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Weekly UpdatesDURING the recession of the 1980s I was working with McKinsey, the management consultants. The advice they gave to their clients, which I heartily endorsed, was to pare back almost every corporate function except sales and marketing. Then, the general business opinion was on their side. Thomas Watson, the chairman of IBM, was reputed to have said: "I would rather cut my throat than cut my sales force." But that was more than 30 years ago. Is the same advice good today?
The world has changed and so has selling. Thirty years ago, the main function of a salesperson was communicating value--showing how a product or service was superior to that of the competition or did a better job of meeting customer needs. Today, the primary sales job is to create value--to add problem solving and creativity, so that the customer buys the advice and expertise of the salesperson as much as they buy the product.
This shift in role has been greatly accelerated, both by the recession and by the Internet. Customers no longer value "talking brochure" salespeople who explain products. We surveyed buyers to find how salespeople created value from the customer's point of view. None of our respondents said that salespeople who talked about their products created value.
On the contrary, product pitches were the number one complaint from customers, with comments such as: "It's quicker, more convenient and more objective to go the Internet than to listen to a product pitch."
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There is also an assumption among sales and marketing management that a direct link exists between sales activity and success. More calls equals more orders. If someone can make 10 sales calls and bring in two orders, then by increasing their activity level to 15 calls, their order rate should increase to three. Right?
Wrong. For business-to-business sales where the products are costly, the customers are sophisticated or the selling cycle is several calls long, activity level is a poor predictor of success.
In the average business-to-business sales force today, about a third of salespeople are talking brochures. They have survived because, in the boom years, products and services sold easily and order-takers could make a modest living, despite their lack of skill. Now, it's a different story. Customers don't want to see salespeople who create no value and companies can no longer afford to keep these non-performers. Selling harder may have worked in the 1980s. It doesn't work now. The talking brochures must be retrained or they must go.
Silver Lining
Despite this gloomy conclusion, there's some good news here. Talking brochures frequently have deeply ingrained behaviour patterns and, in the past, have proved highly resistant to skill improvement. Who could blame them? Why alter your behaviour if what you are doing continues to work? Recession is a powerful stimulus for behaviour change. Many traditional salespeople today are staring failure in the face.
Their results are mediocre and are falling month by month. The option of moving on to a position in another company is made harder by the economy. So they have no alternative--the time has come to rethink the way they sell.
One consequence of falling sales volume is that managers become desperate for business and give most of their attention to those accounts that are nearest to closing. Activity becomes concentrated on the calls late in the selling cycle where a decision is imminent. The other end of the pipeline receives much less attention.
Yet the early calls of the selling cycle offer the greatest potential for minimising the effect of a downturn. Consider this: if the first part of the selling cycle is handled badly, there is no closing part. With any pipeline process, what you get out at the end ultimately depends on what you put in at the start.
Strategies for a recession that depend on maintaining the status quo, cutting prices, and advertising or increased sales activity all have a poor record of success. So, what strategy should a company adopt? The organisations that have succeeded in selling their way out of trouble have generally understood three fundamental facts about sales productivity:
1. Productivity happens where the job happens.
Productivity isn't achieved by policy or edict. Productivity comes from directly influencing the behaviour of the person doing the job. Unless the grand strategies of management translate themselves into changes in sales behaviour during sales calls, then there's no productivity gain.
2. It's skill that counts, not activity.
If salespeople aren't succeeding in a downturn, it's because they're doing the wrong things. Increasing their activity levels so that they do even more of the wrong things isn't going to help. Developing an increased level of selling skill is a more effective and more durable strategy.
3. Selling skills must be trained and reinforced.
Developing an increased level of selling skills is most effectively done by training on skills proven to work in a recession (that is, SPIN) and relentlessly reinforcing those skills by coaching.
How do these principles apply in practice? One good example of how a better understanding of what succeeds in hard times can lead to a winning strategy is illustrated by the work Huthwaite did with a Fortune 100 company during the last severe recession.
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The company was facing both a deteriorating economy and aggressive new competition. Their objective was to improve sales volume in the most unfavourable business climate since the 1930s. It was already clear that a problem of this magnitude wasn't going to be solved just by doing the same things harder. They needed a different way of selling that would work in conditions of deep recession.
They decided to adopt a four-step process to achieve a significant change in sales productivity.
Step 1: Finding what works best. Using behaviour analysis techniques that Huthwaite had developed, managers watched their people selling and picked out the behaviours which were working best in successful calls.
Step 2: Training in coaching skills. Managers were trained in coaching skills to help them pick out and develop these key behaviours which were proving successful.
Step 3: Developing successful behaviours through coaching. The coaching was designed as a three-month project. Managers met monthly with Huthwaite consultants to plan strategies for getting the maximum skill improvement from their people.
Step 4: Measuring productivity. The final and most important step was to assess the effect of the project in terms of increased sales productivity.
Post-training assessment showed a dramatic increase in the selling behaviours that correlate with success in a recession. But were these newly learned behaviours producing the desired sales results?
To find out, the company tracked the trained salespeople for nine months and compared their results to an untrained group of the same size. Sales of the untrained (control) group fell by 13 per cent during the nine month period, reflecting the severity of the recession at the time. In contrast, the group trained to use skills which were effective in recessionary conditions showed a productivity gain of 17 per cent.
In terms of getting business from new customers, which is generally accepted as the hardest sales job in a recession, the trained group performed 79 per cent better than the control group.
Case Study Conclusions
This study, and others like it, tells us three things about sales productivity in tough times:
* In tough times, skill is more important than activity. Selling smarter is a better strategy than selling harder. So investment in skill development is more likely to pull an organisation out of trouble than concentrating on increased activity level.
* Train in methods and models which have been tested and firmly validated in productivity terms during a recession. If your training makes people better at doing the wrong things, you're in trouble. There aren't many recession-validated skill models; SPIN Selling is tried and true.
* There is enormous potential for improving sales productivity. The trained people in this study were 30 per cent better than the control group. That's not an unusual increase. In one of the world's largest manufacturers of copier products, we recorded a 35 per cent increase when similar methods were used; and in another division of the same company, there were increases of over 60 per cent.
A recession is a great time to retool a sales force. It's no accident that some of the most dramatic results that I've achieved as a trainer, in terms of behaviour change and bottom line results, have come from work done in economic downturns. Customers want value-creating salespeople, the economy demands it, and now is an ideal opportunity to implement changes that can transform company fortunes.
Neil Rackham, author and originator of SPIN Selling, is visiting professor of sales strategy at Cranfield School of Management and visiting professor of sales and marketing at Portsmouth University, England. He will be doing a speaking tour on Global Insights to Transform your Business in September 2009 presented by Huthwaite Asia Pacific and SIM. Contact Jacqueline at 62489448.
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