Rethinking the Salesforce (Book Summary)

Rethinking the Salesforce by Neil Rackham & John De Vincentis

Chapter 1: The New Selling – From Communicating Value to Creating Value

• Value creation must directly benefit the customer.
• The sales process itself plays an increasing role in creating customer value
• There are two distinct ways for a sales function to create value. Either you can create additional benefits, or you can reduce the cost of the benefits you already provide.
• Extrinsic value customers frequently reject possible suppliers – even those suppliers who have good offerings that are attractively priced – if the suppliers push their products or solution too quickly with out first becoming educated in the customer’s business.
• Three types of selling:
  • Transactional selling: Skills, strategies, and sales processes that most effectively matches the needs of intrinsic value buyers who treat suppliers as a commodity and are mainly or exclusively interested in price or convenience.
  • Consultative Selling: Rests on salespeople who have an intimate grasp of the customer’s business issues. Create value in three ways (a) to help customers understand their problems, issues, and opportunities in a new or different way, (b) To help customers arrive at new or better solutions to their problems then they would have discovered on their own (c) TO act as the customer’s advocate inside the supplier organization, ensuring the timely allocation of resources
  • Enterprise selling: To leverage any an all corporate assets of the supplier in order to contribute to the customer’s strategic success
• No amount of selling skill, no amount of clever strategies, and no well-crafted value propositions can bridge the gap unless there is a basic alignment of the supplier with the value creation requirements of the customer.

Chapter 2: The New Purchasing World – How Value is Reshaping Purchasing Decisions

• The purchasing function in a larger business is focused on: (a) the lifetime cost of ownership (b) supplier reduction, (c) supplier segmentation
• The more sophisticated and informed buyers become, the less likely they are to be impressed with unsupported assertions, slick presentations, or unsupported claims of superior quality.

Chapter 3: Responding to the New Buying Reality – The Three Emerging Selling Modes

• Just communicating the value inherent in their products and services isn’t enough. All sales forces that hope to prosper, or even survive, in the new world must create real value for customers to justify their existence.
• Different customers demand different approaches to value creation. The key to success will be figuring out which selling approach will bet fit the customer and then creating the most value.
• Successful consultative salespeople focus most of their attention on the early stages of the acquisition cycle, in particular, the recognition of needs stage.
• The more innovative enterprise sellers look for ways to leverage the assets of unrelated third parties.
• Customers are more likely to trust sellers when (a) they interact frequently (b) they show consistency

Chapter 4: The New Transactional Selling – From Fat and Happy to Lean and Mean

• Sellers have a number of ways to add value in the selling process.  They can:
  • Provide information about their products or service that customers don’t know about
  • Provide insight into new applications for their products that create real benefits for customers
  • Help customize products or services to better fit customers’ needs
  • Reduce risk for customers
  • Facilitate the transaction itself
• Four different strategies you can take in a transactional selling situation
  • Create new value
  • Adapt by stripping costs
  • “Make the Market”
  • Exit

Chapter 5: The New Consultative Selling – From Rock Stars to Institutional Value

• Consultative selling allows a sales force to add unique customer value in three distinct areas:
  • Help customers understand their problems, issues, and opportunities in a new or different way
  • Show customers new or better solutions to their problems
  • Act as advocates for their customers within the supplier organization
• To create value, you must first invest in understanding the customer, and that takes time.
• A reason it’s difficult to develop a true consultative orientation is that most sales performance metrics are derived from transactional concepts of selling.
• Dependence on rock-star talent is a serious business risk
• One serious problem with the hunter-farmer model is that it rests on a transactional rather than a consultative concept of selling.
• Existing accounts require just as much active selling a new’ both hunters and farmers require equal skills in questioning and problem solving.
• There are three principal ways to create value on an institutional level that result in a tangible customer impact:
  • Coaching and Training to develop the effectiveness of salespeople in value creation skills
  • Support, Tools, and Information to allow salespeople to identify and provide customer value
  • Sales Process to provide salespeople with a customer-centered roadmap of the steps and tasks required of them
• Training alone, without substantial reinforcement through coaching, has a disappointingly small impact.
• The best consultative sales forces we’ve worked with have a span of control of between 6 and 9 salespeople reporting to a sales manager
• Studies in Xerox that observed over 500 of their salespeople during actual sales calls found that there was no difference in the relative frequency of open and closed questions between top performers and average performers.
• It’s a risky strategy in a consultative sale to go to a senior-level decision maker before thoroughly understanding the issues and problems where you can create value.
• Activity tracking may have a role in transactional selling but in consultative selling, it can be downright counterproductive.

Chapter 6: The New Enterprise Selling – From Large Sales to Deep Relationships

• The defining differences between high-level consulting sales and enterprise relationships lie not in the size of the sale but in the nature of the offering and the roles of the players.
• The goal of the enterprise sale is to redesign the boundary between supplier and customer to make it significantly more productive for the benefit of both parties.
• “Understanding how your customers work across their whole business chain is the most important success factor” – Jim Morgan, Chairman of Applied Materials.
• Unless you have access to the customer’s strategic agenda – and unless you are prepared to share yours – it’s unlikely that you can make an enterprise relationship happen.
•  The skills of managing an enterprise relationship are the skills of managing a business, rather than the skills of selling.
• Successful management of the enterprise relationship rests on the ability to develop metrics that both parties can use to assess how effectively value is being created and whether each party is capturing their fair share.
• The unsuccessful enterprise manager is highly competitive and tends to work through negotiation rather than collaboration.

Chapter 7: Sales Process – Light in the Long Dark Tunnel

• The problems, and therefore the productivity opportunities, lie between functions, not within them
• Given the definition of a transactional sale – that the salesperson can communicate value but cannot create it – it’s logical that most transactional processes should try to design out the salesperson role and replace it with alternative customer-driven forms of communication.
• Effective selling demands flexibility. So, steps and milestones in an individual sales process that become rigid quickly evolve into counterproductive rules that reduce sales effectiveness.
• In designing individual process milestones, use results-based rather than activity-based measures
• Salespeople have a genius for doing what’s compensated for rather than what’s effective.
• Good sales process models begin with a thorough understanding of the customer’s acquisition process

Chapter 8: Rethinking Channels to Create and Capture Value

• One of the major mistakes most suppliers make is to treat intermediary channels as self-managing and to assume that the channel doesn’t need the management time and attention that it would get if it were a direct, owned sales force.
• Every supplier using channels needs to play an active role in improving the value that each channel is creating for customers.
• New channels that tap new markets or new users can be extremely attractive because they can be strong growth drivers

Chapter 9: Changing the Sales Force

• Realistic organizations work with what they have and effect change over time
• No compensation system can make people sell smarter. At best, it can encourage greater effort and cause people to sell “harder.”
• Improving sales force performance will take longer than you could decently imagine. We’ve rarely seen a significant improvement in the effectiveness of a consultative sales force that has come from less than two years of concerted effort.
• Improved performance doesn’t happen as a result of any single action or change. You align training, your reward systems, your coaching, your recruitment, your sales tools, and every aspect of your sales process.
• Sales supervisors are even more critical for creating durable performance change. In fact, if we were forced to choose whether to invest our change efforts in working just with salespeople or just with their supervisors, then the supervisors would win every time.
• An organization structure that reflects the value creation vision will be a key ingredient in successfully changing the sales force.
• The direct sales force in a consultative sale will often be organized around products and/or industries, rather than the cheaper geographic axis of the transactional sale.
• Where products are complex and customization routinely expected, the sales force might be separated into individual product sales organizations.
• The trap to avoid is to just assume that customers are consultative.
• Enterprise sales will always be organized around the account axis; moreover, leadership for this type of sales has to come from senior management rather than a typical salesperson, account executive, or even account team.
• Skill coaching is unlikely to bring about change if it is less frequent than once every two to three weeks
• The Xerox study showed that high-performing coaches didn’t try to coach their whole team at once. Instead, they chose two or three people and coached them intensively for several months before moving on to new team members.
• Coaches who were most successful at increasing their people’s sales applied their coaching effort early in the selling cycle
• Compensation is usually the first change lever that managers reach for – usually with disappointing results. The one reliable outcome from changing the compensation system is a wave of unhappiness and protest from the sales force.
• Measures that have a powerful impact on performance tend to be simple and few in number.
• Design your metrics first, and design them independently of the reward system.
• Metrics are at their most useful when they bring attention to important longer-term performance issues that are victims of the urgent.
• In a consultative sale, you should try to measure the value created for customers directly, and, when that isn’t possible, you should use proxies that can at least give you a ballpark estimate of where you stand.