Organisations and their sales teams must understand customer needs to create and sell products that deliver real value if they want to boost revenue, writes Dan Matthews
Sales 101 basic guide to selling went something like this: get a sales job, find out about the product, ring a load of people, say it’s great, get a bundle of yeses, go to lunch. Repeat forever. Sales 2.0 is a very different picture. Buyers, from the consumer on the street to multinational conglomerates and everything in-between, will slam the metaphorical (or not) door in your face if you can’t explain, not only why what your selling is good, but how it fits into their lives.
The “value gap”, as it has become known, is a term referencing the apparent chasm between the ability of salespeople to pitch a product and their ability to demonstrate its value on a case-by-case basis. The charge is that salespeople look outwards from their product instead of looking inwards from a buyer’s perspective.
The same charge could be levelled at organisations more widely, particularly those that obsess about upgrades and add-ons to product lines while forgetting the things their customers like most about what they sell.
This wouldn’t be a problem if it weren’t for the fact that the people who pay for things are choosier and have more choice than ever before. Since the global economic crunch of 2008/9, people in charge of budgets are scrutinised much harder on their investments. They need to know not just that something is brilliant, but in what way its brilliance will make their world a better place.
During the summer, at a sales conference in Orlando, consultancy SiruisDecisions released research showing that the biggest problem facing sales teams was not education, skills, reticence on the part of customers, technology or budgets, but an endemic inability on the part of salesmen and women to describe the value of a product to a customer.
Results contained within this research revealed what was by no means a close call; a huge 71 per cent said it was their biggest business hurdle in 2014. Meanwhile, just 10 per cent of buyers said sales reps were value focused in their patter. This was the fourth consecutive year that the value gap was identified as the “biggest issue” in sales. So what on Earth is going on?
Tony Hughes, chief executive of Huthwaite International, says: “Especially among people with technical backgrounds, close involvement with the functionality of the product or service gets in the way of understanding real business value – what it can actually do to help the customer solve a problem.
“We see this every time we meet delegates on our sales training for the first time. Typically, less skilled salespeople talk too much, and try and present a generic solution to an insufficiently understood problem far too early.”
So what should they be doing? “They should instead probe and analyse what the true pay-offs would be that would really make a customer see the need to make a change, and for which they would pay full value to do so. To do that accurately, persuasively and consistently is a highly learnable skill,” he adds.
According to research conducted by Huthwaite last year, 57 per cent of sales propositions were resolutely product focused, yet the more effective propositions – that is those from companies who reported big bucks flowing in – were customer targeted and quantifiable.
On the company’s own “scale of excellence” in value propositions, 86 per cent of the highest-scoring organisations were those showing increased profit. Conversely, the majority of those registering a low score showed a loss. Coincidence? It seems unlikely.
But what does a value proposition look like? Wayne Gratton, business development director at Avnet, a global distributor of IT solutions, says that for his business showing value is about identifying the pain points in each sector it sells to.
The biggest problem facing sales teams is not education, skills, reticence on the part of customers, technology or budgets, but an endemic inability on the part of salesmen and women to describe the value of a product to a customer
“It’s important for sales teams to understand there are different drivers in vertical sectors. Security features in healthcare, for example, are focused around data protection for digital health records over and above supporting trends like remote working. That’s where the value of tech lies in this example,” he says.
How do you get sales teams on board? Explaining the value of a product to each new potential customer doesn’t sound like a hard thing to do, but the SiruisDecisions research suggests it is harder than it sounds. A barrier to jump over is that salespeople often think in a piecemeal way – sell ten things and I get a bonus – when they should be shown how to take a more strategic path.
Xactly managing director, Europe, Middle East and Africa, Tom Castley, uses a restaurant metaphor to describe the solution. “Just as a restaurant must design a menu that reflects the chef’s skillset and appeal to diners, it is up to management to encourage reps to develop combinations of value propositions that will never fail to capture customer interest,” he says.
“Without the incentive to follow a clear plan when cooking up deals, management can’t expect to see consistency and progress. If a restaurant failed to support its chefs in such a way, it’s unlikely they’d see any Michelin stars.”
For Huthwaite’s Mr Hughes, closing the value gap is not just about instructing your sales team to ask questions, it’s about asking the right questions, at the right time in the sales process and – critically, because this is the really rare bit – listening carefully to the response.
“That requires planning the line of questioning in a flexible way,” he says, “setting clear objectives for any customer conversations; honestly appraising whether they were met; and using the developing insight into the customer’s problems and aspirations to build a persuasive, specific, resonant value proposition.”
Companies that ignore the value gap – and there are plenty of them still out there – risk staking their commercial future on a strategy akin to howling at the moon. If teams don’t understand implicitly why customers should want what they are pitching, they risk a marathon of cold shoulders and endless dialling tones.