Sales Trend 7 from our 12 Sales Trends for 2017 report delves into the two basic options to run legitimate sales operations: Selling value at a reasonable margin or high volume commodity selling.
With business becoming much more complex and value harder to discern in product sales alone, Sales Trend 7, Sell and Deliver Value or Commoditise, sees business leaders making serious decisions about how to do business. In essence, they have two choices in terms of the way to run legitimate operations:
1. Run a business that sells unique solutions or customised products/services and generates reasonable margins and delivers real value beyond product. This means stepping up their game, building out their sales team’s business acumen and solution selling capabilities so as to stay relevant to their clients, add real business value and ROI, and differentiate themselves from the competition.
2. Alternatively, run a commodity based business with the lowest cost of sale possible, usually automating all or a significant part of the buying process aiming to sell high volume at low margins.
This stark choice is creating challenges across many organisations as they grapple with the changes required to deliver sustainable and ethical business models. What to choose? It all depends on what they are selling and what margins they want to make which in turn affects the makeup of their sales teams.
Option 1—selling value at a reasonable margin
Those smart businesses that select option 1 (sell value at a reasonable margin) as their business model understand that the time has well and truly arrived for B2B and complex B2C professional salespeople to shift into the higher order business consulting realm. No longer can they only rely on their technical knowledge or networks of ‘mates’ to generate profitable sales.
We reported in a blog back in 2015 about the shift to hybrid sales team; however, the need is even more urgent now for many traditional ‘technical’ or ‘knowledge’ sales led businesses to become high-end consulting businesses if they are to thrive. If not, these businesses will be left behind having to contend with high volume low margin commodity selling practices.
As the 21st century world gets more difficult to navigate and in a sea of overwhelming choice, discerning buyers are looking for a leverage point, a leading edge, better productivity and cost control, business value, surety of supply, and so on. They are looking to engage with salespeople who have a depth and breadth of knowledge in their area of expertise, people who can engage in business discussions that respect complexity and offer ideas and solutions that address the opportunities of both today and the future. This requires a higher order of thinking and a skill set that allows for effective communication and collaboration.
Critical skills and knowledge such as business and commercial acumen, business and sales strategy, strategic thinking and action, project management, systems thinking, market segmentation analysis, strategic key account management, analytical thinking, financial analysis and management, business writing skills, just to name a few, along with the core solution selling skills is where Option 1 has shifted to.
The challenge facing many organisations today is getting their current sales teams to transition to the higher order consulting skills required to sell and deliver real value in complex deals and integrated businesses environments. Because if they can’t then they will have to look elsewhere for talent to fill these high end consulting sales roles.
Some businesses have already recognised this and are turning towards recruiting STEM (Science, Technology, Engineering and Mathematics) graduates to sell and replace their traditional salespeople: step in the wide range of engineers, technicians, mathematicians and scientists who are schooled in higher order thinking. As suggested by academics in the 30 June 2016 FINSIA article, ‘Solving the STEM Paradox’, overall, individuals with STEM backgrounds and training are better problem solvers in technology-rich environments—they’re better equipped for new business models, new markets and new sources of economic growth. Paradoxically, individuals with this background remain underemployed compared to the broader population.
This need not be the case if we offer them high end consulting sales careers instead. One way smart businesses are addressing both the STEM paradox and crafting and generating better sales teams is to bring in more engineers, technicians, mathematicians and scientists into our sales teams.
Many of our clients are focusing on taking on technically skilled people and teaching and equipping them in how to do solution selling and Strategic / Key Account Management with great success. In fact, once you help these STEM skilled people overcome any negative stereotypes about selling and show them what good selling is they actually find that they can sell well and enjoy the experience.
The vast majority of technical people we have met and worked with love solving problems and being useful. Combining these talents with Solution Selling and making it a team sport is paying big dividends for smart businesses. So here is a whole new career path for the engineers, technicians, mathematicians and scientists, and a whole new recruitment pool for employers and sales leaders.
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Option 2—high volume, low margin commodity selling
The alternative to selling value at reasonable margins is to run a high volume, low margin commodity sales business where off-the-shelf and automation are key. While some human interaction will be necessary somewhere along the client value chain, the idea is to keep human interaction at a minimum and deal with buyers in an automated way. Low cost of sale is key here.
Many businesses are maturing in this space and many more coming onto the horizon. However, the challenge of offering easy to use online interfaces and effectively dealing with customer complaints and unusual requests is still an issue for many businesses and their customers. Some business opt for the hands off approach hoping that customers will just give up and go away relying on volume outweighing customer frustration which doesn’t bode well for repeat business and enhanced reputations. That’s the risk of playing the high volume, low margin game.
However, those companies that make a great automated user experience, underpinned by user friendly back up support, are taking the lead on those who play the ‘give up and go away’ card. Automation doesn’t have to mean poor or lazy service.
Transactional Product Selling
So what about transactional product sales teams who sell the likes of insurance or telecommunications products and earn low base salaries and high commissions doing so?
Businesses models such as these, and others like them, are coming under increased scrutiny with the rise in dubious sales practices that threaten the integrity of the buyer-seller relationship and see many consumers being ripped off and taken advantage of. Unless governments choose to legislate in these areas and put in place better consumer protection laws these practices will go on unabated as they have done for many years.
However, with consumers speaking up and the speed of social media in sharing these unacceptable consumer experiences, these types of businesses are being exposed and brought to task by the media, consumers and public consumers bodies alike. We can only hope that the more light shone on these murky business practices the quicker they will go out of business or change their ways.
Remember everybody lives by selling something.