Times have changed, our customers have changed. We need to completely re-think what we are doing with the sales and marketing functions. The long term value for the business is in the customer portfolio, the literal, cumulative lifetime value of those customers, and the level to which they are advocates for you. Yet, sales is often not aligned with that goal. Meeting quotas derived from the financial plan does not produce long term value for the business.
Our customers have changed and what we know about our customers has changed.
Yes, leading sales teams is complex but we need to recognise that businesses are systems that deliver value.
So let’s have a look at what we need to be doing from 2018 on.
Our Customers Have Changed
Before we get into how our customers have changed let’s recognise the origins for sales and marketing. Back in the late 1770’s when the industrial revolution was firing up producers were challenged with how to move the volume of product they produced. Josiah Wedgewood was one of these pioneers, one of the first to employ sales people and arm them with product catalogues. Wedgewood used celebrity endorsements and came up with the marketing messages of, “buy one get one free” and free delivery with a certain amount purchased. This was the genesis of sales and marketing as we know it, and for the last 250 years we have really only been iterating.
There has been no true innovation in sales – yes some good developments with Inbound Marketing and the Challenger Sale. But no true innovation even though over the last ten years our customers have completely changed how they behave and how they buy.
Here are the key five ways in how our customers have changed:
1. Customers are extremely ‘sales resistant’ these days. Anything that looks like, smells like, feels like a sell job – resistance rises significantly.
2. And this corresponds with what a lot of people are calling a ‘self-service revolution’ – customers want to do it themselves. Do the research and purchase themselves.
3. Customers are more informed than ever in history. Not only about products and services and the alternatives available to them, but also informed about what other customers say about you.
4. Rising expectations – because some businesses have really nailed the customer experience, our expectations as customers have risen to the point where the experience a lot of organisations provide is not good enough. This often means customers are more impatient, are looking for complete transparency and across all channels. We expect things to be quicker, smoother and no hassle.
5. We have entered into an experience economy, where customers are making their purchasing and promoting decisions far more on their overall experience. Likewise business customers are looking more for an ongoing relationships, rather than a transactions.
This last point is critical. Most sales activity today is still based on features, advantages and benefits selling, providing information to influence a buyer’s decision. Rather than engaging with people to provide an experience that adds insights and value for them.
What We Know About Customers Has Changed
What we know about how our customers buy has also changed a lot in the last ten years.
As humans – customers buy emotionally, then use rationale to justify the decision.
Michael Lindstrom, Buyology (2008-2009) was one of the first published research projects to demonstrate the significant connection between emotions and decision-making. These research projects were literally putting people inside MRI machines and monitoring brain activity under all sorts of conditions that related the brands the customers were connected to and why.
These findings have been reaffirmed in many studies, articles and books since. For example Daniel Levitin in The Organized Mind (2014, Random House) reiterates many of these findings and adds:
• “Economic decisions produce activity in the emotional regions of the brain” (page 276)
• He also refers to the load effect, where “consumers make poorer choices with more information…maximum number of parameters that can be assessed is around ten, …optimal number is closer to five…more information is not always better…”( pages 310-311)
Therefore we need to keep information relevant for that customer – do not overload and present the information in an orderly manner.
Simon Sinek’s Start With Why and the Golden Circle have had profound effects on how we consider what we do…Sinek adds here:
“…the tangible features are simply to help direct the choice of product that best fits our needs. In these cases, the decisions happened in the perfect inside-out order. Those decisions started with WHY – the emotional component of the decision – and then the rational components allowed the buyer to verbalise or rationalise the reasons for their decision.” Simon Sinek Start With Why, 2009, page 59.
Also, even a quick perusal of developments in the field of behavioural economics* will demonstrate the extraordinary amount of bias and heuristics we use to make decisions. Whilst we feel that the decisions are logical, they are emotional and often seen irrational to those looking in. (*consider the work of Daniel Kahneman, Richard Thaler, Cass Sunstein and others).
Customers buy emotionally, then use rationale to justify the decision. The emotional region doesn’t use language, it uses feelings. Therefore when someone asks us why we made that decision, we then justify the decision rationally. One of our problems is that we have been listening to the rational justification from customers as their reasons for buying, and not truly understanding the purchase decision.
Many sales people focus on being “liked”, as the old adage was, people buy from people they like. More so today we really need to find common beliefs we can share. Additionally, it seems that most people really want to change the world in some way (perhaps we are all now aware of our why), in a way that is specific for them and their world. To truly engage with people we need to understand their beliefs, assumptions and what it is they are trying to achieve.
Leading Sales Teams Is Complex
There are plenty of moving parts in sales. Additionally, sales is still predominately managed as a single function, whereas its success is interdependent with multiple teams, including; marketing, service, product, social-media, public relations, even the leadership team behaviours.
In many ways sales is one of the least studied management disciplines.
If you want to be a marketing manager, product manager, or CFO and project manager – you have a play book to follow. Not really so with sales. There are some academics, such as Jobber and Lancaster in the UK who have studied sales management, but what they provide is a framework. And again success depends on how you apply the framework. Likewise, there are very few university level courses on sales management.
And yet it is one of the most critical domains that determine the success of the business.
I use the Wheel of Leading Sales Teams to put a structure around this important function.
• Process is only sequential on the first implementation.
• Your customer strategy is at the centre and this is a translation of your business strategy into what it means for the types of customer groups you need.
• Then we develop sales tactics to deliver on the customer strategy, we recruit people with the aptitude, potential and passion to deliver the sales tactics.
• We then onboard them, and continually develop their skills.
• Our recognition and remuneration needs to match our sales tactics, and matched to the behaviours needed for the business and the sales person to be successful.
• ‘Organisation’ is about how we align the resources we have to maximise the results – do we have appointment setters, in-side / outside sales people..? How do we reduce the admin work and increase the customer facing efforts..?
• Coaching is a key part of the role of the sales leader which directly links to motivation.
This approach is based on systems thinking, and each of these functions need to be in balance across the wheel.
Problems sales leaders see are often reflected across the wheel.
For example, if you have the team organised as Account Managers and they are regularly visiting existing customers, but your remuneration model is one that is better suited to roles that need to find customers, then you will see problems in the motivation and productivity areas. Managers often then try to fix these perceived problems with motivation and productivity solutions, but unless they address the root cause problem, they will make the problem much worse.
Most sales teams chase deals and quotas, rather than having a deliberate Customer Strategy in place. Your financial plan is not a sales plan. Even though personas might be used they really can only compliment a well developed Customer Strategy. Using a persona only leads to finding profiles with generic needs and pain points which doesn’t match how people make decisions, nor does it represent the optimal value back to the business.
Businesses Are Systems That Deliver Value
Businesses are systems that deliver value – or not – for their customers. The level of value delivered, the consistency of that value combined then with the experiential value, determines the long term success, failure or mediocrity of the business.
We have seen that the way customers behave and buy in the last ten or so years have completely changed from the previous centuries. Yet, sales practice has only seen some minor iteration during the same period.
We know that leading sales teams is complex, and yet we typically fail to apply systems thinking or deeper customer analysis (not just what they tell us, as this is only the rationale excuse for decisions) to develop meaningful customer strategies for the organisation and well thought-out flows for customer engagement.
The role of the leader is to design the optimal activity to be delivered, implement, coach and finetune the design over time.
The framework I use for this is the Architecture for Customer Engagement.
The goal here is to build a customer portfolio that is full of profitable promoters of what you do. Profitable because you have chosen the customers that get the value you deliver – these customers will spend more and stay longer. Promoters, because they get the value you deliver, they will advocate to their networks for you.
The initial stage for this is defining your customer strategy. Knowing the specific groups of customers that get the value you deliver, then having value propositions for those customers (not products or services). These are your awesome customers. You want your customer portfolio to be full of profitable promoters.
There are two types of Adoption to consider. Firstly, using the Diffusion of Innovations (Rogers 1964-2005), identify what stage your awesome customers are in, and therefore is your challenge to find them, or somehow break through the noise to be heard. Then, you should always start a relationship the way you want it to be, forever. So, how do you want your customers to use your product/service, do you want them to be advocates of what you do..? If so, this will affect the design of your engagement flow. Start the engagement the way you want it to be, forever.
Also the initial stage requires the business to determine its values and ethics, what are the behaviours that demonstrate what you stand for. Don’t dilute these important attributes by allowing anyone to apply their own beliefs and values. Don’t put leaders and frontline people in a situation of an ethical dilemma that they have to resolve themselves. Determine the values and ethics your organisation stands for, then lay the foundation for congruence across the whole flow of engagement with the customers. Remember customers buy emotionally, if it doesn’t feel right they will disengage.
The second stage is about defining the buying or decision-making process your awesome customer goes through. Then align the flow of information and activities in a coordinated and congruent way that engages your customer from the beginning through to opening the relationship with profitable promoters.
The whole process is an action learning cycle. Implement, measure, monitor, learn and finetune.
Sales and marketing efforts have really only iterated over the last 250 years. It seems we are still trying to solve the same problems from the industrial age. However, how our customers behave has completely changed in the last ten years. Additionally, we now know that a most of the old sales paradigms are based on false assumptions. We now know that customers buy emotionally and then justify their decisions rationally.
We need to design our flow of engagement with customers to be values based and congruent with how they behave.
This then is now the role of leaders to manage this transition and build teams of people that can genuinely add value for customers, to create a profitable portfolio of customers.