Major Account Sales Strategy (Book Summary)

Major Account Sales Strategy by Neil Rackham

Preface

• Unless strategy can be readily translated into specific actions within individual accounts, then it’s just empty jargon.

1 How Customers Make Decisions

• The better we understand the customer decision process and how to influence it, the better our strategy will be.
• A measure of the health of a sales organization is the amount of time it spends relating to customers compared with the time it takes relating to the internal needs of the company.
• Build a selling strategy that focuses on the steps the customer takes in deciding, not on the steps the salesperson takes in making a sale.
• The customer decision process in a major sale normally progresses through distinct stages. Three of these stages take place before the decision, and a fourth stage happens after the decision has been made.
  • Recognition of Needs:  The decision process begins when you no longer feel totally satisfied. During this stage, you move from minor irritation to real dissatisfaction, and then finally to a point where you decide you’re going to do something about it. The most effective selling strategy [in this phase] is to uncover the source of dissatisfaction and to increase the customers’ perception of its intensity and urgency. in the early part of the Recognition of Needs phase you hold back on product discussions and presentations.
  • Evaluation of Options: Your optimum selling strategy during this stage of the sale is to influence in your favor the criteria the buyer or buyers are using to evaluate available options. “It’s very confusing choosing between different systems. So I’d like to begin by looking at some of the factors you should consider to help you make the right choice.” The most common strategic error that salespeople make in this phase of the sale is that they don’t try to uncover the customer’s guidelines, or criteria, for making the decision
  • Resolution of Concerns: Until you’ve overcome [your prospect’s] fears [they] won’t be ready to move ahead to make the final decision. A good selling strategy at this point in the sale must find a way to uncover and resolve fears and concerns of this kind. It’s more dangerous to ignore signals of customer concern than it is to explore potential concerns and get them out into the open.
  • Implementation
• Successful people ask a lot more questions during sales calls than do their less successful colleagues.

2 Account Entry Strategy: Getting to Where It Counts

• Entry strategy is complicated by the irritating habit of some customers of pretending that they have decision-making authority when they don’t.
• Successful people tended to seek a sponsor — an individual within the account who helped them, advised them, and, if necessary, represented them in places where they couldn’t gain access.
• Often, rather than rely on an individual person to act as sponsor, successful salespeople [often] find a particular function or area of an account to sponsor them.
• The Three Focus Points of an Entry Strategy
  • The focus of receptivity
  • The focus of dissatisfaction
  • The focus of power
• Calls to people who are purely receptive tend to be most successful if your strategic aims are to find out information about the account and the people in it and to gain access to others in the account who are located at the focus of dissatisfaction
• Receptivity — in isolation — doesn’t lead to business. You must also have dissatisfaction and power.
• Needs begin with dissatisfaction. The ability to uncover and develop dissatisfaction is the most important of all selling skills.
• There are two strategic objectives for sales calls to individuals or departments at the focus of dissatisfaction. These objectives are to:
  • 1. Uncover dissatisfaction and develop it to a point where the customer wants to take action.
  • 2. Use the dissatisfaction you’ve developed to gain access to the decision-maker, either directly or by using your sponsor to sell on your behalf
• The best friend is the person who’s having the most problems with your competitor.
• It’s difficult to gain access to decision-makers — so don’t waste it.
• Meetings with people at the focus of power are often wasted because the seller has an inflated expectation of the decision maker’s ability to make a unilateral decision.
• The traditional distinction between influencers and decision-makers is breaking down. It’s frequent to see two roles — or sometimes all three — combined in one person. For instance, a person with dissatisfaction will often be receptive, and sometimes the person with the problem also has decision power.
• [To enter an account,] first, decide who is likely to be most receptive. Then, ask for feedback on how your solution could help someone like them.

3 How to Make Your Customers Need You: Strategies for the Recognition of Needs Phase

• Three strategic objectives during the Recognition of Needs phase
  • 1. Uncover dissatisfaction,
  • 2. Develop dissatisfaction,
  • 3. Selectively channel dissatisfaction, so that people in the account selectively feel dissatisfaction in those areas where your products and services provide them with the best solutions
• You must begin by deciding what problems your products can solve for customers.
• I’ve come to mistrust general relationship-building objectives because they are vague and they lack the kind of specificity that can be turned into measurable action. Rather than “to build relationships”, [top salespeople] are likely to set call objectives such as “to get an introduction to the Planning Department” or “to agree to the steps we must go through to get on the vendor list.”

• Good [call] objectives must be specific — so that they state clearly identified purposes, not global intentions like “collect information” or “build relationships”— and forward-moving — so that they advance the sale in some clearly identifiable way.
• SPIN questions
  • Situation Questions
  • Problem Questions: Ex: “What parts of this operation give you the most difficulty?”
  • Implication Questions:  Develop a problem by asking about its effects or consequences. In major sales, Implication Questions are very strongly linked to success during the Recognition of Needs phase.
  • Need-Payoff Questions: Ex: “How would this help you?”
• With the increasing trend toward shared decision making and committee purchasing, access to the full range of individuals at the focus of power is likely to become increasingly difficult. Salespeople must learn more effective indirect methods to influence these unseen but powerful people. Use your sponsors at the focus of dissatisfaction to sell [indirectly] to the decision-maker on your behalf.
• Rehearse sponsors to represent you at the focus of power. Instead of saying, “Tell your boss that this will be a benefit,” ask Need-payoff Questions (ex: “Why might your boss find this a benefit?”) of people at the focus of dissatisfaction so that they practice explaining the benefits that your product offers.

4 Influencing the Customer’s Choice: Strategies for the Evaluation of Options Phase

• Within the same account, you must sometimes face customers who are in different phases of the decision. Despite this, it’s usually relatively easy to tell when the critical mass of people in an account has moved from the Recognition of Needs phase to the Evaluation of Options phase. Watch for signs such as:
  • Published specifications
  • Purchasing committees
  • Vendor presentations
• Alternative demands on the customer’s budget, for example, can be just as important a competitor as another vendor.
• Three specific strategic objectives in mind when making sales calls during the Evaluation of Options phase.
  • Uncover decision criteria. Ex: How do you judge a telecommunications system?
  • Influence decision criteria.
  • Maximize perceived fit with decision criteria.
• Skillful sellers influence decision criteria to bring about a better fit with their products.
• You shouldn’t take screening criteria at their face value. It’s usually worth making at least an exploratory challenge if you feel you can meet the customer’s needs but you can’t meet the screening criteria.
• Decision criteria live on after the sale. One interesting difference between a need and a decision criterion is that a need disappears after it has been satisfied.
• Four major strategies for influencing decision criteria.
  • Develop decision criteria from needs you’ve uncovered during the Recognition of Needs phase of the sale.
  • Reinforce crucial decision criteria you can meet.
  • Build up incidental decision criteria in areas where you are strong.
  • Reduce the importance of crucial decision criteria which you can’t meet.
• Sometimes in complex sales, the trade-offs are between the needs of different people or functions, not just between product capabilities.
• Never try directly to diminish or minimize something which is important to another person. By making a direct challenge to a crucial criterion you are more likely to strengthen it than to diminish it.

5 Differentiation and Vulnerability: More about Competitive Strategy

• A good differentiator should also be one where the seller’s product or service should be measurably superior to the competition’s.
• Divide these differentiators into two lists. One list should be the “hard“ differentiators — those which can be objectively measured by the customer. The other list consists of the “soft“ differentiators — those which are matters of judgment or which can’t easily be objectively measured.
• The ideal selling position is when your product has clear superiority in terms of its “hard” differentiators.
• The shorter the evaluation period, the more the customer will rely on “hard “differentiators
• The job of the effective sales strategist is to influence and guide the customer’s decision process
• Top salespeople go to great lengths to define, refine, and reposition so that the customer is able to communicate the criterion to others involved in the decision.
• Any alternative solution to a customer problem constitutes a potential form of competition which it’s dangerous to ignore
• Three strategies for countering vulnerability.
  • 1: change the decision criteria
  • 2: increase your strength
  • 3: diminish your competition

6 Overcoming Final Fears: Strategies for the Resolution of Concerns Phase

• Two traits of exceptional seller: disarming honesty + being a great listener
• Consequences are psychological issues which exist in the customer’s mind that arise from the perceived risk of doing business with you. Only the customer can resolve them. Your role is to help the customer, not to try to resolve the concern on the customer’s behalf.
• As the decision nears, price issues are often raised as a respectable way to let a vendor know that a deeper discomfort exists.
• Consequences can be difficult to recognize because
  • (1) they are often under the surface,
  • (2) when they do surface, they are often in the disguised form of a price concern
•  “I don’t sell computers,“ he told us. “I sell safety.” If the customer wants to understand technicalities, I call in a support specialist. I raise risks about service, risks about reliability, and risks about software support. Then I show the customer that risks are much lower with IBM. IBM is safe.”
• Accept price issues at face value unless they seem to be unrealistic.
• Signals that a Consequence issue exists
  • Unjustified postponements.
  • Unwillingness to meet.
  • Withholding of information.
• It’s better to get the issues out on the table where they can be handled and resolved, rather than to have them lurking under the surface.
• Three Deadly Sins of Handling Consequences
  • 1. Minimizing
  • 2. Prescribing
  • 3. Pressuring

• Sales Negotiation: How to Offer Concessions and Agree to Terms
• The most common mistake people make when they’re not clear about the difference between selling and negotiating is to begin negotiating too soon. The earlier you give concessions, the less impact they will have. By giving things away early, you may create an expectation that even larger concessions will follow later. Instead, use terms like “very competitive“ to gain interest without giving anything away.

8 How to Ensure Continued Success: Implementation and Account Maintenance Strategies

• Involve the customer in the installation planning process. The more that installation is based on the customer’s own plan, the more forgiving the customer will be if something unexpectedly goes wrong.
• An average plan which gets real commitment from the people implementing it will always beat a great plan which forgot to involve people.”
• inadequate attention to existing accounts is often a key reason for competitor success. If you don’t reassess your understanding of your customers’ needs, the competitors will. Competitors get into your accounts by uncovering and developing needs which you’ve neglected.
• The people who protect their business most successfully are those who are always actively looking for new opportunities in the account. Ironically, if your objective is to maintain or protect, then you’ll be more likely to fail than if your objective is to sell.
• Ensure that your customer’s files contain concrete evidence of successes, not just problems.
• Generate leads either very early in the installation process, during the “New Toy” stage, or else wait until your implementation is complete and producing maximum results before asking for introductions and references.
• A few years ago, the popular idea was introduced that there are two types of successful sales personalities, “Farmers “and “Hunters.” The idea is appealingly simple, but, like many simple concepts, it turned out to be naive and dangerous.
• Start the introduction of new products in your smaller accounts and don’t approach your key existing customers until you’re confident that you can make a strong needs-based sales call.

9 Anatomy of a Sales Strategy