![]()
INTRODUCTION
NEW SALES REALITIES
Selling is changing, but much current conventional wisdom about the impact on sales of e-commerce, big data, AI, and other megatrends is misleading and not supported by empirical data. If you as a manager fail to separate fact from hype, you will make decisions based on bad assumptions and, in a competitive market, eventually fall victim to those who can understand cause-and-effect links between buying and selling.
Look at how most newspapers reacted for years to digital competitors: try to mimic the online firm, but with a much higher cost structure and while giving away their own content online. This was a literal enactment of the joke about selling below cost but hoping to make it up in volume. Or look at how many retailers responded with self-fulfilling-prophecy actions to e-commerce competitors: cutting head count in stores, not investing in training sales associates, and often being oblivious to online/in-person interactions and the impact on sales and sources of advantage.
Consider The Home Depot when Robert Nardelli became CEO in 2000. In a business built on in-store personnel who provided advice to shoppers, Nardelli made cuts in those areas. By 2006, Home Depot saw its fourth consecutive year of declining foot traffic, its market value had declined by 55 percent, and it was last among major US retailers in the annual University of Michigan Customer Satisfaction Index, eleven points behind its main competitor, Lowes. As a board member commentedâafter the factââThe most experienced store employees, the real experts on plumbing or electricity, had been let go and replaced with less experienced and cheaper part-time store workers. New stores ⌠were not generating good returns, leading to further staff cuts.â1 When new CEO Frank Blake took over, he made rejuvenating the point-of-sale experience a priority and that rejuvenated sales and the stock price.
You cannot manage a profitable response to market changes unless you understand changing buying behavior and the corresponding impacts on business-development tasks. Admittedly, this is not a simple TED-Talk-and-a-listicle activity, especially when youâre operating in an industry rife with myths, unexamined assumptions, and fads. If youâre an executive in most markets today, remember that (as they say in the movies) âyou chose this life!â Selling involves a complex combination of factors: a coherent strategy, relevant hiring practices and incentives, and ongoing performance management that motivates the right behaviors in the face of many changes outside the control of your company. You can deny the complexity, but itâs still there.
And thatâs the purpose of this book: to help you separate signal from the noise and clarify key choices and actions. This book can help salespeople respond to changes at buyers and help sales managers improve productivity and results. It can help investors get more from the sizable investments they already make in sales efforts. It can help those in the C-suite navigate the thicket of claims made about emerging technologies and better use those tools in customer acquisition and retention. And it can help all interested readers understand why, in modern economies, improving selling activities is not only a financial and growth issue but, in fact, a key social responsibility of business leaders.
What Is Changing and Why It Matters
Itâs easy to say things are changing, because change is perennial in business. Fogies, beware. But managers must move beyond platitudes and develop an accurate view of their current situation and how it might evolve. How sales is changingâand not changingâmay surprise you. Letâs look at some truths and misconceptions about that core business activity and the implications.
From Funnels to Streams
For over a half century, buying has typically been framed in terms of a hierarchy-of-effects model: moving a prospect from awareness to interest to desire to action.2 The AIDA formula and its many variants are the basis (often, the unconscious basis) for sales activities and organization in most firms. Itâs fundamentally an inside-out process, and customer relationship management (CRM) systems are there to provide data about progression (or not) through that companyâs funnelâthe âpipelineâ metrics that dominate talk about sales in books, blogs, training seminars, and coaching initiatives.
But research (and probably some reflection on your own experience) indicates a different buying reality. Rather than moving sequentially through a funnel, buyers now work through parallel activity streams to make a purchase decision. Letâs label those activity streams as explore, evaluate, engage, experience (see the sidebar for more detail on each).3
BUYING IS A PROCESS OF PARALLEL STREAMS, NOT A LINEAR FUNNEL
Explore. Here, buyers identify a need or opportunity and begin looking for ways to address it, usually via interactions with potential vendors and (as in the consumer auto market) self-directed information search on the internet. Activating a need can be instigated by internal triggers (e.g., a system breaks, a car or other machine wears out, a process fails, a new initiative is born). External triggers include regulatory mandates (e.g., the impact of the Affordable Care Act on health-care insurance purchasing), new technologies or markets, or perhaps advertising and sales promotion.
Evaluate. Buyers take a closer look at options uncovered while defining the need or opportunity, again leaning heavily on self-directed search, peer interactions, and sales representatives from potential vendors. This activity is not primarily about determining the specific product or service they will buy, but about determining the best approach and pathway (e.g., build versus buy, own versus lease, etc.). Buyers are comparing multiple options, identifying the solution type, and winnowing the options to a short list.
Engage. Buyers initiate further contact with providers to get help in moving toward a purchase decision. Depending on the market and product category, this might involve downloading a white paper or other form of content marketing, sending out a formal request for proposal (RFP) in many B2B markets, or (as they say in the ad business) initiating a âbake-offâ between competing vendors. But in the twenty-first century, âengageâ activities donât necessarily start and stop with the sales rep. Buyers interact with others in the selling organization. Indeed, another impact of websites, blogs, chatbots, and social media has been to make the sellerâs organization more visible to buyers. They value interactions with people in product and/or service, and they expect the rep to orchestrate that interaction purposefully.
Experience. A formal buying decision is made and buyers use the product, perhaps in pilots or proof-of-concept trials for new technologies, and develop perceptions about its value. As services become a bigger part of economies and as software becomes more embedded in products, more of that value is what marketers call âexperiential valueâ that only becomes apparent in actual postsale usage. This has important implications for pricing, sales metrics, and other aspects of selling.
Consider buying a car. Consumers now do lots of online research. US auto buyers on average spend about 13 hours online researching car models prior to purchase, and about 3.5 hours at dealerships.4 Yet most cars are still bought at dealerships (e.g., less than 1 percent of the 40 million used cars sold in the United States in 2018 were online sales and less than 5 percent of new cars). But because auto shoppers can access prices, product reviews, and other information online, their buying behavior is changing.5 For example, more than 50 percent will leave the dealership if a test drive is required to get the list price of the vehicle. Nearly 40 percent will not patronize a dealer whose website doesnât list vehicle prices, and about 40 percent will leave the dealership if prices arenât posted on the vehicles.
In the auto industry and others, information sources have changed customer expectations about the role of the salesperson as a walking, talking purveyor of a sliding scale of prices. Even when done with good intentions, many traditional sales practices unwittingly increase customer dissatisfaction. Moreover, buyers generally use online tools as a complement to, not a substitute for, sales conversations, and they are discriminating in using these tools. Car buyers, for instance, use third-party websites for model comparisons and reviews, car manufacturer sites for detailed model information and videos, and dealer websites to look for specific vehicles and information about local inventory.
Buying is now a continuous and dynamic process, not a linear funnel. Understanding where customers are, how they navigate between streams in your market, and how to interact with them appropriately in a given stream is now central to effective selling. For the most part, it is still the sales force that must do this. The research results in figure 1-1 echo what car-shopping studies indicate, but now with respondents across industry sectors in North America, Europe, and China.6
FIGURE 1-1
The most influential B2B marketing activities
On average, business buyers say direct interactions with providers influence their purchasing decisions more than anything else.
Source: Frank V. Cespedes and Tiffani Bova, âWhat Salespeople Need to Know About the New B2B Landscape,â HBR.org, August 5, 2015.
One reason the sales force remains so important is that most products and services are parts of a wider usage system at the buyer. This means integrating the product with driving, household, or other activities in B2C markets. In B2B markets, buyers must typically justify a purchase decision to others in their organization that are also competing for their share of a limited budget. Some of that combination of economics, solution integration, risk management, and organizational politics can be handled online, but most buying journeys still rely on knowledgeable sales help. Hence, this research also found that, across all buying streams, buyers emphasized the importance of product demonstrations, sales presentations based on their situation, and salespeople who can do that while bringing knowledge from their work with other companies. Among the least-valued interactions, by contrast, are cold calls in response to registering for webinars or online events.
In other words, solution selling and account management skills still matter. But how this is done by effective salespeopleâthat is, the sales tasksâis changing. For example, in figure 1-1, customer references are a close second in terms of influence. But the nature of references has changed. In the past, the seller would cite a few satisfied customers (whose satisfaction, by the way, might be more a function of a price discount than product satisfaction). Now, through the web, customers can connect with each other and get unedited versions of othersâ experience through review sites such as PowerReviews and access to people at other companies who share purchase and usage experiences through community sites such as SAP Developer Network and Marketo Marketing Nation.
Also affecting sales tasks are activities like content marketing and lead generation by email and other means. Traditionally, these activities were part of marketingâs domain, not sales. But these lines are blurring, putting pressure on companies to rethink sales models, metrics, and the relationship between marketing and salesâtwo functions that are more interdependent but different in their procedures, perspectives, and mindsets. More generally, itâs important to recognize that buying streams mean prospects now touch your brand and company at many different points (online, offline, marketing collateral, and so on), and each touch impacts sales tasks.
Finally, if you consider these streams and what buyers value in suppliersâ behaviors, then a big disconnect emerges. Despite advances in technology over the past decades, most sales models are incapable of dealing with the reality that buying is so often continuous and dynamicâan ongoing motion picture, not a selfie or snapshot in a funnel. Going forward, many companies must reconfigure their selling, and despite what you often hear, no single tactic (e.g., a given selling methodology, âchallengingâ the customer, or big data analytics) will do this. Aligning buying and selling is a process, not a one-shot deal.
The Importance of Talent
As firms confront new buying processes, required sales competencies change. Figure 1-2, based on an extensive database of company sales profiles, indicates the altered nature of sales competencies at many firms. Competencies that were considered essential only a decade earlier were lower in priority by the second decade of the twenty-first century. Does this mean that developing leads, qualifying prospects, persistence, and adapting to different buyer motivations are no longer important in selling? No. The way to interpret this data is in keeping with the punchline to the old joke about two hunters pursued by an angry bear: âI donât have to outrun the bear; I just need to outrun you!â As one should expect in any activity where success is measured by relative advantage, the focus of productivity improvement in sales is shifting. Yesterdayâs distinctive sales strengths have become todayâs minimum skill requirements in more industries. This has implications for hiring, training, compensation, and performance evaluations.
FIGURE 1-2
Salespeople require d...
