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December 20, 2021

Rethinking Sales When Buying Changes

By Frank Cespedes, Senior Lecturer of Business Administration, Harvard Business School

The most important thing about selling is buying. Rather than moving sequentially through a funnel, customers are now online and offline multiple times in their buying journeys. But in doing research for a new book, I found that much current conventional wisdom about the impact on selling of ecommerce, online media, and big data is not supported by facts. It is not and unlikely to be a digital-eats-physical selling world. But buying changes do affect core business-development requirements. For example:

Hiring

Average turnover in sales across industries is typically 20-30% annually, meaning that at many companies the equivalent of the entire sales force must be hired and onboarded every 3-5 years. Unlike most other business functions, moreover, there is no established degree or educational priors for sales positions, which vary greatly depending on the product or service sold.

Sales hiring has always been difficult; it’s getting tougher as data-analytics reshape needed competencies; and common hiring practices make a tough job needlessly tougher. But you can improve hiring by augmenting interviews with new tools, deployment practices, and job trials.

Training

Companies spend 20% more per capita on sales training than in any other function, but the ROI is disappointing. There are systemic reasons why most sales training is ineffective, and practical steps to improve your team’s skills. Sales training should be a process, not an event, so avoid over-reliance on classroom training. Reps pay attention to and absorb information when they most need it: in preparing for or during sales calls, not at a seminar weeks before or after those calls. So use wisely new just-in-time learning tools.

Research also shows that reps learn most from the best of their peers, picking up lessons about how to discuss the product’s relevant business outcomes, ask questions, and respond to price objections. Accelerate this learning with new technologies, and provide more impactful training in the flow of work.

Pricing

In most companies, the sales force frames price and the value proposition with prospects. In linking price and value, recognize that digital technology and omnichannel buying are changing the relevant unit(s) of value and purchasing criteria in many categories. For example, when software firms move from selling up-front product price to subscription SaaS models, that often means moving from the customer’s capital budget to an expense item in quarterly operating budgets, with big differences in who buys, how, and the sales tasks.

In an information-rich world, responses to price can change quickly and value-pricing approaches (versus standard cost-plus approaches) become more available. Hence, price testing should be an ongoing part of effective business development. But there is much inertia in this area, even as new tools allow for quick testing of behavioral reactions to different prices.

Leadership

In the past 20 years, more C-suite executives than ever have made it there without prior prolonged customer-contact experience in their careers. This affects a core leadership task: developing and implementing a market-relevant strategy. Conversely, there is no such thing as effective selling if it’s not linked to your firm’s strategic objectives. This has implications for sales models and careers, and what sales managers can do to close the gap between strategy and sales in their firms.

It’s not the responsibility of the market to adapt to your sales model. It’s your responsibility to adapt to the market, and the pandemic raises the stakes for getting these matters right by separating signal from noise.

Headshot of Frank Cespedes

Today's post is by Frank Cespedes, a Senior Lecturer of Business Administration at Harvard Business School. Frank serves on Boards of companies, has published in numerous publications, and is the author of six books including Sales Management That Works: How to Sell in a World That Never Stops Changing (Harvard Business Review Press, 2021).