Four key characteristics distinguish superior sales organizations from their rivals. Their ability to consistently execute on these attributes positions them to convert more sales opportunities into customers, more customers into repeat purchasers and more repeat purchasers into strategic partners. These characteristics are:
- Customer Focus – The entire company, not just the sales team, are intensely focused on satisfying customers.
- Organizational Architecture – People, systems and processes are designed with the goal of helping customers.
- Institutional Intelligence – A commitment to collect and widely distribute quantitative and qualitative customer information.
- Sales Process – A systematic approach of relating to customers based on their expectations.
The winds of change are constantly buffeting the business-to-business landscape. With creative, migratory talent in every corner of the world, twenty-four hour design, build and test cycles and open access to almost any supplier, this year’s must-have new product is next year’s commodity. Product superiority or ultra-efficient operations may no longer be the path to sustainable competitive advantage they were a few years ago. Globalization of trade has made selling costlier, riskier and even more competitive. Technology has shifted the information advantage from sellers to buyers. Sales cycles are longer than ever before and, due to the demands of buyers, have become more and more intricate. Purchasing is undergoing a profound transformation. Executives are looking for constant price reductions and are evaluating their sourcing and relationship strategies.
Globalization
Competition from outside the U.S. has given B2B buyers significantly more choices. Due to global trade agreements, cross-border trade is up dramatically from just a few years ago. The emergence of China, India, Brazil and Russia have added to what was already a challenging domestic competive landscape.
These markets are now deeply ingrained in the global supply chain. Their suppliers offer buyers a compelling mix of attractive prices, acceptable quality, value-added services and competitive terms.
Consequently, the goal of achieving preferred supplier status has become more elusive. Sales organizations must be equipped to compete and win across buying locations with a variety of needs, languages, time zones, cultural boundaries, laws, and government regulations.
Technology
Prior to the Internet, one of the primary roles a salesperson played was that of information provider. She had detailed product information and, for a buyer interested in making an informed decision involving a fairly complex purchase, access to that information was paramount. The seller’s goal was to establish a relationship with the customer and her leverage was product knowledge. This is where the selling process often originated.
Today, a potential buyer can begin the selling cycle before the salesperson even knows it has started. Most companies post extensive product information on the Internet, sometimes running to thousands of pages. All of the product knowledge a salesperson used to bring to their prospect in paper form can now be accessed electronically, including performance features, sell sheets, how to use instructions, and packaging dimensions. Many companies are now including case study narratives that allow potential customers to see how the company has configured their product offerings to meet the needs of other customers.
Information equilibrium means salespeople, more than ever, need to find new ways of attracting a customer’s attention and initiating a meaningful dialogue. The successful sales organization of today needs to sell value, trust, and innovative solutions. They must convince the buyer they have the ability to partner with them and help them to achieve their strategic needs.
Complexity
Selling in the business-to-business arena today is much more complex than it was even five or ten years ago. Salespeople have to deal with multiple needs over a variety of locations, languages and cultures. They must not only intimately know their own increasingly broad and diverse product line, but also have an in-depth familiarity with their customer’s customers, competitors, business challenges, and need hierarchy. Arthur Miller’s “man way out there in the blue, riding on a smile and a shoeshine” has evolved into a team player - globally savvy, strategically aware and comfortable in the role of business consultant to her customers.
Making the sale often requires the salesperson to know more about a customer’s business than they do and teaching them how to reduce operations expense, mitigate risk, penetrate new markets and improve customer satisfaction. The proliferation of purchasing committees requires the sales pitch to strike just the right chord with several constituencies who may have conflicting agendas or priorities. Today’s sales professional must not only have interpersonal and problem solving skills but the ability to orchestrate a team of service personnel to implement the product and/or service solution.
Purchasing Dynamics
Customers themselves have undergone a profound transformation, primarily due to the impact of the two severe economic contractions experienced in 2001-2003 and again in 2008-2010. According to a study by Accenture, in response to the latest crisis, 56% of purchasing managers have had their procurement budget cut and 59% have been asked to increase savings targets. As a result of a difficult economic decade and the response of purchasing mangers, key parts of the supply chain are having an increasingly difficult time not only staying profitable but remaining in business.
In an effort to balance these two seemingly conflicting priorities - the need for cost reductions and the desire to have a reliable supplier base - two-thirds of the purchasing managers surveyed are re-evaluating their sourcing strategies and saving methodologies. Nearly three-fourths are increasing their emphasis on supplier relationship management
Volatility of commodity prices, greater regulation, environmental concerns and protectionism are also contributing to consolidation of the global supply chain. The best in breed purchasing organizations are managing and segregating vendors based on the depth of the relationship and what the vendor provides them. Single sourcing for key components is becoming the norm rather than the exception. Commodities suppliers, preferred vendors and strategic partners are managed and measured differently through distinct processes, people and mindsets.
Cost will always be a key consideration. Procurement managers are using the clout of emerging markets to force price concessions while at the same time asking for better terms, more flexibility and innovation from long-time vendors.
One of the most dramatic developments is the expectation by customers that suppliers provide them with a significant percentage of their product innovation. The savviest purchasing executives are not thinking in terms of a supply chain but in terms of an integrated value chain and how it can be leveraged to simultaneously reduce cost and gain an edge on their competitors.
Today, the best sales organizations are responding to these market dynamics in ways that will position them to maintain or achieve strategic partner status with their customers and garner the major share of their business. They are developing relationships in order to create an enduring competitive dominance that will be difficult, if not impossible, for their rivals to overcome. They employ a variety of tactics for building and nurturing their customer relationships, but there are a few practices the best seem to have in common.
LEADING SALES ORGANIZATIONS
Four key characteristics distinguish superior sales organizations from their rivals. Their ability to consistently execute on these attributes positions them to convert more sales opportunities into customers, more customers into repeat purchasers and more repeat purchasers into strategic partners. These characteristics are:
- Customer Focus – The entire company, not just the sales team, are intensely focused on satisfying customers.
- Organizational Architecture – People, systems and processes are designed with the goal of helping customers.
- Institutional Intelligence – A commitment to collect and widely distribute quantitative and qualitative customer information.
- Sales Process – A systematic approach of relating to customers based on their expectations.
Customer Focus
Companies that excel at building unassailable customer relationships make satisfying and retaining them an enterprise-wide focus. Lifetime value of a customer takes precedence over short-term profits. They understand their path to success and enduring competitive dominance is based not on their skills in product development, operations management, or financial legerdemain but in their ability to do a better job of relating to and meeting the needs of their customers.
Their corporate mind-set, organization architecture and information systems are all aligned toward the companies that purchase their products and services. This single-minded orientation is reflected in what they do as well as what they say. Their intra-company communication, meeting agendas and mission statement reinforce this focus.
Johnson & Johnson’s credo, unchanged since 1943, is a prime example of a company that puts meeting the needs of its customers first.
“We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services. In meeting their needs, everything we do must be of high quality.”
Web sites of customer focused companies make it easy for customers to get the information they need. Printed material details how they can help customers instead of how great they are. Reaching them by telephone is easy, stress-free and efficient. They make the process of returning goods simple. Warranties and guarantees are written in plain English. Their CEO is easily reachable by telephone.
The actions of top management demonstrate their buy-in and serve as an example for the rest of the company. Line employees, regardless of title or functional area, clearly comprehend and deliver on this core principle in every transaction; they have broad discretion when it comes to satisfying customers. They will not hesitate to customize a product or fulfill a special request in their drive to increase customer loyalty.
USAA, based in San Antonio, offers insurance, mutual funds, and banking services exclusively to members of the military and their families. They have gone to extraordinary lengths to see to it that their 13,000 service personnel “walk in their customers boots” in order to better relate to their lives and empathize with their problems.
They send their front-line service personnel authentic deployment letters, have them dress in full military gear including a helmet, 65lb. backpack and flak jacket, eat MRE’s and read letters from troops in Iraq. Executives of the company, who are military veterans, retell their experiences during training. Some call center reps are referred to as “troops.”
USAA is dedicated to the idea that the company is the relationship their frontline employees have with their members. Service representatives aren't scripted, and the calls aren't timed. They enjoy the freedom to make decisions and suggest changes that will impact customer satisfaction - such as one service rep's proposal to offer insurance premium billing timed to the military's biweekly paychecks.
As a result of their incredible company-wide focus on meeting the needs of their customers, USAA was recently ranked number one in Business Week’s Customer Service Elite. Their customers are incredibly loyal – 74% said they would recommend the company and 85% said they would definitely repurchase – 14 points better than next best in the survey.
Organizational Architecture
The systems, processes and structures common to leading sales organizations are geared specifically to customer satisfaction and retention. Performance evaluation and compensation plans measure and reward employees based on both revenue metrics and subjective criteria of customer satisfaction. Their CRM platform, market research and new product development are synergistic tools designed to serve the customer, not detached functions.
Broad subdivisions that once categorized their buyers are shrinking. Their willingness to customize and configure their product offerings in search of the best solution results in an increasingly granular definition of market segments.
All customers are not kings; only the most profitable are treated in a highly preferential fashion. The best sales companies discriminate among customers based on their potential lifetime value and required service levels. Sales resources are assiduously allocated according to this Darwinian doctrine.
Sales, marketing and support groups are organized around customers, not products, functions or geographies. One salesperson with an intimate understanding of the customer’s strategic needs, business challenges and competition takes total responsibility for orchestrating their company’s response to the customer rather than multiple salespeople whose primary goal is to push their division’s product. Some companies have gone so far as to create dedicated business units whose sole purpose is to acquire, assimilate and apply customer insights.
3M has 23 Customer Technical Centers around the world including Dubai, Singapore, Brazil, India, China and Russia. The centers are divided into a number of zones which showcase 3M technology, capabilities and products specific to the local market. The primary goal of the Technical Centers is to gain a deeper understanding of customer needs by learning how they actually use 3M’s products.
A day at one of 3M’s centers begins with a presentation by a customer team to a group of 3M marketing and technology experts. The 3M experts ask an extensive series of open-ended questions, trying to discern their customer’s strategic imperative. Customers then visit one of 3M’s core specialty showrooms where they are able to touch and test multiple 3M technologies and learn about their various applications in the on-site teaching rooms.
In addition, the center serves as a hub for ideas to accelerate the development of new products and services. The objective is not to show completed products but to spark ideas for new ones or novel ways of using existing products to solve customer problems. According to John Horn, Vice-President for research and development at 3M’s industrial and transportation business, “The goal is to understand what our customers are trying to accomplish, not what they say they need.”
Institutional Intelligence
The best sales organizations understand the importance of and invest in information systems that enable them to make informed decisions about which segments and customers provide the best potential. Their customer technology platform allows them to differentiate quickly and accurately among customers based on both the level of service they require and their revenues. Transactional data from their own operations is folded into third-party demographic and psychographic information on the overall market to form a more complete picture of their best customers and the prospects that may mirror them.
The acquisition, analysis and use of customer information are not the sole domain of either sales or IT departments. Each business unit, functional specialty and geographic market understands the importance of collecting, sharing and turning customer data into actionable intelligence. The accumulation of knowledge about the customer is not a strategy in itself but rather a means to achieve the mission of finding, serving, satisfying and retaining customers.
The most successful companies find ways to spread customer information wherever and whenever it is required. It is freely shared throughout the company without regard to functional boundaries. Field reps, call centers, marketing staffers, product development and service personnel are all responsible for using and updating this institutional intelligence to help the customer achieve their strategic goals. Some even share purchasing data with customers as a way of demonstrating how they can save money by changing their buying approach.
Customers are more than quantitative data and the best sales organizations know the importance of considering the person behind the transaction. They capture subjective, human-centric intelligence by observing the customer using the product, soliciting their ideas and recording what they say during sales and service interactions. By blending both quantifiable transaction data and subjective behavioral anecdotes, they form an integrated image of their customers that enables them to enhance profitability and sales productivity.
One aspect of Dell Computer’s information system facilitates the collection and sharing of ideas from its 80,000 employees and 3,000,000 daily customer interactions. Via IdeaStorm, customers have a convenient way to be part of the product development process and tell the company what they want to see in future releases. Through EmployeeStorm, employees can overcome traditional functional and geographic barriers and collaborate more readily – for example, tech support employees in Asia can share ideas with sales representatives in Texas.
Feedback is posted to the system, which allows employees and customers to vote on the best ideas. Innovations in product development, services and operations are the result of this impartial, shared community of knowledgeable users.
Dell’s decisions to build select consumer notebooks and desktops pre-installed with the Linux platform and to continue offering Windows XP as a pre-installed operating system option were in direct response to customer comments that originated through IdeaStorm.
However important information may be in telling the story, it is never the lead actor. World-class sales teams know the importance of and have the ability to combine the science of data analysis with the art of selling to improve sales force productivity. The ability to act on the information and temper it with subjective experience and gut instinct is a pivotal balancing act.
Sales Process
Sales leaders recognize that offering the best products or services is no longer sufficient to achieve competitive advantage. With product parity more common than ever, they are searching for new ways to improve their knowledge of customer needs, add value and collaborate with their customers. Many have found emotional and relationship related factors such as convenience, ease of doing business, responsiveness and trust mean as much or more to their customers as do the tangible benefits their products bestow. To identify and leverage these factors, the best sales organizations are taking a more systematic approach by developing, reinforcing and continually improving a formal, organization-wide process to improve the performance of their sales force and forge deeper customer relationships.
This methodology is being applied to differentiate the sales person in the customer’s mind by making them more knowledgeable, trustworthy, and solution oriented. Their salespeople intimately understand the customer’s company, the needs of its end users and its competitive environment. They apply this knowledge and go beyond just meeting needs by crafting innovative solutions that assist the buyer in opening new markets or developing more creative products. As a result, their companies are more easily able to move up the relationship ladder from vendor or preferred supplier and eventually become strategic partners with their customers. Not only do they gain market share but they benefit from word of mouth endorsement, and, in some cases, capital investment from their customers.
A study of 1300 sales management professionals conducted by CSO Insights shows that 85% of those using a sales process feel it either improves or significantly improves overall sales performance. They identified a strong, positive relationship between the level of adherence to a sales process and the ability to positively impact key performance metrics such as quota attainment, depth of customer relationship, sales person turnover, and closing ratios.
The survey also acknowledged what high-performance teams learned a long time ago - the advantages of internally developed processes and the importance of continual measurement and improvement. According to the survey, 73% of companies who have a formal, internally developed and continually improving process demonstrated the ability to sell value and avoid excessive discounting versus 30% of those with no formal process.
This is a good article to read, thank you for the information. Customer focus is important because if you will not focus on them you will not learn how to talk and communicate to them. Organizational architecture is important too because processes and systems must be well elaborated and it should be followed.
Regards,
Maryann, OBP
Website Profile:
Maryann Farrugia Management Profile
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