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March 19, 2009

Selling in Tough Times – From “Cronyism”… to Collaboration (The 5 C’s of Selling)

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In late February, I had the pleasure of delivering a seminar for a national sales conference in conjunction with a colleague who specializes in sales, marketing and business development.

We were co-presenting to an organization that was requiring its sales force to take a new approach to its selling efforts.   Today’s economic climate has presented this organization with some tough business challenges that require its sales representatives to think and act differently.

I specialize in change leadership and how to influence others; my colleague specializes in professional sales skills, so we titled our presentation: “How to Overcome Resistance and Move into a Collaborative Selling Mode.”   Our presentation was very well received.   Here is a synopsis of some the content.

5 Generations of Selling

The reality is…sales has come a long way.   If you look at the selling process over the past 60 years, it has really evolved through 5 generations.   We call these the “5 C‘s“.

1. Cronyism.  The first era of selling, prevalent in the industrial boom following world war two, was what we call, “cronyism”.    In this approach, the sales person was essentially your buddy; that is, someone whom you got to know well and liked.    The sales person would drop by every so often and take your order.   Times were good and there was very little differentiation of product or focus on deeper buyer needs.

2. Commodity Selling.  The second era took hold from the 1950’s until mid 1960’s where sales people basically sold on price.  Again, there was little product differentiation, which resulted in discounting and price wars.    Sales people typically dislike this approach as there is always pressure to cut the margins.
3. Content Selling.   This era of selling was the first to involve a strategic differentiation of one product from another.   Starting in the 1960’s through to the 1980’s, professional marketers, with the help of advertising agencies, were now able to create brand awareness and customer knowledge as to why one product was superior to another.  The goal was to educate buyers on the “features and benefits” of a specific product, and thereby generate excitement in purchasing these features and benefits.

Content selling enabled sales people to move away from a commodity approach based on lowest price to being able to charge a higher price (with greater margins) due to brand awareness and buyer sophistication.

Although this era marks the start of “professional selling”, the flaw with a features and benefits approach is that it did not take into account the unique and differing needs of customers.  In effect, this approach was product-centric versus customer-centric.  Although “content selling” raised the likelihood of increased sales with some customers, it did not maximize success with all customers.    Hence the evolution to the 4th era of selling…

4. Consultative Selling.   Over the past 20 years, consultative selling has been very much in vogue.   By the 1980’s, organizations realized the problem with content selling (“features and benefits”) was that you may be providing a benefit that the customer doesn’t value, and missing a benefit that the customer does want.

In consultative selling, the initial focus is on first understanding the deeper needs and buying motives of the customer and then ensuring your product fits with these needs and motives.   Given that customers value different things, this approach requires some product diversity but also presents greater upside on the sales front.

However, even consultative selling has a drawback, which is particularly apparent in these tough economic times.   That is, when the entire focus is on meeting the needs of the customer, that negates the very real needs of the supplying organization, especially when the business climate is hurting.     In other words, notwithstanding the critical importance of the customer, if those needs are the only ones that matter, then some excellent selling organizations may be pushed out of business – and that indirectly hurts the customer that has benefited from this solid customer-supplier relationship.

This brings us to what we see as the dawn of a 5th era in selling – Collaborative Selling.

5. Collaborative Selling. In a collaborative selling approach, there is a partnering mentality between customer and supplier.   Both organizations realize that their longer term success is predicated on both of them staying in business – and this means that supplier needs matter too.

We are currently in a well documented economic climate of restraint and cutbacks.  Sales volumes are down in almost all industries.  This means that many suppliers will find their revenues decreased and be required to make some tough business decisions to survive.

This is where the buying organization’s role takes precedent.  The buyer may be able to partner on matters that would typically be the sole responsibility of the seller.    We are not suggesting that the buyer take a reduction in quality or service; that wouldn’t make sense.  But there may be some opportunities where the buyer can be flexible in order to help the seller survive.   This could include some flexibility on payment terms, inventory levels, and other items that help the overall bottom line of the seller, without significantly impacting the business of the buyer.

In effect, in collaborative selling, both buyer and seller become customers to each other.   This approach has three (3) primary goals for both organizations:  (i) minimize short-term risk (ii) maximize long term gain and (iii) create value by partnering with each other.  Creating value is recognizing the natural synergies that already exist and jointly seeking new ways to be innovative and proactive in adding to each partner’s business success.

How and When to Move into Collaborative Selling Mode

We realize that not all customers want to be partners.   In fact, for many customers, the current focus on consultative selling (with a focus solely on their needs) works just fine.  For these customers, the sales person should continue to do what’s been working well – no need to change a winning game!

There are in fact 3 ingredients that cause both buyer and seller to want to move from a consultative to a collaborative mode, including:

  1. The two organizations (buyer, seller) already have a successful and trusting business relationship.
  2. Each organization needs the other organization to succeed in order for it to succeed.
  3. There is some element of risk threatening the welfare of one organization that potentially could cause harm to both.

When these three conditions are present, it is in the best interests of both organizations to partner with each other.    Given their already trusting relationship, it should be relatively easy for the sales person to articulate the needs for flexibility and joint problem solving on matters that were traditionally the sole concern of one organization, but not both.

It is also worth pointing out that the “tables can turn”, so partnering can have reciprocal benefits to both organizations.  That is, whereas one organization may be struggling today; the other may be struggling tomorrow.  Working in a collaborative way builds a spirit of reciprocity that can help both partners as business cycles ebb and flow.

Ramifications to Your Sales Success.

Our hope is this article presents the differing approaches to selling and gives you insights as to ways you can increase your sales success.

Start with self awareness – what type of sales person are you?   Are you still sticking to the old ways of “you scratch my back and I’ll scratch yours” (cronyism)?   Are you engaging in price cutting to secure business but significantly hurting your livelihood in the process?  Are you still pushing the features and benefits of your products even though these are not compatible with the deeper buying motives of your customers and prospects?

Hopefully, you are mostly engaged at a higher level of professional selling in being consultative with your clients.  But don’t stop there.  This article gives you suggestions on how to further raise the bar with some key clients and thereby significantly reduce the business risk inherent in today’s precarious economic climate.

Collaborative selling makes sense, especially when conveyed in a manner that helps both parties over the longer term.   By partnering with the seller, the buyer receives greater benefits since the business relationship is maintained and the opportunity to create value now exists.   This will add to the bottom line of both organizations.    Find ways to make the business case for your customers to partner with you, and then move into the new era of selling – that is, be collaborative.

I wish you the very best in your selling efforts.  If you have selling or consulting needs, you can contact Robert Harris at rhr@idirect.com or visit our website at www.rhresources.com.

This article was authored by Robert Harris, B.Comm, MBA, CHRP who is President of Robert Harris Resources Inc. and author of the new book, Change Leadership: Inform, Involve, Ignite! Robert regularly presents to sales groups on “How to Influence and Get Buy-in.” and “How to Build Trust in Relating to their Needs.”

2 Responses to “Selling in Tough Times – From “Cronyism”… to Collaboration (The 5 C’s of Selling)

    avatar club penguin says:

    Very good! Excellent article.

    avatar yashtractor says:

    tractor

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