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Don’t Be A Pigeon (Why Selling Is Dead)
Traditional selling techniques are no longer effective in the twenty-first century. A study conducted by Harvard Business Review revealed that only 1 in 250 salespeople actually creates positive economic impact for their companies, and less than 37% of salespeople meet a profile deemed to be “effective.” It is time to end the traditional approach to sales, where most salespeople are considered pests or peddlers and transform that approach so that salespeople are perceived as the valuable assets they can be.
Through 20 years of research, I have learned that the problem is a systems problem, not a people problem. To drive profitable growth, companies must adopt new systems, develop new skills and apply new disciplines to be effective. The good news is that companies that make this transformation gain disproportionate rewards – often 5 to 10 times average rates of return.
The fundamental problem with traditional selling is that it structurally places the focus on the commodity value. If your goal is differentiation and earning margin premiums, then you must work against traditional selling tactics. For six years, the focus of this blog has been to support the development of a better approach to selling. Consider this post a 30,000 foot review of six years of content (with the links to previous posts to support it).
Here’s the problem with traditional selling:
- It is solution-focused. When you begin with the focus on the solution, you are focused on the commodity portion of your proposition. As I’ve written before: solutions are worthless – until there is a problem.
- It views your difference as a “value-add,” rather than as core to your proposition (think IBM pre-1995).
- The playing field is defined by your competition, and the focus is “winning the business.” This make the process far more adversarial than it should be. From a customer perspective it makes it a hodgepodge of “sameness.”
- Because it’s solution-based, the go-to-market focus is broad; too broad. The approach is based upon “who can use the solution,” rather than on where the selling organization can be best.
- The sales and marketing approach are silo’d within the selling organization – leading to misalignment, confusion and brand degradation.
A new, far more effective model of selling flips these issues on their head. The focus is on creating value throughout the entire sales/marketing process. Rather than merely fulfilling demand (which is akin to being a pigeon trying to compete for a piece of bread) the focus is on creating demand – what I call Demand Creation Selling.
- It focuses on critical results – and the barriers that prevent those results – rather than on solutions. It focuses on the problem, and enabling the customers/prospects to better understand their problems and the causes and consequences of those problems.
- Rather than viewing your difference as the “value-add,” it focuses on your difference, your business’ intelligence if you will, as the core of your offering. I refer to it as making The Shift from selling stuff to selling your ability to create results.
- The focus is on creating demand (and markets), and as such, you eliminate competition and you own markets, rather than compete.
- You focus and allocate your resources where you can be the best, and you ignore areas where you’re a “me-too” company.
- Instead of focusing on the solution, Demand Creation Selling means that you manically focus on understanding customers – better than the customers understand themselves.
- Sales and marketing are fully integrated, and the company goes-to-market in a clear and powerful manner. There is no need to differentiate, because you are different.
- Expertise is defined by how well, and how deeply, you understand your customers and their issues, rather than how well you know and understand your solution.
Growth is tough enough as it is. Businesses can no longer rely on systems and approaches that work against them. The time has come to change the way you sell – and the rewards await.
The Most Important Power in Business
Last week I took Warren Buffet to task for his ill-conceived philosophy on making mistakes. Today, I’m going to highlight his genius.
While being interviewed by the Financial Crisis committee, Buffet commented, That good management is unnecessary to a successful company. So what is important:
“The single most important decision in evaluating a business is pricing power.”
While I think Buffet is overstating his comments on management, I completely agree with his sentiment about pricing power. The biggest challenge for businesses following The Great Recession is recapturing pricing power – if they ever had it.
B2B companies that don’t have clear, distinct value propositions that stand out in a meaningful way DO NOT have pricing power.
As I’ve written before, the single best way to capture the pricing power that Buffet is talking about is to be indispensable to your core market.
Go Ahead – Make Some Mistakes
Regular reader of this blog know that I’m a fan of mistakes. I’ve shared my mistakes, I’ve used the television show House to model what the go-to-market process is like, and I’ve shared the wisdom that the winners in sales are the ones that make mistakes and fix them faster then their competition.
Then I come across quotes that remind me that everyone does not agree with this sentiment. Yesterday I got a newsletter from a customer featuring a quote from the “Oracle of Omaha,” Warren Buffet. He says, “You only have to do a few things right in your life so long as you don’t do many things wrong.”
I get the quote when it comes to investing. When I was a financial advisor I always said that the first rule was not to lose money. I also get this when it comes to making big capital expenditures. Small and mid-market companies can’t afford to spend tens to hundreds of thousands of dollars and be wrong very often.
That’s why I’m a firm believe in rapid prototyping. As my friend and coach Dan Sullivan says, sell the tickets – then build the ride. Don’t get too far out in front of yourself when taking something to market. The best way to test something is to see if someone buys it.
This approach allows you to make mistakes. And despite what Mr. Buffet says – You only have to do a few things right – even when you make hundreds of mistakes.
Build It…They Will Come
The 1989 movie Field of Dreams is, in fact, the daydream of every marketer. The line made famous in the movie, “If you build it, he will come,” embodies the desire of every marketing organization since the beginning of time.
Of course, marketing has never been that easy. John Wannamaker, a famous retailer, said, “I know I’m wasting 50% of my marketing budget, my problem is that I don’t know which 50%.” My own experience indicates that not only are most companies wasting 50% of their budgets, but also the 50% that is not wasted is only getting about ½ of the results it should be.
The fact of the matter is that marketing – traditional marketing, at least – is broken. Just like traditional selling, it is built on an ineffective, highly inefficient foundation. This means that improving your marketing efforts isn’t going to do you any good. Quite the contrary, merely throwing more to this inefficient system is going to further thrust your company into the black hole of The Commoditization Trap.
There are two critical flaws with traditional marketing:
- It is a broadcasting mechanism, and
- It only communicates value and typically fails to create any.
Broadcasting
It’s trite and it’s true. When there were only three channels and virtually no other way to communicate, broadcasting worked. Today, broadcasting is highly ineffective.
Picture yourself in Times Square in New York City. How difficult would it be to get the attention of people there? How loud would you have to yell? It would be virtually impossible (before you protest, the Naked Cowboy is the exception that proves my point).
You need to understand that today we all compete in Times Square. Here are some scary statistics for you:
- The typical person is exposed to 3,000 commercial messages a day, yet the human brain is incapable of processing more than 100 per day.
- In the last 5 years, the number of pages indexed by Google has expanded by more 360 times.
- In 1986, America had more high schools than shopping centers. Today shopping centers outnumber high schools by two to one. Plus the stores are three times denser than in 1986 – and that doesn’t even account for “online shopping centers.”
This means that there are a lot of people shouting and if all you’re doing is broadcasting (shouting) with a static website, advertising, direct mail or whatever, the likelihood of getting through and driving real results is highly unlikely. Whatever results you do create will be swept away by the costs of getting and maintaining your presence.
Value Communication
Before the age of the Internet, people relied on traditional advertising and marketing as a means to know what was going on, what was available and how much stuff cost. Today, people are building bigger barricades to keep advertisers and broadcasters out.
With all of the noise in the world today, the only effective approach to marketing now is to earn people’s attention. And, in case you didn’t know this, your customers and prospects don’t really care about you, your products, or even your goings on.
What they care about is themselves. They care about their lives and they’re constantly looking for ways to make it better. Contribute to that – before they have to buy from you or even give you their name – and they’ll give you their attention.
The Good News
The marketing tools available to businesses today make it relatively easy to overcome the barriers of traditional marketing and to transform your broadcasting approach into a finely tuned, pull marketing system. Today, if you follow the new rules: if you build it – they will come.
Even better, where traditional marketing approaches favored large, high capitalized business, today size is at worst a neutral factor; and in my experience the new world of marketing plays to the strengths of small and mid-market companies willing to work at it.
There are three simple rules you must follow:
- Create value by providing useful information and knowledge that will help your customers and prospects.
- Give it away and give up control. That’s right – give it away. Don’t ask for money, don’t ask for commitment, and don’t even ask for an email address. First give, then over time you will receive.
- Consistently engage. This is not an overnight success strategy; you must “be there.”
If you follow these three simple rules, you’ll be able to build an enormously valuable marketing asset and you’ll be able to eliminate marketing expenses.
Avoiding A Damaging Sales Mistake (Part 2)
In yesterday’s post I shared a critical designation, and strategic sales decision, that must be made early in the sales process. Are you making a “status quo” sale, or a “change” sale. Now I’d like to share part 2 – the implication of each sale and how to tell the difference.
In many ways, a status quo sale is easier than a change sale. But, as with anything, “ease” has its trade-offs. Status quo sales are far more susceptible to competition, commoditization, and price/margin pressure. It’s very hard to stand out when making a status quo sale, so the sales/marketing focus is much more tactical, with the tactics shifting frequently.
Change sales are harder to make, if for no other reason than change is involved. The upside is that they can have greater impact to the buying organization. Selling organizations that master change sales are able to avoid commoditization by bypassing the competitive environment and becoming a true resource to their prospects/customers – as I’ve written before – they’ve made The Shift from selling to stuff to selling results.
The danger here is that sellers frequently attempt to make change sales to people in the buying organization who worry about the present or past. This is just as damaging as when companies try to sell total value propositions to fundamental value buyers.
In a typical business organization 80-90% of the people are responsible for the present or past. If they’re who you are counting on to drive the sale, then you need to be making a status quo sale.
Only 10 – 20% of people in a company are responsible for managing and allocating resources to address what could be happening. They should be the focus of your sales efforts if you are making a strategic, change sale.
Be careful, while title is an indicator of one’s time frame it is often misleading. So, how can you tell if you’re talking to a future-oriented person or not? Two cues:
- Listen to them. If they spend most of their time talking about what could be, they’re future oriented. If they spend time talking about what is or was, they’re status quo.
- Look at their resource allocation authority. Do they allocate resources to deal with future possibilities or present-day realities?
Going forward spend a little extra time to make sure you are aligning your selling proposition to your buyer’s time frame.
Avoiding a Damaging Sales Mistake (Part 1)
In 2004, I wrote about the need to align your sales proposition with the value definition of your buyer. Over the last seven years, I’ve become increasingly aware of another critical misalignment that occurs in sales efforts every day – timeframes.
Far, far too often, sellers are bringing superior value propositions and promises of better futures to people who do not worry about the future. There are two types of people who work within companies:
- Those who worry about the future.
- Those who worry about the present (and past).
As a seller, you must make a critical decision early in the sales cycle (and in many cases even before the sales cycle begins): Are you making a “status quo” sale, or are you making a “change” sale?
A status quo sale requires very little change in behavior or approach on the part of the buyer. While there are too many possibilities to describe all status quo sales, you are promising an improvement in an area of work where your customer/prospect is already paying for something – be it a key process, a resource or even people. When your new customer makes a status quo purchase from you, they do the same basic things they did with their previous “solution.” The status quo sale is aimed at addressing the issues/problems/worries in the “now.”
A change sale requires the prospect/customer to change their approach is some way to be able to fully take advantage of (and therefore, fully value and pay for) the value proposition. A change sale can address key process or resources, just as a status quo sale can, but the issues/problems/worries it addresses occur in the future.
Tomorrow, I will share the implications of a status quo vs. change sale and how to tell what type of buyer you are dealing with.
Predicting The Sales Slump
I can predict, with a great degree of accuracy, when a new salesperson (to sales or to your company) will experience their first prolonged slump. When, you ask? When they become comfortable with the product or service they are selling.
That’s right – the first slump almost always occurs when a salesperson becomes comfortable with what they are selling. How can this be? It’s quite simple actually.
When a salesperson is not completely comfortable with their offerings, they are forced to pay extreme attention to the customer/prospect. They ask questions – lots of them. They don’t push. And, most importantly, they don’t jump to the solution. The spend time understanding the customer, because that’s the only thing they can do. As regular readers of this blog may remember, that’s right in line with The First Rule for Creating Demand.
Once the salesperson becomes comfortable with their offering, guess what they do? They start talking about it. Before you know it, they smack in the middle of the We-Do’s. They start asking fewer questions, they pay a little less attention, and, without realizing it, they start pushing. They jump to the solution – confident they can explain their way to a sale.
The point of this post is not that salespeople should not become comfortable with their products or services (though I would strenuously advise that they should never become too comfortable with the offering); it’s that product knowledge is secondary to focusing on and understanding your customer. What drives them, what worries them and what are the results they want to achieve.
The next time you go into a meeting with a customer or prospect – forget everything you know about your products, pretend you’re new and use the time you would have spent telling them about your great stuff to ask deeper, more powerful questions. You’ll be surprised just how effortless selling becomes.
Busy-ness is the New Lazy-ness
In my experience working with thousands of salespeople, I’ve learned that there are relatively few activities that have any real impact – positive or negative – on the results they enjoy (or not). For that reason, I’ve advised top performers to always be asking themselves two questions:
- What are the three most important activities that will best contribute to my desired results?
- Am I doing them?
The challenge in life has always been to balance the urgent with the important (often referred to as The Tyranny of the Urgent). As “The Great Recession” ends and “The Great Recovery” begins, the difficulty in successfully navigating this challenge will balloon, for one simple reason – people are busy.
“I’m too busy.”
What a great excuse. In today’s environment, no one can argue with it.
The problem is that “busy-ness” has become the impenetrable reason that stops people from doing things that a) matter and/or b) make them nervous/are out of their comfort zone/they are scared of (take your choice).
- Important action: Develop a list of 20 companies to pursue and start developing relationships there. Sounds great, I’ll get to it just as soon as I clear things up. I’m just too busy. Reality – it’s out of the comfort zone and it makes one nervous.
- Important action: Develop a pull marketing program. Yup, I’d love to do that – I’m just too busy to create the content. Reality – I don’t really like writing, and besides, how will I know it will work?
- Important action: Make a call to the senior person at the prospect’s company, rather than respond to the RFP. Hey, that’s a great idea. I just don’t know where to fit it into my schedule. Reality – I don’t know what I would say to the senior person and I’m afraid I’d look foolish.
You get my point.
The danger of the busy-ness excuse is that the only one who knows the truth is the one making the excuse.
Success today requires more effort, and yes, more bravery, than at any time in my professional career. I’m reminded of what the lecturer Randy Pausch (The Last Lecture) said about brick walls: They’re great because they keep everyone else out.
So it’s your choice, stick with the busy-ness excuse, or get busy doing what really matters.
Focus On Your Core
This book review originally appeared in Baltimore and Washington SmartCEO Magazine February issue.
When I was a wealth management advisor at Merrill Lynch, I used to keep a sign in my office that said, “Don’t confuse brains with a bull market.” For the last five years, I’ve been telling senior executives and salespeople at mid-market companies, “just because the fish are jumping in your boat, doesn’t mean you an expert angler.”
As businesses put growth back at the top of their agenda and try to put the issues of the “Great Recession” behind them, they are discovering a fatal flaw:
They’ve lost their core business (or they’ve never had a core business).
For far too long, businesses have been selling to the lowest common denominator, simply because general demand was growing rapidly. For 25 years, from 1982 through 2007, executives could count on the record growth of markets to mask many of the errors that were taking place beneath their businesses.
Now, in response to the economic displacement companies are struggling to find new formulas for growth. If growth is on your agenda this year, there are two things you should understand and focus on.
1. Maybe Your Business Was Never As Big As You Thought It Was
I work with a client who did $38 million of business in 2007, did almost $62 million dollars in 2008, and did $30 million in 2009. Demand in the market dropped by more than 50% as a result of the recession. Now, I don’t care how well you manage your business –that type of loss hurts.
As we worked with them to put together a strategy that would allow them to return to profitability, we discovered something quite interesting: They had lost their core.
So we did a “core business analysis” to deterimine what their core business really was. We found that, at the peak, their core business was about $19 million. In 2009, when the business was down nearly 50%, the core part of their business was only down 20%. Plus, their core business had gross margins that were 25-75% above their other lines of business.
Here’s what I know, and what we told them. If they had viewed their business as a $19 million business (their core) instead of a $62 million business and fully focused on that business there are certainly a couple of things that would have happened:
- The core business would have been larger than $19 million. Now, the company probably wouldn’t have grown to be $62 million; but their core business would have been bigger had they focused on it.
- The business would have been more profitable – in good times and bad.
We recommended they follow the strategy implemented by Steve Jobs when he retook over the reins at Apple and announced, “Apple will get bigger by first getting smaller. We will refocus on our core and we will continue to grow for our core.” No suprise, that Apple is the top performing stock since Jobs came back.
2. Good Is No Longer Good Enough
Famous investor Warren Buffet is fond of saying, “It’s only when the tide goes out that you learn who’s been swimming naked.” In the post-recession, “new normal” good is the equivelent of swimming naked. It works for you if the tide is in your favor, but once the tide turns you’re in toruble.
Simply put, there are only two types of companies in the world. You are either:
- The Best, or
- Me Too
And, no matter how good you think you may be, you cannot be the “best” for everyone. To be the best you must focus on the key activities and the key customers where you can excel. You must disproportionately invest and allocate your resources to those areas. You must take away resources, such as time and attention, from the areas where you have determined you will not be the best.
When you’re the best, you earn margin premiums that allow you to further invest in expanding your competitive advantage. If you’re a “Me Too” company, then you’ll be forced to compete with everybody for the table scraps.
Executives that are intersted in what is involved in both identifying and exploiting their core business would benefit from reading Chris Zook’s Profit From The Core: A Return to Growth In Turbulent Times. Zook, a consultant with the Bain Consultants, shares the research Bain Capital has conducted into what businesses must do to trigger real growth.
According to Zook, even in good times nine out of ten management teams fail to gain real growth profitably. When you factor in natural growth, fewer than one in ten companies deliver growth and return greater than the cost of capital. Not suprisingly, 80% of those companies focus on their core.
The Great Recovery
If 2008 – 2010 is now being characterized as “The Great Recession,” I’m ready to declare “The Great Recovery.”
While I do not wish to diminish the issues that still must be dealt with, virtually all of my indicators and research indicate that we have clearly entered a recovery phase. This is backed by economic data and a tremendous amount of anecdotal data (including that this January has been the busiest in our history).
The winning businesses of tomorrow must understand the immortal words of hockey legend, Wayne Gretzky – You must skate to where to the puck is going to be, not to where the puck is now.
While true recoveries (and this is the first one we’ve experienced since 1982) represent tremendous opportunity, they also represent significant danger for businesses that are not prepared. Companies planning on growing must understand the advantages and dangers that recoveries represent. And I’m sharing those observations with anyone who wants them.
I’ve just published my first eBook (it’s short – I promise): Successfully Growing In A Recovery: How Recoveries Can Be More Dangerous Than Recessions & 20 Questions To Ensure Your Success. In this eBook, I share:
- The 5 reasons recoveries are dangerous for growth companies
- The 5 areas (I call them The 5 P’s) where a company must excel to succeed in a recovery
- 20 questions and actions (4 for each area) that you must address to ensure your success
The eBook is free. If you’d like a copy just click on Successfully Growing In A Recovery: How Recoveries Can Be More Dangerous Than Recessions & 20 Questions To Ensure Your Success.
PS: Even is you don’t believe that we’re in a recovery, the advice in this book will help you grow profitably as well.
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Resources
Doug's Washington Business Journal Columns- Intelligent Growth Articles
Third Wave Selling Blog
Products to Grow
