Businesses rely upon increasing market share, sales revenue, and profit, and the responsibility for maintaining and facilitating this growth and profitability is met by salespeople. A sale is the art of providing a product or service to a customer for a real or perceived monetary value, such that each party recognizes the benefit of the transaction. It is the salesperson’s responsibility to maximize the perceived value both to secure the sale and to maximize the profit.
Organizations have evolved through successive stages of market development. Industry in the early 20th century was focused on mass production. At this time, any manufacturer that could provide good-quality goods at a reasonable price could be assured of a sale, predominantly because of the underlying shortage and high demand for the new products. However, businesses that were product oriented had to change to a sales-focused orientation once supply had been met and demand had decreased. A particular trigger point was during the economic Depression of the 1930s. It was during this time that “hard sell” techniques were developed, a practice that still occurs in some industries today.
After World War II, businesses were faced with increased national and international competition in addition to wealthier, more sophisticated, and more demanding consumers. Empowered more recently by digital technologies, the customer’s increasingly complex requirements have taken precedence in strategic planning. The sales role has had to evolve to meet these expectations and has done so by combining knowledge from the fields of psychology, communications, and sociology.
Sales Channels
Most organizations sell though parallel channels, some of which involve little or no direct interaction with the customer. Examples include internet and catalog sales where the sales emphasis is either the brand reputation or a low price. Under these circumstances, low price can often be offset by bulk purchase and low fixed costs. Sales situations that may involve some proactive selling include exhibition and retail sales. These generally rely on interested customers selecting the product for purchase with some or no help from the sales assistant. The traditional door-to-door salesperson still exists, but has now largely been replaced by telephone call centers. This traditional “hard sell” approach involves an additional sales challenge in that buyer interest has to be gained within the first few seconds of the telephone call being answered.
Most major organizations will combine some of these sales channels with other direct channels such as sales agents, “missionary” or “new business” salespeople, geographic(territory) or product-focused salespeople, and key account managers. This ensures that different market segments are targeted according to the frequency and value of orders and each is managed as cost effectively as possible. Other employees such as service engineers, technical support, and customer call center personnel may also be directly or indirectly involved in the sales process even though they may not be identified as part of a sales team. However, each role involves an element of customer interaction and is therefore likely to influence the overall impression of the organization.
Depending on the product or service for sale, sales teams may be focused toward either individual customers in a business-to-consumer (B2C) relationship, or to businesses in a business-to-business (B2B) relationship. The buyer expectations will be different for each scenario and the sales approach will need to reflect this.
B2B sales may be characterized as either transactional, such as the sale of office stationery materials, or consultative, where the salesperson provides added value over an extended timescale, for example, in the sale of manufacturing equipment. A transactional buyer will already be aware of the competitive products’ features, benefits, and prices and will be looking for maximal value with minimal administrative effort. A consultative purchase is more likely to require additional information and possibly advice from the salesperson or account manager, particularly if the product or service is complex or expensive. The buyer might also rely on other specialists within his/her organization, and collectively, they would be classed as the decision-making unit (DMU). It is important that the account manager is aware of the composition of the DMU and maintains regular contact with each member. The account manager’s role may also demand significant investment of time and resources in complaints handling, but if managed proactively, these will also add value to the relationship and help to secure future business.
The tightest relationship between B2Bs is a strategic alliance or partnership, which is often formed as a result of a previous long-standing consultative relationship. In a strategic alliance, value is added at multiple levels or “touch points” throughout both organizations, but the relationship is managed by a strategic or key account manager. A strategic alliance must provide equal benefit to both organizations and will include more than just sales. For example, confidential information and future budget projections are likely to be shared within the partnership, sometimes resulting in joint product development or service provision.
Salespeople
Salespeople are usually rewarded, in part at least, according to the revenue and/or profitability they generate. This form of financial motivation is known to be particularly effective with young salespeople looking to “make a name” for themselves. There are a number of alternative commission systems; however, most are calculated on three factors: the commission basis, for example, sales revenue or profit; the incremental rate of commission; and the point where commission commences. Thus, a sales agent might be employed with a low guaranteed or base salary and an uncapped steep incremental rate of commission linked to sales achieved over $10,000. A key account manager is more likely to maintain a high level of repeat business and might therefore be given a relatively high basic pay, with financial incentives to successfully conclude certain projects. Typically, sales forecasts are set by the sales manager on the basis of past performance, potential growth, and budget expectations. The achievement of on-target revenue, profit, or numbers of units may result in additional bonuses or awards being given as an added sales incentive. Support personnel such as in-house sales teams and service engineers might be rewarded through team-based commission or bonus systems.
The salesperson requires a wide range of abilities including time management, product knowledge, business knowledge, the ability to sell and communicate, and information technology (IT) skills. These may all be provided with the appropriate training. However, there are also many important personal attributes such as empathy, self-motivation, resilience, integrity, persuasiveness, initiative, and self-confidence that the salesperson must intrinsically have or develop for him-/herself. This combination of attributes is relatively rare and, despite the lure of high rewards, it is common to see a high number of dropouts in the first few months of a sales role.
Sales Processes
The sales process can, however, be taught, even if the experienced sales professional later adapts the process in the light of experience and intuition. The purpose of a sales process is to find a potential customer and negotiate a sale such that both parties are happy with the deal. This is known as a “win-win” situation.
Research has shown that successful selling is associated with asking questions and taking careful notes of the responses, providing relevant information, and where possible, supporting claims with evidence. It is also important to empathize with the customer and wherever possible release tension to make the process as natural as possible. While these tips may be useful, for the new recruit at least, a structured process is also required to maximize the chance of a sale. Fortunately, there are a great many published sales processes and often these form acronyms. A simple model (CAB) reduces the sales process to just three stages: Cognition (awareness), Affect (interest), and Behavior (action). The AIDAS acronym is more detailed and describes the sales process as stages that attract the Attention, Interest, Desire, Action, and Satisfaction. However, the majority of sales processes are based on six stages that guide the trainee salesperson from the first customer interaction through to closing the deal and after-sale follow-up. Throughout any sales process, the salesperson should be looking to differentiate his/her product or service offering by adding perceived or real value to his/her solution. The heaviest time investment should therefore be at the start of the sales process.
Prospecting
In many sales situations such as B2B and nonretail scenarios, the customer first has to be found. This process is called prospecting and will mainly include customers who have not previously bought from the company. New prospects are the lifeblood of any company because they replace those customers who no longer have a need or have taken their business elsewhere. It is also new prospects that guarantee long-term growth because a proportion of these customers may be important buyers in the future.
Prospects may be found by a number of different means. The simplest mechanism for finding prospects is to ask existing customers if they know of any other potential customers. Advertising, direct mail, coupons, and exhibitions will also generate leads or inquiries that can be followed up by the salesperson. The press is a useful source of information, especially when companies are recruiting, because this may identify expansion and potential business. Trade directories, telephone directories, and “bought in” databases also provide a framework for canvassing interest. Cold canvassing also can be performed in busy streets, from door to door, or by telephoning. However, these techniques are not applicable in professional or industrial sales situations where appointments have to be made with buyers.
Once an interest has been established, it requires evaluation or qualification to determine that it is genuine, a budget is available, the time scale is appropriate, and a solution can be provided. This process of qualifying may be performed by a more experienced salesperson rather than the prospector. Once qualified, the new prospect may be reclassified as a lead, and at this stage, the customer is likely to be entered into some form of record system or database.
Sales databases vary in sophistication and scalability, with the most sophisticated systems being integrated into a more comprehensive customer relationship management (CRM) system. CRM systems typically also combine data on campaign management, support services, training, project management, outbound and inbound customer communications, and so forth. These can provide a wealth of information that not only records all the customer interactions with the organization but also provides reporting tools that can help the organization to understand and anticipate customer needs. The sales database contains customer contact details and provides the facility with real-time tracking of leads. Typically, these systems are internet-based and therefore allow for remote working and collation of data across sales teams. Hence, the sales manager can produce up-to-date reports on data such as call rates, lead conversion ratios, likelihood of lead closure, order value, and forecast predictions.
On making the first customer contact, the salesperson should remember the importance of first impressions and aim to project a trustworthy and professional image. The meeting should fully evaluate the customer’s needs, with considerations such as purpose, performance specification, size/number/ volume, timescale, and price all being discussed. This information is gained through the use of open questions and should be considered carefully as it provides the opportunity for more detailed follow-up or clarification questions. Often, sales can be won or lost at this meeting because the salesperson incorrectly assumes that he/she fully understands the customer’s requirements and moves on to the next stage. By doing this, he/she may miss some key features or requirements that other salespeople may identify.
Models such as the SPIN model (Huthwaite) focus on a specific stage in the sales process and subdivide it into a more detailed working framework. The SPIN acronym is a reminder of the sort of questions that salespeople need to ask at the “identifying and developing needs” stage in the sales process. These are Situation, Problem, Implication, and Need payoff questions. This tool is useful in all sales scenarios, but is particularly useful in account management situations where complex needs can be evaluated. Using questions based on this acronym, the buying organization can even be helped by the experienced salesperson in identifying and articulating its own needs.
Presentation, Negotiation, And Closing
Once the customer’s needs have been fully established, a presentation of the most appropriate product or service may be made. This provides the salesperson with the opportunity to highlight the unique selling points (USP) of the proposition by explicitly focusing on the customer’s stated requirements. These should be presented as benefits to the customer rather than just features. In this way, a potential solution is proposed rather than just a functional product.
The next stage may involve the demonstration of the product to the buyer or the DMU. This is the opportunity for the salesperson to show his/her knowledge, demonstrate the benefits, and generally reduce the “perceived risk” inherent in most purchases. Whenever possible, the DMU should be encouraged to interact with the product as this provides context and familiarity and can also serve as a memory trigger. Demonstrations, however, take time to organize, are time consuming, and can go wrong. Alternatives to demonstrations include “third-party testimony” using satisfied reference customers, or a trial offer possibly as a “sale or return.”
Customer objections may come at any stage of the buying process and should be viewed as opportunities to highlight benefits, add value, and to close the deal. The skill of the salesperson is to empathize with the customer and then counter the objections in a positive and helpful way, at the same time overcoming or minimizing their concerns.
Preparation for the negotiation is essential because it will influence the balance of power between the buyer and seller. This power balance is determined by the number and feasibility of alternative options that are available to each party, the “confidential” information that is known about each other’s position, the closeness of fit between the requirement and the proposal, and the external pressures on each party to conclude the deal. A salesperson will also be at a relative advantage if he/she is reliably informed about all of the competitor’s products, services, and prices, as this provides boundaries for the negotiation. Hence, a noncompetitive technical sale that closely matches the buyer’s requirements will put the salesperson in a relatively strong negotiating position.
Both sides in the negotiation will have minimal or “must-have” objectives and ideal or “nice-to-have” objectives. The opening of the negotiation is likely to start at the “nice-to-have” from either the buyer’s or seller’s perspective. In a negotiation when one side concedes something, it should be traded for something in return. For example, the seller might trade “low cost” but perceived “high value” items, such as training, for higher volumes or guarantees of future business. Experienced salespeople “reluctantly” start negotiating by trading low-value items followed by even-lower-value items, as a large discount or early giveaway immediately devalues the sales proposal. In most negotiating situations, there are many things that can be traded other than price, such as quantity discounts, guarantees of future business, credit terms, delivery times, trade-in values, and so forth. If the negotiation process reaches stalemate, the seller should restate the points of agreement, asking for clarification where necessary and, if required, request “time out” to rethink the strategy.
Closing the sale can occur at any stage with or without a buying signal. There are many closing methods including simply asking for the order, or more subtle approaches such as asking when the customer would like delivery or what color of product they would like. Once the order is placed and the product or service is delivered, it is considered good practice to follow up with the customer to ensure that everything is as expected, thus leaving the door open for future business.
Tendering Processes
Not all sales opportunities fit the typical sales process. Many large contracts are also awarded on the basis of a competitive open tender. These are commonly advertised in the national press or in trade magazines and are also available by subscription through organizations that compile and categorize tender publications. Typically, although not always, tenders originate from the public sector or from major corporations requiring large-value items. The tender process is an expensive one and does not lend itself to lower-value items.
A tender specification document is provided to those who wish to apply, with details regarding the expected format of the reply and the closing date for return. Commonly, the DMU is unknown or unapproachable, so if there was no previous opportunity to influence the tender specifications, the “selling” must be through the retuned document. The tender decision may therefore be based primarily on price rather than value through performance, reliability, reputation, and support. More sophisticated tendering processes require that prospective tender replies are filtered to a smaller number that enter a second round for further detailed questioning and bidding. This process attempts to reduce the number of bids from companies that exaggerate their claims and cannot realistically fulfill the tender requirements.
Laws And Contracts
Regulations are in place to prevent fraudulent and irregular practices through open tendering, the avoidance of corruption, and fairness in bid evaluation. Much of this regulation is to protect the misuse of public sector funds; however, there are also many laws and codes of practice that have come into effect in the last few decades that are designed to protect the consumer. These laws include restrictive trade practices (e.g., collusion), misrepresentation, faulty goods, debt collection, fair trading, unsolicited goods, consumer credit, and cooling-off periods that target not just the seller but also the advertiser. Much of this legislation revolves around the contract of sale.
A contract of sale is legally binding once a deal is agreed on and the terms are accepted. A contract can be verbal or in writing; both are enforceable but detailed written contracts are less likely to lead to a dispute. An important part of the contract are the terms and conditions (T&Cs), which state the circumstances under which the buyer is prepared to purchase and the seller is prepared to sell. T&Cs most commonly cover such things as alterations to orders, warranty conditions, delivery timescale, payment terms, and so forth. International terms of trade are more complex and include the responsibility of the goods in transit from exporter to importer and ownership while on ship (i.e., the bill of lading).
However, a salesperson does not just have to comply with the law, but he/she is also required to conduct business in an ethical manner. A good business relationship is based on trust and the building of value, which means delivering on promises, acting with discretion, not engaging in bribery or other inducements, avoiding the temptation to mislead, and not using undue pressure to conclude a sale. While this may not always be easy to achieve, especially when a salesperson’s job or bonus is on the line or the sale is being conducted in an environment where these activities are commonplace, the reputation of both the salesperson and the organization he/she represents relies on it.
Bibliography:
- Harry Beckwith, Selling the Invisible (Grand Central, 1997);
- William T. Brooks, Perfect Phrases for Lead Generation: Hundreds of Ready-to-Use Phrases for Finding New Customers, Keeping Your Pipeline Full, and Growing Your Sales (McGraw-Hill, 2008);
- Jeffrey Gitomer, Little Red Book of Selling: The 12.5 Principles of Sales Greatness: How to Make Sales Forever (Bard, 2004);
- Christian Homburg, Mathias Droll, and Dirk Totzek, “Customer Prioritization: Does It Pay Off, and How Should It Be Implemented?” Journal of Marketing (v.72/5, 2008);
- Robert L. Jordan and William D. Warren, Sales (West, 1992);
- Kumar, Rajkumar Venkatesan, and Werner Reinartz, “Performance Implications of Adopting a Customer-Focused Sales Campaign,” Journal of Marketing (v.72/5, 2008);
- Verne Meyer, Patrick Sebranek, and John Van Rys, Business and Sales Correspondence: Trait-Based Strategies That Improve Writing and Save Time (UpWrite Press, 2008);
- Ken Mondschein, Advertising, Sales, and Marketing (Ferguson/Infobase Publishing, 2009);
- Leslie Pockell, MBA in a Book: Fundamental Principles of Business, Sales, and Leadership (Business Plus, 2009);
- Christopher K. Randolph, The Sales Edge: Making the Difference Between the Average Salesperson and the Successful Sales Professional (Business Bookshelf, 2008);
- Anneke Seley and Brent Holloway, Sales 2.0: Improve Business Results Using Innovative Sales Practices and Technology (Wiley, 2009);
- Zig Ziglar, Zig Ziglar’s Secrets of Closing the Sale (Penguin, 1985).
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