Posted By: Santi Chacon
Senior Business Coach
By: Huthwaite
(Creator of Spin Selling)
One of the most provocative conclusions from behaviorist Neil Rackham’s groundbreaking selling research was the identification of the profound difference between “complex” and “simple” sales. While the distinction
between the two now seems obvious, Rackham was initially considered a heretic by sales and business leaders and his work was rejected by several publishers—even though it was based on extensive empirical data. But Rackham’s research, memorialized in SPIN® Selling and Major Account Sales Strategy, proved to be accurate and has stood the test of time.
Complex sales are not simply small sales writ large. To this day, their attributes include “big” decisions, multiple decision makers, long sales cycles, significant financial investments and intricate decision criteria. What few sellers recognize today, however, is that the complex sale has undergone a dramatic transformation. And like the leaders who cried “heresy” before, they are likely to be left behind if they fail to recognize the truth before them.
Through the mid-1990s, it was the product or service that established differentiation. A seller’s primary focus
was to draw a buyer’s attention to how the product or service produced benefits for the buyer. Unfortunately,
a combination of forces like supply chain management, purchasing strategies and the increase in information
available to the buyer from the Internet, has greatly eroded the ability of companies to maintain product and/or service differentiation.
The question is, now what?
Every seller knows without some form of differentiation, the sale quickly degenerates into a commodity-like pricing war. If customers perceive so little difference between offerings that they are willing to choose on price alone, what role is there for the professional salesperson? The answer, quite frankly, is none. Unless sellers recognize how the complex sale has changed—and are prepared to adapt to that change—their job is very likely to disappear. In today’s business environment no company needs a walking, talking, compensation-earning quote machine.
So, if complex sales are still characterized by “big” decisions, long sales cycles, etc., what is different about
them today? What is the change to which sellers need to adapt? Huthwaite research reveals that it all comes down to how customers perceive value. It was not so long ago that sellers could win by exploring customer needs and then demonstrating how their products best addressed those needs. But just about everybody does that now. Value has migrated so far away from products today that even “consultative” selling has become commoditized. Genuine value—the kind that differentiates and for which customers are willing to pay a premium—is now achieved through the expertise that sellers bring to the customer relationship. Great product and branding are just prerequisites. If sellers want to win.
Value
In a recent Huthwaite study of nearly 500 sales managers, 92% rated their sellers’ skills “above average.” Yet those same managers were also overwhelmingly dissatisfied with the actual results of their sellers’ efforts.
Why the disconnect?
There are a number of reasons, but the primary problem is that sales managers began their sales careers and achieved success when it was possible to sustain product, service and brand differentiation. Most do not recognize or know how to deal with a selling climate where expertise is what buyers value. In company after company, sales managers are still teaching the importance of product knowledge and probing for needs around product features. But, that just doesn't get it done anymore. Buyers can now access all of
that information without ever seeing a salesperson.
For several years, Huthwaite has been conducting research into the concept of “value.” We have examined thousands of transactions sharing a common characteristic. In each case, the buyer reported seeing little difference between competitive offerings, but nonetheless chose one of the more expensive options. Examining these transactions as a body of data revealed that buyers have re-defined what they “value”—what they are willing to pay a premium to get. Furthermore, customer perception of extraordinary value was a result of how they were sold not what they were sold.
In short, customers reported that every one of these transactions involved one or more of the following Value
Drivers from the selling process:
- The seller revealed to the buyer an Unrecognized Problem that the buyer or the buyer’s organization
- was experiencing.
- The seller established an Unanticipated Solution for the buyer’s problems that the buyer or the buyer’s
- organization was experiencing.
- The seller created or revealed an Unseen Opportunity for the buyer or the buyer’s organization.
- The seller served as more than just a vendor of product and services, but instead served as a Broker
- of Capabilities.
Specifically, the seller served to make available to the buyer the full range of capabilities of the seller’s organization in such a way that these capabilities contributed to an expansion or redefinition
of the customer’s success.
Huthwaite has discussed this list before (please see our white paper, Escaping the Price-Driven Sale), but the question for this paper is how can sellers use the Value Drivers to showcase their expertise and effectively differentiate themselves?
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