The B2B Sales Environment – part 2

B2B sales environment samurai business group

This is part 2 of our B2B Sales Environment series – click here to catch up on part 1 

 

The Way Forward: Customer-Driven Focus

The evidence is clear that to succeed in the twenty-first century, companies will be required to develop sales organizations and processes that adapt to evolving customer expectations and requirements. Although the terms “customer-driven” and “customer-centric” have become basic elements of the corporate executives’ lexicon, the evidence overwhelmingly shows that these initiatives have been, to a great extent, lost on the actual customers. The buyer’s perception is that a very small minority of salespeople are highly responsive to his needs while the clear majority is essentially oblivious to them.

To understand why there is such an apparent, widespread lack of customer-driven behavior by salespeople, one must examine the gap between the corporate initiatives and their implementation. Customers do not interact with the organization, they interact with individual salespeople. To be effective, corporate strategies must be translated into tactical behaviors to be activated during the customer/salesperson interactions.

The concept of “customer-driven” requires a concentrated focus on customer needs and expectations. Without this focus, companies become internally focused and tend to impose their own needs on the customers, rather than responding to the customer’s needs.

Customers today expect professional salespeople to understand their businesses. A knowledgeable salesperson can engage in a meaningful business conversation and offer insightful business advice, rather than ask frustratingly basic questions and recite product features and benefits. 

There is only one reason for a customer to interact with a salesperson: He believes that the organization the salesperson represents can create some type of business value through the implementation of her products and services. Salespeople’s source of value is no longer in knowing the products, but in knowing how to solve the customer’s unique business problems. 

Customer Perceptions of Salespeople and Their Effect on Customer Loyalty

B2B sales environment samurai business group

Look at this chart to the right. The data comes from a study conducted at the London Graduate School of Economics. Customer ratings (perceptions) of the salespeople that call on them were correlated with the annual turnover rate (actions), which is defined as replacing the current vendor with a competitor. The fact that over 90 percent of the vendors whose salespeople are viewed as poor are replaced within a year is not surprising. What is surprising is that half of the vendors whose salespeople are viewed as good or very good are replaced. Apparently, just doing a good or very good job is no longer sufficient to ensure customer loyalty. 

On the other hand, for salespeople whom the customers perceive as excellent, being replaced by a competitor is almost out of the question. The customer perceives them as a valued resource, in some cases treated them as if they were part of his staff. In the few instances where they are replaced, it was almost always due to a merger, change in management, relocation, or some other external event that precipitated the change.

The message is clear: being good or very good at delivering your product or service is not enough. The customer expects you to be good or very good. After all, they didn’t select you because they thought you would do a bad job!  It is only through delivering exceptional value to the customer that you become more than a vendor; you become a partner. This is the essence of customer loyalty.

From this perspective, the salesperson’s ability to understand the customer’s business is the driver of the entire buying process. It accelerates the understanding, by both the salesperson and the customer, of the situation and its consequences; and it increases the likelihood that the solution proposed by the salesperson will successfully deliver the expected business value. True customer-driven salespeople understand that they will only create value for themselves by creating value for their customers. 

Roles of the Sales Person

To transcend the traditional sales role and be perceived by the customer as a trusted asset, you must act as if you were an employee of the customer and fill the following roles:

  1. 1. Business Agent – You must act as if you were the manager of an internal department and take personal responsibility for producing the results. This will require you to be the liaison between the customer and your company, and to manage your company’s resources.
  2. 2. Business Advisor – You must understand their business from a big picture perspective; their values, culture, markets, customers, goals and objectives, and industry. You should provide advice that can help them get where they’re going.
  3. 3. Advocate & Expeditor – You must make sure that your organization provides the necessary emphasis and resources to the project to ensure timely results.
  4. 4. Consultant – You must provide applications, not products.
  5. 5. Troubleshooter – You must resolve any problems that occur and pre-empt problems when possible.
  6. 6. Innovator – Today’s business customers are demanding innovation and continuous improvement in every product and service that they outsource, just as they do for all their internal production. What they are really buying is you and your company’s expertise and your ability to apply it in new ways to improve their results. 

 

Business Driver Categories

The primary reason that any business exists is to generate a profit through its operations. Profits permit the company to continue its existence. They are the cost of the future. For without sustained profits, the company has no future.

There are three basic business drivers, they are: 

Profits

The primary reason that any business exists is to generate a profit through its operations. Profits permit the company to continue its existence. They are the cost of the future. For without sustained profits, the company has no future.

Profits are the only direct driver in a business. All the other drivers are indirect, in that they ultimately have the effect of increasing profits. 

The two main methods of increasing profits are:

  1. 1. Increasing revenues
  2. 2. Reducing costs

 

Process

This indirect driver focusses on how the company goes about generating its profits. Improving the company’s various processes by making them more effective or more efficient will ultimately improve profitability. Efficiency generally addresses cost reduction. Effectivity generally addresses increasing revenue.

People

All businesses are comprised of people who operate on behalf of the company. Improving the knowledge, skills, attitudes, and capabilities of the employees will ultimately improve the implementation of the various company processes, and thereby have a positive impact on profitability.

Business Organization

All businesses are divided into the people that are directly involved in generating the profits and those that are indirectly involved via supporting the efforts of those directly involved. These groups are called line and staff. 

Line / Operations

The line is the subset of people and departments that are directly responsible to conduct the activities that generate the revenue. They directly fulfill the purpose of the business. 

For example:

b2b sales environment samurai business group
Staff / Support

All the other departments/people in a company are staff. Their purpose is to support the line’s efforts, for, without the line, they would be unnecessary. Using a manufacturer as an example:

  1. 1. Purchasing is not needed if there is no production
  2. 2. Human resources is not needed if there are no employees
  3. 3. Accounting is not needed if there are no operations
  4. 4. IT is not needed if there no technology

 

Line / Staff Dynamics

Line takes its direction from executive management and the Board of Directors. Staff takes its direction from the line functions. All initiatives the company takes have their genesis somewhere in the line. Staff then becomes involved in the implementation of the initiative.

For example, the purchasing department will implement the procurement of the materials required by the line. Purchasing departments just don’t go about buying things unless a line function has directed them to do so. 

Line / Staff Conflicts

When companies experience disagreements between various departments, the line department will always prevail over a staff department in a non-dysfunctional company. The reason that this is so is that the ultimate arbiter, the Supreme Court of the company, is the CEO. And the CEO is evaluated by the Board of Directors and the stockholders based on the profits generated. Therefore, when push comes to shove, the line will win out.

Business Buyer Viewpoints

There are four buyer groups that will be encountered during business-to-business sales. Each will have a unique viewpoint based on their function.

Executives

Executives see themselves as strategic thinkers and innovators. They are big picture in their orientation. They think in terms of the success and growth of the entire organization. Their principal concern is getting a superior return from any initiative.

Departmental / Functional Managers

Department managers see themselves as problem solvers. They are immersed in problems daily. They are the company’s “firefighters”.  Their principal concerns are:

  1. 1. How to improve their operations
  2. 2. When to improve their operations
  3. 3. Where to improve their operations

 

Technical Support

Technical support people see themselves as the implementers of the functional managers’ initiatives. Their principal concern is the ease with which they can be implemented and maintained. 

End Users

End users are the people who will interface/utilize the processes daily. Their principal concern will be the impacts the changes will have on their daily activities.

Business Buyer Roles

There are three roles that are involved in every business-to-business buying decision. It is imperative to focus on the roles being played rather than titles of the people involved. Roles are transient and can change with each situation. A role can be fulfilled by one individual or by a group of individuals, and one individual may play multiple roles.

Economic Buyer

The economic buyer role is to give final approval to buy. They have direct access to the money, the discretionary use of the funds, and the authority to release them. This role is usually filled by an executive, but could also be filled by a functional manager with budget authority.

They never lack places to put money to work in the business. What they do lack, however, are the funds themselves. The relevance of the proposal will depend on the rate of return expected and how dependably it can be obtained.

User

The user role is to make judgments about the impact on job performance. This role is usually filled by functional managers and / or end users. This role involves the strongest emotional component of the decision because of the direct impact it will have on the users themselves.

Technical

The technical role judges the measurable, quantifiable aspects of the proposal. They are “gatekeepers” in that they can’t say “yes” – but they can say “no”. Their principal concern is that the proposal “meets the specifications.” 

Committees & RFPs

In business-to-business sales, virtually every major initiative will involve a committee that is formed to make the decision. The buying process generally revolves around a specifications/requirements document called a “Request for Proposal” (RFP) which is sent to the vendors to solicit their responses. RFPs are also known as “Request for Quote” (RFQ) or “Request for Information” (RFI).

The “Rigged” RFP / Committee Process

The dirty little secret is that most of the time, the committee / RFP process is a rigged game in that the winner has been predetermined by the executive role and the process is manipulated to generate the preconceived result.

You are probably asking yourself; “Why would an executive form a committee if they have already made the decision?”  The answer is for political reasons. Having a committee involved with the decision provides:

  1. 1. Consensus and buy-in
  2. 2. Cover in case things don’t go well

 

The second question you may be asking is “Why issue an RFP if you already know who you are going to select?” The answer to this question is for political/legal reasons:

  1. 1. The law or company policy requires the company to get “3 bids”
  2. 2. The RFP provides cover if the decision process is questioned later

 

The Fair RFP / Committee Process

The only time that the RFP process will be fair is when the prospect has very little knowledge regarding the category of products/services under consideration. In this case, they are seeking to gain in-depth knowledge and insights into how the product will fit in their environment. Under these circumstances, there is no preconceived winner and the process will give everyone a fair shot at least at the beginning.

If they are truly seeking knowledge and insight, it is in their best interest to initially talk with every vendor that responds. As they begin to zero in on their selection, they will continue to talk to that vendor to make sure that they eventually win the business. 

The Key Indicator

If they have a pre-selected vendor, they won’t want to waste time speaking with all of the other vendors that respond to the RFP. Instead, they will hold a “bidder’s conference” where they can combine these meetings into one while maintaining the allusion of fairness.

The key indicator for a salesperson is if they are continuing to have substantive discussions with you. If not, you have already lost. Make no mistake about it, they’re talking to somebody. And that somebody will be the winner.

For information on the Samuari Business Group Sales Mastery Training and Sales Management Mastery Training programs, contact us today at (312) 863-8580.

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