Which is the right sales model for your business?
Most organisations struggle to define how the sales function should work, especially now the Internet offers both choices and challenges.
In the old days it was simple.
A manufacturer would build a factory, make products and send people out into the world to offer them for sale. That’s how the concept we today know as sales began. In the original sales model, the representative would knock on a door, introduce the product, reveal the price, and ask for an order.
It was simple – anybody could understand it – and successful – it worked. But today’s markets are more complex, and sales models have to evolve for the 21st. Century.
On the one hand we see industries destroyed by new entrants using technology, and changing the cost dynamic. Amazon might be the best example. It changed the market for books and drove Borders out of business.
Another is how consumer insurance has changed. A decade ago, virtually all consumer insurance was sold by High Street brokers. Now its sold on-line. In house sales, real estate agents still have offices in prime locations, but it’s their on -line presence which brings in most customers.
In books and magazine, in insurance, and in house sales, the traditional sales role has all but disappeared.
On the other hand we see manufacturers offering custom versions of standard products, selling them using the expertise of people.
Automobiles is a good example. Does anybody buy an off the shelf Mercedes any more? I doubt it. Choosing from the models available, preferring a particular colour, adding those extra features to make this one individual and special. That’s all part of the customer experience.
It can be done on-line, but is so much more fun when a sales associate facilitates the decisions. In luxury cars, the individual sales role is fundamental to the value proposition.
Those are extreme examples of course.
Most businesses aren’t that clear cut. But nor were books and wheels, until somebody decided to challenge the old order of things with an engaging new proposition to customers. Henry Ford would have been overjoyed at the prospect of selling on-line, when you could have any colour you wanted, as long as it was black. Meanwhile book sellers, including Amazon, struggle to personalise the buying experience.
In each of these examples, somebody made the decision. They chose a customer demographic, decided on a value proposition, and constructed a sales model to suit.
That’s where most businesses find themselves stuck. Is the business model maximum volume, minimal value add, and low prices? Or is it about customer experience, with high prices and margins, but at low volume.
Which is your choice? Somewhere in between, no doubt.
Both models are valid in most markets. Either will work, more or less, depending on execution. But ultimately the choice has to be focused on clear blue water. That’s the only way to stand out from the crowd. Customers have to understand the unique proposition, and the trade off between price and personal service.
If your choice is the volume option, forget about a direct sales force. The Internet does a much better job, at lower cost.
If your choice is customer experience you’d better get focused on delivering it.
You need a sales force capable of fitting in with what the customer wants. You need a management structure capable of turning itself inside out for one customer. You need marketing to explain what customers will get, provided they pay the price.
Probably you’ll be somewhere between the two – most businesses are.
You’ll need an on-line presence, maybe with order processing options, or not, depending on other decisions. Your web site makes a big contribution, regardless of whether you choose to sell from it.
It helps customers find you, understand something about your proposition, and find the particular information they want. That’s why the site should offer as much as possible, in terms of product and service options, features and what they mean, and corroboration from testimonials, case studies, configuration tables.
Anything which draws the customer into a conversation is valuable – even if its just the prospect interacting with web pages. These days a web site isn’t a nice to have – it’s fundamental to your sales model, the way that brochures used to be. Your site is your opportunity to make sure every prospect gets the very best practice presentation of your value proposition. It also saves time in the sales process.
You’ll need a prospect acquisition function, which may or not include formal marketing, but will certainly be promotion of your value add to the selected markets. There’s a lot of noise made these days about social media – Twitter, Facebook, Linked In etc. In some cases claims made by ‘consultants’ wanting to sell you services are entirely valid, but certainly not all, and probably not many. If you’re a band selling music downloads social media is right up your street, but if you’re into B2B that’ll be a different story.
Inbound marketing, particularly with blogging has its place. So does direct mail, or one of its variations such as leaflet drops.
But if the proposition is more complex, most likely you’ll need sales people on the ground, doing what they’ve always done. Seeking out prospective buyers, and engaging them in an ‘awareness to order’ process, is what sales guys do. It isn’t easy, which is why they get paid a lot for doing it.
If your business needs sales people you’d better have enough margin in your prices. Businesses using direct sales in their model, typically spend 40% of revenues paying for it.
Life gets exponentially more complex when you need to employ sales professionals.
These guys cost a lot to run – like luxury cars – but mostly waste their time chasing rainbows. In days gone by, when prices were high, and customers were gullible, businesses could afford the cost inefficiency, paying reps to sell to people who weren’t going to buy. That was yesterday. Do that today and you’ll go bust before you know it. The biggest risk, the most likely unproductive cost, is cost of sale when the prospect doesn’t buy.
In which case you’ll need a sales process.
Research your target customers. Choose the ones most likely to do business. Talk to the decision maker early. Qualify both the inclination and the ability to purchase.
Negotiate a buy/sell process and then deliver it. Walk away when the prospect defaults on his side of the bargain. Stay with it when the genuine prospect needs help. Act like a business. If it looks likely not to work, don’t do it. Save cost of sale investment for a better opportunity.
So what’s in a sales model? Here’s a list you can use as a template,
but not literally. No two businesses are the same, and no two sales models are the same. You need to find the one which works best for you, and that may, or may not, include:
- Researching – identifying targets who precisely meet the demographic you’ve chosen. Those for whom your proposition is the stand out leader.
- Prospecting – reaching out to those targets who make the grade, introducing your new ideas and ways they’ll advantage buyers.
- Qualifying – making sure the prospect has both the ability and motivation to make a decision to purchase.
- Resourcing – allocating the support needed – technical to get the spec right, management to get the relationship right, admin to get the paper right.
- Collaborating – working with the prospect to agree a buy/sell process in which you’ll both make sure the business about to get done will work out for both parties.
- Negotiating – cutting the deal, on price, on terms of contract, on delivery, on risk management.
- Closing – the part everybody wants to do – signing the order, buying the lunch, and the office celebration. Get all of the wood behind the arrowhead.
- Account Maintenance – staying with the customer once the deal is done, arranging delivery, ensuring quality, finding new ways to add even more value.
- Leveraging – finding ways to build on your success with testimonials, referrals, introductions, contributions to user groups.
This is an awfully big concept. You can easily see how it might apply to other, more complex businesses, but does it really apply to you? Yes it does.
My mother ran a successful business for 40 years, making curtains (or drapes if you prefer), never employing more than 2 people. She wouldn’t have recognised the model described here as anything she did, but its exactly what she did.
It made sense to her, simple common sense.
Make sure the customer will like what you do, and then do it well. Everything else naturally follows.
