Today’s guest post is by Diane Williams, product manager for the SPIN® Portfolio of training programs for MHI Global. She is responsible for the development of new programs that support the use of SPIN skills.
The corporate world is in the midst of a significant shift in business strategy. The established emphasis on bottom-line efficiency that gave the business world such familiar techniques as downsizing, restructuring overhead value analysis, and reengineering is being replaced by a new interest in strategies for boosting growth.
The sign that the shift is both real and profound can be seen in the changing pattern of consulting revenues. Consulting firms, which a couple of years ago were grazing the lush pastures of cost-reduction advice, are now experiencing something of a famine. Because of that, many consulting firms have opened sales-effectiveness practices to help their clients boost revenue.
Here’s how they’re doing it – and how you can, too.
Selling cheaper. The easiest strategy for boosting revenue – particularly for those whose background and expertise are in cost reduction – has been to find cheaper ways to reach a wider customer base. The Internet has blossomed as a low-cost way to expand the width of customer contact, and there’s also a well-established track record for reaching a wider customer base at a low cost through telemarketing and alternative distribution channels. Consequently, most corporations with low-end products and a substantial customer base have drastically reduced their face-to-face sales forces during the past two years and continue to move toward cheaper alternative delivery systems.
Selling deeper. Purchasing has changed drastically over the years. The average industrial companies are continuing to cut supplier bases by more than half. Because of that, transactional purchasing (i.e., putting out a bid and allowing suppliers to respond) is seen as a heavy strain on resources, while the rise of alternative relationship models, such as partnering, allows for deeper, more meaningful, and longer lasting transactions.
Shifting the source of value. Many sales functions – particularly those that sell through highly compensated salespeople – add negligible value to the overall sales effort. The sales organization provides little more than minor administrative support, telephones, and business cards. Almost all the value of these sales functions resides in individual salespeople and not in the institution. This makes the typical sales organization uncomfortably vulnerable.
If the value of the sales organization lies in individual salespeople, then there’s a real risk that superstars will jump ship, tempted by competitors’ offers – taking their books of business with them. This vulnerability puts many organizations at risk, leading strategists to search for ways to embed more value at an institutional level.
At the same time, when salespeople add all the value, they rightly expect to receive a disproportionate share of the rewards. Many of them have become – to put it mildly – highly compensated. This leads to something of a Catch-22 phenomenon. In most sales organizations, promotion into management means a significant drop in remuneration. Still, it’s hard to add value at an institutional level unless you can attract talented individuals.
In this way, sales organizations are imprisoned by the high rewards they have to pay salespeople who provide all the value. Because of that, many organizations are revisiting their sales process and working to come up with a way to help a wider range of sales professionals succeed. By shifting the source of value, the benefits can spread throughout the company.