a mark on the sales process, but offers considerable potential for further development.The challenge is the appropriate ‘application’. CRM systems are a good example of widely adopted technology initiatives that have varied greatly in their impact. The application and change management aspects need to be considered carefully before investment. Technology effectiveness is dependent on the processes and behaviours with which they interact. Internet based self service channels are another example of how technology has changed the sales process and in this case actually become ‘competition’ to the established sales-force. Direct and self service sales channels are attractive due to the considerable cost advantages, but they cannot replace the relationship exchange and intimacy of a salesperson. Therefore they must be use selectively and as part of a thought through channel strategy.New technology developments offer exciting prospect for continuing to enhance sales-force efficiency. Cloud computing and mobile technologies have created the ‘connected’ workforce, enabling access to information ‘any where’ ‘any time’ which can improve the speed and flexibility of a sales-force. The use of mobile applications (Apps) and digital video have created a new channel that if used appropriately can enhance the customer experience and reduce sales costs. Consider the potential for customers to review at their leisure a salesperson explaining specific products, capabilities or case examples via online digital video or the option to download an App that supports product implementation or training. The goal of technology is not to make salespeople obsolete, but to make more effective use of their time. Reducing time spend on routine conversations and administrative tasks and focusing more time on creative, solution development and relationship building activities. Video conferencing is expected to continue to grow significantly over the next decade, the quality is now such that it is quite acceptable to consider this as an alternative to certain face to face sales calls. The cost implications could be dramatic, especially in complex sales environments where you may have a number of high cost sales people attending one meeting. It also provides a CSR and sustainability benefit, with the potential to significant reduce the sales-force carbon footprint and make both the customer and the sales organisation feel gracious in there ‘eco friendly’ interaction. These developments have led a number of sales experts to predict that distinction and status between inside and outside sales will become narrower as technology drives more and more communication online and makes face calls increasingly selective.Finally, we cannot finish without acknowledging the social media explosion of recent years and another prediction that Social Networking will surpass cold calling as a prospecting technique. Linkedin is the standout example of how social media is being used to prospect for business, however, as more niche social networking communities develop, so does the potential for more targeted prospecting. Social media strategy and literacy may develop as a core part of the next generation sales organisation. PurposeReframing the purpose of the selling, to put the customer at the heart of the processSix years ago Lisa Mcleod was involved in a six-month double-blind study of a major Bio tech sales force to determine the behaviour that separated top salespeople from the average ones. The study identified that top performers all had a far more pronounced sense of purpose than their more average counterparts. The sales people who truly wanted to make a difference to customers, consistently outsold the salespeople who focused on sales targets and financial reward. Lisa Mcleod turned her research focus to this phenomenon and has just published the book ‘Selling with a noble purpose: how to drive revenue and do work that makes you proud’ which has received strong accolades, and being touted by many as the future of selling.Lisa’s work is strongly advocated Jim Stengel, former CMO of Proctor and Gamble who’s research has shown brands that define and live out their essential reason for being ‘beyond profits and market share’ are the ones experiencing the greatest financial success. The secret to exponential growth starts with a question: What higher-order value will you add to your customers’ lives?Lisa Mcleod suggests the single most important question for sales managers to ask, is often the question they don’t ask: “How will this customer be different as a result of doing business with us?” Asking?this question “ignites a chain reaction that drives outstanding sales performance.”This new perspective fits comfortably into the new paradigm we are suggesting for the salesforce and the need to focus more on the customers success as a basis for developing stronger value offerings.The sale person qualities valued most by customers are consistently identified as ‘trust’, ‘openness’ and ‘integrity’ and if you consider the value placed on ‘honesty’ ‘fairness’ ‘eco friendly’ as society values change. Then you could argue this research is not the ‘revolution’ as claimed, but just good common sense.The challenge however, is that it is not common practice and sales leaders would be wise to reframe the purpose of the sales role to help sales people think differently. Switching the narrative from the organisation and the individual: ‘How much is this customer worth to us’ , ‘how are you going to hit revenue target’, ‘How are you planning to maximise revenue from this sale’Towards the customer :‘how is this customer going to be different as of a result of doing business with us’, ‘What do we need to do to create more value for these customers’Immediately places the customer’s interests at the heart of the sales process and develops a more strategic mindset within the salesperson. However, most importantly, it is more profitable according to the research. The difference is that profit is the by-product rather than the focus. Reframing the sales role and installing the right values within the sales team could be the single most effective way to initiate a change in behaviour and impact results.SUMMARY: The transformation imperativesFocusing on long term customer relations, but also assessing customer value and prioritising the most attractive prospects.Developing market sensing and learning capabilities, to improve strategic effectiveness and sales effectiveness.Developing the capabilities of sales management and shifting from ‘command and control’ to ‘coaching and facilitation’Developing a cross functional sales process and increasing sales person commitment to customer resultsApplying new technologies appropriately to make more effective use of scare sales resourceReframing the Purpose of the sales-force, to put the customer at the heart of the processCompeting successfully in today’s competitive business environment involves a radical re-think of the sales organisation; their purpose, the process and the way they managed. The sales organisation must become more strategic, more customer centric and serve as a dynamic source of value creation and innovation.CONCLUSIONThe role of the sales force is changing and has never been so challenging or critical to company success. Organisations must reframe the way they think about the sales function and develop a more strategic sales approach to match increasingly complex, demanding and competitive market environments.Those who fail to successfully change and fall behind will be subject to the misery of commoditisation and may be engulfed by their rivals. Those seize the opportunity to get ahead will develop a new source of dynamic value creation that provides competitive advantage, stronger business relationships and superior business returns. ................
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