1: The Science of Selling
There are many books that suggest a scientific approach to selling - but in the authors' examination, they found that "science" was just a marketing term that was used to give some borrowed credibility to folksy anecdotes. Sometimes, a smattering of science is merely laid on top of self-aggrandizing success stories, and many times the word "science" is not mentioned anywhere but in the title. This book means to be true to the claim.
The term science implies developing a theory and testing it against observable and measurable evidence by generally accepted methods that employ logic and reason to derive a conclusion. Real science is done to discover the truth, not to bolster a foregone conclusion.
At the same time, it is possible to go to the opposite extreme, to dwell entirely in a realm of theory and fail to touch base with reality, with practical application of scientific discovery to drive measurable success in action. The author is equally resolute to avoiding that pointless extreme.
As such, the present book is a "manifesto" for the scientific approach of selling, combining research that suggests practices with case studies that demonstrate their application. It is hoped that this approach will improve the profession of selling - from the individual salesman, to the management and coach, to those who define sales practices.
The Changing Nature of Selling
The sales profession, like many others, is undergoing a significant change in recent decades, mirroring changes to the market. There are virtually no companies that are the sole providers of a given product, who can sit back and take orders from desperate customers who are forced to deal with them. There aren't even that many who have only one or two major rivals. For the most part, companies have dozens or hundreds of competitors, all vying for the business of a customer base that is better informed about their options, and who recognize their position of power in negotiating with suppliers.
The authors specifically look to technology: the Internet came out of the "era of experimentation" to become an integral part of our professional and personal lives. Its use by customers, residential and commercial, gives them access to loads of information about their options, not to mention that it functions as a channel through which orders and re-orders can be conveniently placed.
It has already had a significant disruptive impact on society, so much that it's impossible to enumerate all the changes that have taken place in the last decade alone. But consider the following trends that speak to some of the highlights:
- Buyers have more information from a wide array of sources. Within seconds, a person considering a purchase can get a wealth of data from suppliers, industries, critics, and even other customers. They have the potential, if they will use it, to be better informed and make better decisions and cannot be easily or effectively deceived.
- Selling is more demanding. Technology has not only put accurate information at their fingertips, but has accustomed buyers to feel a sense of empowerment. The salesman serves in more of a consultant that provides information at their request, to be used as input to their decision. He is no longer in control of the customer, and cannot shepherd them to the sale. People simply won't stand for it anymore.
- Buyers are more risk-averse. The economic downturn has made customers more cautious about spending money, but the technology has given the ability to be more deliberate in their buying process and to consult a range of informational resources. Moreover, they automatically consider the seller, and the salesman himself, to be among the least trustworthy.
- Selling is becoming more professional. Sales used to be the profession into which college drop-outs (and never-wents) fell into, but is increasingly becoming a subject of academic study. While most firms still do not require a degree of entry-level salesmen, they are gravitating in that direction, and the uneducated salesman is in competition with those who have had greater career preparation.
- Inside sales teams are growing. Specifically, the use of independent salesmen who call on customers at their offices is giving way to in-house sales teams who do less travel and more correspondence from the office. Specific evidence: an MIT study found that recruiting for outside sales reps has leveled off at 0.5% annual growth while hiring of inside sales reps is growing at 7.5% annually.
- Sales and marketing are merging, largely because marketing is being informed through better data and analysis. The age-old complaints that marketing didn't understand the needs of customers and flooded sales with "bad leads" are dwindling as marketers are making more accurate assessments.
- Sales is going global. Largely because of the reach of communication technology, salesmen are no longer being assigned to a specific and limited geographic territory, but must handle customers from anywhere in the word, which entails being knowledgeable about a broader range of cultures and values.
- Increased use of social media. Sales has been deemed a "people business" and the Internet provides a wealth of information about people, in addition to being a channel for communicating. A sales rep can learn a lot about the buyer before they meet, and a sales manager can learn a lot about candidates before the interview.
- Sales departments are using more technology tools. On the back end, sales databases have changed dramatically to become more comprehensive customer relationship management (CRM) tools. On the front end, salesmen were among the earliest adopters of notebooks, smartphones, and tablet computers.
These nine changes alone have had a dramatic impact on the world of selling, and they are a small sampling of the many ways in which the change in external factors (chiefly technology and culture) has completely shaken the profession.
With this in mind, it should be clear that the profession has reached a point of crisis, an era in which there will be much upheaval and change. Those salesman and companies that cling to practices that have worked well in the past are already feeling the negative results, an the hope that things will go back to the way they used to be is inconceivable.
The Crisis in Sales Management
An industry study of more than 2,800 firms in 2008 found that the percentage of salesmen who make their quota was at 51.8%, down from 58.8% just the year before. This raises the question: is it because quotas are too aggressive, the market has become tougher, or salesmen have been less effective at selling? The answer is likely some combination of the three.
A separate survey of sales managers found that they had doubts in their own ability to successful field sales teams: they estimate that only 40% to 60% of their sales force are able to execute even the most basic sales strategies. (EN: This is according to a researcher at her own firm, which sells sales training, so take it with a grain of salt.)
In terms of objective performance, the Pareto principle holds true, and is even a bit pronounced: almost 87% of sales revenue is generated by the top 13% of salesmen. (EN: From another sales training consultant, this time not at the author's own firm.)
It's clear that the gap between "the best and the rest" is widening, which is suggests that the difference between an effective salesman and an incompetent one has to do with factors other than the training and development they receive from their employers. Especially since a good salesman is significantly more effective (500%) than a poor one, this is cause for serious concern.
Part of the problem is slapdash hiring: firms continue to take any candidate with a pulse and push them into the field with little training, and leave them to discover on their own how to be successful. The result is a high level of churn, 30% to 90% in many organizations, which means that most of the company's sales force are inexperienced. Aside of the considerable expense of constantly hiring and training, having a staff of inexperienced salesmen contributes to the poor performance overall.
It's also noted that the same is true at the other end of the scale. As reported by an industry journal, the average tenure for the top sales officer in firms (CSO or VP) is less than two years. So even the leaders do not have time to learn the ropes and have a long-term impact on their organizations before moving on.
There's some mention of the general economy - a downturn depresses sales in general, and training budgets are among the first areas to be clipped; and an upturn creates retention problems as lucrative opportunities arise for top performers. But this tends to be a distraction: training and retaining quality salesmen is a critical issue for firms under any economic conditions.
However, this does lead to an important point about turnover: companies do not seek to hire away your dogs, but to take away your gems. As such your loyal long-term employees tend to be mediocre performers - good but not great - and the best and brightest are lured away.
Another bit on turnover is that it tends to affect younger workers more than old, between lifestyles and generational differences, employees under age 45, and especially those under age 30, are far more likely to be lured away than the older members of your workforce. You can see it as losing less experienced workers, but consider that the people who are leaving had the potential to become the future leaders of your organization and, given the previous point, those who are not leaving are likely to be less than ideal.
As to the expense, the general estimate is that an employee who leaves costs his employer about 150% of annual compensation to recruit and train up a replacement. For sales, it is even more detrimental because a salesman's departure also means the loss of some of the key customers he served.
Back to economics, the author mentions that the "coping mechanisms" many firms use to muddle through a downturn are often factors that cause employees to leave when the economy improves: they cut training, pay expenses and commissions slower, tighten budgets, and take other actions that cause the employees to feel resentment and seek, or at least be more inclined to take, a position with another firm.
The author remarks on the "outmoded thinking" in the hiring process: there are many firms that assess candidates by their ability to make an impromptu sales pitch. While presentation skills are valuable in sales, the ability to perform like a carnival barker is far less important than the ability to relate to a customer in a meaningful way. (EN: In fact, people who are good at one are often terrible at the other.)
Technology is also mentioned as a serious problem: many firms are still using decades-old systems based on sales tactics that are even older. Even companies who adopt recent technology often find that it fails because the new tools are a mismatch for old attitudes and practices that the firm means to perpetuate. Where a firm sees a new system as being "good" it is because it supports bad behavior.
Training is another foible: it's estimated that US firms spend between $4 and $7 billion each year on sales training that is "simply repackaged motivation programs" that do not teach any practical skills. Moreover, training that does propose to teach skills often focuses on non-critical tasks: there is a lot of training on "how to close a deal" but very little on "how to form a stable and loyal customer base."
Procedural issues are also a problem: it tends to be focused on putting the customer through a process that is convenient to the company. The official policies and procedures in a firm are not derived from the best practices of top performers - in fact, it's found that the top performers are often the worst offenders when it comes to following an official process. Obviously, the official process does not work, yet it remains there to guide anyone who complies in the wrong direction.
From all of this, the author concludes that sales is in a constant state of crisis. It has been so for many years, and there are not many credible signs that it will change.
The Advent of Scientific Selling
The author suggests that the solution to the crises in sales management is to introduce "real science" into sales organizations, to encourage the practice of selling (including everything that influences it) toward rational behaviors that replace the vague and mystical principles that have traditionally driven the profession.
Sales organizations have been attempting to apply metrics for many years, but they focus exclusively on the end results: leads generated, sales made, revenue earned, and so forth. This is the ultimate goal toward which sales is directed, but knowing how we did is not the same as knowing how we did it. The result is that the sole method of motivating salesmen is pressure - do better or you're fired - without any useful guidance as to how their performance can be improved.
A scientific approach demands more granularity to determine what is needed to achieve the desired results, and take meaningful action to correct and improve specific behaviors that contribute to achievement.
This book focuses on two specific areas: behavioral psychology (drive and motivation) and skills assessment (knowledge and judgment). There is overlap and interplay between them. The two areas area also applicable to the salesman who wishes to encourage clients to purchase as well as to the sales manager who wishes to encourage his salesmen to sell.
In terms of sales training, behavioral assessment looks at actions (how people act) and skills assessment looks to their knowledge (what people know). The aforementioned interplay is that what a person knows has a strong influence on the way in which they choose to act. Training tends to focus on one area or the other - and it's obvious that the two should be applied in parallel.
The authors look ahead to some of the case studies that will be presented in future chapters, and notes that they are dramatic - but assures the reader that they are in fact real, and are achievable by other firms. (EN: Generally speaking, the worse your current practices are, the more dramatic the change to your outcomes will be when you improve upon them.)
The authors state with confidence that "sales organizations that embrace the concept of selling more scientifically will inevitably become more competitive." The methods they present will attack the problem at both ends: scientific sales has the potential to improve the results, and at the same time to eliminate irrelevant or counterproductive activities.
Ultimately, the goal of scientific selling are to increase the organizations effectiveness and create a sales culture that attracts, improves, and retails high-performing salesmen within the organization.