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.
Ever since I wrote my post about Pests, Peddlers and Demand Creators, the most common question I’m asked is, “How can you tell if you’re being a Peddler or Commoditizer?”
Here’s the simplest and fastest way to determine if you’re peddling:
Look at how you approach your prospects and customers early in the sales cycle. Consider the questions you ask, the material you share and the possible presentations you make. Now answer this question: Who learns about the prospect/customer’s company?
If the answer is you (or your sales rep) you’re a peddler. If the answer is the prospect/customer then you’re positioned perfectly to break-free from The Commoditization Trap.
You read that correctly. If you want to avoid being commoditized and being treated like a Peddler, your job is to ensure your prospect/customer learns about their company, their situation, problems and opportunities from the very first interactions. Learning about your company, it’s products and solutions comes last, with no exceptions.
The problem so many selling organizations have is they view their first interactions as a qualifying or needs assessment process. They ask questions to educate the selling organization, and, frankly, they bore the buyer.
- Don’t ask how the company has handled a function in the past. Instead ask them how they’ve adjusted to address the problems that could be causing that function to be performing at subpar levels.
- Don’t ask them what do they like about what they’ve done in the past and what would they would change? Provoke them with your Commercial Teaching Point-of-View that will cause them to look at their solution differently.
The point here is that the bar has been raised to making high value sales. You can no longer rely on the customer to educate you on what they need. You must teach them instead. When you do that, you’re in a position to create real demand and separate yourself from your competition.
Over the last 18 months I’ve been focusing on simplifying the approach that small and mid-market companies take to growth. There is probably nowhere where this is needed more than in strategic planning process.
Working with thousands of companies, I’ve come to understand that the focus of your go-to-market strategy can be broken into three categories. They are:
- Those who will do business with you.
- Those who won’t do business with you.
- Those who should and aren’t doing business with you.
Those Who Will
The reality is that you do not need to spend significant time creating strategy for this group. This is the customer base that you already have a strong grasp on, and as long as you don’t blow it, they’ll continue to buy from you.
Those Who Won’t
You shouldn’t expend any strategic energy figuring out this market. While this may sound obvious, I’m constantly surprised how much strategic time is spent trying to get people who are never going to buy from you, to do so. At best, energy put in this area will get you into an RFP process, that if you execute flawlessly will allow you to finish second.
Those Who Should
This is the segment of the market that deserves 90%+ of your strategic energy and effort. To do so effectively, however, requires an approach that’s different than most companies take.
Here are some pointers to expand your customer base:
- You cannot figure out how to get the people who should buy from you to do so by looking at the people who are buying form you. If you could, this group would already be buying from you.
- Attracting those that should buy from you requires that you first change how they view and value the issues you impact.
- You do this by creating your Commercial Teaching Point-of-View.
- Expanding this market requires that you focus on building customers – not making sales.
One of the things we do for clients is to create the content that provokes, educates and leverage sales efforts. Over the last three weeks I’ve been involved in about 12 content interviews we conduct to keep the voice of our client. With a couple of exceptions, the only word I can use to describe what was shared is “Boring!”
The most frustrating part of my job is when I’m more excited about your company, your products, services and your impact than you are. I don’t know what it is, but the way 98%+ of companies talk about themselves is just boring. Maybe it’s because our parents told us that bragging about ourselves is rude. Maybe it’s because we’re so focused in trying to get people to understand the importance of what we do that we can’t help but “blah, blah, blah” our way to oblivion. Whatever the reason, it’s ineffective, it’s killing your company and it needs to stop! Now!
We work with a client (who’s name and details I will protect here) who does some amazing things. Their product is truly disruptive and yet extraordinarily simple. Their solution can materially and permanently reduce the cost of manufacturing, increase efficiencies, virtually eliminate rejection rates and shorten production cycles. What’s more it can be implemented in days, requires little training and no change or retrofitting for their customers manufacturing process.
Yet, how did my client talk about themselves? They talked about their process. They talked about the technical details. They were (and still are to some degree) reasonable that a manufacturing process is complex, and the credited their prospects with the knowledge and understanding to allow them to translate their features and benefits into meaningful results.
The important thing to remember is that your prospects and customers don’t have time to think. They’re too busy trying to keep up with the multitude of demands, the simply do not have the attention span to connect what you do to even the most obvious of points. If you talk about yourself like a commodity, you are going to be treated like one.
The solution is to stop talking about your features and benefits – features and benefits are dead. You need to speak the language of results. Lead with impact. No start with what you think makes you unique, finish with it.
- Be bold.
- Share you experience – help them understand why they’re failing to get the results they desire.
- Take charge. Remember, your job is to challenge your customers.
We work hard to get to essence of what makes our client’s companies special, while standing out from competition and resonating with clients. In an effort to help end the boredom, I’d like to share our approach with you. If you’d like to access The Five Tips to Stand Out & Resonate With Your Market, along with an accompanying worksheet, you can download it here.
As I shared in my post last Monday: Stop Selling! If you’re selling you’re doing something wrong.
Whenever I share this insight, it’s always greeted with agreement…and frustration. People shrug their shoulders and ask, “I get that I shouldn’t do this, but what should I do?”
Solving The Seller’s Paradox requires that you fully and completely leave the world of the peddler. You must let go of your products and services, your features and benefits and engage – truly engage – with your prospects/customers. You must embrace a diagnostic approach.
The basis of this approach is rooted with what I call The Three Sale Mindset™. A successful sale is really the culmination of three distinct “sales.” They are:
- Agreement defining the problem.
- Agreement defining the best solution.
- Agreement defining the best provider.
The problem with traditional sales (and with about 95% of salespeople) is that they’re completely programmed and focused on making sale three, and as a result skip steps, assume and commoditize.
Diagnosis is all about focusing on the first sale, and realizing that you don’t really have a prospect until you have clearly and mutually agreed on what the problem is, the impact of the problem as well as its priority.
There are three distinct decisions that must be reached in The First Sale™:
- I (the prospect/customer) have a problem.
- A clear definition/description as to what the problem is and the underlying cause.
- Determination that the status quo is no longer viable, and that change must occur.
It is critical to understand that The First Sale has not been made until all three points have been met. It is not at all unusual (actually, it’s the norm) that salespeople move forward when only the first and third points are being communicated.
When a prospect/customer reaches out to you claiming to acknowledge a problem and desiring a solution, if you assume that they either a) understand what their problem really is, or b) are truly committed to solving the problem once they learn everything that is involved you are moving into false positive territory – and you’re peddling!
When you slow it down and spend the necessary time to ensure that all three points are covered, you’ll find you move beyond competition and begin to get treated like the trusted resource your should be. Focus on The First Sale, and you’ll see the next two move through faster than ever.
One of the toughest behaviors to change when salespeople are working to transform from being peddler to becoming Demand Creator, is the relationship they have with their pipeline.
Having been taught (consciously or otherwise) that sales is a numbers game, peddlers always feel better when the pipeline has more opportunities in it. As salespeople move up the value chain, they gain an understanding that the quality of an opportunity is far more important than the quantity.
This leads to a pipeline that feels weaker, and it increases the fears associated with the the necessary change in behavior and mindset. While the pipeline is actually becoming stronger, it doesn’t feel that way..
In 20+ years working with salespeople and sales management, I’ve learned that there’s little reality in most pipelines. While there may be many “opportunities” listed, few of those opportunities are real. A couple of years ago we conducted a comprehensive pipeline review with a new client’s sales team. The review started with 59 opportunities from 4 salespeople.
When we were done we discovered that 5 were bona fide opportunities, 7 had little to no chance of closing despite the fact that the company was about to invest several thousand dollars of man hours and expenses to prototype a solution, in 33 of them the sales rep was clearly talking to the wrong person and the rest were no better than a lead you could get from a newspaper.
The focus on quantity in the pipeline leads to several bad behaviors, such as:
- A lot of valuable time is wasted chasing the wrong opportunities or even the right opportunities, but with the wrong people.
- Reps lack the time to adequately invest in the right opportunities and places to build the business case and move beyond price.
- Pipeline reports become jokes within management circles, and businesses (especially small and mid-sized businesses) lack the critical intelligence needed to accurately assess their position and make adjustments in a timely and effective manner.
- An urgency mindset, instead of an importance mindset, is built; preventing salespeople and organizations from making the necessary changes to control their destiny.
Demand Creators firmly believe that all progress and growth begins with an honest picture of reality. They realize that focusing on fewer, high quality opportunities is the key to standing out and escaping commoditization.
Making the transition from a pipeline with lots of names on it to one with fewer can be quite scary, and it’s necessary to achieve the effortless growth you desire.
The trends are not good when judging the effectiveness of small and mid-market B2B sales efforts.
- According to recent purchasing surveys, as many as 40% of organizational buying processes are ending in a “no decision.”
- A recent research project done by the Wall Street Journal demonstrated that on 37% of salespeople were actually effective, and a comprehensive research project done by The Sales Research Council shows number worse than that.
- Margin and pricing pressure continues to mount on businesses, even as we emerge from deep recession.
- Finding good salespeople is tougher than ever.
Most companies continue to struggle to find a successful growth formula that will work in the short-, mid-, and long-term. There are, however, a few businesses that have transformed the challenges before them into a significant advantage over their competition. They’ve developed new ways to shorten the sales cycle, bypass competition and grow margins.
These companies understand that their sales process is the most powerful leverage point available to their business. Companies that are able to materially shorten the sales cycle enjoy huge advantages over their competitors.
- They need less money or capital to grow.
- They are able to capture more revenue without adding people.
- They enjoy a significant cost advantage.
- They’re margins and profits are substantially higher.
Shortening the sales cycle should be a key objective for every growing company. Yet, only about 5 – 10% of small and mid-market B2B companies are able to do so consistently.
Make sure you’re one of them!
Join us on May 23rd at 2pm EDT, as we share the secrets to shortening your sales cycle in our latest webinar.
The single biggest, most common, and most expensive mistake made by salespeople occurs when they go to their solution too early. The biggest cause of this mistake is the apparent readiness on the part of the prospect to hear about the solution.
The nature of most small and mid-market organization’s sales and marketing efforts leads to the primary contributor of this problem. 80% or more of the time, salespeople begin their interaction with the prospect after the prospect is looking for a solution. When they first meet with a prospect, or when a prospect first reaches out to them the conversation typical begins with the prospect asking them about their solution.
In my 25 years of selling and advising others in the sales process, the most important lesson I’ve learned is that just because the prospect asks about the solution, or appears ready to make a decision does not mean that the prospect is actually ready. Quite the contrary. At this point in the process, the prospect is not ready to understand the value of your solution, or the difference between what you do versus what your competitors do.
When the sales conversation begins with the prospect asking about your solution, the most effective thing you can do is to slow the process down. Ask the prospect why are they looking for a solution. Spend time clarifying and deepening your understanding of the issues and problems that the prospect has that leads them to believe that they need your solution. Ensure that they understand what’s causing the problem every bit as much as they understand the solution and the results they desire.
The time you spend gaining a fuller understanding of their issues will also help them gain an understanding of their issues as well, and even more importantly gain an understanding as to how your solution is different and better than that of your competition.
When I share this advice with salespeople, they all nod in agreement. When I ask what prevents them from acting upon this advice, the number one response is, “Well, the customer is asking me to explain what we do; they don’t want to take a step backwards.”
Please know, digging deeper and diagnosing IS NOT taking a step backwards. It’s taking a giant step forward by demonstrating that you are not merely a peddler of products, but a true advisor that will enable them to solve problems and achieve critical results.
Imagine selling word processors, when the IBM Selectric typewriter with self correcting tape was considered cutting edge technology. Think about the challenges you’d have as a salesperson:
- You couldn’t focus on “your solution” because no one knew they had a “word processor problem.”
- You couldn’t rely on explaining your features and benefits because no one would understand them.
- There’d be no word of mouth, because no one was really using them.
- You’d have no case studies, because it has little to no history.
I could go on. Let’s just agree that it would be very difficult.
So, what would you do?
Here’s how I’d handle it:
- I’d get real clear on the critical business result I would focus on. In the case of word processing I’d choose between productivity and costs. Here I would focus on costs over productivity as the primary result, putting productivity very much in the background. The reason for this is that productivity focuses on gains, while costs focus on loss avoidance. When asking people to change, loss avoidance is far more powerful than gain.
- Next I would decide what a good sale is. Do I one to sell one software package at a time, do I want to sell several, do I want to sell in bulk, etc.? In my case, I’ve always been a fan of leverage so I would focus on selling hundreds of licenses at a time.
- Then I’d focus in on what types of organizations are incurring costs that I could impact in a big way.
- As I brainstormed the list I’d be looking for a sweet spot. Who are the people that absolutely need what I do and have the ability to buy at the level I want. It’s important that I focus not only on the types of companies that I want to sell to, but who inside those companies do I want to connect with. I want to connect with the people who have the power to cause change and displace the status quo.
- Once I’ve settled on the key customer types that I want to focus on and who I want to connect with, my job becomes immersing myself in their world and understanding them better than they understand themselves.
- Now my job is to sell.
Tune into my next post to learn the specifics of what I’d do.
With increased frequency I’m getting requests from owners, CEOs and VP’s asking for recommendations for a recruiter who can “find ‘good’ salespeople.”
What’s unfortunate about these requests is that even if these companies do find good salespeople (a difficult task in and of itself) there’s still only about a 10% chance that the salesperson will be successful. A study reported in Harvard Business Review revealed that only 1 in 250 salespeople actually exceed their targets.
It does not take a genius to realize that a 99.6% failure rate is not a people problem. It’s a system problem.
The traditional selling system is broken.
There are two fundamental problems with traditional selling.
- First, as I have written extensively, traditional selling is solutions focused and commoditizes the selling organization.
- Second, traditional selling (as it is implemented in 95% of small and mid-market B2B companies) puts way, way, way too much of the client acquisition burden on the salesperson. In today’s complex, fast-paced, ultra-competitive world there is simply too much pressure on the capabilities of an individual to succeed. As a result, the rate of commoditization, and failure, increases.
Great salespeople, and great selling organizations, are the result of excellent systems. IBM created the greatest selling force of all-time, not by hiring great salespeople, but by plugging normal people into a superior system.
There are four parts to every effective selling system:
- Solid positioning. A successful sale begins long before a salesperson arrives – it begins with effective positioning. Do you have a clear, powerful message? Is your value proposition understood, and valued? Are you clear on who your core customers are? Is your pricing strategy clear?
- Outreach. Great selling organizations are very focused in their go-to-market approach, while average ones are tactically opportunistic. Are you earning and capturing the attention and awareness of your best few markets? Do your salespeople know precisely who to focus on and what the resonating issues are? Does your marketing efforts clearly support your sales efforts?
- Cultivation. The buying process is far, far longer than the selling process, beginning even before the potential customer knows that they are looking to buy anything. It is triggered when the customer starts to investigate their issues and uncover their problems. This is where the fundamental flaw of traditional selling rests – and 95% of small and mid-market B2B companies completely skip this step. If you’re not optimizing this step of the system, your results could be negatively impact by as much as 75%. Are you regularly creating content that educates your customers and causes the sale?
- The Sales Process. The fourth – and final – part of an effective selling system is the sales process. An effective sales process ensures consistency, repeatability and effectiveness. It unleashes the power and capability of good salespeople, making them great. And it makes great salespeople stars.
To win in the competitive world that we find ourselves, you can no longer rely on hiring good people alone. You must match good people with effective systems.
As much as I would like to tell you about a short cut to resonating with your customers and Creating Demand, there are none. That’s the bad news. The good news is that the process is rather simple. The approach can best be summed up as: Deeply understand your customer’s business (and life).
The First Unbreakable Rule To Creating Demand is: Know and understand your customers better than they understand themselves.
You need to know:
- What drives their profits? And as a subset of that, what drives their revenue and costs?
- What are their key processes and how do those processes drive their profit formula?
- What are their key resources and how do those resources support their key processes?
- What is their customer value proposition and how do they deliver it?
When you understand these four areas you can begin answering these questions:
- What problems exist in their model that they aren’t aware of?
- Where are unnecessary choke points?
- How can they run their model more efficiently? More effectively?
- What opportunities could they capture with your approach?
These four questions are the basis of your business case. When your case is clear, you can provoke awareness and manage the sales process effectively. If you do not understand this and you attempt to move the sales process forward – it’s a good bet that you’ll find yourself in The Commoditization Trap.
“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?
I’ve been spending a lot of time working with clients to build out diagnostic systems to create value and create demand. I recently referred one of my clients to a blog post I wrote almost 5 years ago. I thought it was valuable enough to share again.
My experience working with fast-growth companies has taught me that there are three levels of value that a company can provide:
- Level one occurs when you provide people with the knowledge of ‘what’ needs to be done.
- Level two occurs when you provide the knowledge of ‘how’ to do it.
- Level three (execution) occurs when whatever needs to get done actually gets done.
Level one is all about diagnosis. Today, too many companies hold back level one value, fearing that if prospects know what needs to be done, they’ll go out an try to do it themselves or to do it cheaper. The reverse is actually true. Give the ‘what’ away. The more people know what to do, the more value your company’s knowledge of ‘how’ to do it becomes.
When prospects don’t know the ‘what’, they self diagnose; and when that happens, you are, and should be, just a commodity. So, stop “protecting’ your intellectual capital so fiercely. Start giving it away and fast growth is yours.
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.
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.