Let’s innovate in selling!

My interest is in competitive advantage and disruptive innovation. So here’s a disruptive look at the sales profession, and a new ‘selling’ model.

Most business executives will agree that >90% of the salespeople that they meet are too incompetent to express the advantages of their product as customer benefits in the customers’ terms, which puts the onus on the customer to work out whether the product applies to them or not.

Procurement is getting more sophisticated. Many salespeople end up merely responding to tenders, with little opportunity to influence the outcome.

Companies are slimming down. Their executives don’t have the time to meet with all of the salespeople they would like to, let alone those who would like to meet them. They particularly don’t have the time to find all of the innovations from small companies that could potentially give them a competitive advantage, so they are missing out.

As globalisation, supply chain fragmentation and product complexity has increased, so the number of products and services to select from has ballooned. Executives have to kiss an ever increasing number of sales frogs to find a sales prince with the right solution for their problem. This all results in a huge amount of wasted time and resource on the part of both buyers and vendors and they might still not find the optimum solution – a M executives * N salesmen problem.

So what if we broke the problem into two – an M*1 and a N*1 problem? Create vendor-free industry forums, probably split by function along the lines of Porters’ value chain, at which executives meet to discuss industry issues. The Forums provide vendor evaluation and comparison services and provide anonymised feedback on the industry issues to the vendors in return. The Forum also looks at and reports on innovations. They could also provide best-practice procurement support services.

Our top-performing salespeople, who are really vendor-provided change agents, swap sides and work for procurement. Their skills are used to find efficiencies and competitive advantages for their employers, with a wide range of pre-assessed products and services to choose from with the assistance of the forums.

Disruption like this only works if every party that remains in the new value system is better off. The buyers will be finding better solutions faster, improving their competitive edge. The vendors can fire their under-performing sales teams and their product teams will be plugged directly into the needs of the industry. Innovators have only one place to go to to find out if there is a market for their ideas and to get advice on what they need to be accepted. The top salespeople get a more fulfilling and business-oriented role doing what they do best.

This structure does what good disruptive innovation always does – take a significant amount of cost out of the system.

Thoughts? And for those who think this will never happen – it’s already started. Although most of the players are still feeling their way towards the solution.

  1. Mninawe Nomnga said:

    If we look at the opportunity from a Jobs-to-done theory lens as dictated by Christensen, What job do executives want to get done when theyhire a product.I would argue that the main job jo be done for an executive is to maximise revenues and minimise the costs and that improve profitability of his or her operations thus creating a sustainable competitive advantage for the company. Executives have problems that they want solved in their organisations, it can either be human resource productivity problem, Process efficiency problem, financial problem, technical problem etc. For this problem they are looking for a solution in other words they are looking to hire a product that can effectively and efficiently get the job done. A salesperson in this regards is an ambassador that represents all the attributes of the job candidate, that product that must be hired to get the job done. You have observed that most business executives will agree that >90% of the salespeople that they meet are too incompetent to express the advantages of their product as customer benefits in the customers’ terms, which puts the onus on the customer to work out whether the product applies to them or not. In other words salespeople are not trained in the Jobs to be Jone mould of selling or what is known as solution selling. Whether this is a valid observation from your side remains to be proven. The other angle is to look at the outcomes that the executives seek in the job canditates from a functional, emotional and social dimensions. Having done that you then need to uncover barriers to consumption that the executives face in their day to day lives, For instance you have also observed that executives don’t have the time to meet with all of the salespeople they would like to, let alone those who would like to meet them. They particularly don’t have the time to find all of the innovations from small companies that could potentially give them a competitive advantage, so they are missing out. Conviennce, accessibility, simplicity, affordability are the Hallmark of a disruptive innovation. Lastly What solution do you offer to address the barriers you have observed and address the job to be done. I think your Idea has seeds of a disruptive innovation

  2. tfoale said:

    Hi Mninawe, thanks for your comment. Your analysis is correct. I can’t claim any credit for the creation of this type of professional forum, I have just observed some in action and talked to their founders. They are all wondering what direction to take next to add more value, so perhaps this post will help them to develop their strategy.

    I don’t expect a lot of professional forums like these to spring up overnight – there needs to be sufficient pain to cause the executives in each discipline to want to meet and share issues. It’s interesting that the IT forum, for instance, has over 5,000 IT decision-making members of whom only a tiny fraction are CIO’s – most are from finance or operations who want to talk about business issues, not technology. The energy/CO2 reduction forum covers an area that all UK businesses need to be doing something about because of recent legislation, but few have the expertise in-house. Other forums form in regulated industries to provide a single voice to represent their views, and will quite possibly never be involved in procurement issues.

  3. There are some implied paradoxes in your proposal.

    1. If everyone did things this way, the truly skilled salesperson who both understands the features and advantages of their product and how to apply them to solve business problems, and who has the ability to understand their clients’ businesses, empathize with their needs, and help design new processes to apply their product would end up being the real disruptors. They would stand out so much, even more than they do today, that every sales organization would quickly abandon the model above and try to pattern on the “superstar salesman model”, and we’d end up right back where we are now.
    2. It appears that there is an embedded assumption of the “one best product” for everyone. Even if there was one best way to do anything, if everyone followed that approach, the opposite or something skewed in a different direction would be better and disruptive, because the differentiated solution will grab a higher and more profitable share (since other solutions are forced to compete on price).
    3. If there were industry forums as you describe above, and I saw an opportunity for competitive advantage using the products in this category differently or better, I certainly wouldn’t share that, and I’d probably ignore the forum consensus, because it is more likely to point the way to commoditized outcomes than to arriving at a solution that gives me an advantage. Forums like this work best when there are standardized things that industries don’t compete on (e.g. accounting systems, Six Sigma, payroll systems), but rapidly lose value when it is an area of service or product differentiation for the buying company.
    4. It isn’t really that there are more products to choose from. It’s that if there is a lot of innovation happening, it is too fast to absorb. Forums have a tendency to squelch innovation and make it harder for the little guy to break through with truly disruptive solutions. If they have potential to shake up an industry, they aren’t going to want to work through forums — they’ll find a way to meet the CEO and persuade him of the opportunity. And, it will work, because the CEO is the one person who has not only permission but a duty to “break the rules” and look for things that will have big impact in the business, whether by adopting new approaches, changing manufacturing processes, changing the product/service mix, etc.
    5. If everyone did things this way, there would be no disruption.

    Disruptive innovators are unlikely to use this “one place to go to” forum for product insights, for the simple reason that everyone will get the same insights, which destroys the potential for disruption. I certainly wouldn’t use it, at least not until much later in the cycle when I’m trying to have my product stamped as an industry standard. It’s far more effective to work with a handful of customers directly who are themselves innovative enough to see the advantages of doing things differently, and who are willing to be guinea pigs for stuff that doesn’t quite work perfectly yet. Besides, in most cases it’s impossible for the customer to envision a solution to a need that they’ve suppressed or can’t express because they can’t know what’s possible until a solution exists. Forums are great for telling me what needs to change after a product exists to make it better, but they rarely offer anything useful early on.

    It isn’t that I disagree with your opening problem statement: most salespeople are indeed incapable of really expressing the true benefits to the target customer. However, i think that is being addressed in a very different way, with more of the buying process happening before a potential prospect even contacts the vendor(s). The internet enables a vastly superior process to finding out what alternatives are available, who makes them, comparing features, and even to assess your needs better before ever talking to a salesperson. It can also provide better ways to many of the things salespeople used to do, from conducting presentations and demonstrations, offering free trials, calculating ROI. I think the real key to improving sales is to understand that there is a buying cycle which is different from a sales cycle, and that people prefer to do as much as possible themselves and only talk to a salesperson at the very end. Then, make sure customers have access to the knowledge they need when they need it. Then the purpose of a salesman becomes handling exceptions + problem solving rather than routine things the customer can do for themselve

    • tfoale said:

      Thanks for your very thoughtful comment Paul. I agree with almost all of your arguments. However, truly disruptive innovations are subtle and rarely look like they will trouble the incumbents, until too late. It will start with products that don’t offer competitive advantage but have a high cost of acquisition, known as MRO (Maintenance, Repair and Operations) purchasing, as well as the more complex propositions like ERP etc. There is already an online service (not a forum) that does this, Technology Evaluation Centers. A forum extends this by helping to find solutions to industry-wide issues in a particular area, like energy costs.

      This model won’t affect high-performing salespeople or critical customer relationships, at least for a long time. For the vendor it’s just another channel to the customer. It is a very well-known model called affinity marketing. It sits quite comfortably alongside sales teams today – in fact I used to encourage my salespeople to find affinity opportunities. The salespeople that did got paid very well because they swapped margin for volume at the same sales cost as one normal sale. I suspect that there will be more vendors asking for access to the members than vendors avoiding the channel to preserve a competitive advantage.

      The CO2/Energy forum sources products for an industry vertical which is particularly troubled by the UK’s CO2/energy usage legislation. The members have responsibility for the issue but no time or the background knowledge to select the best products for the role that actually convey no competitive advantage. The lucky vendors the forum chooses get very low cost sales to the forum’s client base. The rest can try sell directly, but the forum members have no time to meet them…

      The rest of it is a business design issue. It’s relatively easy to come up with a structure that feeds suitable innovations, however unready, to the members to review, particularly if that is a service of value to the members. There is a small downside for the members in that they can all see the innovations, but no two businesses have exactly the same resources, processes and values – and they would eventually all know about the innovation anyway through normal sales routes, exhibitions etc. Sustainable competitive advantage doesn’t come from external products unless the vendor is silly enough to offer exclusivity, it comes from inside the business. You mention innovators wanting to work with a select few customers – how do you find those select few customers in the first place? Unless you are a true industry insider it will be by talking first to lots of businesses that don’t want to be guinea pigs.

      Like all disruptive innovations, this model will take cost out of low business value transactions first and gradually improve to take cost out of higher and higher business value sales.

      • Some clarity is required here.

        We are mixing up different categories of products which have different attributes of value and are purchased different ways for a reason.

        I completely agree that products which are strictly about regulatory compliance don’t offer anyone an advantage. They are clearly more suitable to be marketed through forums, because for most businesses, they are a “nuisance purchase” that most would prefer to spend no time on at all. Depending on the nature of the regulation, however, and the penalties for failure to comply there may be other factors that a forum can’t help with, such as personal relationships. That’s because trust is a much bigger factor than normal in this type of sale. Still, it’s a good way for this type of product to get to market — good for both sides because there is also low competitive differentiation, which means low margins. Minimizing sales cost is paramount.

        Regarding products and especially innovations that do offer competitive advantage, there are many ways that vendors find the customers most suited to be early adopters, but the least likely place is a forum. Whether they’re easy to find or not is not the issue, but looking in the right places definitely is. We’re obviously talking about b2b sales here, because b2c sales also have a different dynamic, and even with b2b, there are strategic vs tactical/operational buying decisions, and inexpensive all the way to extremely expensive (enterprise level) decisions. Each of these sell through different channels, and require different levels of customer relationship and face-time to sell. I just don’t see important decisions ever happening through a forum channel, and lower level decisions are already increasingly made with low sales involvement and through cooperative/forum types of channels.

        It doesn’t seem like there is disruptive potential here, because there is no chance of it becoming the new dominant method for sales. If you think otherwise, I’d be interested in a scenario by which you see that happening that accounts for competitors deliberately “breaking” (avoiding) channels and what happens as product innovations are introduced ever more rapidly. Forums seem fine for slow moving stuff, but the greater the innovation happening in a market space, the less useful a forum will be.

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