The Changing Role of Sales: Viewing sales as a strategic, cross functional process.
This is an academic research study that presents 4 case studies of global companies in the midst of a sales transformation initiative aimed at responding to changing circumstances in their industries. All four are in the process of changing from simply selling products and services to focusing on improving the productivity of their customers. Each is responding to the same environmental forces we discussed in the first white paper; the growing challenge of differentiating products, the increasing sophistication of buyers due to readily available information via the internet, cross channel information searches that change buying patterns, and the ability of IT systems to handle basic transactions that were previously a sales function. These environmental forces are pushing the sales force simultaneously towards account management and solutions and consultative sales. As we said in White paper #1 hiring the right skills and attributes will drive results, but equally important is to organize and support the efforts of your sales team in the new knowledge economy.
Company A: The Construction Company
Problem: Reduce the number competitive low bid deals that were lengthy, expensive and risky, increase the number of cooperative contract customers
Solution: Vertically integrate and target investors seeking positive cash flow. Broaden the offering to include site selection, building design and building management.
Challenges: Sales force role changes dramatically, instead of preparing detailed bid responses they tailor solutions based on the purchaser or leaseholder needs. This requires different skills and processes in the sales organization and requires much more insight into customer needs, an understanding of finance, and the ability to reconstruct its value proposition from a property based to a cash flow one.
Transformation: This required a major change in skill set. The traditional sales force was disbanded and customer oriented project managers with the desired skill set were installed . Project managers have the skills to discuss project details early in the sales process. Because they handled both the sales and project delivery phase there were no information gaps that often occur when complex projects are handed over from sales to project delivery. And they were able to form deep, trusting relationships with the customers, many of whom came back to Company A for their next project.
Note: Though the article does not include a timeline, we can assume that this transition occurred over time, with the project manager concept aimed at a specific target market with differing needs from the old target market and that the project managers worked in a separate organization from the traditional sales force. It does address the common issue of how to add value in an increasing commoditizing market.
Company B: The Power Solutions Provider
Problem: Industry is quickly moving from separate buying processes for equipment and services toward a single power solution. Company B is currently structured around product business units. They must now address the need for these disparate business units to work together to provide a seamless solution for their customers or lose business to their competitors.
Solution: Created a separate solutions business and overlay that included a horizontal sales team, marketing, business intelligence, concept design and customer relationship management.
Challenge: Required new culture, skill sets and metrics for cross functional teams to operate productively.
Transformation: Sales resources within the product business units were to collaborate with the solutions unit. Solutions unit focuses on customer relationship, understanding of customer business and needs and solutions. Product sales teams focus on product expertise. New solutions require deep integration between solutions team and customer. It is a radically different value proposition than traditional company B products. The initial move to this networked sales structure resulted in highly complicated processes and has created considerable conflicts within the organization. Consider the complexities in measuring success for business units and the solutions group, who gets credit for what? As a result, Company B is considering a further organizational structure to a customer segment organization where sales and account management processes would be handled by sector specialist teams who would own the customer relationship. In this structure, the product people will support the relationship team.
Company C: The Building Technology Provider
Problem: A change in corporate strategy towards customer centricity necessitated a change in sales strategy. Company C moved from a product centric organization to one redefined by its customers which it expanded to include property developers, building owners and facility managers along with its traditional customers of architects and construction firms.
Solution: The sales function was radically reformed in four respects; creation of cross functional processes, development of a partnership program for strategic customers, redefinition of the role of its major project business unit, and the integration of customer and sales related issues into corporate strategy and management system.
Challenge: Traditionally sales resided in two separate divisions; new equipment sales and service sales. The move to a customer centric model required changes in this structure while demanding higher growth.
Transformation: Company C selected a number of strategic customers out of its base based on relationship, volume, profitability, growth potential and learning potential. These customers were responsible for 30% of all sales. The objective of the partnership is ensure a collaborative cross functional and cross business unit approach to exploits all opportunities for cross selling, up selling, and additional sales while ensuring the strategic customers the optimal performance of their machinery at a minimal cost of ownership. Two years into the transformation, sales to strategic customers have grown over 3 times as fast as overall revenue growth. The company’s share of spend has increased as has customer loyalty.
Company D: The Electronics and Software provider
Problem: Faced with growing international business and a highly complex offering consisting of hardware, software, and service components it needed to systematize its account management and sales processes across all business units worldwide.
Challenge: Business Units are geographically designed P & L’s
Solution: Create a horizontal business unit that encompasses all of the Strategic Account teams.
Transformation: Company D now uses a two fold management system to align the operations of the business units and account teams. Biannual target setting for both business units and account teams consists of three components; volume, profit and non monetary targets. The non monetary targets are intentionally used to create alignment. For example, a business unit may receive a non monetary target to win a certain sales case that may not be strategic to business unit but is very important to the strategic account team and the company. Further all bid or not bid decisions are made jointly between the business units and strategic account teams. There is a formal escalation process to senior management if agreement is not reached.
Summary: The sales process is becoming less about selling a product and much more about creating a long term, mutually beneficial relationship. White Paper #1 discussed the need for sales people to become knowledge brokers, not just about your company and its products, but perhaps even more importantly, about the industry in which the customer competes, their points of differentiation and how they can gain a competitive advantage through doing business with your company. Your sales force can also become a two way flow of knowledge, not just to the customer but back from the customer to your company to help you better hone your offerings and innovations. But, as this paper indicates, organizational design, linkages between teams, proper metrics and financial incentives and sales support are all integral to building success.
If you would like a copy of this research study, please contact Steve Young at syoung41@gsu.edu
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