Consultative Selling May Lead to Fewer Sales and Unhappy Customers

Scott Santucci

Consultative Selling is a Business Model Decision

Elana - Thanks for the compliment, I’m glad I piqued your interest.

I can’t believe your timing. I literally just got back from having lunch with an EVP of Business Strategy for a large enterprise software firm and we talked about his challenges of developing the right business plan and what the hand offs are between business strategy and a sales model.

The point I was trying get across with my article was that the sales model a company selects for itself, sets the direction for the client engagement model. A consultative selling strategy cannot be successfully implemented without support from the product side of the business, or the marketing side.

Let’s use a multi-billion dollar enterprise software firm as an example. Like most of the players in the software business, they have a gigantic portfolio of products and services. We you look at the business through the lens of a product – you see it as a market. Product X has these features and benefits that compare favorably (or unfavorably) against features and benefits from other competitors. Product people look at the world through that lens because they have to build those capabilities. The product people report up into a business unit, who hires marketing people to create programs to promote the value of these products to markets. You can just see the Product Marketing Manger of product X building a demand generation plan and will say something like, “according to Gartner, the problem management market is $1B and we have $100M, so we have $900M upside”. You can also image those conversations happening for all of the other products that company has.

However, look the world through a different lens. Consultative selling strategies are generally related to targeted account go-to-market models. In this world, revenue per account is king. “Markets” in the sense that product people and marketing folks think don’t really apply when it comes to an account. The mindset on an account based business model is about wallet share. Sales people focus on the finding people with discretionary budget, and then on what problems they have where they can have conversations. Each account organizes itself differently, they have different cultures, and maturity models, and because of that, most company’s problems don’t fit neatly into the markets defined by the product and marketing people.

If there is one generalization about sales people that is true, it is that they will always find a way to do the least amount of work and produce the most amount of money. Following this principle, logic dictates – why waste time with all of these manager level issues and people when I can try to get to the guy with a $1B budget. And this is where things really fall apart. As we all know, as you move up the chain in a company, the things that people care about change dramatically. Lower level people have limited scope (so their issues are more tightly contained) and are evaluated by the tasks they perform. When you reach the C-suite, the scope of their responsibility changes and so do the issues.

Back to our example, for the sales person to add value to, in this case, the CIO, he needs to really understand that persons: role in the organization, credibility among peers, vision for how he wants his shop to run, current maturity level, barriers to overcome, problems, and managerial style (to name a few). Where is this knowledge going to come from when very few people inside that company have ever held the position of a CIO, or worked closely with one on these issues?

If I came off as being too critical of marketing, that’s not my intent. I think that few people in businesses today think pragmatically about execution. They hire McKinsey to tell them high level strategy stuff and then try to buy generic training programs, or technology systems, but they don’t really think through the requirements.

There is a tremendous company wide commitment required to successful implement a “consultative” sales model. It requires some very deep thinking about how to pull it off, an agreement on who the customers really are, and an ability to organize complex information so that it can be delivered by the sales person who you’ve made into a “consultant”.

Failures with consultative selling models are not only a problem with sales (although the VP Sales usually gets the bullet first for increasing the sales costs too high), its not a problem with marketing (although they eventually get the bullet for not moving the dial), and its not the product group (who usually escapes the axe because they blame marketing and sales). It’s a company wide problem and should be examined as such.

This is about really understanding how to be valuable to your customers. I actually referred to it today as “Service-Oriented Marketing” – the ability to define combinations of material which can be easily configured at the point of sale.

Elana – I know you agree with a lot of this. I wanted to take the opportunity to reply to your comments and go on the record to be clearer. I especially agree with your past comments that the functional organizational construct gets in the way of being customer centered. I’m very much looking forward to collaborating with you. Perhaps there are a set of business patterns which exist where the execution model for developing a customer centered business looks different and the best practices vary depending on the conditions.

Fantastic feedback and great commentary. Thanks a lot Elana.

Scott Santucci