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Business Selling: Choosing the Right Methodology

February 2012 Selling 1 Comment

How should salespeople sell?  Yes, they need to be well groomed (presentable), have a good people skills and a tough skin, and have an orientation towards action and winning.  But assuming they have these basic skills, what specifically should they do?

To address this question, over the last 60 years the crucible known as the American business environment has spawned a number of excellent sales methodologies:  IMPACT selling, SPIN selling, Miller-Heiman selling, Black Belt selling, Solution selling, Action selling, Dale Carnegie selling, Sandler selling, Richardson selling, and many more.

Each of these methodologies delineates specific action steps salespeople should take to close sales.  Moreover, each has been found effective.  But no two are alike.  So which is best?

Research

Earlier research into this question has led to a clarification of the difference in my 2004 article: Between Solution and Transactional Selling, and a proposed a partial solution in my 2006 book: Hawks Seagulls and Mice.  More recent research by Homburg, Muller, and Klarmann provide a much more robust and detailed clarification.

The Question

Homburg et al examined the relationship between a salesperson’s customer orientation and their sales performance.  The customer orientation is identified by the focus a salesperson places on understanding and adapting their offerings to fulfill customer needs.  For quite some time it has been suspected that salespeople with a high customer orientation will perform better than others.  And, each of the above sales methodologies encourages a customer orientation to one degree or another.

But how much customer orientation should a salesperson have? At what point should they push back and force the customer to make a trade off?  That is, when should they stop trying to create solutions for the customer and when should they focus on the transaction?

A high customer orientation also involves cost.  Detecting, understanding, and delivering to a customer’s core needs take salesperson’s time.  This might imply that some opportunities are not uncovered as a salesperson focuses on maturing the opportunities in their funnel rather than uncovering new customers that could go into the funnel.  It might also imply increased organizational complexity as salespeople request product managers to redesign existing products to meet specific customer demands.

Homburg et al have examined this tradeoff.  They tracked the customer orientation and performance of salespeople across 33 different businesses and 195 different salespeople.  They examined the salesperson’s customer orientation across all steps in the sales process (see table).  And, they statistically evaluated the optimal level of customer orientation as it differs between firms.

Sales Process and Customer Orientation Behaviors

The Answers

What Homburg et al found was that there was an optimal level of customer orientation.   At some point, the costs associated with the customer orientation are greater than the benefits, as measured by sales performance.  But the level of customer orientation at which the costs outweigh the benefits it is routinely higher than that applied by most salespeople.  A few salespeople were hyper-customer oriented, but most salespeople were completely insufficient.

While I find this statistical proof-of-logic satisfying, and while sales executives can use it to underscore the need for sales training by any of the above mentioned firms, it isn’t this result which piqued my interest.  Rather, it was Homburg et al’s examination of the variation in optimal customer orientation between firms.  That, the variation in optimal customer orientation between firms, is what determines which subset of the above sales methodologies is best for which type of firm.  (See table)

Firms that benefit from higher levels of customer orientation, in terms of sales performance and profit, are those which offer highly individualized products, products which are of greater importance (strategic or financial) to their customers, and that are positioned at a higher price point.

Firms that benefit from a lower level of customer orientation, in terms of sales performance and profit, are those which offer more standardized products, of lower strategic and financial importance, and at a lower price position.

Competitive intensity also moderates the optimal level of customer orientation.  Firms in highly competitive markets should seek a higher level of customer orientation in their sales process than those enjoying lower competitive intensity.  (Competitive intensity was measured according management reporting of cutthroat competition, promotion wars, competitive offer matching, price competition, frequency of competitive moves, and competitor’s strength.)

Hence, in terms of sales methodologies, it isn’t a one-size fits all answer.  Some focus more on building rapport and driving towards closure (transactional selling), others focus more upon uncovering needs and detecting value (solution selling).  The right one for your firm is dependent upon your market.  Just how much customization is possible?  Do customers buy from you because they need basic supplies and tools or are you delivering an offer of significant financial and/or strategic importance?  Are your prices higher than your competitors because your offering delivers positive differential value or do you attempt to “mark to market” a relatively commodity like product?  And, just how intense is the competition?  These are the questions that should drive the selection of your sales methodology.

Customer Orientation and Market Alignment

 

Reference

  • Christian Homburg, Michael Muller, & Martin Klarmann, “When Should the Customer Really Be King?  On the Optimum Level of Salesperson Customer Orientation in Sales Encounters”, Journal of Marketing, 75 (March 2011) pp: 55-74.
  • Bernard J. Jaworski and Ajay K. Kohli, “Market Orientation: Antecedents and Consequences,” Journal of Marketing, 57 (July 1993) pp:  53-70.
  • David Jobber and Geoff Lancaster, “Selling and Sales Management,” Harlow, UK:  Pearson Education Limited (2006).

Note of Interest and Holdings: At the time of writing, the author is not currently a direct consultant to nor investor in any of the firms listed in this article.



  • Bob Cermak

    Tim,

    I once worked for a fortune 500 company that trained their sales staff to recognize and approach potential customers using different methodoligies. Sometimes with the same account on the same call.

    If the company had multiple manufacturing sites that offered different sales opportunities for technically advanced materials with volume potentials producing high gross profit ratios, we were to wear one type of hat. And these parameters did exist. It was the sales persons responsibility to qualify and quantify the business objectives.

    On the other hand, if the company was regional, offering limited potential (volume and profit percentage) we were to keep them in the funnel, however, wear a different hat. Still quantifying and qualifying the business objectives.

    If the product potential was for a commodity product that was highly competitive, we were to keep them in the funnel in the event our company was seeking the unload excess inventory into the marketplace. Once again we had to wear a different sales hat to keep this tier of potential business in our portfolio.

    Each sales person handled between 90 to 150 different products. Each product provided different technical values, product and industry application offerings, with different finished product benefits.

    The corporations investment in hiring and training their sales staff produced technically strong, flexible, sucessfull, and advance worthy candidates into future management assignments.

    Each sales person and first line manager could quarterly measure levels of achievement, and areas for improvement. Self grading and analysis became some what of an automatic tool used by high achieving sales people.

    The sales staff was not a group of clons, but instead of group of well trained individuals with strong team identification, business committment, and the mission to succeed.

    Your correct, one size does not fit all.
    Regards,
    Bob Cermak

About the author

Tim J. Smith, PhD is the Managing Principal of Wiglaf Pricing, and an Adjunct Professor at DePaul University of Marketing and Economics. His most recent book is Pricing Strategy: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures.

Tim J. Smith, PhD
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