Sales is emerging from a short term tactical concern, to a strategic business issue meriting board level attention. HR Chally recently interviewed over 90 senior executives from across the world, including the Americas, The UK, Europe, The Middle East, South Africa; The Far East and the Pacific Rim. This article highlights some of the key findings.
What will be the three most important challenges companies will face moving into the future?
The insidious erosion of commoditization is pervasive and very visible. Buyers have, in fact, become much better at buying than sellers have at selling. Consequently, there is increasing pressure on sales organisations to escape the commodity trap by moving to value based approaches to selling, through their ability to provide business solutions that deliver demonstrable financial returns, and to be rewarded relative to the value delivered. Many are trying and many are failing, and McKinsey estimate that 75% of businesses embarking on solution selling fail.
“There is a difference between selling and value managing. Selling is about what you want the customer to hear about your product and your features. Value managing is understanding what the customer needs, providing the benefits the customer is looking for, and having that customer understand how those benefits translate into either a better top line or a better bottom line. It’s no longer about what we want to push. It’s got to be about what fulfils the customers need and what will do that profitably for both parties.” Craig Wilson Director of Corporate Marketing; International Paper.
Protecting Intellectual Capital
This will add a whole new challenge in protecting intellectual capital. The pressure on companies to keep up with the competition has made reverse engineering a well-developed technology. Even in western economies where the patent laws are fairly rigidly enforced, it’s quite legal to disassemble a competitor’s product and gain access to their proprietary systems or otherwise unravel their corporate assets, as long as the “proper” procedures are followed. In third world economies, the problem continues to be nearly unstoppable. For years, “copies” of brand-name products were easily mass-produced and sold through a wide variety of distribution channels. Today, however, the “apparent quality” of retail products is often indistinguishable from the original. This is easily accomplished in music, or other electronic products and services, but it has also spread to industrial products and even to sophisticated business services.
The second form of intellectual capital is the total corporate knowledge base residing across all the employees. With reduced company loyalty, companies are finding that major investments in retaining existing, especially senior technical and managerial, personnel will be an ever growing necessity.
Managing the Product Life Cycle
Competition for business among suppliers will become even more intense than it is today, as will the commoditization of products and services. Consequently smart sales organisations are employing innovative new approaches to selling products, which are very often commodities, by finding ways of delivering business solutions that deliver demonstrable value. For example, Boise-Cascade Office Products, supplier of office consumables, uses its expertise in procurement and supply chain management to achieve sole supplier status in major corporations, and deliver major savings through centralised, web-enabled procurement, stock control and bulk buying. BCOP have been rated as one of the best sales forces in the world.
Customers’ Expectations are up... and that’s Only the Beginning
Empowered customers will make even greater demands for quality, innovation, service, and low prices – all with the attitude that if Vendor A can’t supply them with these things, Vendors B, C, D or X can.
Customers will be more educated than ever, largely due to the Internet and high-speed/real-time information technology. They will have more product and market knowledge than ever before. Many of the “best”, i.e., most viable and profitable customers, will not only identify tight strategic directions; they will also hold their suppliers accountable for helping them move in that direction.
All the public relations “spin” that marketing people might offer won’t overcome the need for cold, hard proof of the benefit they’ve delivered. Customers will establish measurable criteria to actually assess their suppliers’ ability to help them meet their strategic goals.
Consequently, sellers will have to learn their customers’ goals in detail and be ready to demonstrate how their products and services can help their customers reach them.
“You have to achieve company-to-company collaboration, both from a technical perspective, from a business process perspective, and from a people perspective. The automotive and the pharmaceutical sectors are good examples. They have a number of people they outsource functions to. They can outsource manufacturing, document production, and they can actually outsource research and development. Consequently, the large pharmaceutical companies are focusing on only the highest value in the value chain to dominate. The challenge is: how do you integrate this group of different outsourcing companies together with different needs and different requirements and get a very successful economical flow from the beginning to the end of a process?” Mike Broomhead SVP Business Development, Trusted Edge
It’s Inevitable – There Will Be Pressure on Your Prices and Margins in Spite of Your Added Value
Despite all their customers’ talk about strategic direction, the fact is that many – if not most – customers are working and will continue to work to strip the “value-added” pricing argument from suppliers offerings, and to line up their suppliers one next to the other in an attempt to drive down prices. Some already view this customer response with irony and frustration. After all, they have worked hard to define their value in the market. Yet, after establishing what they thought were long-lasting relationships with their customers, they have found those relationships to be as fragile as the next company’s lower price.
The Human Factor
Only by hiring and retaining the very best people – salespeople, operations people, etc., - can companies hope to thrive in such an environment, say the respondents. But finding such people is a challenge.
“At the end of the day it’s not a plan or even a solution. It’s having the people who can continually modify the plan and build new solutions.” Peter A. Luongo, President and CEO; The Berry Company
Winners will hire people who themselves are committed to a customer-centric approach to the market, and then build internal systems and processes to “institutionalize” it. By removing all the internal obstacles that hinder smooth and productive work relationships, companies will free themselves up and allow their employees to focus outward on the only thing that matters – the customer. It will mean changing people’s mindsets from product-centric to customer - - or service-centric. Successful companies and effective salespeople in this new environment will focus less on features and benefits, and more on helping customers’ solve their most pressing problems or capitalise on their greatest opportunities. In a market in which customers see most of their suppliers and products/services as commodities, the only distinguishing characteristic of a company will be the people who personally call on the customer. Those people will become the all-important drivers of the new market.
“I see way too much time being spent on ‘people monitoring’ and ‘managing exceptions.’ All that leads to this internal focus that takes you away from the customer. You end up building all these administrative walls just to make sure you’re doing what you said you’re going to do. And so much of that can be combated if you make sure to bring in the right people in the first place.” Sam Reese, President and CEO; Miller Heiman
Companies dedicated to finding such people will still face the challenge of keeping them. Retaining people and maintaining their enthusiasm in the midst of tight margins and the commoditization of their products and services is a tall order. As the Baby Boomers retire in droves, companies will be challenged to understand the next generation and to acclimatise them to the needs of the new market. The “golden days” of selling and competing during the 1990s may never be seen again, and the shock will be hard for many younger people to absorb.
A significant addition to this “people theme” is an anticipated demographic challenge. Companies will have to invest in ramping up or replacing mismatched or retiring staff skills with new talent that recognizes that:
1. More specialisation will be required (specialise to professionalise).
2. New multinational/cultural experience and skills will be required.
3. The Baby Boomer generation will be retiring in substantial numbers. We collectively will be losing knowledge. To reduce the drain, we will need to redefine the role of older employees, who may want to work longer, but not full time, to capitalize on the critical asset of their knowledge. This is only one issue that will drive a new approach.
4. The need to ramp up new people more quickly to fill leadership gaps will require companies to customise offers to different high potential individuals, which flies in the face of today’s traditional internal equity issues and standardization.
5. Companies will also be dealing with the work versus personal life “balance” that is increasingly important to today’s knowledge-based workers.
6. And finally, companies will be reorienting their corporate cultures to adapt to the increasing switch to a more fluid and often matrix-based management structure versus the more rigidly fixed and linear reporting relationships of the past.
In a Nutshell
In short, leading sales executives envisage a tougher new world – one in which they will be constantly challenged to identify their customers’ most intimate but constantly changing needs, and then to respond quickly and cost-effectively – and still execute better than the competition.
Great Sales Challenges of the New Millenium - To learn more about this author, visit Peter Gilbert's Website.
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Peter Gilbert
(Visit Peter's Website)
Peter began his sales career with Ecolab
Inc in South Africa.He spent 14 years with
the company in a variety of technical and
sales roles, with his final assignment
being as CEO of the South African
operation. He then founded the South
African affiliate of Philip Crosby
Associates, and fulfilled the role of
Sales Director for 7 years, during which
period the company became the largest TQM
consultancy in the southern hemisphere.
When the Company was bought by Proudfoot
Consulting, he assumed the role of Sales
Director for three years, before leaving
to establish Chally SA, specialising in
sales assessment and recruitment
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