Establishing and Elevating Customer Relationships

Transcription

1 Establishing and Elevating Customer Relationships By Jim Dickie and Barry Trailer; Managing Partners, CSO Insights In workshops, I've often asked the question, What does it mean to sell? Typical responses are invariably to find a need and fill it, to provide a customer with a solution, or some equally lofty notion. I then ask what terms came to mind (free association) when hearing the term salesman or sales rep. Answers are often much less favorable, and include pushy, coinoperated, overpromising, overbearing, etc. I record the various answers on charts hung around the room, and then present the levels of relationship model (see figure 1). At the lowest level, the base of the pyramid, are vendors. One level up are preferred suppliers; another level up, consultant (whether you have this term in your title or not); and at the upper levels contributor and partner (today also called trusted advisor). We show these levels as a pyramid because it also represents that there are many more individuals and firms operating at the lower levels of the relationship scale than at the upper levels. Figure 1. The pyramid represents both levels of relationship and relative numbers of firms operating at each level. CSO Insights 1

2 There are several significant observations can be made regarding this model. For example, there are things that increase as you move up through levels of relationship. These include increased credibility/trust, understanding of the buyer s business and their customers, number of contacts and access, size and duration of deals, repeat business, references, and enthusiastic referrals. Also increasing are margins and total time invested in the account. There are things that decrease as you move up through levels of relationship, including number of competitors, time to close, price sensitivity, the significance of any feature or function of your product/service, and barriers within the account. All of the changes of each of these elements in this manner are good for business and that leads directly into our definition of selling: establishing and elevating relationships over time. Another observation is that at the base of the pyramid sales can be said to be tactical, at midlevel strategic, and at the upper level political. At the base of the pyramid sales are characterized by transactions (rapid, repetitive, routine), while at the upper levels sales are interactions (complex, creative, and protracted). Because of the rapid, repetitive, and routine nature of tactical sales, they lend themselves to being handled by technology (e.g., kiosks, ATMs, e-commerce). Said another way, the base of the pyramid is constantly being eroded by technology increasingly these sales should not be conducted by experienced sales reps. Reps should be focusing on higher-level sales work. To address what higher order selling work looks like, we turn the pyramid 90 (see figure 2). Figure 2. Changes in focus and competencies as levels of relationship increase. CSO Insights 2

3 Again, working our way up the pyramid, we see the base level sellers have solid products and/or services that they're representing. Another level up, sellers have some track record of delivery and understand how customers use their products and services. At the consultant level, we see a shift away from the sellers offerings and toward a focus on the buyer s business and competitive issues. Absent this shift in focus, sellers will continue to be relegated to lower level contacts within accounts and find themselves continually competing for short-term, price-sensitive, demanding buyers. To get beyond this, sellers will want to be thinking more about the big picture and looking at their accounts as a whole. In so doing, you add value to the buyer, and will find you are involved in more business conversations (rather than product conversations) and, as a result, become more entrenched in the account. There is another reason for doing this in today's business climate. As buyers have taken on a greater role in educating themselves about possible solutions to their various needs, they have given less credence to reps product knowledge and have instead increased their demand for reps understanding the buyer s industry and business challenges. Today, buyers do a good deal of research via the Internet (corporate websites, industry articles, customer reviews, blogs) and are generally well informed before ever speaking to a sales rep. They are expecting the same level of interest and investigation from those calling upon them offering solutions to their needs. For this reason, having a clear process by which sales reps prepare for calls, conduct themselves during calls, and generally pursue opportunities and farm accounts, becomes critically important. We have defined four levels of sales process implementation: Level 1 Random Process: Your company may be perceived as being anti-process, though what you really lack is a single standard process. Essentially, sales reps do their own thing, their own way. Level 2 Informal Process: Your company exposes your salespeople to a sales process and indicates that they are expected to use it, but usage is neither monitored nor measured. Level 3 Formal Process: Your company regularly enforces the use of a defined sales process (sometimes religiously). You conduct periodic reviews of the process to see how effective it is and make changes based on that analysis. Level 4 Dynamic Process: Your company dynamically monitors and provides continuous feedback on sales reps use of your formal sales process. You also proactively modify the process when you detect key changes in market conditions: new competitors emerging, changes in governmental regulations, shifts in the economy, etc. CSO Insights 3

4 W e now have the two axes that comprise our sales relationship process matrix (see figure 3). Figure 3. A firm s location in the SRP matrix and where they want to move to also suggest what changes and processes need to be implemented to successfully move. Does any of this really matter? One answer to this question is to look at four specific performance metrics: percent of revenue attainment, percentage of reps meeting or beating quota, forecast accuracy, and total rep turnover. From our most recent survey data (Q4 2011), let s compare these figures for three cells in the matrix: 1) vendor-random process; 2) consultant-informal process; 3) contributor-dynamic process. Sales Performance Across Levels Comparison Vendor Random Consultant Informal Contributor Dynamic % Reps Making Quota 42 % 63 % 74 % % Company Plan Attainment 83 % 87 % 91 % % Forecast Wins 38 % 53 % 60 % % Forecast Losses 43 % 26 % 17 % % Forecast No Decisions 19 % 21 % 23 % % Sales Force Turnover 40 % 24 % 16 % Table 1. Moving up in Level of Relationship and Level of Process Implementation pays real dividends. However, a second way to answer this question and one you may more directly relate to is by listening to what other sales executives have to say about it. Nick Levandowsky, Director, U.S. CSO Insights 4

5 Laser Refractive, heads sales, business development, and clinical for Abbott Medical Optics U.S. Laser Refractive group. Even though he felt they only recruited top talent for their sales team, Nick still felt there was room to improve. With this in mind, he brought in different programs, including negotiation training and others. Our reps are more confident, intentional, purposeful and disciplined. moving up the relationship pyramid. Last year he brought in The Brooks Group and their IMPACT program (1-day classroom session, 9-week follow-up on-line and phone). Although they face a number of challenges in their market, Nick has noticed a significant change since the training. Our reps are more confident, intentional, purposeful and disciplined. And for good reason they ended 2011 significantly exceeding their equipment plan versus previous year s results. Nick attributes this change to them having both a clear framework with IMPACT and to In a clear demonstration of the added value, Abbott not only sells lasers to ophthalmologists, they are now offering an abridged version of IMPACT to their doctors to help them build their practices. John Johnson, National Sales Manager at Valent USA Corporation, also brought in The Brooks Group though his sales process is completely different. Valent sells plant health products (herbicides, insecticides, fungicides, and plant growth regulators) for turf, ornamental, and aquatic businesses. They sell to these businesses through channel partners and, like Nick, John was interested in his reps taking their calls and relationships to another level. I wanted my team to step up to making better calls, not necessarily more calls. I wanted my team to step up to making better calls, not necessarily more calls. Just as he was looking to have his reps become more involved with and partner with customers, John was looking for a training firm that would get involved and partner with him. They kicked off the program with a 2-day event in June 2010 with their sales reps. Since then, their marketing and technical groups have also gone through the training and 9-week follow-up. Is this relationship-building approach working? The turf business is driven by golf courses that have suffered in the lagging economy. Ornamental is largely dependent upon the housing industry also down the past few years. Still, John is happy with the training and follow-up they received. 100% of his reps made their number this past year (including stretch goals) and they reported double-digit growth year over year. CSO Insights 5

6 John feels the training is helping separate them from their competitors because his reps are now doing a better job of preparing for calls, developing better questions to ask, having and restating clear objectives at the beginning of each call. There is also a line that his reps have been using more frequently that further demonstrates this improvement: Let s back up a little (when flown in by a partner to pitch a product), and better understand your business to see what you need. Establishing and elevating relationships, one call at a time. Conclusion Whether you want to move from transactions to interactions, tactics to strategy, or define higher level relationships in another way, the data and anecdotal evidence support the assertion: What you sell is less of a sustainable competitive differentiator than how you sell. We invite you to consider what level relationship your sales organization is currently perceived by your buyers and what benefits would accrue from stepping up your game. For more information please contact: Paul Bilodeau paul@thebrooksgroup.com About The Brooks Group The Brooks Group is an award-winning sales and sales management training and assessment company based in Greensboro, NC. Since 1977, The Brooks Group has helped thousands of organizations in more than 500 industries transform their business practices through practical, down-to-earth skills development in sales and sales management growth. The firm s mission is to deliver results-producing processes, services and products to sales organizations. Laura Andrus laura.andrus@csoinsights.com About CSO Insights CSO Insights has provided executives with best practices in sales and marketing for over eighteen years. Each year, we survey thousands of Chief Sales Officers (CSOs) to benchmark the use of people, process, technology, and knowledge, and the impact on sales effectiveness. We also review offerings from solution providers to retain our position as the experts on options for CSOs. CSO Insights 6