Wednesday, July 15, 2015

Are you a Solution Seller, or Did You Stumble into the Buzzword Trap?

Buzz words bug me. A decade or so ago everybody suddenly became a “value-added" sort of guy. Every salesperson I talked with for more than 20 seconds managed to find a new place to insert the words “value-add," yet most couldn’t define the value they were adding. Even fewer had any idea as to the worth of their “value” to the customer. And, only one in every thousand could manage to prove their value in dollars and cents.

Long ago we suggested a break from the whole value-added selling hyperbole and laid out a plan for value-metric selling. You can read what I said back in 2011 here

Value-metric selling added definition and focus to the extra services distributors provided along with their products. We suggested then and still believe providing services or some other value to the customer equation without thinking (or at least considering):

• Does the customer even want the service?

• Does the customer place any value on the service?

• Is the value the customer places less than or greater than the cost to provide the service?

• How much would it inconvenience the customer if the service was not available?

• Can the inconvenience be measured in monetary terms?

• How much does the service cost us to perform and are we making enough gross margin to cover our expenses and still make a profit?

• Should we be compensated for the service in some way above and beyond the gross margin generated by the sale?

Sorry I may have gotten carried away. 
Let me step down off my soapbox and blast another distributor buzzword:  Solution Seller.

Just like “value-added” from the turn of the century, “solution selling” has developed a life of its own. Even the guy who sold my wife a new Buick tossed the phrase out a couple of times. And, with no intention of bashing an otherwise great sales guy, he really wasn’t selling a solution. He was there to sell a vehicle (and I played a cameo role as the evil purchasing guy negotiating the deal.)

The point of all this is to define what might actually be a solution sale and perhaps the various degrees of solution selling. Below is a graphic derived from The Challenger Sale: Taking Control of the Customer Conversation, which is a book I highly recommend. Let’s walk our way down the road from product seller to solutions seller with a few comments along the way.

Pure product sales
Don’t get me wrong there is nothing wrong with selling a product. Strangely, it has been my experience that solutions only guys in the world of engineering services daydream of a time when they can sell a product. Product sellers are often educated in not only the major nuances of their products but in trivial features as well. Constantly on the vigil to avoid commoditization, they often know precisely why their product is better than a dozen or so competitors.

Silo based product sellers develop such in-depth expertise on a given technology or product set they are sought out in the market place. Great examples for the retail world might be the camera stores of days gone by, where the seller knew every factoid imaginable of the topic of cameras. Customers were attracted to the knowledge and purchased accordingly.

In the world of industrial automation a number of silo based sellers have emerged centered on expertise in Programmable Controllers (PLCs), electronic drives, motion control and machine vision. Further, I believe the value each of these silos has diminished over time as the general population of the market has learned the product. The camera stores have largely gone away and I believe there is very little/limited future in being a silo-based product seller.

Product bundling provides customer convenience. Supermarkets provide a form of product bundling. It is quick and easy to do “one stop shopping” but I am not entirely certain the practice ranks high on the solution scale. Taking the whole thing one-step further, I wonder how many distributors providing this bundling practice still struggle to get their inside sales teams trained to the point of making the right product suggestions? One would imagine this would be an advancement in product bundling.

A quick review of our industry demonstrates most of those claiming to be solution sellers are actually wrapping advice and service around some product group. Definitely some solution work going on here, but the practice seems as if it could easily be challenged or replaced by another competitor.

Hopefully you see the escalation of quality of the solutions. Along with each step, comes a bit of competitor proofing. The more advanced the solution, the greater the value to the customer.

Time and space here does not allow me to go into each of the various levels of solution selling. You can look into these as you move forward. However, there are a couple of points you should consider:

• Customers are willing to pay more for solutions that increase their ability to make more money, so understanding your value is even more important.

• Advanced solutions are customized and developed specifically for the customer.

• Advanced solutions make you competitor proof.

• Finally, salespeople who master the solution sale have been proven to be nearly three times more effective than the average seller.

1 comment:

David Gordon said...

Frank, a couple of thoughts.

1. What % of distributor salespeople are really account managers, servicing an order / processing a request vs actually selling and either creating demand for a product or converting a requested need into either a more profitable, more appropriate or a "preferred supplier" sale that benefits the customer and their company? This "selling vs servicing" role is a major issue within distribution (and it's also an issue for sales management on how to train on it.)
2. If someone / a company begins a "valued-added" initiative and sales "we now do 'x'", what does that say about the value that they offered before? That they had no value other than "business basics"?
3. Your point of "will they pay for it" is 100% accurate. How will the company (seller) receive a premium? This could be a fee, preference for an order or something else unless the cost of retaining the business is offering the service.
4. Value is in the eyes of the beholder and the beholder is inevitably the customer (I know you're old enough to remember the phrase "he who has the gold rules".) This also then gets to the issue of "value-based pricing" (which is much different than value-engineering!).
5. If one / a couple of your salespeople periodically communicate the approach, is the company committed to the initiative? How is it communicated and reinforced internally and to customers? How does a company share with their customers to become known in their marketplace for the various "value-added" activities? Most companies don't market these ... they only pull them out upon customer request.

Just some food for thought.