After witnessing thousands of sales calls, and advising clients on thousands more, I can confidently say that the number one reason that customers/prospects fail to make timely decisions is because the salesperson skips steps in the process. While it may sound counter-intuitive, the key to shortening the sales cycle is for the salesperson to slow the process down.
The problem begins because buyer and seller are out-of-sync. Most sales approaches rely on the buyer to be actively in the process of seeking out solutions. Difficulty presents itself as a buyer engages in conversation by either asking about a “solution,” its terms or conditions; yet, the problem has never been clearly defined.
While most people realize this is true when perceived from the seller’s perspective, they assume that the buyer does have an understanding of their problem. Yet, my experience and the vast majority of recent research, this is a fatal assumption, and leads to both major decision reluctance and commoditization.
In our approach, what we call Demand Creation Selling; we teach that there are four distinct segments of the sales process. There are distinct and important decisions that must be made within each segment. When you’re in Segment A & B, your focus needs to be on establishing:
- The problem,
- The cause of the problem,
- The cost of the problem, and
- The need to change.
Segment C is about defining what’s required to solve the problem, or defining the solution, and Segment D focuses on establishing that your company is the best one to solve the problem.
The out-of-synch issue presents itself in two troublesome ways:
- Because salespeople tend to be so solutions focused, they strive to get to Segment D (where the focus is on their solution) as quickly as possible, and fail to create value or build the necessary weight to their business case.
- The nature of most sales and marketing systems positions the message to be relevant to the end of a buying process. This means that by the time buyers reach out they’re oriented to Segment D, but the salesperson hasn’t participated in defining, diagnosing or assessing the problem. This means the buyer is focused on what the solution costs, while the seller wants to focus on what the solution is worth.
In both of these cases chaos, confusion and commoditization accelerates. The sales process gets bogged down, predictability is eliminated and sales costs grow, often to non-sustainable levels.
Solving the problem requires that you slow the sales process down. Whether you’re reaching out to the prospect or they’re reaching out to you, you must address each segment of the sale sequentially.
If a prospect calls you asking for a solution, ask them what’s led them to believe they need that solution? What problem are they trying to solve? What’s led them to believe that this is their problem?
For example, it’s not unusual that a prospect will reach out to me and ask about sales training. It may go something like this (with my narrative thoughts in parenthesis):
Prospect: Hi Doug. An associate of mine was telling me about the sales training you did for his company and I was quite impressed. We’re getting the final details of our next sales meeting together and I thought it would be a good idea to consider using a trainer like you for the event. Can you tell me about your program and how much it costs? (Clearly calling believing he knows what he needs and wanted to enter a “what’s it cost” conversation.)
Me: Thanks for reaching out. I’m glad that your associate had positive things to say. I’m more than happy to tell you all about our sales training approach; before I do, can you tell me what is it your looking to do sales training for? (I know no one wants to buy training, they want a result. Training is about cost, results are about worth. I also know that he probably doesn’t have a good answer for this question.)
Prospect: Well, we’re looking to increase our sales. (While this sounds like a result, it’s not. It’s vague and meaningless and will get us nowhere.)
Me: Not surprising. I’m curious, what do you think is presenting your from getting more sales with your current approach?
Prospect: That’s a good question. I’m not real sure, but I know that my salespeople need to improve their closing skills. We keep losing opportunities at the ends of the process.
Now we’re on to something. It could be closing costs, lead generation, sales cycles times or any other issues, but now we’re defining the problem. In virtually every case (and this typical example highlights the fact) they’re focused on a symptom – not the problem! And this is where I can pivot the conversation. I can begin asking questions about the symptom they’ve shared and highlight what’s really causing the problem.
By slowing the process down, I gain significant control and predictability. I’m able to make my business case and clearly demonstrate if and why we are the best alternative. While it lengthens the time to get to a proposal, it also both increases the value of the proposal and the likelihood of success.
In my fourth post on this blog (back in September of 2005), I made the point that the ability to get customers/prospects to be willing to pay for a sales call was the biggest sales advantage you could create. Over the last six months, I’ve come to the realization that it’s no longer merely an advantage – it’s absolutely critical to your ability to consistently make profitable sales.
To put it as simply as I can, if you are not creating real value in the sales process, you’re falling waist deep into The Commoditization Trap.
At the risk of over-simplifying corporate structure, I’ve learned executives have one of two focuses. At the senior level, they’re focused on the problems facing the company, while mid- and lower-levels are focused on managing solutions.
- Problems are strategic and solutions are tactical.
- A problem focus is all about finding the right/best questions to unlock opportunities, while a solution focus is all about finding the most efficient answers.
- Problems deal with changing the status quo, while solutions are about managing it.
The problem that sellers face is that the traditional sales approach is not geared to connecting to the problem-centers of the customer/prospect organization. I see it time after time. Selling organizations are so solutions focused that they forget that they’re really in the business of solving problems.
With this focus they fall into the vicious cycle of solution selling, where they need to increase their volume at increasing rates to make up for tighter margins and lower win rates. And simply restyling your website, or creating a new tag line isn’t enough to break through and gain the attention of the right people.
If you want to be valued, you must first change how your customers/prospects think about the solution you provide. You must provoke them, and break them out of their traditional, status quo thinking. And you can’t do that when your focus is on your product or service.
To succeed, you must create value. You must teach them something that matters. You must be able to show them first why they’re failing to get their desired results as easily as they’d like, and further you must be able to show them how they can reach their objectives more effortlessly. You must ask them questions where they learn about their company and see their challenges from a different perspective.
Here are three tips to jump-start your efforts:
- Create a list of questions that will cause your customer/prospect to look at their situation from a new or different perspective.
- Share a 15 – 30 minute presentation providing a unique angle to solving a perplexing problem. (Please note, this presentation cannot be about you – it must be customer focused and valuable to them.)
- Develop tools that allow customers to assess themselves.
When you do that, you’re doing something worth paying for. And if you fail to do that, you’re going to be treated like the commodity provider they think you are.
I’ve written about the curse of knowledge before. An important sales implication of the curse is that selling organizations become increasingly committed to the belief that it’s the expertise and knowledge about the solution that separate competitors in buyers’ eyes.
There are two important points that contradict that belief:
Your customers are nowhere near as educated as we’d like to believe they are about their problems, so it’s virtually impossible that they’ll be able to:
- Truly understand your expertise and solutions, and
- Effectively compare the difference – and the value of that difference – between you and your competitors.
- When you’re focused on your expertise or solution you must overcome 2 huge barriers:
- You’re in a what’s it cost conversation, and
- Your competitors have expertise and solutions as well, and they’re probably pretty good too.
As a small, mid-market business, if your goal is to separate yourself from your competition, drive accelerated growth and expand your margins, you cannot do so by focusing on or attempting to differentiate your solutions.
You must – MUST – contribute to defining the problem.
Ask yourself these 3 questions to determine if your sales efforts are setting you apart and making growth effortless:
- How much time do I, or my salespeople, spend talking about our solution vs. digging deeper into the real problem facing my customer?
- In my sales calls with my prospects and customers, how much do they learn about their problem vs. learn about my solution? As a general rule, you want them to learn 3x more about what’s preventing them from achieving their desired objectives than about how your solution will help.
- How much documentation do we use to highlight and quantify the cause and cost of the problem? (Feel free to check out our Core Sales Toolkit if you’re looking for some tools.)
Having witnessed thousands of sales calls, and advised thousands of more, I can state – unequivocally – that the single biggest, most common and most damaging mistake is that selling organizations spend too little time defining the problem, and jump to the solution way too fast.
I love simple graphics that tell big stories. As I was reviewing some of my article archives, I came across this graphic from Marty Neumeier on The Dynamics of Different and Good. It’s about as simple and insightful as you can get.
I often remind small and mid-market business executives that being different should never be the goal, instead, it’s different and better. Yet, as this graphic explains, achieving the goal is the beginning of the journey – it’s not the end! When you achieve “difference” going to market becomes difficult. The market resists because it’s not used to it, and as a result your sales and marketing strategy must educate and influence your market. (For a deeper dive into this subject, watch my 25 minute video on the subject.)
What equally interesting and critical is the failure to achieve this goal results in the appearance of an easier path to the market. The market (and those whose opinions you seek before going to the market) respond more positively to what they’re familiar with. The challenge is that there’s little to no growth on that path, and lots of price pressure.
Market resistance is a part of the game. Don’t avoid it, embrace it.
“People don’t buy what you do, they buy why you do it.” – Simon Sinek
These of some of the wisest words I’ve heard in years.
Many of you may already be familiar with this video. For those that are not, I promise that watching this will be 18 of the best minutes you’ve spent on your business.
Sinek does a masterful job of sharing why companies are being commoditized (without every using the word commoditization). He shares the remarkably simple secret of success for companies like Apple, Starbucks and Southwest; as well as the Wright brothers, and, even, Martin Luther King, Jr. He also shares why TiVo has never been a commercial success.
Please watch this 18-minute video (I promise it’s worth it), then answer the question below:
Why do you do what you do?
In September 2009, I wrote about the fact that, as marketers, we are all competing in Times Square today. Simply put, people are overwhelmed with commercial messages.
This came to light on my trip to Chicago yesterday. The picture you see here is of the handrail for the escalator. That’s right, they’ve turned the handrail into an ad. I don’t know about you, but I’m no more likely to go to this hotel than I was before.
The moral of the story is that merely broadcasting is a useless strategy at best. More likely than not, it contributes to becoming increasingly irrelevant. Going forward, the only viable marketing strategy is to engage with your market.
There are 2 types of companies in the world today. You are either:
- The best, or
- You’re a “Me-too” company
Only “best” companies will earn margin premiums and enjoy the growth worthy of the hard work of business executives and salespeople.
I’m becoming increasingly convinced that BlackBerry is rapidly falling into the “Me-too” category, and will become increasingly irrelevant (and less profitable) going forward.
Full Disclosure: I’m an Apple fanatic (of course, if you’re reading this blog, you probably already know that). I’ve owned every version of the iPhone within a week of its release. So maybe that colors my thoughts, but I don’t think so.
One of the fundamental precepts of great businesses is to narrow your market focus and expand your yield. Great companies are maniacally focused on who their customers are – and who they aren’t. Jim Collins made that clear in his seminal book Good to Great.
BlackBerry, at one time, was an absolute killer device. I had one and loved it. Ever since the iPhone came out, and the smart phone category exploded, BlackBerry has been struggling with finding its place. The Storm was a disaster (on all counts), and they continue to lose market share.
To fight that, they keep “innovating” and coming out with new products. A recent view of their website highlights seven different models to chose from. So I ask, what is a BlackBerry?
In contrast, Apple offers one model (two if you consider the fact that they are still selling the 3GS), and no one need ask the question, “What is an iPhone?”
Watching BlackBerry’s approach reminds me of the 1991 movie, Other People’s Money. In it, Danny DeVito played the memorable character Larry the Liquidator. In trying to takeover a dying company, he said:
We’re dead alright. We’re just not broke. And you know the surest way to go broke? Keep getting an increasing share of a shrinking market. Down the tubes. Slow but sure.
Here’s my corollary:
You know the surest way to go broke? Keep introducing more new products while you continue to lose share of a growing market. Down the tubes. Slow but sure.
Think about this for a moment. Who loves – I mean really loves – their BlackBerry?
Heavy duty email users – that’s who.
Email was the entire basis of BlackBerry’s success to begin with. They invented technology and a device that solved a critical problem for people.
Now, what’s their newest device? The BlackBerry Style. Huh?! What?! If someone is buying a phone for “style;” guess what – they’re buying an iPhone.
People who buy BlackBerrys buy them for function. BlackBerry is superior to the iPhone if email is critical. The iPhone is superior in just about every other way.
What Should BlackBerry Do?
To ensure its future, BlackBerry needs to stop playing other people’s games. They need to focus on their core market – heavy duty email users.
Is that a smaller market than the size of their current business today? Yup. But guess what, BlackBerry isn’t as big as it thinks it is.
BlackBerry needs to answer the same question that small and mid-market companies are faced with every day:
Do I keep fighting for volume and size which will result in less profit and greater vulnerability, or do I accept the market for what it is and focus on what we do best and become relevant?
What would you decide?
For as long as I’ve been in sales, guru’s have always focused on the differences between selling products and selling services. The approach, skills and talents required to successfully sell products are quite different from those needed to successfully sell services.
A major trend I’ve noticed over the last 5 – 10 years is that the distinction between “products businesses” and “services businesses” has become increasingly blurred; as product oriented companies have added services, and services companies have “productized” their offerings.
While the distinctions between companies has grown more nuanced, it’s impact in the selling process hasn’t. It’s critical that you decide if you are selling a product or a service. This simple statement of need can best illustrate the difference between a product and service sale:
Which word do you focus on – “it” or “now?”
If you focus on “it” over “now” you are making a product sale. You’ll focus your sales process, marketing and positioning on the product being offered. You’ll gear your sales efforts to late stage buy-cycle opportunities. Because your focus is on the product, you’ll deal with commoditization on a regular basis (you may even be the chief commoditizer), and as a result your margins will be tighter; hence, you’ll focus more on volume.
If you focus on “now” over “it”, you are making a services sale. You’ll focus your sales process, marketing, and positioning on the consequences of not getting it now. You’ll spend more time educating your customer base on the barriers to “now” and the impact that “now” has on their organization. Your efforts will focus on radical differentiation, and while your volume may be lower (everyone that needs “it” doesn’t need it “now”), you’re margins will be much higher.
A perfect example of the two can be seen between the two most profitable companies in the technology space:
- Microsoft focuses on “it,”
- Apple focuses on “now.” (Realizing that “now” is a metaphor.)
The Big Mistake
Everyday I see companies, especially small and mid-market ones, make a critical mistake. They try to focus on both “it” and “now.” At the risk of over-simplifying the issue, let me be clear:
You must focus on either “it” or “now;” you cannot focus on both.
For those that have been reading this blog for a while, you realize that the product sale focuses on “left-side value,” while the service sale needs to focus on “right-side value.” When you try to focus on both you fall in the middle, and there is no room in the middle.
The middle is Death Valley. You face the on-going margin pressure like a products company with the increased complexity and costs associated with services businesses.
When you’ve chosen which sale you will focus on, your job is to ensure that everything you do – the questions you ask, the ads you run, the social media strategy you implement, etc. – is completely aligned behind the decision.
I am not saying that the product or the service sale is either good or bad. My point here is that they are different. If you want to accelerate your profitable growth in the future you need to chose one – and only one.
Recently, I was presenting to a large group of CEOs, discussing how the commoditization trap was devastating company profits. As I was sharing the key indicators of a company in the cross-hairs of commoditization, I was asked how could you tell if you were effectively avoiding/fighting the commoditization trap.
Here’s my answer:
I call these key indicators your Sales Process Vital Signs. There are three primary indicators that will tell you if you are in the cross-hairs or if you are avoiding commoditization:
- Cost of sales. If it costs you less and less to acquire new revenue (as a percentage of revenue), it’s a very good indication that you are avoiding commoditization. If it costs you more to acquire new revenue, you’re being commoditized.
- Sales cycle times. If sales cycle times are going down, you are most likely avoiding commoditization; if they’re getting longer (or if you don’t know what they are), you’re probably getting commoditized.
- Margin growth. If you’re margins are growing, it’s a good bet you’re avoiding the impacts of commoditization; if there’s pressure on margins, commoditization is most likely the cause.
If all three indicators are working in your favor, keep up the good work. If one or more indicators are working against you, make sure you have a strategy to combat commoditization, or prepare for the consequences.
- “That’s not how we do it in our industry.”
- “I’m not sure I’m comfortable doing that, I’ve never done that before.”
- “I’ve been working with my customer for several years, and I’ve never asked those types of questions.”
- “Salespeople aren’t expected to do that in our industry.”
- “We’ve never done that before. How will I know it will work?”
These are just some of the most common statements that I hear every day from people who claim that they want to differentiate their companies from their competitors.
Let me remind everyone that differentiation is an ends – it’s not a means. The critical component to differentiating yourself in the market is doing something different that matters.
90% of the time the activity that matters and makes you different will, initially, make you and the people in your company uncomfortable. Think about it, if it were comfortable to do, it’s highly likely many others would be doing it.
Please do not misunderstand my point. Merely being different is not enough to differentiate. So, just because no one has ever done it before doesn’t mean that you should do it – but it’s a great starting point.
I was talking with my friend, advisor and client – Gini Dietrich, and it hit me that I’ve been blogging for 5 years now. So, wanting to avoid some work for a few minutes, I thought it would be fun to go back and look at my first few posts.
I have to admit that as I read them, I was surprised by how applicable they still are today. My first content post was titled Commoditization Is The Enemy of Growth. Unfortunately – it still is. For your benefit, I’m posting it again:
How easily can buyers quantify the differences between your offering and your competitors? How easily can your customers make those same distinctions? How can you continuously differentiate your company when market forces are constantly commoditizing you? Think about that question for a moment. It is the greatest challenge facing businesses of all sizes in the 21st century.
Commoditization is the evolutionary process that reduces all offerings to their lowest common denominator. Commoditization is the situation businesses find themselves in when their focus is mainly on their offering instead of the quantifiable difference their offering delivers to their customers. I have asked over 2,000 businesses why people should buy from them. Virtually all of the answers fall into the category of “we are better,” or “we give more value” and virtually all of those answers propel the business into commoditization.
“Value creation” is among the most common buzzwords used in business today. There is only one meaningful definition in business for the word value: something buyers would be willing to pay for. Your company can do great things, but if people aren’t willing to pay more for it, your company is not creating value.
So I ask: What are you doing to break away from commoditization? How are you making value creation a core discipline of your company?
Anyone who has heard me speak knows that I believe business acumen is the most important capability for a successful selling. One of my goals in writing this blog is to support the development of business acumen in the sales process.
I started reading the book Seizing the White Space: Business Model Innovation for Growth and Renewal. I found the title interesting because I often advise executives to “seek the white space.” I’ll provide a more detailed review of the book when I’ve finished reading it. However, regardless of the rest of the book, Chapter 2, The Four-Box Business Model Framework, is must read for everyone.
Mark Johnson provides one of the simplest and powerful descriptions of what a business model is, how to understand it, and how to affect it. Looking briefly at the four elements from the four box business model, they are:
Customer Value Proposition (CVP) – An offering that helps customers more effectively, reliably, conveniently, or affordably solve an important problem (or satisfy a job-to-be-done) at a given price.
Profit Formula – The economic blueprint that defines how the company will create value for itself and its shareholders. It specifies the assets and fixed cost structure, as well as the margins and velocity required to cover them.
Key Resources – The unique people, technology, products, facilities, equipment, funding, and brand required to deliver the value proposition to customers.
Key Processes – The means by which a company delivers on the customer value proposition in a sustainable, repeatable, scalable, and manageable way.
Understanding your customer/prospect’s business model is critical – I repeat CRITICAL – to becoming indispensable. If you don’t understand, you cannot make The Shift to selling results, and you’ll find your company, your offerings, and your sales efforts increasingly marginalized.
When you do understand their business model, you can begin to answer important questions like:
- Which boxes do we impact?
- How do we impact them?
- How will our customers business model improve as a result of our impact?
- What is that worth?
With those answers in place, your customers will be far more interested in talking with you and far more open to sharing their needs with you.
I realize I’m about to induce headaches, but it’s critical you stay with me. I’m losing sleep, because every day I’m seeing really good businesses throw themselves into the middle of the commoditization trap. Once there, your future is best described as quicksand – either do nothing and sink slowly and fight like mad and sink more quickly.
The fatal error can best be described as taking what you do and selling it. If you think what you do is what you sell, YOU ARE A COMMODITY, AND YOU WILL BE RIGHTFULLY COMMODITIZED. If that’s the case, then you must play the commoditization game to have any chance of success. (That game, by the way, is won by growing volume and cutting prices faster than anyone else. It is a race to the bottom.)
I created the following SlideShare presentation to illustrate my point. If you’re new to the blog, you can read these posts about pricing and value creation.
A friend of mine is a regional sales director for a Fortune 500 (soon to be 100) company. His boss recently asked everyone at his level to provide a brief response to the question, what makes his company different/better than other providers. My friend’s response is one that all fast growth executives need to know and understand.
He said, “in a world where every product is the same, or at least perceived as the same, the only difference that matters is the salesperson’s ability to sell. Our company is better because our salespeople are better.” Don’t view this as an oversimplified viewpoint. My friend sells a highly sophisticated solution. His company has several proprietary offerings that they insist matter. What he understands is that no matter how unique your offering is, a) if the buyer doesn’t understand how it’s unique, and more importantly, why that uniqueness matters and/or b) the buyer has alternatives (and they always have alternatives), then you’re not unique.
He is absolutely right. Today, if your sales effort isn’t superior in a meaningful way to the buyer, then your margins will be under attack. If your buyers don’t feel a difference between how you sell and how your competitors do, then they are going to assume you are the same, and price will become the driving factor. As a matter of fact, there is no acute symptom more directly tied to ineffective sales efforts than price increasing in importance in the decision and/or your margins facing increased pressure.
Selling is the process of enabling buyers and potential buyers to, first, understand their problems and, second, to understand how one’s solution can solve the actual problem. Selling is not telling. Selling is far more than the ability to make an energetic presentation or to tell a story. While these skills are quite valuable, selling today is far more about diagnosing and consulting (not to be confused with “consultative”) than it is about the power to “close” or to overcome objections.
Selling and salesmanship, today, is about your ability to:
- Provoke the awareness of problems within your customer base
- Diagnose those problems in a collaborative fashion
- Have the business conversations to help your buyer’s translate your offerings into their results
- The ability to make them feel safe
The winners of tomorrow will be the ones who invest the time, the money, the energy, and the discipline into build a superior sales force.
Verizon Wireless and AT&T are in an ad war right now. First, Verizon came out with their “There’s a map for that” ad promoting their cell coverage while insulting AT&T’s. Then AT&T sued Verizon and lost. After that, AT&T fought back by hiring actor Luke Wilson to sling mud about Verizon’s network – and back and forth they go.
At the end of all this, the net result will be that both AT&T and Verizon will have spent hundreds of millions of dollars and the negatives towards each company will be heightened, causing consumers to like each company less. My bet is little to no market share will actually shift as a result of this.
The easy reaction to this is to sigh and mutter, “What a waste!” While this would certainly be a very reasonable response, there is an instructive lesson and huge warning sign for growth oriented companies.
When companies fail to consistently create value – and by extension create demand, competitive pressures become increasingly intense. The challenge that both AT&T and Verizon Wireless have is that neither of them does anything particularly special. While Apple, Google, Palm and other handset makers continue to innovate and search for new ways to delight customers, AT&T and Verizon Wireless are left fighting over who’s 3G network is better. I wrote about this six years ago: “We are better” value propositions don’t work.
The Warning Sign
This entire ad war reminds me of political campaign and negative campaigning. When you play the competitive game I call Demand Fulfillment, you are increasingly vulnerable to competitive attacks and mudslinging. The solutions focus of demand fulfillment makes compelling differentiation virtually impossible. Features and benefits become commodities. Developing new applications become increasingly expensive and risky. Because margins are tight, companies desperately search for quick hit tactics that can “have an impact.”
What’s the quickest, easiest tactic? Insult the competition. Sure, we all know that we’re not supposed to say bad things about the competition (that’s what I was taught in sales training), but politicians proved years ago that scaring buyers voters about their opponent had far more immediate impact than building themselves up. Of course, if the company being insulted is vulnerable to competition, they must fight back, and before you know it millions (or for small businesses – thousands) of dollars are wasted on inane messages, rather than on developing deeper understanding and connections with core customers.
Companies that create demand are increasingly immune from competitive pressures. Their maniacal focus on their customers – and solving their customers problems – give them a competitive-free like status. So long as they continue to build deeper relationships with their customers and desired markets, attacks from competitors have no impact.
The lesson for every company, even especially those companies in difficult markets, is to stop playing the traditional game. If you do, the AT&T – Verizon Wireless war is your future.
Start creating demand. Determine the results your customers want, help them understand the problems they don’t understand that are preventing them from getting those results, and sell a new solution. Don’t tell me people won’t pay more or do different things in this market, because I know that will. It’s your choice!
So, what are you going to do differently to create demand?