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The New World of Sales

Author Neil Rackham on what your sales team is doing wrong.

“The average company has twice as many competitors as it did five years ago,” Neil Rackham, author of Spin Selling, told CEOs gathered for Chief Executive’s B2B Sales and Marketing Summit. “Statistically, that means your market share is cut in half.”

That less-than-cheery thought, of course, underscores the importance of having effective salespeople—the kind who can not only accomplish the increasingly difficult feat of winning entrée to potential customers, but who can also effectively communicate the value of your products and services. In fact, ideally, your sales team will be capable of actually adding to that value proposition themselves.

Traditionally, salespeople have been charged with explaining the value of a given product, essentially enumerating all the ways that it’s better than competing products. However, intense competition has led to a commoditizing world, one where fewer and fewer products and services are viewed as unique. That new reality renders the “we have a better mousetrap” approach to sales virtually obsolete.

The Value Imperative

“Instead of the old role of explaining the products and services and why they’re good—information customers can find themselves on the Internet—sales, done well, is becoming a value-creation channel,” noted Rackham. “What the salesperson is doing becomes the reason why the customer buys from you. They don’t sell a mousetrap, they say, ‘Let me show you the kind of cheese to put in your mousetrap. Let me show you where you should place it to catch the most mice.”

Yet, the way the business world—from CEOs to sales representatives—tends to view the sales role remains mired in that traditional idea of, essentially, a walking, talking sales brochure. Unfortunately, not only is that method of sales no longer effective, it’s downright detrimental.

“The reaction to the salesperson who says, ‘Let me tell you about our mouse- trap’ is actually now negative,’” explained Rackham. “In our study of 1,100 buyers, it was the No. 1 complaint they madeabout the people who pitch them.”

Instead, buyers want to hear information they can’t find elsewhere—information about market trends, about what competitors are doing, about industry developments—and they want help understanding and preventing or solving their business problems. “One of the people I interviewed told me, ‘If I fall in hole, there are 50 salespeople who can sell me a ladder to let me climb out,’” said Rackham. “But there aren’t a lot of salespeople who can prevent me from falling into the hole in the first place.”

Buyers also value a salesperson who acts on their behalf, advocating for a rush delivery or actively sorting out any problems that arise. “Maybe that’s why the best salespeople are always a pain in the ass to manage, because they’re client advocates fighting their companies all the time,” suggested Rackham.

Transactional vs. Consultative Customers

According to Rackham, another fundamental shift has changed the reality of the way selling relationships play out in today’s market. Historically, customers have fallen somewhere on a range between transactional customers, who are motivated by price and ease of doing business, and consultative customers, who are looking to benefit from the expertise their vendors can offer. “Five years ago, you probably had a few transactional customers and a few who were very consultative; but most were probably somewhere in the middle,” says Rackham. “Now both extremes are growing and the middle ground is going away.”

For the majority of companies, which generally have sales forces trained and accustomed to selling to the middle of that range, this situation is problematic. Obviously, sending your most talented salespeople to pursue opportunities where price is the only determining factor is wasteful. Yet, given a mix of transactional and consultative sales prospects, a salesperson will inevitably place too much focus on the transactional relationships. “They’re quick and easy and the fact that it’s a zero-margin business doesn’t worry them,” noted Rackham. “They’ll still get their commission check at the end of the month.”

The solution? Companies should explore every possible way of shifting those transactional relationships to cheaper chan- nels, such as telesales or the Web, said Rackham, who acknowledges that salespeople will not look kindly on this concept and referenced his own experience justifying such a change at Oracle. “I thought I was going to be assassinated because to salespeople, taking away anything is taking bread from their mouths and starving their children,” he recounts. “The argument went all the way up to Larry Ellison, who said, essentially, ‘You know what’s wrong with my sales force? They’re so busy knocking off gas stations, they never get to rob the bank.’ That really communicates it.”

Ultimately, taking transactional business away from salespeople both frees and motivates them to focus on deeper, consultative relationships. However, companies need to go further, helping their sale forces develop the skills to build value-creation relationships with their customers. “Very few salespeople look beyond the immediate, possible contract,” pointed out Rackham. “You have to help them develop a sense of looking forward.”

Ditch the Pitch

One proven approach, covered in detail by Rackham’s book, is for salespeople to engage customers with questions designed to understand the problems and challenges they struggle to overcome. “The best people ask the kind of questions we call implication questions, taking a problem and saying, ‘What’s that really costing you? Could it lead to this? What’s the impact on other products? On customers?’” explains Rackham. “These questions get the customer to tell you the benefits you offer, which is more powerful than saying, ‘Let me tell you why we’re better.’ That’s because customers believe their own words.” At the same time, too many of the wrong questions can backfire. Salespeople who go in asking questions they could have gotten the answers to on their own risk earning the ire of their customers. To avoid this problem, Rackham urges companies to school salespeople on boosting their pre-call research and preparation, which he says is more important than ever.

However, the big change is one of mindset. “Salespeople need to stop jumping in to talk about products and services—about the mousetrap. They really have to up their game,” says Rackham. “Ultimately, questioning skills are going to make or break their success. Interestingly, most salespeople are quite good at making pitches. They find questioning a lot harder.”

About Jennifer Pellet

As editor-at-large at Chief Executive magazine, Jennifer Pellet writes feature stories and CEO roundtable coverage and also edits various sections of the publication.