Key transformational trends in selling
11th April 2015 | Dr Javier Marcos and Dr Philip Squire
Organisations need to understand how selling is evolving and to involve sales leadership in developing strategies to thrive in the new environment.
Professional selling is undergoing significant and unprecedented change that, in turn, profoundly impacts the role of the professional salesperson. Change has always been part of professional selling; however, the scale and speed of that change has increased so substantially that for many to describe their response to market challenges simply as “change” would be to completely underestimate the degree of adjustment required.
Transformation is the new environment for many sales organisations.
Many factors can potentially affect sales organisations and their performance. These include: the macro environmental issues of politics, civil and military unrest; recession and lower growth rates in the economy; new competitors; new markets; emerging and disruptive technologies; and also internal issues relating to organisational change; acquisitions; and ever-shifting reporting structures.
We argue that future sales success will be defined, in part, by companies’ ability to understand these transformations and to develop action plans to address them.
In 2008, Cranfield initiated a study in collaboration with Consalia into the changing nature of the sales profession, of which the initial phase was concluded in 2013. The research revealed a number of transformations.
From selling products to customisable bundles of products and services
Over the past decade or more, companies operating in both industrial and consumer markets have embarked on growing their businesses by selling integrated offerings of products and services (“solutions”) rather than just products alone. In Western economies such as those of the United Kingdom and the United States, services accounted for 77% of GDP, with manufacturing representing just 22% in 2010. In terms of labour force, the service sector accounts for 75% of employment in the US and UK and more than 50% in Brazil, Russia, Japan and Germany. About 40% of manufacturing firms sell services as well as products and, in some cases, industrial companies operating in sectors such as aerospace or transport obtain over 50% of their revenues from services.
Service offerings and customer solutions are generating significant opportunities to create and capture value for customers and suppliers alike, having given birth to a trend often referred to as “servitisation”.
Examples of “servitised” companies can be found in various sectors. In telecoms, Ericsson and Nokia offer turnkey solutions to design, build and operate mobile phone networks. In transport, Alstom, Siemens and others can offer maintenance, upgrade and operation of trains and signalling systems. In aerospace, Rolls-Royce coined the concept of “Power by the Hour” where the customer pays for the servicing of the engines according to the number of hours the engines are in use. Xerox launched innovative document management services with a guaranteed fixed price per copy. One of the participating companies in this research, IBM pioneered the transition from a product-based company (hardware) to a world-class service provider.
The shift towards the provision of integrated services means a change in the approach and the extent of the value proposition of many companies. Providers often evolve from supplying well-defined products or services such as IT systems, aero-engines or trains, to “data management”, “flying hours” or “transport availability”.
These complex value propositions require new contractual approaches, such as outcome-based contracting, that reshape the nature of B2B customer relationships. These approaches often require the supplier to take on a level of risk that is either higher or more unpredictable than when products and services are sold in a more transactional fashion, putting more pressure onto sales organisations to establish the “right” relationships and sell the “right” solution.
From discrete exchanges to dynamic relationships
Relationships have always been paramount in B2B selling. Most of us would recognise that establishing and developing relationships with customers will remain a key dimension of the role of professional salespeople. However, the nature and complexity of such relationships are rapidly changing.
Team selling is now standard in complex selling, and multilevel and multifunctional relationships are increasingly commonplace. Typically, sales teams comprise several specialists who interact with the customer to deliver integrated solutions. In most cases, an account manager takes charge of the required coordination of sales teams. There is a growing trend of serving transactional customers with online self-service portals, call centres and resellers.
In a context where sales organisations have to streamline their processes for transactional customers and to invest decisively in strategic accounts, the ability to implement coordinated customer approaches through different channels becomes essential. This in turn, requires managing customer expectations and implementing systems that bring together information about contacts from different functions across the supplier and the customer organisation.
Relationships between sales staff and customers are increasingly defined as “multilevel and multifunctional”: multilevel, to go beyond procurement departments to demonstrate value and make an impact at higher levels of decision-making; multifunctional, to enable a more enduring relationship with the customer, establishing different interaction points.
In a number of industries, supplier-customer relations are becoming more formalised and increasingly regulated, which poses a challenge to traditional relationship-building strategies. For instance, in the life sciences sector in some jurisdictions, salespeople are no longer able to develop personal relationships with their customers (usually physicians who prescribe medicines) by regularly visiting them, thus restricting the influence of personal contact in buyers’ decision making.
Sales professionals have to find new ways to engage the customer rather than the traditional path of simply building personal relationships – new approaches to influencing people, and different decision makers. Following the example above, pharmaceutical companies are having to develop a wide range of relationships with regulators (Medicines and Healthcare Products Regulatory Agency in the UK), public bodies like NICE (National Institute for Health and Care Excellence), and within healthcare centres with the physicians, pharma purchasing and hospital management functions. Orchestrating these complex relationships appropriately should enable stakeholders in the healthcare system to align the commercial interests of pharma companies with the agenda of healthcare institutions of providing better patient care and creating a more sustainable healthcare system.
From product knowledge to customer business knowledge
Buyer behaviour in business markets has progressed as customers have become increasingly informed and more demanding, particularly in seeking to gain superior value from suppliers. A key precondition for providing compelling value is in-depth customer knowledge. Higher levels of customer understanding enable suppliers to define more effective service-delivery processes.
Since value has a perceptual component, a deeper understanding of the customer organisation and its internal relationships will help frame value propositions more in sync with customers’ expectations.
Customer knowledge is recognised to be important, not only to deliver against current customer expectations, but also against future ones. The development of business with a number of customers depends on the seller’s ability to anticipate and capture future needs and to develop novel solutions for those customer needs.
Sales-related knowledge, of which customer knowledge is a key component, has been identified as a key driver of sales performance. A recent study suggests that high-performing salespeople “challenge” the way the customer thinks about his/her buying decision. Only a deep understanding of the customer’s business will ensure a meaningful and constructive conversation about the customer’s needs and how a supplier may fulfil them.
Gaining in-depth customer knowledge is neither straightforward nor quick. It requires sales forces to spend time developing insights about the customer’s strategy, its processes, its people and even the customer’s customers. Sales management practices, in particular targets and incentives, may influence the extent to which salespeople spend time cultivating relationships that lead to customer knowledge generation. Furthermore, the sales leader’s style will affect the extent to which professional salespeople develop knowledge-creation capability.
Customer business knowledge can be seen not just as an individual skill, but also as an organisational competence. As such, it requires linking internal processes and practices such as customer information systems, marketing-IT interfaces, senior management involvement, and employee alignment with the firm’s strategy.
In best-practice organisations, salespeople are involved in “customer intimacy” workshops that are set up as mechanisms to find ways to improve customer service. Joint customer-supplier activities such as innovation meetings are organised to create new value propositions or enhance existing ones.
These practices are underpinned by a co-creation approach; in this model, value is created partly at least in partnership between customer and supplier, rather than in the traditional way where customers specify the “value” they want and the supplier delivers that “value” according to specification. At the heart of this approach lies the salesperson’s knowledge of the customer business in addition to the offerings of his/her own organisation.
Traditional approaches to develop salesforce competence do not equip sales professionals with the approaches to handle transformation.
What are the implications of these transformations for sales professionals?
Imagine what it’s like to be part of the transformation… in a an organisation that, within six years, witnessed market share plummeting from 47% in 2007 to 3% in 2013 – such was the experience for Nokia. Consider the impact on every aspect of the sales process from account planning to opportunity management to negotiating strategies in a world where once you were the dominant player but now only a marginal one.
How different it is working in the banking industry today compared with pre-2008 times where salespeople are now called relationship managers, sales commissions are curbed, and where the sales process is now forensically scrutinised by regulators.
Consider the impact of the transformation of merging two huge sales organisations such as Novartis and GSK that are currently undergoing massive structural changes as they create a new global consumer pharmaceuticals business.
Transformation is not just the remit of the board. The sales organisation plays a critical role in the execution of board strategy in the field and an emerging role in providing the board with insights gained from the field. Yet, a study by Forrester (2011) cites CEOs stating that the “sales force is always 12-18 months behind strategy”.
Addressing the profound transformations in sales will rarely be done by tactical investment in resources such as CRM processes, sales force automation or superficial organisational changes. What is required is a change in mind-sets and core belief systems about markets, customers and one’s own organisation. We argue that realising transformation at an organisational level will require high doses of personal transformation.
So what are the implications for sales professionals and sales leaders? Traditional approaches to develop sales-force competence do not equip sales professionals with the approaches to handle transformation. Knowledge and process is becoming less relevant in a world that changes so fast. What is required is fostering self-directed learning to enhance sales performance by helping salespeople develop their own competence though enhanced awareness and mindfulness.
The qualities to address such domains, underpinned by the right mind-sets, will be de rigeur in the future. In Five Minds for the Future, Howard Gardner eloquently sums up the requirements for future success: “For (sales) people to meet the world of the future – with its ubiquitous search engines, robots and other computational devices – will demand capacities that until now have been mere options…. (Sales) people need to be well equipped to deal with what is expected as well as what cannot be anticipated; without these minds, the (sales) person will be at the mercy of forces that she or he can’t understand, let alone control.”
For sales leaders a new paradigm of sales management and sales leadership is required to manage complexity encompassing dimensions such as: managing ambiguity; innovative thinking; synthesis of insights and information; reflective practice and enhanced collaboration.
How to manage ambiguity
Decreasing prejudgement; learning how to let go the uncessary; be inquisitive; challenging received wisdom and thinking; understanding your own values and belief systems; challenging the status quo and the processes that stifle creativity.
How to think innovatively
Developing the use of mind maps; considering design thinking techniques; listening to others particularly when in disagreement; adopting appreciative enquiry to problem formulation and to problem solving.
How to synthesise informaton
Seeking the facts beyond the anecdote; collaborating with others to seek patterns in data that otherwise would not be apparent; using software to map key words; developing critical thinking skills and learning the value of simplicity.
Developing reflective abilities
Spending more time white-wall gazing, more time with people and mastering reflective techniques.
Creating stronger stakeholder networks with highly competent people; teaching others how to think; being generous, open, recognise credit where credit is due, being humble.