10 Trends every Sales Exec, Leader and CEO must know for 2013

Regular readers and clients will know of my enthusiasm for the principles contained in “The Challenger Sale” – which are in turn based on an exceptional body of research conducted by the Corporate Executive Board’s Sales Executive Council.

Nick Toman of the CEB recently published his guide to the 10 trends that every sales executive (and, in my opinion, and maybe even more importantly, every sales leader and CEO) must know for 2013. I’m delighted that Nick has given me permission to reproduce the article in full here.

A word of warning – at over 3000 words (Nick originally published the article in two sections) it’s a little long for a blog article, and some of the links are to material that is available to SEC members only. But it’s an exceptionally worthwhile read. I’m sure you’ll enjoy it. Over to you, Nick:

“It’s a unique occasion when we get to step back from the day-to-day of supporting our members’ decisions and reflect on where we believe the world of sales is headed. Across 2012, the Sales Executive Council had thousands of interactions with sales executives around the globe, held dozens of conferences and summits, and analyzed hundreds of thousands of data points.

As the world’s preeminent sales excellence research organization, we’d love to give our readers a sense of what we’re exploring and thinking about based on our interactions from 2012.

Please note, this is NOT a list of definitive research findings. But it is a series of informed thoughts and hypotheses, often based on some initial data trends we are seeing. We hope you’ll take a minute and reflect on how these trends are manifesting in your own organization, feel free to disagree where appropriate, and share ideas you think we missed. It’s meant to be a reflective, but fun list. We look forward to your input!

1. Customers get increasingly “untaught.” All of us are now selling to incredibly well-informed buyers, that are able to buy on price alone. It’s a hugely troubling trend. Customers are able to spec their own buying criteria without supplier involvement, pinning a small set of suppliers against one another in a consideration set. That’s just customer code for “in consideration for who is going to cave the most on price.” To combat this trend, suppliers must “unteach” customers. I have to credit my colleague Brent Adamson with this term, but it perfectly captures how sellers must be able to show customers new ways to think about managing their business that will form the basis of the criteria they buy upon. This is the entire premise behind our original research on Insight Selling™ leading us to the Challenger sales profile. We have seen tremendous strides made this year between sales and marketing organizations as they unite to arm their sellers with insights that properly unteach customers. We’re excited to offer more support to companies pursuing this path. Our latest tool and diagnostic helps firms assess the steps required, across both sales and marketing, to create great insights to unteach customers. It’s a really helpful tool that results in a custom report for your organization – and it only takes about 15 minutes to complete it. Leading salespeople are already unteaching customers – they are the natural Challengers – but we are starting to see leading organizations make good on this idea. Building insight is indeed an organizational capability, not a rep-level skill, and therefore requires tight coordination across sales, sales ops, and marketing.

2. Sales culture gets an overhaul. We can claim this because we are currently studying it, intensely at that. Anecdotally, we’ve seen that organizations heavily invested in driving new selling behaviors through the traditional means of training, coaching, and hiring are seeing some gains but those are often short-lived. The investments these organizations make in driving a new sales behavior are for naught without the right (and, we believe, very different from most) cultural foundation. It’d be a cliché to say that sales culture matters when driving substantial transformation. But when you pry beyond the idea and accepted importance of sales culture, you find little evidence or understanding of what this really means. Social science that can help sales leaders better understand what good sales culture and good social norms look like in today’s selling environment simply does not exist. Frankly, our data is suggesting most sales organizations embodying a cultural profile that overly emphasizes compensation, individual contribution, and near-term outcomes. We think those cultural norms are a distant cry from what today’s best sales organization should embody. Stay tuned as we have more to come on that front… For our member organizations, be sure to participate in the 2013 Sales Culture and Transformation Survey to understand the cultural profile of your sales organization, and how that is helping or harming your efforts to sell to today’s highly informed customer.

3. Individual performance takes backseat to network performance. Closely related to trend #2, we believe a fundamentally new organizational dynamic will drive sales productivity – and it’s not based on making individual reps more effective in their sales-related tasks. This trend is based on research our sister team at the Corporate Leadership Council spent the better part of this year conducting. Their publically available research summary is a must read. The punch line of their research is that peak organizational productivity is driven by both:

• individual task performance: an employee’s effectiveness at achieving individual tasks and outcomes, as well as
• network performance: an employee’s effectiveness at improving others’ performance and using others’ contributions to improve his or her own performance

Network performance spans well beyond collaborative online portals and knowledge management platforms – it’s literally the informal networks that answer the question “how does work really get done around here?” And here’s the kicker: network performance is drastically underrepresented in most organizations despite its importance nearly doubling in the past 10 years.

In fact, firms that were able to properly balance network and individual performance saw a 10% improvement in profitability. This underscores how important the creation of not just formal, but informal networks within your sales organization are becoming. In sales environments, CEB suggests that the “right balance” is closer to 44:56 in favor of individual versus network performance.

Most sales organizations, however, are nowhere near that ratio, drastically over-representing individual performance.

4. Sales comp gets an overhaul. Related to both trends #1 and #2, we believe the backbone of most sales organizations – the comp plan – is drastically out-dated for today’s sales environment. Team performance, information sharing, collaboration and peer support are being forsaken at the cost of driving individual rep productivity. Our good friend and member – Mitch Little, Head of Sales at Microchip – is moving aggressively on this idea and has shifted sales compensation away from the traditional quarterly incentives, highly-variable comp model towards a team performance model that resembles traditional salaried positions. And Mitch isn’t alone. In fact, I’d say one of the most common questions we’ve been getting from our most progressive heads of sales is on this very topic. I don’t think we are prepared to proclaim an end to the coin-operated era in sales, but all the evidence and research in the space of human motivation sure does signal that comp design needs to be revisited, and not just to tweak it, but to potentially overhaul it. This is another trend for our members to stay tuned to as both our team and our sister council, the Corporate Leadership Council for Compensation, further research the implications.

5. New watering holes emerge for sales talent. Here’s an idea to consider: what if I told you that the best salespeople for today’s complex sale are currently employed as teachers, engineers, or other knowledge workers? In fact, they have no inclination towards sales, but they love to share ideas, they love to challenge others’ thinking, they love to see the outcomes of their work, and help others. What if I told you that those characteristics rarely co-exist in the candidates you’re currently screening who are opting into sales roles? Would you believe me? It kind of gets you thinking doesn’t it? A hard work ethic, persistence, and strong interpersonal skills were enough to get by in yesterday’s sales era. We think the entrance into the Insight Selling™ Era is changing the game of talent entirely. This is an idea that, at this point, is more conjecture than fact so don’t go tell your head of HR to blow up the recruiting plan. But our data is starting to shed some interesting light on where the right talent can be found. Our recent acquisition of SHL is helping our team better understand the human capital challenges facing heads of sales in ways we never could have before. We have a lot of reasons to believe that the old model of hiring folks who want to sell and training them to teach a customer is less productive. The better way, we think, is to hire folks who can teach and convey ideas clearly, and train them to sell. That one is sure to spark some debate and we look forward to keeping our members posted on the findings. And to be clear, this doesn’t mean you can’t train your current sellers to Insight Sell, or challenge customer thinking – you can, and we’ve proven this several times over. But it does mean that as some percentage of sellers who can’t or won’t make that transition opt out and leave your organization, you may want to consider a drastically different backfill.

6. Your customer becomes your biggest competition. More specifically, your customer’s ability to learn what their business needs are, and options to act on those needs. We call this the “1 in 3” problem and here’s why: customers that are now able to learn on their own (or with a consultant’s support) are also able to arrive at a requirement set without supplier input. For example, they dictate the uptime requirements, the performance thresholds, the expected SLAs, and other criteria. They winnow a list of potential suppliers down to the top 3 that best meet these performance thresholds. Then they call you in to present. Congrats you’re in the consideration set! And so what do you do? You highlight your performance against their criteria. “Well we see that you require 95% uptime, we can deliver 98%. And we see that you need 30,000 units output, but our innovative technology delivers 33,000.” To which the customer replies, “yes, we already know that, but we only need 95% uptime and 30,000 units output, and all the companies in consideration deliver that. So…let’s talk price.” In this world, consideration equals commoditization. There are two vitally important takeaways from this trend:

First, this underscores why the Insight Selling™ approach is so important. Insights which you can teach customers are differentiated, and have the ability revise the purchase criteria, mitigating the “1 in 3” problem. I’ve discussed this in trend #1 and my colleague Brent Adamson has explored this challenge extensively here (this is another must read once you’ve finished this blog post).

Second, this highlights how the customer has taken this new information advantage and used it (as they should) to their benefit. If they can rely on social networks and third party consultants to force us into a price war, they’d be foolish not to do that. We are losing this information game to customers. The best sellers, however, are taking this information disparity right back to customers. Our data shows us that the best reps are conducting deep opportunity/account due diligence with one specific goal: learn something about customers that the customers themselves haven’t realized.

This isn’t information in the public filing statement, annual review, or company website. This is information that exists in the deep inner workings of customer organizations. Information that “Talkers” dish out. Information that purchase consultants divulge. [NOTE: This is NOT unethical information or insider secrets.] It is a much deeper understanding of what’s happening in the customer business that often requires outside intervention to even realize. When this context is combined with powerful insights, customers have little choice but to at least listen and learn from suppliers. And that mitigates the “1 in 3” challenge. Sellers who choose to arbitrarily “spray” insights at customers risk harming the relationship permanently, but those who properly tailor those insights in a meaningful and economically-grounded ways will beat the “1 in 3” problem.

7. Early sales stages get an overhaul. Keeping in line with our research underlying the importance of teaching insights to customers, the sales process must evolve. Most organizations have a sales process oriented to identification of needs and alignment of solutions to those needs. Typically stages 1 and 2 are some derivative of understands needs (or, recognize needs from the buyer perspective) and qualifies opportunity (or, evaluate options from the buyer perspective). The sales activities inherent in these stages walk salespeople directly into the “1 in 3” problem articulated in trend #6, above. Why? They are engineered to sniff out and sell into established demand. These are instances where the customer has identified a need and is determining options. Creating emerging demand is the correct goal. And that happens well before the traditional stages 1 and 2. This is often considered marketing’s domain – a place where sales need not go. But increasingly, the best sellers are actively teaching where customers are passively learning.

Therefore, sales stages that support teaching (from the sales perspective) and learning (from the buyer perspective) are required. Implications for rewriting the top of funnel activities are considerable and I won’t go into much detail with this blog post. [SEC members can check out our Demand Shaping Toolkit, which compiles the best of dozens of star reps’ thoughts on early stage engagement into a comprehensive tool.] But here’s one of the most important implications: you can’t simply expect sellers to teach as an incremental stage without rewriting the understand/recognize needs stage.

Why not? If you don’t rewrite that stage, sellers will regress right back to selling into the “1 in 3” problem. It’ll reinforce sales based on established demand, and as my colleague Brent Adamson has coined, “put your salespeople on a train to RFP station.” Contrary to what many believe, this is why the Insight Selling™ approach can’t simply be “overlaid” on top of existing sales methods. It requires rewriting the DNA of the sales process, most notably in the early stages, with a series of trickle-down implications throughout the remainder of the sales process. Organizations that get this right, will have to burn many (not all, but many) of the long-standing bridges of traditional solution sales techniques.

8. Identification of where customers learn. For the past year, we’ve been sharing our most recent research entitled “Getting in Early.” One of the critical questions we ask our members is this – do you know where your customers learn? Not learning about a purchase, but passively learning about new ways to manage their business. The instinctive reaction is “of course” – that is, until you really think about it. Then an unsettled feeling takes over. If you’re like most heads of sales, you and your team, likely don’t know. It’s likely some mix of social media, other peer networks, consultants, salespeople and vendors, maybe professional conferences or trade shows. The reality is that customers are constantly learning. They don’t manage their business in a static manner; a significant part of any business stakeholder’s job is to find ways to improve their business whether they’re an end-user of products or a CXO. Now let’s just assume that you have a good understanding of where customers are indeed passively learning. Do you think your salespeople are actively teaching there? Understanding where your customers learn starts with simply asking them. In the first handful of conversations, you’ll learn a tremendous amount about the information sources they trust and engage, and the multitude of sources they tune out and consider noise. You don’t need to engage your market research team to do this, at least not initially. Just ask. Then ask yourself how much permission and opportunity you’re affording your sales force to be part of those conversations.

9. Big data exposes a significant talent gap. At CEB we are fortunate to have a strong cross-functional perspective on what the best companies do. Our IT practice has intensively studied the promise of big data, and recognized that it has been met with an equally large degree of paralysis and low ROI. As our CEO, Tom Monahan, said in a recent interview with Consulting Magazine, “Companies’ love affair with big data has proven fickle. It’s no coincidence that the organizations with the biggest IT and analytics budgets over the last five years are the ones that have gotten into the most trouble.” The amount of big data facing nearly any function – even sales – has placed a higher cognitive burden on all those who use and rely upon this data. This includes sales operations teams, managers, and even sales professionals. The problem is that few have the skills to understand what data truly suggests and how to take action on that data. I had an interesting conversation with a Head of Sales from a major electronics company earlier this year. His team sells into big box retailers (the CPG world will know this problem all too well, though it applies more broadly). He said that the influx of data his team was now able to share with their retail channel partners was absolutely overwhelming. Sales conversations had evolved into data dumps, where account managers basically handed over a giant report to retail partners. The partners expected this, the account managers accommodated. What was entirely lost was the story within the data, and the implications for the retailer – and ultimately the value prop of this electronics company. Data is not insight, nor is insight merely data. The best companies will invest in the proper capabilities for interpreting big data, making sense of the numbers, and providing clear action steps. This doesn’t mean all sales professionals or heads of sales ops will need these data interpretation skills, but it does mean that individuals with this skill set are either hired or this capability is outsourced. As sales analytics gains moment, this will become increasingly important for the sales management function.

10. Personal rep branding is embraced. Admittedly social selling has become all the rage, and having devoted a significant amount of time and energy to the topic through 2011 and early 2012, we’d like to think we helped accelerate this trend. While individual reps are starting to embody social selling, organizations are apprehensive to embrace the notion that reps can, and even should, have their own personal brand in their markets. Social media provides a hugely powerful platform for accessing customers as they learn. Companies like IBM have been lead-steerers for the rest of the sales community time and time again – and their work in the social selling space is no different. They’ve implemented an approach where messages are pre-built and scaled for use in social media by marketing teams, but individual reps broadcast these messages to the market in such a way that identity and personal brand still matter. This is just the start however. Organizations will invest in building rep competency for selling in through social media and other highly-networked channels. While not perfect, metrics such as Klout score (a measure of social media influence) will start to gain momentum in dashboards. In fact, organizations like Network Hardware Resale are using Klout scores and other metrics to allocate territory based on social media proximity. It’s a fascinating idea – one that is likely years off for many companies – but underscores the importance of sellers having access to customers as they learn, yet again.”

So there you have it: 10 profound trends that will affect the lives of every sales person, sales leader and CEO in 2013. How do you see them affecting you and your organisation? I’d love to hear your reactions.

By the way, if like what you’ve read and would like to keep in touch with the CEB SEC’s thinking, I strongly recommend you follow @CEB_SEC and Nick Toman @nick_toman. You’ll probably also want to consider SEC membership.