HBR’S 10 MUST READS ON SALES

BY HARVARD BUSINESS REVIEW, WITH JAMES C. ANDERSON,

MANISH GOYAL, PHILIP KOTLER, AND ANDRIS ZOLTNERS

Contents

Members of The Buying Center 3 Bases of Power 4 Dominant Motives for Buying A

Telecommunications System 5

Buyer Continuum 5 Matrix for Gathering Psychological Information 6 How Well Do Sales and Marketing Work

Together? 7

Do We Need to Be More Aligned? 10 Sales & Marketing Integration Checklist 11 The Buying Funnel 12 The Four Factors for A Successful Sales Force 13 How Sales Sizing Strategies Stack Up 14 Sizing the Sales Force by The Numbers 15 Optimizing the Maturity Phase 18 A New Selling Guide for Reps 19 Prioritizing Your Opportunities 20 Finding the Right Allies 21 How Data Can Drive Sales Growth 22 The New World of Sales 23 Compliance Climates Still Dominate 24 How Reps Use Judgment 25 Value Selling Vs. Tiebreaker Selling 26 Group Size Matters 27 How to Create A Sales Comp Plan 28

Members of the buying center and their roles

Initi

ator

Influ

ence

rs

Deci

der

Purc

hase

r

User

s

Gate

keep

er

Initiator Division general manager proposes to replace thecompany’s telecommunications system

Decider Vice president of administration selects, with influencefrom others, the vendor the company will deal with andthe system it will buy

Influencers Corporate telecommunications department and the vicepresident of data processing have important say aboutwhich system and vendor the company will deal with

Purchaser Corporate purchasing department completes thepurchase to specifications by negotiating or bidding

Gatekeeper Corporate purchasing and corporate telecommunica-tions departments analyze the company’s needs andrecommend likely matches with potential vendors

Users All division employees who use the telecommunicationsequipment

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3

Bases of power

Type of power Champion Veto

Reward Ability to provide monetary, social, politi-cal, or psychological rewards to others for compliance n

Coercive Ability to provide monetary or other punish-ments for noncompliance n

Attraction Ability to elicit compliance from others because they like you n n

Expert Ability to elicit compliance because of technical expertise, either actual or reputed n

Status Compliance-gaining ability derived from a legitimate position of power in a company n Note : These fi ve power bases were originally proposed over 20 years ago by psychologists J.R.P. French, Jr., and Bertram Raven. See “The Bases of Social Power” in D. Cartwright, ed., Studies in Social Power (University of Michigan Press, 1959).

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4

Dominant motives for buying a telecommunications system The benefi ts in the shaded column are more highly valued than the others and represent the company’s “hot button.”

Benefi t class

Financial Product or service Social or political Personal

Absolute cost savings

Cheaper than competitive off erings

Will provide operating-cost reductions

Economics of leasing versus buying

Pre- and postsales service

Specifi c features

Space occupied by unit

Availability

Will purchase enhance the buyer’s standing with the buying team or top management?

Will purchase increase others’ liking or respect for the buyer?

How does purchase fi t with buyer’s self-concept?

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Buyer Continuum

How buyersees our goods

nega

tivel

y

negatively

How

buy

erse

es o

ur p

eopl

e

positively

posi

tivel

y

5

Matrix for gathering psychological information

Who’s in the buying center, and what is the base of their power?

__________________________________________________________________________________________________________

__________________________________________________________________________________________________________

__________________________________________________________________________________________________________

__________________________________________________________________________________________________________

Who are the powerful buyers, and what are their priorities?

__________________________________________________________________________________________________________

__________________________________________________________________________________________________________

__________________________________________________________________________________________________________

__________________________________________________________________________________________________________

What specifi c benefi ts does each important buyer want? __________________________________________________________________________________________________________

__________________________________________________________________________________________________________

__________________________________________________________________________________________________________

__________________________________________________________________________________________________________

How do the important buyers see us?

__________________________________________________________________________________________________________

__________________________________________________________________________________________________________

__________________________________________________________________________________________________________

__________________________________________________________________________________________________________

Selling strategy

__________________________________________________________________________________________________________

__________________________________________________________________________________________________________

__________________________________________________________________________________________________________

__________________________________________________________________________________________________________

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6

Stro

ngly

di

sagr

ee

1

Dis

agre

e

2

Nei

ther

3

Agre

e

4

Stro

ngly

ag

ree

5

1.

Our

sal

es fi

gure

s ar

e us

ually

clo

se to

the

sale

s fo

reca

st.

____

__

____

__

____

__

____

__

____

__

2.

If th

ings

go

wro

ng, o

r res

ults

are

dis

appo

intin

g, n

eith

er

func

tion

poin

ts fi

nger

s or

bla

mes

the

othe

r. __

____

__

____

__

____

__

____

__

____

3.

Mar

ketin

g pe

ople

oft

en m

eet w

ith k

ey c

usto

mer

s du

ring

the

sale

s pr

oces

s.

____

__

____

__

____

__

____

__

____

__

4. M

arke

ting

solic

its p

artic

ipat

ion

from

Sal

es in

dra

ftin

g th

e m

arke

ting

plan

. __

____

__

____

__

____

__

____

__

____

How

wel

l do

Sale

s an

d M

arke

ting

wor

k to

geth

er?

This

inst

rum

ent i

s in

tend

ed to

hel

p yo

u ga

uge

how

wel

l you

r sal

es a

nd m

arke

ting

grou

ps a

re a

ligne

d an

d in

tegr

ated

. Ask

you

r hea

ds o

f Sal

es

and

Mar

ketin

g (a

s w

ell a

s th

eir s

taff s

) to

eval

uate

eac

h of

the

follo

win

g st

atem

ents

on

a sc

ale

of 1

to 5

, whe

re 1

is “

stro

ngly

dis

agre

e” a

nd 5

is

“str

ongl

y ag

ree.

” Ta

lly th

e nu

mbe

rs, a

nd u

se th

e sc

orin

g ke

y to

det

erm

ine

the

kind

of r

elat

ions

hip

Sale

s an

d M

arke

ting

have

in y

our c

ompa

ny.

The

high

er th

e sc

ore,

the

mor

e in

tegr

ated

the

rela

tions

hip.

(Sev

eral

com

pani

es h

ave

foun

d th

at th

eir s

ales

forc

es a

nd th

eir m

arke

ting

staff

s

have

sig

nifi c

antly

diff

eren

t per

cept

ions

abo

ut h

ow w

ell t

hey

wor

k to

geth

er—

whi

ch in

itse

lf is

qui

te in

tere

stin

g.)

Scor

ing

20–3

9 Un

defi n

ed

60–7

9 Al

igne

d

40–5

9 D

efi n

ed

80–1

00 In

tegr

ated

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7

5. O

ur s

ales

peop

le b

elie

ve th

e co

llate

ral s

uppl

ied

by

Mar

ketin

g is

a v

alua

ble

tool

to h

elp

them

get

mor

e sa

les.

__

____

__

____

__

____

__

____

__

____

6.

The

sale

s fo

rce

will

ingl

y co

oper

ates

in s

uppl

ying

feed

back

re

ques

ted

by M

arke

ting.

__

____

__

____

__

____

__

____

__

____

7. Th

ere

is a

gre

at d

eal o

f com

mon

lang

uage

her

e be

twee

n Sa

les

and

Mar

ketin

g.

____

__

____

__

____

__

____

__

____

__

8. Th

e he

ads o

f Sal

es a

nd M

arke

ting

regu

larly

con

fer a

bout

up

stre

am is

sues

such

as i

dea

gene

ratio

n, m

arke

t sen

sing

, and

prod

uct d

evel

opm

ent s

trat

egy.

__

____

__

____

__

____

__

____

__

____

9.

Sale

s an

d M

arke

ting

wor

k cl

osel

y to

geth

er to

defi

ne

segm

ent b

uyin

g be

havi

or.

____

__

____

__

____

__

____

__

____

__

10.

Whe

n Sa

les

and

Mar

ketin

g m

eet,

they

do

not n

eed

to s

pend

m

uch

time

on d

ispu

te re

solu

tion

and

cris

is m

anag

emen

t.

____

__

____

__

____

__

____

__

____

__

11.

The

head

s of

Sal

es a

nd M

arke

ting

wor

k to

geth

er o

n bu

sine

ss

plan

ning

for p

rodu

cts

and

serv

ices

that

will

not

be

laun

ched

fo

r tw

o or

mor

e ye

ars.

__

____

__

____

__

____

__

____

__

____

12.

We

disc

uss

and

use

com

mon

met

rics

for d

eter

min

ing

the

succ

ess

of S

ales

and

Mar

ketin

g.

____

__

____

__

____

__

____

__

____

__

13.

Mar

ketin

g ac

tivel

y pa

rtic

ipat

es in

defi

nin

g an

d ex

ecut

ing

the

sale

s st

rate

gy fo

r ind

ivid

ual k

ey a

ccou

nts.

__

____

__

____

__

____

__

____

__

____

14.

Sale

s an

d M

arke

ting

man

age

thei

r act

iviti

es u

sing

join

tly

deve

lope

d bu

sine

ss fu

nnel

s, p

roce

sses

, or p

ipel

ines

that

sp

an th

e bu

sine

ss c

hain

—fr

om in

itial

mar

ket s

ensi

ng to

cu

stom

er s

ervi

ce.

____

__

____

__

____

__

____

__

____

__

15.

Mar

ketin

g m

akes

a s

igni

fi can

t con

trib

utio

n to

ana

lyzi

ng d

ata

from

the

sale

s fu

nnel

and

usi

ng th

ose

data

to im

prov

e th

e pr

edic

tabi

lity

and

eff e

ctiv

enes

s of

the

funn

el.

____

__

____

__

____

__

____

__

____

__

(con

tinue

d�)

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8

++

+=

Stro

ngly

di

sagr

ee

1

Dis

agre

e

2

Nei

ther

3

Agre

e

4

Stro

ngly

ag

ree

5

16.

Sale

s an

d M

arke

ting

shar

e a

stro

ng “

We

rise

or fa

ll to

geth

er”

cult

ure.

__

____

__

____

__

____

__

____

__

____

17.

Sale

s an

d M

arke

ting

repo

rt to

a s

ingl

e ch

ief c

usto

mer

offi

cer,

chie

f rev

enue

offi

cer,

or e

quiv

alen

t C- l

evel

exe

cutiv

e.

____

__

____

__

____

__

____

__

____

__

18.

Ther

e’s

sign

ifi ca

nt in

terc

hang

e of

peo

ple

betw

een

Sale

s an

d M

arke

ting.

__

____

__

____

__

____

__

____

__

____

19.

Sale

s an

d M

arke

ting

join

tly d

evel

op a

nd d

eplo

y tr

aini

ng

prog

ram

s, e

vent

s, a

nd le

arni

ng o

ppor

tuni

ties

for t

heir

resp

ectiv

e st

aff s

.

____

__

____

__

____

__

____

__

____

__

20.

Sale

s an

d M

arke

ting

activ

ely

part

icip

ate

in th

e pr

epar

atio

n an

d pr

esen

tatio

n of

eac

h ot

her’s

pla

ns to

top

exec

utiv

es.

____

__

____

__

____

__

____

__

____

__

____

__�

____

__

____

__

____

__

____

__

____

__  T

otal

+

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9

Undefi ned Defi ned Aligned

Don’t make any changes if.�.�.�

The company is small.

The company has good informal relationships.

Marketing is still a sales support function.

The company’s prod-ucts and services are fairly cut- and- dried.

Traditional marketing and sales roles work in this market.

There’s no clear and compelling reason to change.

The company lacks a culture of shared responsibility.

Sales and Marketing report separately.

The sales cycle is fairly short.

Tighten the relationship between Sales and Marketing if.�.�.�

Confl icts are evident between the two functions.

There’s duplication of eff ort between the functions; or tasks are falling through the cracks.

The functions com-pete for resources or funding.

Even with careful defi nition of roles, there’s duplication of eff ort between the functions; or tasks are falling through the cracks.

The market is commoditized and makes a traditional sales force costly.

Products are devel-oped, prototyped, or extensively cus-tomized during the sales process.

Product life cycles are shortening, and technology turnover is accelerating.

A common process or business funnel can be created for manag-ing and measuring revenue- generating activities.

Move to aligned Move to integrated

Do We Need to Be More Aligned? THE NATURE OF RELATIONS BETWEEN Sales and Marketing in your organiza-tion can run the gamut—from undefi ned (the groups act independent of one another) to integrated (the groups share structures, systems, and rewards). Not every company will want to—or should—move from being undefi ned to being defi ned or from being defi ned to being aligned. The following exhibit can help you decide under which circumstances your company should more tightly integrate its sales and marketing functions.

Move to defined

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10

Sales and Marketing integration checklist To achieve integration between Sales and Marketing, your company needs to focus on the following tasks.

Integrate activities

Integrate processes and systems

Enable the culture

Integrate organizational structures

□ Jointly involve Sales and Marketing in product planning and in setting sales targets.

□ Jointly involve Sales and Market-ing in generating value propositions for diff erent mar-ket segments.

□ Jointly involve Sales and Market-ing in assessing customer needs.

□ Jointly involve Sales and Marketing in signing off onadvertising materials.

□ Jointly involve Sales and Market-ing in analyzing the top opportuni-ties by segment.

□ Implement systems to track and manage Sales and Marketing’s joint activities.

□ Utilize and regularly update shared databases.

□ Establish common metrics for evaluating the overall success of Sales and Marketing eff orts.

□ Create reward systems to laud successful eff orts by Sales and Marketing.

□ Mandate that teams from Sales and Marketing meet periodi-cally to review and improve relations.

□ Require Sales and Marketing heads to attend each other’s budget reviews with the CEO.

□ Emphasize shared responsibility for results between the diff erentdivisions of the organization.

□ Emphasize metrics.

□ Tie rewards to results.

□ Enforce divisions’ conformity to systems and processes.

□ Split Marketing into upstream and downstream teams.

□ Hire a chief revenue offi cer.

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11

The Buying Funnel

THERE’S A CONVENTIONAL VIEW that Marketing should take responsibility for the fi rst four steps of the typical buying funnel—customer awareness, brand awareness, brand consideration, and brand preference. (The funnel refl ects the ways that Marketing and Sales infl uence customers’ purchasing decisions.) Marketing builds brand preference, creates a marketing plan, and generates leads for sales before handing off execution and follow- up tasks to Sales. This division of labor keeps Marketing focused on strategic activities and prevents the group from intruding in individual sales opportunities. But if things do not go well, the blame game begins. Sales criticizes the plan for the brand, and Marketing accuses Sales of not working hard enough or smart enough.

The sales group is responsible for the last four steps of the funnel—purchase intention, purchase, customer loyalty, and customer advocacy. Sales usually develops its own funnel for the selling tasks that happen during the fi rst two steps. (These include prospecting, defi ning needs, preparing and present-ing proposals, negotiating contracts, and implementing the sale.) Apart from some lead generation in the prospecting stage, Marketing all too often plays no role in these tasks.

Brandawareness

Brandconsideration

Brandpreference

Purchaseintention

Purchase

Customerloyalty

Customeradvocacy

Marketing

Handoff

Sales

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12

Customerawareness

The four factors for a successful sales force A company must focus on diff erent aspects of its sales force structure over the life cycle of the business, just as it matches customer strategy to the life cycle of a product.

Business life cycle stage

Start-up Growth Maturity Decline

Emphasis

Role of sales force and selling partners H H H H H H H H H H Size of sales force H H H H H H H H H H H H H Degree of specialization H H H H H H H H H H Sales force resource allocation H H H H H H H H

Underlying customer strategy

Create awareness and gener-ate quick product uptake

Penetrate deeper into existing segments and develop new ones

Focus on effi ciently serving and retaining existing customers

Emphasize effi ciency, protect critical customer relation-ships, exit unprofi table segments

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13

How sales sizing strategies stack up In their infancy, companies often undersize sales forces. The charts show the impact of three diff erent sizing scenarios on one pharmaceutical company’s profi ts. The fi gures are projections based on mathematical models. The pharmaceutical company, which started with 300 salespeople, found that an “earn your way” approach to staffi ng (increasing the sales force only as fast as revenues increase) resulted in the highest fi rst-year contribution, but it yielded the lowest three-year contribution. The longer-term contribution was highest with a “quick build” strategy (quickly ramping up the size of the sales force to the long-term optimal level).

$84M

$321M

$83M

$351MQuick buildPlay it safeEarn your way

Salesforce size

Year 1contribution

3-year totalcontribution

Year 1 Year 2 Year 3 Year 1 Year 2 Year 3 Year 1 Year 2 Year 3

350380

320350

380

$87M

$301M

380 380 380 380

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14

Sizing the Sales Force by the Numbers

EVERY COMPANY IN GROWTH MODE should conduct a break- even analysis to check if its sales force is the right size. That involves computing the break- even ratio (the ratio of the incremental sales revenue per additional sales-person to the break- even sales), estimating the carryover sales rates, and using those estimates to determine the three- year return on investment in sales staff .

To determine the break- even ratio: 1. Estimate the annual cost of a salesperson ( C ), the gross margin ( M ),

which is the amount of sales revenue that the business keeps as profi tafter deducting variable costs, and the gross margin rate ( M R ), which is gross margin expressed as a percentage of sales revenue.

2. Calculate break- even sales by dividing the cost of a salesperson by the gross margin rate ( C ÷ M R = B ). That’s the amount a salesperson mustsell in a year to cover his or her costs.

3. Estimate the incremental sales revenue that an additional salespersoncould generate in a year ( I ).

4. Divide the incremental sales revenue per additional salesperson by the break- even sales to compute the break- even ratio ( I ÷ B ). A ratio of2.00, for instance, implies that a new salesperson will generate grossmargin equal to twice his or her cost in a year.

Break- even =

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15

To determine the carryover sales percentage: 5. Estimate the percentage, based on past trends, of this year’s sales that

the company will retain in future years without any sales force eff ort.Those are the carryover sales percentages ( K 2 for next year and K 3 for the year after).

Carryover =

K2��K3

To determine the three- year ROI on sales staff : 6. Take the sum of the gross margin on the incremental sales revenue that

an additional salesperson can generate in year 1, the incremental gross margin on carryover sales in year 2, and the incremental gross marginon carryover sales in year 3.

7. Subtract from that sum the annual cost of an additional salesperson.

8. Divide the total by the additional salesperson’s annual cost. The resultis expressed as a percentage. The formula looks like this: [( M R × I ) +( M R× I × K 2 ) + ( M R × I × K 3 ) − C ] ÷ C

ROI =

The break- even ratio and the fi rst- year carryover rate can tell you how to size your sales force. In the table below, the numbers in each cell represent three- year returns on sales force investment. Businesses can set their own crite-ria, but in our experience, companies have sized their sales forces optimally when the ROI is between 50% and 150%. If the ROI is below 50%, the sales force is too large, and if it is over 150%, the force is too small.

(continued�)

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16

New

sa

lesp

erso

n sa

les/

Brea

k-ev

en s

ales

Carr

yove

r

0%

10%

20

%

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40

%

50%

60

%

70%

80

%

90%

0.25

−7

5%

−72%

−6

9%

−65%

−6

1%

−56%

−5

1%

−45%

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9%

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0.50

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0%

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8%

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−2

2%

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%

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22

%

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0.75

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%

4%

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31

%

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%

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10

3%

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11

%

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39

%

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75

%

96%

11

9%

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17

1%

1.25

25

%

39%

55

%

74%

95

%

119%

14

5%

174%

20

5%

239%

1.50

50

%

67%

86

%

109%

13

4%

163%

19

4%

229%

26

6%

307%

1.75

75%

94

%

117%

14

3%

173%

20

6%

243%

28

3%

327%

37

4%

2.00

10

0%

122%

14

8%

178%

21

2%

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29

2%

338%

38

8%

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2.25

12

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17

9%

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25

1%

294%

34

1%

393%

44

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2.50

15

0%

178%

21

0%

248%

29

0%

338%

39

0%

448%

51

0%

578%

2.75

17

5%

205%

24

1%

282%

32

9%

381%

43

9%

502%

57

1%

645%

3.00

20

0%

233%

27

2%

317%

36

8%

425%

48

8%

557%

63

2%

713%

3.25

22

5%

261%

30

3%

352%

40

7%

469%

53

7%

612%

69

3%

781%

3.50

25

0%

289%

33

4%

387%

44

6%

513%

58

6%

667%

75

4%

849%

3.75

27

5%

316%

36

5%

421%

48

5%

556%

63

5%

721%

81

5%

916%

4.00

30

0%

344%

39

6%

456%

52

4%

600%

68

4%

776%

87

6%

984%

�O

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ed

235499_03_045-066_r3.indd 58235499_03_045-066_r3.indd 58 01/03/17 7:33 AM01/03/17 7:33 AM

17

Optimizing the maturity phase Mature companies optimize their resources when sales forces focus on the customers, products, and selling activities that generate the highest response to their sales eff orts. To do that, sales leaders must ask themselves the follow-ing questions:

Resource allocation decisions

Customer Product Activity

What market segments should we focus on:

● High volume or low volume?

● Highly profi table or less profi table?

● National accounts or smaller accounts?

● New or old accounts?

What industries do we call on?

What geographic areas do we focus on: local, regional, national, or international?

Which accounts should headquarters staff call on, and which should fi eld sales call on?

What products should we focus on:

● Existing or new?

● High volume or relatively low volume?

● Easy to sell or hard to sell?

● Familiar or unfamiliar?

● Diff erentiated or nondiff erentiated?

● Products with long selling cycles or short selling cycles?

● Products with high short-term impact and low carryover or with low short-term impact and high carryover?

What activities should we focus on:

● Hunting for new customers or retaining old customers?

●  Selling or servicing?

How do we allocate relationship experts, product experts, and industry experts?

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18

A new selling guide for reps The best salespeople are replacing traditional “solution selling” with “ insight selling”—a strategy that demands a radically diff erent approach across several areas of the purchasing process.

Solution selling Insight selling

What kind of company to target

Organizations that have a clear vision and established demands

Agile organizations that have emerging demands or are in a state of fl ux

What sort of initial information to gather

What need is the customer seeking to address?

What unrecognized need does the cus-tomer have?

When to engage

After the customer has identifi ed a problem the supplier can solve

Before the customer has pinpointed a problem

How to begin the conversation

Ask questions about the customer’s need and look for a “hook” for your solution

Off er provocative insights about what the customer should do

How to direct the fl ow of information

Ask questions so that the customer can steer you through its purchasing process

Coach the customer about how to buy, and support it throughout the process

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19

Prioritizing your opportunities The scorecard below, derived from the ways high- performing reps evaluate potential customers, can help you assess whether or not to pursue a deal.

1. Organizational basics Yes No

Does the customer have signifi cant current or potential spend?

□ □ If either answer is no, do not pursue a deal

Is the customer fi nancially sound? □ □

2. Operating environment Yes No Unknown

Does the customer face external pres-sures to change, such as new industry regulations or loss of market position?

□ □ □ 1 point for each Yes

Are there internal pressures to change, such as new management or a rethink-ing of strategic direction?

□ □ □

3. View of the status quo Yes No Unknown

Is there organization- wide discontent with the status quo?

□ □ □ 2 points for each Yes

Does the current supplier fall short of expectations?

□ □ □

Is the customer unhappy with existing workarounds?

□ □ □

4. Receptivity to new or disruptive ideas

Yes No Unknown

Do internal stakeholders frequently share best practices?

□ □ □ 3 points for each Yes

Do they attend conferences and other learning events?

□ □ □

Do leaders look to the broader organization for ideas?

□ □ □

5. Potential for emerging needs Yes No Unknown

Do stakeholders engage in construc-tive dialogue when their assumptions are challenged?

□ □ □ 4 points for each Yes

Do they seek to continue conversations about industry benchmarks and trends?

□ □ □

Is there at least one confi rmed “ Mobilizer” in the company?

□ □ □

Total � □ Scoring

0–10 10–20 20+ Consider not pursuing the opportunity

Consider pursuing with limited resources

Consider pursuing with limited resources

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20

Find

ing

the

righ

t al

lies

We

iden

tifi e

d se

ven

dist

inct

sta

keho

lder

pro

fi les

with

in c

usto

mer

org

aniz

atio

ns. S

tar r

eps

fi lte

r out

the

less

use

ful t

ypes

and

ta

rget

the

ones

who

cou

ld h

elp

driv

e th

e de

al. H

ere’

s ho

w to

do

the

sam

e.

Nex

t st

eps

Use

Mob

ilize

rs to

hel

pdr

ive

your

dea

l. Bu

t firs

tm

ake

sure

they

can

mob

ilize

. For

exa

mpl

e,as

k th

em to

eng

age

ahi

gh-l

evel

man

ager

in y

our d

iscu

ssio

n.Ye

s

Fact

s an

d ta

sks

Mob

ilize

rs

Skep

tic

Go-

gett

er

Bloc

ker

Clim

ber

Frie

nd

Talk

ers

Don’

t pur

sue

Bloc

kers

. The

y’re

tie

d to

the

stat

us q

uoan

d ha

ve li

ttle

inte

rest

in o

utsi

de v

endo

rs.

Yes

Do

they

sha

reus

eful

in

form

atio

n?

Hea

lthy

ske

ptic

ism

Do s

take

hold

ers

enga

ge w

ith th

eid

ea, a

skin

g ha

rdqu

estio

ns?

“We”

“Me”

Teac

her

Gui

de

No

No

Stor

ies

and

opin

ions

Use

Talk

ers

to o

btai

nin

form

atio

n bu

t not

todr

ive

actio

n. T

hey’

re

unlik

ely

to b

uild

the

cons

ensu

s yo

u’ll

need

.

Firs

t, o

ffer

a pr

ovoc

ativ

ein

sigh

t—th

en

gaug

e pe

ople

’s

resp

onse

s.

Inte

rest

ed in

grea

ter

good

Is th

eir p

riorit

y th

eor

gani

zatio

n (“

we”

)or

them

selv

es(“

me”

)?

Com

mun

icat

ion

styl

eDo

they

spe

ak in

term

s of

fact

s an

d ta

sks

or o

f st

orie

s an

d op

inio

ns?

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21

How data can drive sales growth

Traditional approach Micromarket strategy

Data management

Sales collects customer data from internal sources (CRM, billing, customer- service databases)

Data are updated and analyzed quarterly or semi- annually

Outside analysts provide tools, advice, and statistical services

Sales combines very large databases of internal and external data such as demographics, social media chatter, and competitive intensity

Data are updated and analyzed monthly, weekly, and daily

Data collection and analytics are done by in- house experts

Resource allocation

Sales coverage is defi ned by large regions and territories

Sales resources are allocated according to a region’s historical performance

Sales coverage is segmented into dozens or hundreds of micromarkets

Resources are deployed at the micromarket level according to expected future opportunity

Performance management

Rep (and channel partner) performance is assessed relative to other reps (and other channel partners)

Performance is assessed relative to the opportunity within micromarkets

Collaboration

Sales, marketing, and other departments are siloed

Sales, marketing, strategy, customer ser-vice, and other functions are collaborative

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22

The new world of sales

The customer expressesa def ined need Qualif ication

criteria

Identify a stakeholderwith the authority tospend

Stakeholderselection

Demonstrate the valueyour solution providesrelative to competitors’offerings

Nature of theconversation

The customer is in astate of uncertainty

Identify a stakeholderwho is open to changeand can inf luencedecision makers

Disrupt the customer’sthinking and assump-tions about its business

New world:Judgment-oriented

Old world:Process-focused

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23

Compliance climates still dominate Sales reps need some latitude in how they engage highly knowledgeable and wary customers. But in many organizations— even those trying to adopt a new approach to selling— reps report that the sales climate is oriented toward monitoring their compliance with prescribed processes rather than encouraging them to exercise judgment.

Percentage of companies

26%

37%

19%

14%

4%

Compliance-oriented Judgment-oriented

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24

How reps use judgment Here are some of the ways reps use judgment at each step in the sales process.

Steps in the process

Cultivate the opportunity

Assess the customer’s receptivity to insight

Challenge the customer’s thinking

Build consensus

Close the deal

Determine if the opportunity is worth the investment of time

Make informed assumptions about the customer and its needs

Judge when best to engage key decision makers and other stake-holders

Tailor re-sponses to stakeholders’ highly varied objections and reactions

Assess the buying group’s understanding of what dif-ferentiates the solution from the alternatives

Hypothesize about new ways to engage the customer

Identify atypi-cal sources of information about the cus-tomer and its assumptions

Adapt the ap-proach in order to generate buy- in

Creatively determine ways to revive stalled deals

Know when to stand fi rm or acquiesce in negotiation

Infer the scope of the opportu-nity on the basis of limited infor-mation about the customer

Exercise patience in order to allow an opportunity to develop

Assess the worthiness of the pursuit on the basis of the customer’s reaction

Encourage and arm key stakeholders to infl uence detractors

Identify nego-tiation points beyond terms and conditions

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25

Value selling versus tiebreaker selling With value selling, suppliers build a case to prove that their off erings provide greater worth to customers than competitors’ do. But when purchases aren’t strategic, that approach is ineff ective, and suppliers need something extra whose value is self-evident to win the sale.

Value selling Tiebreaker selling

Supplier’s core off ering Highly diff erentiated The product or service has unique features that customers appreciate

Undiff erentiated The customers want only their basic specs met at a competitive price

Customer’s view of the purchase

Strategic The purchase signifi cantly contributes to diff eren-tiating the customer’s off erings

Not strategic The purchase is not criti-cal to diff erentiating the customer’s off erings

Customer’s willingness to extensively evaluate the off ering’s value

High Low

Deal winner Quantifi ed value of off ering The off ering provides quantifi ably higher value than that of competing off erings, which more than compensates for its higher price

A “justifi er” The supplier off ers an extra that the customer fi nds valuable without analysis and that shows the purchasing manager’s contribution to the business

Supplier’s goal A signifi cant price premium (>5%)

A slight price premium (3%–5%)

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26

Group size matters The likelihood of a purchase drops sharply as the number of decision makers increases.

Number of group membersOne Two Three Four Five Six

81% 31%0

50

100

Averagebuying-groupsize is5.4

Chan

ce o

f pur

chas

e

Source: CEB/Motista 2013 B2B brand survey

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27

How

to

crea

te a

sal

es c

omp

plan

Sa

les

com

pens

atio

n pl

ans

need

to s

uppo

rt a

com

pany

’s s

trat

egy;

mot

ivat

e a

broa

d ra

nge

of p

erfo

rmer

s; b

e fa

ir a

nd s

impl

e to

ex

plai

n an

d un

ders

tand

; and

resu

lt in

pay

outs

that

are

with

in a

com

pany

’s b

udge

t. H

ere

are

the

step

s sa

les

man

ager

s m

ust

take

to d

esig

n a

plan

that

mee

ts th

ose

crite

ria.

Step

1: S

et t

he

pay

leve

l

Step

2: B

alan

ce

sala

ry a

nd

ince

ntiv

es

Step

3: D

esig

n th

e pl

an

Step

4: C

hoos

e pa

yout

per

iods

Step

5: C

onsi

der

addi

tion

al

elem

ents

This

is c

ruci

al fo

r at

trac

ting

and

reta

inin

g ta

lent

.

The

prop

or-

tion

of e

arni

ngs

that

com

es

from

sal

ary

and

from

ince

ntiv

es

dete

rmin

es th

e ris

kine

ss o

f the

pl

an. T

he p

rope

r ba

lanc

e va

ries

by in

dust

ry a

nd

is o

ften

bas

ed

on th

e de

gree

of

cert

aint

y th

at a

sa

lesp

erso

n’s

eff o

rts

will

dire

ctly

infl u

ence

sal

es.

Met

rics

M

ost c

ompa

nies

st

ill p

ay s

ales

-pe

ople

a c

om-

mis

sion

bas

ed o

n gr

oss

reve

nue,

al

thou

gh s

ome

com

pani

es p

ay

on th

e ba

sis

of

profi

tabi

lity

of s

ales

.

Plan

typ

e M

any

com

pani

es

supp

lem

ent

sala

ry a

nd c

om-

mis

sion

s w

ith

bonu

ses

base

d on

ex

ceed

ing

quot

as

or re

achi

ng o

ther

go

als.

Payo

ut c

urve

Ca

ps o

n ea

rnin

gs

limit

the

pay

of

top

perf

orm

ers

and

fl att

en th

e pa

yout

cur

ve

(or m

ake

it “r

egre

ssiv

e”);

ac

cele

rato

rs o

r ov

erac

hiev

emen

t co

mm

issi

ons

ram

p up

the

pay

of to

p pe

rfor

m-

ers,

cre

atin

g a

“pro

gres

sive

” st

ruct

ure.

Com

pani

es c

an

set q

uota

s an

d bo

nus

stru

ctur

es

to c

over

per

iods

ra

ngin

g fr

om a

si

ngle

wee

k to

an

ent

ire y

ear.

Rese

arch

sho

ws

that

sho

rter

pa

yout

per

iods

he

lp k

eep

low

pe

rfor

mer

s m

otiv

ated

and

en

gage

d.

Man

y co

mpa

nies

us

e no

nmon

etar

y in

cent

ives

, suc

h as

co

ntes

ts o

r rec

og-

nitio

n pr

ogra

ms.

Sour

ce : A

dapt

ed fr

om T

he P

ower

of S

ales

Ana

lytic

s, b

y An

dris

A. Z

oltn

ers,

Pra

bhak

ant S

inha

, and

Sal

ly E

. Lor

imer

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28