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
235499_02_023-044_r2.indd 30235499_02_023-044_r2.indd 30 27/02/17 4:51 PM27/02/17 4:51 PM
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�)
235499_02_023-044_r2.indd 31235499_02_023-044_r2.indd 31 27/02/17 4:51 PM27/02/17 4:51 PM
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
+
235499_02_023-044_r2.indd 32235499_02_023-044_r2.indd 32 27/02/17 4:51 PM27/02/17 4:51 PM
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.
235499_02_023-044_r2.indd 38235499_02_023-044_r2.indd 38 27/02/17 4:51 PM27/02/17 4:51 PM
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
235499_03_045-066_r3.indd 48235499_03_045-066_r3.indd 48 01/03/17 7:33 AM01/03/17 7:33 AM
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
%
30%
40
%
50%
60
%
70%
80
%
90%
0.25
−7
5%
−72%
−6
9%
−65%
−6
1%
−56%
−5
1%
−45%
−3
9%
−32%
0.50
−5
0%
−45%
−3
8%
−31%
−2
2%
−13%
−2
%
10%
22
%
36%
0.75
−2
5%
−17%
−7
%
4%
17%
31
%
47%
64
%
83%
10
3%
1.00
0%
11
%
24%
39
%
56%
75
%
96%
11
9%
144%
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%
250%
29
2%
338%
38
8%
442%
2.25
12
5%
150%
17
9%
213%
25
1%
294%
34
1%
393%
44
9%
510%
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
vers
ized
��
��
Righ
t siz
e ��
��
Unde
rsiz
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
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