Ch 1: The Evolving Journey of Solution Selling
worst. But what were they doing differently? How were these reps still selling well when virtually no one else was selling at all? In studying this question in significant depth we discovered something surprising. What set these best reps apart wasn’t so much their ability to succeed in a down economy, but their ability to succeed in a complex sales model—one that places a huge burden on both reps and customers to think and behave differently. That model is often referred to as “solution selling” or a “solutions approach”—or simply “solutions”—and has come to dominate sales and marketing strategy across the last ten to twenty years. The story we found in our research, however, told us something very important about the world of solution selling. It’s evolving dramatically. As suppliers seek to sell ever bigger, more complex, disruptive, and expensive “solutions,” B2B customers are naturally buying with greater care and reluctance than ever before, dramatically rewriting the purchasing playbook in the process. As a result, traditional, time-tested sales techniques no longer work the way they used to. Core-performing reps struggle mightily in all but the most straightforward of sales, leaving an alarming number of half-completed deals in their wake as they attempt to adapt to changing customer demands and evolving buying behaviors. From this perspective, the down economy that so troubled senior sales executives when we first launched this work proved to be a red herring. The downturn exacerbated the widening gap between core- and star-performing reps, but it didn’t cause it. In fact, the story laid out here isn’t about the economy at all. It’s about the evolving world of solution selling and the skills necessary to
drive commercial success across the foreseeable future irrespective of economic conditions. As the world of solution selling continues to change, Sales Executive Council research clearly indicates that a specific set of sales rep skills has emerged as significantly more likely to drive commercial results than those emphasized in either traditional product selling or early solution selling. To understand why those skills matter so much, it’s helpful to first examine the evolution of the sales model itself.
THE PATH TO SOLUTION SELLING Solution selling comes in many flavors, but generally describes the migration from a focus on transactional sales of individual products (usually based on price or volume) to a focus on broad-based consultative sales of “bundles” of products and services. The key to its success is the creation of bundled offerings that not only meet broader customer needs in a unique and valuable way, but also that competitors can’t easily replicate. The best solutions, therefore, are not just unique, but sustainably so, allowing a supplier to address customer challenges in either new or more economical ways relative to the competition. Why does that matter? Solution selling is largely driven by suppliers’ attempts to escape dramatically increasing commoditization pressure as individual products and services become less differentiated over time. Because it is harder for a competitor to offer the full spectrum of capabilities comprising a well- designed solution bundle, it’s much easier to protect premium pricing in a solution sale than in a traditional product sale. Not surprisingly, the approach has become widely popular across business-to- business sales for that reason. In fact, to get a sense of how widespread solution selling has become, in a recent SEC survey we asked sales leaders to characterize their primary sales strategy across a multistep continuum from traditional product sales on one end to full-on customized solution selling on the other. The result? Fully three-quarters of respondents reported aspirations to be some kind of solutions provider to a majority of their customers. Essentially, some flavor of solution selling has become a dominant sales strategy across almost every industry.
Source: Sales Executive Council research. Figure 1.1. The Shift from Product to Solution Selling Now, we don’t dispute the value of this long-term migration to solution selling—particularly as a way to escape relentless commoditization pressure— but the strategy nonetheless brings with it a number of real challenges. Chief among them are two challenges that explain how—and why—the solutions model has necessarily evolved over time. The first is the burden that solutions places on the customer. The second is the burden it places on the rep.
THE CUSTOMER BURDEN OF SOLUTIONS By definition, a shift to solution selling results in customers’ expecting you to actually “solve” a real problem and not just supply a reliable product. And that’s hard to do. It requires that you not only understand the customer’s underlying problems or challenges as well if not better than they do themselves, but also that you can identify new and better means of addressing those challenges, articulate clear benefits from using limited resources to solve that problem versus competing ones, and determine the right metrics to measure success. And the only way to do all of that is to ask the customer lots of questions. So reps spend a great deal of time asking things like, “What’s keeping you up at night?” in an attempt to truly understand a customer’s competing challenges. The problem with all of this “discovery” is that it can often take on the feel of a protracted ping-pong match between the supplier and customer. The customer explains their needs, the rep summarizes her understanding, the customer confirms whether or not the rep got it right, she creates a proposal, the customer reviews and amends it, and on and on. This complicated and often rather protracted process requires a huge amount of customer involvement at each stage, placing two kinds of burden on the customer: The first is time, and the second is timing. Not only does this dance entail significant customer commitment across a wide range of different stakeholders, conference calls, and presentations, but from the customer’s point of view, most of this effort comes early, before they see any value. Really, it’s an act of faith on their part that they’re going to get anything in return for all of their trouble. This has led to something we call “solutions fatigue.” As solutions complexity has increased, this burden on customers has gone up as well, leading customers to engage with suppliers very differently when it comes to complex deals. In fact, four trends really stand out in describing how customer buying behavior is evolving rapidly.
The Rise of the Consensus-Based Sale First, we have seen a significant increase in the need for consensus in order to get deals done. Because the payoff of buying a complex solution is so uncertain, even C-level executives with significant decision-making authority are unwilling to go out on a limb to make a large purchase decision without the support of their teams. Our research at the Sales Executive Council indicates that widespread support for a supplier across their team is the number-one thing senior decision makers look for in making a purchase decision (a finding we’ll discuss in more depth later in this book). And of course, that need for consensus has huge implications for sales productivity. Not only does the rep now have to spend the time tracking down all these individuals and selling them on the solution, but the risk that at least one of them is going to say no goes up with each new stakeholder that rep has to engage.
Increased Risk Aversion Second, as deals have become more complex and more expensive, most customers have become much more concerned about whether they’ll ever see a return on their investment. As a result, many are moving aggressively to require suppliers to share more deeply in the perceived higher risk of these solutions themselves. It’s nothing new for customers to demand just-in-time delivery or on-demand production, but more and more we’re seeing revisions to the very metrics customers use to judge the success of a solution implementation. As a result, in the world of complex solutions, supplier success is often measured by the performance of the customer’s business, not the supplier’s products. Suppliers looking to grow a solutions business, then, are going to have to run right at risk, building it directly into their value proposition, as an increasingly large number of customers are no longer willing to accept at face value that “solutions” will ultimately deliver the kind of value that suppliers promise up front.
Greater Demand for Customization Third, as deal complexity goes up, so does customers’ natural tendency to want to modify the deal to more closely meet their specific needs. Whereas suppliers typically see customization purely from a cost perspective, customers see customization as part of the promise of a “solutions” sale: “If you’re going to ‘solve’ my problem, then this is what I need it to do. Why should that cost more money? After all, if it doesn’t do that, then it’s not really a ‘solution,’ is it?” It’s hard to argue with that kind of logic. Customization: Everyone wants it; no one wants to pay for it.
The Rise of Third-Party Consultants Finally, over the last several years, we’ve seen a dramatic and troubling rise in the number of third-party consultants employed by customers to help them “extract maximum value from the purchase decision.” A well-established practice in some sectors—corporate health insurance in the United States, for example—this trend really took off globally in late 2009, forged by the need of most companies to cut costs on the one hand, and the even more urgent need of recently laid-off industry experts to find a job on the other. Typically, these newly minted consultants sold their services largely on the basis of their ability to save companies money. In that case, “extracting maximum value from the purchase decision” really was nothing more than code for doing everything possible to stick it to suppliers on price, up to and including going back and auditing prior deals to uncover grounds for renegotiation. Over time, however, larger organizational players have become deeply involved in the purchase as well. In their case, “extracting maximum value from the purchase decision” typically translates into something closer to helping customers navigate solutions complexity. The fact of the matter is that as suppliers seek to sell increasingly broad solutions to ever more complex customer problems, as often as not the complexity of those problems is so high that customers are themselves unqualified to navigate—let alone evaluate— potential courses of action on their own. They need help. Rather than turning to the suppliers for that help, however, they look to “neutral” third-party experts. As a result, suppliers today are frequently confronted with new and aggressive third-party intermediaries looking to take their share of “value” from the deal. And you can be sure that that pound of flesh is going to come from the supplier side, not the customer side, given whom these consultants are working for. In this world, you can easily wind up with all the customer’s business, but none of their money. All four of these trends in customer buying behavior have led to a hard truth for sales organizations all over the world—and especially for the reps who sell for them: While the economy has gotten better, selling hasn’t gotten any easier. It’s the physics of sales: Suppliers called the solutions play, and customers have made their countermove. Customers are looking for ways to reduce both the
complexity and the risk that suppliers’ solution selling efforts have foisted upon them.
A WIDENING TALENT GAP How does this solutions story play out for individual rep performance? The impact has been nothing short of dramatic. In a recent study, our team at the Sales Executive Council conducted an analysis looking at the impact of a company’s sales model—in other words, transactional selling versus solution selling—on the performance distribution of their sales reps. What we found was eye-opening and more than a little troubling. In a transactional selling environment, the performance gap between average and star performers is 59 percent. So the star performer sells about half as much as the core performer. However, in companies with solution selling models the distribution is very different. There, star performers outperform core performers by almost 200 percent. The gap is four times greater. Put another way, as sales become more complex, the gap between core and star performers widens dramatically. Source: Sales Executive Council research. Figure 1.2. Core Versus High Performers in Transactional (Left) and Solution Selling (Right) Environments This leads us to three conclusions. First, as a solutions provider, you’ve got to
find a way to put a big corporate bear hug around your stars. They’re carrying the day for you. One head of sales in business services told us recently that of their hundred sales reps, two were responsible for bringing in 80 percent of the company’s revenue. While the situation in your organization may not be as extreme, the shift to solution selling has undoubtedly seen a dramatic rise in key- person dependency problems across many sales forces. It’s not just that stars are carrying the day for you; they’re often carrying the entire company. Second, as your sales model becomes more complex, the value of narrowing the gap between your core and star performers goes up radically. In the transactional world, the value of getting someone just halfway from good to great is a 30 percent improvement. That’s not bad. But the value of the same move in a solutions environment is an almost 100 percent improvement. Put simply, closing that gap is worth a lot more than it used to be. Finally, the penalty for not closing the gap is terrifying. As your model evolves, left untended, the core will fall farther and farther behind, until they ultimately can’t execute the new model at all.
A NEW WAY FORWARD In this world of dramatically changing customer buying behavior and rapidly diverging sales talent, your sales approach must evolve or you will be left behind. So the question now is: What do you do about it? If you’re going to win going forward, you’ve got to equip reps to generate new demand in a world of reluctant, risk-averse customers—customers who are struggling to buy complex solutions just as much as you are struggling to sell them. That’s going to take a very special kind of sales professional indeed. As the world of sales has evolved dramatically across the last ten to twenty years, our research indicates that the best reps have evolved a set of unique and powerful skills to keep up. And that’s where our story goes next.
2 THE CHALLENGER (PART 1): A NEW MODEL FOR HIGH PERFORMANCE THE NEED TO understand what your star-performing reps are doing to set themselves apart from their core-performing colleagues has never been more urgent. The world of sales is changing. The pre-recession recipe for sales success won’t get the job done in a post-recession economy. That said, the economy itself serves only as a backdrop to this story. The real story revolves around the