Sales Skills

What’s the number-one attribute Warren Buffett, arguably one of the most successful investors in the world, looks for in a company? “Sustainable competitive advantage,” he told an interviewer.

Competitive Advantage is a set of factors or capabilities that allows firms to consistently outperform their rivals. (adapted from Roberts, 2002)

If competitive advantage is so valuable, how does a business acquire it? Competitive advantage can be found at many levels. It can come from a variety of competitive differentiators. At the business model level some companies, such as Ebay, have sustainable competitive advantage from network effects. The low-cost airlines have a business-model advantage – they actively avoid the additional costs associated with serving high-demand, package travel and long-distance customers. Some very lucky businesses have monopolies. Some have a cost advantage, perhaps from scale or some technological or process advantage, which allows them to make excess profits while competing on price. Some businesses focus on having the best customer service.

For it to be a competitive advantage only one company can be best at whatever it is. For it to be a sustainable competitive advantage there must be some structural reason that another business could not emulate or beat it.

At the individual level, competitive advantage should be a key focus of every salesperson – if the salesperson can help the customer quantify how their particular solution benefits the customer, or by changing the proposition move the advantage away from a key competitor, then price becomes far less of an issue in the sales process.

What tools are available to help create competitive advantage? Michael Porter’s revolutionary approach to competitive advantage is now over 30 years old. Developed around the same time as the personal computer and before the mobile phone, the internet and worldwide web, it is an industrial-era theory. It focuses on creating competitive advantage within value chains within a business- the processes that make the product. However, the internet and globalisation has fragmented value chains into value systems.

It takes not one, but hundreds of collaborating and competing companies to manufacture a smartphone, for instance. So competitive advantage has firstly to be understood in the context of complex and dynamic value systems.

Network effects were not a consideration 30 years ago, and are not even mentioned in Michael Porters Competitive Advantage, but are a major source of competitive advantage in the modern world for companies like Ebay, Amazon, Facebook and Skype. Network effects have created businesses with the fastest growth rates ever seen.

The theory of disruptive innovation was developed in the 1990’s. It is not a new phenomenon – the huge ice transportation industry which provided ice for icehouses built for the homes of the wealthy was disrupted by the development of the refrigerator in 1844, and Schumpeter published his ideas on creative destruction in capitalism in 1942 – but Christensens’ theory was the first that analysed the circumstances in which disruption happens and why market incumbents are powerless to protect themselves despite their resources. Disruption in markets is growing and the rate at which companies enter and leave the list of Fortune 1000 companies is constantly increasing as a result. The theory of disruptive innovation has some very useful tools for understanding all types of competitive strategy.

Using Porter’s ideas, these tools and others, I’ve developed an analytical methodology for identifying and creating competitive advantage which I call The New Competitive Advantage – follow this link for a presentation of the key ideas. It updates Michael Porters approach for the information age. It introduces ideas and concepts that were not developed 30 years ago and moulds them into an approach that can take a technology, a product or a business model and create competitive advantage.

When applied to a technology (in the example I apply it to a new fundamental technology, the recently-discovered room temperature maser), the process helps understand when the technology will be good enough for particular markets. It can be used to discover early new market or potentially disruptive uses of the new technology. When applied to products it helps create differentiated propositions. I have used it to help several startups to create a business model that creates a clear competitive advantage in their market. I hope it is of similar use to you.


Qualification is an essential sales skill if we want to achieve our targets. Too many salespeople cling to prospects that are never going to close, to fill their pipeline and avoid having to prospect for new business. Pipelines get cluttered with prospects whose close date rolls and rolls. A lot of time is wasted chasing business that is never going to happen or that was always going to your competitor.

From the salespersons’ perspective, failure to qualify early and accurately wastes valuable time.

From a management perspective, this is a sales management problem that is easily solved. Sales managers must refuse to accept prospects that have not met well-defined qualification criteria. More importantly, moving a suspect to a higher qualification category must be backed by evidence from the customer. Sales process emails and letters are just good practice anyway – they help ensure that the customer and the salesperson have a common understanding of the customers’ requirement as well as what has to happen next, whose responsibility it is and when it should be done by.

Discounted Cash Flow

The most effective sales tool I use when selling big solutions is a spreadsheet. The spreadsheet gets me into the CxO level immediately and often gets me an immediate yes or no. It frees up discretionary CxO-level budgets. It tells me if I should even be selling the products I am asked to sell.

Complex solutions are difficult sales. They often affect more than one division of the business, which leads to a longer sales cycle. Selling to the people in the business that understand the solution itself means that we are relying on these people to represent us to the people that will free up the budget – and are they better salespeople than us? We might as well make the call to the CxO ourselves, control the whole sale and perhaps, free up budgets that would not be accessible any other way. The spreadsheet is essential here – it reduces the benefits to the customer to a common language to all businesses, that of finance. A CEO or CFO can quickly decide whether the project is worth looking into further,without having to know anything about the technology itself.

As an example, I have recently been selling new waste recycling technologies as an agent.  In the case of the waste technologies, the technologies I have selected create new products for markets that the waste operators have no understanding of, which makes my selling job doubly difficult. The operator doesn’t know how to develop products,  doesn’t have the customers for the products and doesn’t know how to value the market for the products.

Why did I select these products? I selected them because, when I investigated the market for the products, the waste supply and then built this into a conservative operating financial model of the plant in a spreadsheet, it showed a very attractive Internal Rate of Return (IRR). The IRR is a measure used by businesses to compare the profitability of investments. A project with an IRR higher than the business’s cost of capital (how much it costs to borrow the money to finance the project, or, if it doesn’t have to borrow, the rate at which investors would be better off having the money returned to them for investment elsewhere) is a potentially attractive investment. A typical large business will have multiple projects that it is considering, with different durations, capital requirements and risks. IRR is one tool used to select which of these projects will get the firms limited capital. If the product saves costs, then a payback model is appropriate – how many months before the project pays for itself in savings.

With every technology, the first waste operator that I discussed the project with, largely in financial terms, wanted the project. The rate of return, even on a conservative basis, is better than investing in other projects they were considering. I have reduced the uncertainty by thoroughly researching the markets for the end-products and opening discussions with interested customers.  There is still a long way to go on these projects, the operators must go through their due diligence, choose a site with planning permission and customer contracts must be agreed – but the operators have invested the resources to complete this as quickly as possible, and all because the respective CEOs liked the numbers.

I don’t lose any sale on price. Price is the very last differentiator, after all of the other possible competitive differentiators between our solution and our competitors’ solutions have been discounted by our customer. It is much better to compete by creating another differentiator. This is a lesson that I learned very early in my British Telecom sales career, because BT was never cheaper on anything than the competition. This meant that going head-to-head on a sale with exactly the same technology and service proposition was a waste of time – either something had to be found to justify the price premium, some other solution had to be offered or the sale was qualified out.

Lots of different things can be used to justify a higher price. A good one with BT was the risk factor – my customers enjoyed telling me that “BT was big enough to sue” (meaning that BT had to correct problems with products to avoid the damage to its reputation of ending up in court). This could sometimes justify a 5% price premium on its own. Risk, and its other side, trust, is an often-forgotten but extremely important part of the sales process in solution selling. Once a prospect has determined that our solution meets their needs and is affordable, their thoughts turn to risk, both internal and external – do I trust this company to deliver, is my job at risk if this fails to deliver the promised benefits, do I believe what this salesman is telling me, how can I reduce the risks? Reducing perceived risk is a big competitive advantage.

Other sources of competitive advantage – for the salesman, rather than the company – include the support provided to help the customer make their decision, changing the commercial structure of the sale to better fit the prospects’ finances, customer service, or adding things into the solution that are of value to the customer but of little cost to us. A previous manager of mine closed a very big deal by offering a number of days specialist support for free for each year of the contract – having worked out the proportion of time that his specialist teams should be spending in the account anyway, given its contribution to revenues! And of course those specialists would be looking for more new opportunities – a win-win.

The most frequent reason salespeople give for losing a sale is price. The real answer is that they were out-competed by another salesperson.

I once had a salesman work for me who was a really hard worker. His outbound call statistics were excellent, he knew the product inside out and was very likeable. However, his sales performance did not reflect his hard work.

He had an unfortunate, very flat, emotionless speaking voice. It didn’t matter if he was talking about his children, his football team, a sale he closed or the weather, his delivery pace and tone didn’t vary. He could have been reading everything from a script. He could, as the saying goes, bore for England. He lacked something called Emotional Intelligence.

Emotional intelligence is the ability to control and use emotion. Emotion is primal, people respond much more strongly to that than words. It’s why enthusiasm is infectious.

Despite lots of training to get him to express some emotion he never got there, so reluctantly I had to let him go – a tough decision as he was so likeable. Some people just don’t have that skill.

I became aware of the need for emotion in selling in my very first sales job, one summer holiday at university. Bored with the technical jobs on offer, I answered an ad in a paper and ended up being trained to sell encyclopaedias. Out of 100 there on the first day only two of us finished the week-long ‘training’ and I was the only person to turn up on the first day.

I stood it for a week and sold not one encyclopaedia. However, our most successful salesperson who sold at least one every night was a small, round bouncy and bubbly American girl who was irrepressibly enthusiastic. I watched her charm her way in everywhere with amazement.

I went on to be a six-week success at selling double glazing instead, using what I’d learned about emotion to mine a rich seam of people who hated double glazing salesmen. I use emotion regularly in selling, it’s another part of the skills in body language.