Consultative Selling May Lead to Fewer Sales and Unhappy Customers

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Knowing they need their front line sales force to develop relationships with executives to gain access to bigger budgets and differentiate themselves from the 5 other players who can do similar things, many B2B companies are retooling their sales and marketing organizations to be more consultative in their selling approach. This is generally accompanied by another major objective to round out the product portfolio to offer more valuable stuff to these executives they want to build relationships with.

So, how are companies doing with this?

Not so well.



The Sales Leadership Council (a Corporate Executive Board service) in 2006 found that most consultative selling efforts were increasing the cost of sale at a greater rate than sales were growing. In fact, more than 20% of their clients were actually losing money due to their consultative sales effort – so much for expanding margins.

To me, this really comes into view when I speak with executives who are on the receiving end of these so called solution sales calls. We’ve known for ever that executives avoid spending time with sales people like my two year old avoids having his hair washed. Most executives admit they are meeting with a few more sales people than in the past, but their experience isn’t that pleasant.

One CIO told me that the message left on his voice mail from one rep was exactly the issues he was dealing with so he agreed to take the meeting. However, when the sales person showed up, he just walked through a product pitch that was poorly disguised as something created just for him. Normally, he was have text messaged his assistant to interrupt the meeting with an “emergency”, but he kept investing time with this guy believing there would be a pay off… but there never was. “My expectations were raised to the point where I could actually talk about my problems and have a real conversation, but at the end of the day, I felt tricked. At least the guys who want to give me a product demo are honest.”

WOW.

Let that sink in.

Here a company thinks it’s improving its access and setting itself up for future growth, but in reality, most of the sales people are annoying executives, making them feel duped.



Why is this happening?

I know a lot of you will think it’s the general nature of sales people to be dishonest, or lazy. That might be true for the lower performing 20% of the sales force, but that’s not the majority. No, the real problem lies with content… specifically really knowing what information will be genuine and valuable for a given executive at a given time. This knowledge is hard to share, but its incredibly valuable to your customers because they don’t know it either and will accept it from a sales person who can deliver it sincerely.

How is it the fault of the sales organization when solutions or marketing people who have never sat down with a CIO, provide sales people with the material? In most cases, the level of real practical knowledge about a particular targeted stakeholder is so low, it is laughable. Here is an actual example.

One of our customers (who will remain nameless) had developed an infrastructure assessment product. It basically helped data center directors determine what their current state technical environment was, what its future state could look like, and the costs to get from where they are to where they want to be – Nothing wrong with that product. However, the marketing team was directed to create “C-level” messaging (for something that would never be bought by a C-level, or even a V-level) and materials. The result – “If a company is experiencing margin pressures, the sales team should talk about the infrastructure assessment offering with a CFO because this information will help the data center reduce costs”.

In “Lala Land” I am sure there are tons of CFO’s waiting with baited breath to talk about data center assessments. I realize that to an IT vendor, the CIO’s budget is the entire universe. What they don’t realize is that IT spending only accounts for between 1% and 5% of corporation’s total revenues. There are probably 1,000,000 different and more valuable conversations to have with a CFO who can save more money renegotiating the toilet paper contract than he could save with a report. So, how seriously would a sales person be if he were to heed the advice of what he was trained to do?

To develop relationships, you have to offer value. To offer value to executives, you better bring your “A” game. Unfortunately, most of the efforts we see within B2B companies is preparing their sales force to be hated C-Rate consultants.



The bottom line here is that if you are going to pursue a business strategy requiring elevated access to higher level people, you better make sure you really understand their issues and that you have a legitimate reason to be calling on that level. Tremendous returns await companies who are authentic, genuine, and provide actionable information to executives. Before setting out on a solution selling endeavor, you should ask yourself if the people leading it have ever had a conversation about the subject matter with the targeted executive before. Imagine all of the back end investment to enable a sales force (training, marketing, technology, hiring, management oversight, etc) and how all of these decisions are likely being led by people who have never met the customer segment you are targeting before.

2 COMMENTS

  1. Scott –
    You do have the art of creating a good title down! It peaked my interest for sure. I’d say, however, that the issue isn’t that consultative selling is BAD… In the example that you shared, what happened is that the sales guy failed to follow through on the consultative sell. Somebody (marketing?) gave him the right things to say on the phone so that he got the meeting. Then, he couldn’t pull it off when he was face to face. What that really highlights for me is that consultative selling is hard! You have to be knowledgeable about the details (the technology, the business), able to think on your feet, comfortable with senior executives. I must say that these are not necessarily skills that are often pervasive in the lowest ranks of a typical field sales force.

    I think a key challenge is different skills are required to get the initial meeting and then to follow through on it. I, for example, hate cold pursuit of new prospects. But, put me in front of someone with a clear business pain (in my line of expertise) and I can sell til the cows come home.

    I also think you are absolutely right in you criticisms of marketing. I, too, have seen way to many marketers that are too far removed from the customer — and reality.

    ELANA ANDERSON
    Marketing Strategy Consultant
    NxtERA Marketing
    [email protected]

    http://www.nxteramarketing.com

  2. Elana – Thanks for the compliment, I’m glad I piqued your interest.

    I can’t believe your timing. I literally just got back from having lunch with an EVP of Business Strategy for a large enterprise software firm and we talked about his challenges of developing the right business plan and what the hand offs are between business strategy and a sales model.

    The point I was trying get across with my article was that the sales model a company selects for itself, sets the direction for the client engagement model. A consultative selling strategy cannot be successfully implemented without support from the product side of the business, or the marketing side.

    Let’s use a multi-billion dollar enterprise software firm as an example. Like most of the players in the software business, they have a gigantic portfolio of products and services. We you look at the business through the lens of a product – you see it as a market. Product X has these features and benefits that compare favorably (or unfavorably) against features and benefits from other competitors. Product people look at the world through that lens because they have to build those capabilities. The product people report up into a business unit, who hires marketing people to create programs to promote the value of these products to markets. You can just see the Product Marketing Manger of product X building a demand generation plan and will say something like, “according to Gartner, the problem management market is $1B and we have $100M, so we have $900M upside”. You can also image those conversations happening for all of the other products that company has.

    However, look the world through a different lens. Consultative selling strategies are generally related to targeted account go-to-market models. In this world, revenue per account is king. “Markets” in the sense that product people and marketing folks think don’t really apply when it comes to an account. The mindset on an account based business model is about wallet share. Sales people focus on the finding people with discretionary budget, and then on what problems they have where they can have conversations. Each account organizes itself differently, they have different cultures, and maturity models, and because of that, most company’s problems don’t fit neatly into the markets defined by the product and marketing people.

    If there is one generalization about sales people that is true, it is that they will always find a way to do the least amount of work and produce the most amount of money. Following this principle, logic dictates – why waste time with all of these manager level issues and people when I can try to get to the guy with a $1B budget. And this is where things really fall apart. As we all know, as you move up the chain in a company, the things that people care about change dramatically. Lower level people have limited scope (so their issues are more tightly contained) and are evaluated by the tasks they perform. When you reach the C-suite, the scope of their responsibility changes and so do the issues.

    Back to our example, for the sales person to add value to, in this case, the CIO, he needs to really understand that persons: role in the organization, credibility among peers, vision for how he wants his shop to run, current maturity level, barriers to overcome, problems, and managerial style (to name a few). Where is this knowledge going to come from when very few people inside that company have ever held the position of a CIO, or worked closely with one on these issues?

    If I came off as being too critical of marketing, that’s not my intent. I think that few people in businesses today think pragmatically about execution. They hire McKinsey to tell them high level strategy stuff and then try to buy generic training programs, or technology systems, but they don’t really think through the requirements.

    There is a tremendous company wide commitment required to successful implement a “consultative” sales model. It requires some very deep thinking about how to pull it off, an agreement on who the customers really are, and an ability to organize complex information so that it can be delivered by the sales person who you’ve made into a “consultant”.

    Failures with consultative selling models are not only a problem with sales (although the VP Sales usually gets the bullet first for increasing the sales costs too high), its not a problem with marketing (although they eventually get the bullet for not moving the dial), and its not the product group (who usually escapes the axe because they blame marketing and sales). It’s a company wide problem and should be examined as such.

    This is about really understanding how to be valuable to your customers. I actually referred to it today as “Service-Oriented Marketing” – the ability to define combinations of material which can be easily configured at the point of sale.

    Elana – I know you agree with a lot of this. I wanted to take the opportunity to reply to your comments and go on the record to be clearer. I especially agree with your past comments that the functional organizational construct gets in the way of being customer centered. I’m very much looking forward to collaborating with you. Perhaps there are a set of business patterns which exist where the execution model for developing a customer centered business looks different and the best practices vary depending on the conditions.

    Fantastic feedback and great commentary. Thanks a lot Elana.

    Scott Santucci

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