Business Skeptic

A second principal for effective and successful capitalism is the need for an educated consumer. Adam Smith’s capitalism assumes that consumers will act in a rational manner and attempt to maximize individual utility. Rational buying behavior requires an educated consumer, knowledgeable with regards to the domain and specifics of the transaction.

Unfortunately the practice of “educating” the consumer is more notable in its breech than its practice. The sub prime mortgage market is great example. The consumers lured into purchasing homes they could not afford were certainly not educated by the mortgage bankers. People need to attend school and pass exams to earn the right to drive an automobile, but no competency is required to go into debt for hundreds of thousands and risk one’s economic future. Capitalism cannot nor should it protect people from their own stupidity, but neither should it take advantage of it. An uneducated consumer should be helped and educated, not seen as a target market and exploited.

This goes back to the founding principal of Adam Smith’s “Wealth of Nations”. Capitalism must be build upon a solid foundation of cultural morality. Many notorious rip-off’s have hidden behind the defense of “the free market”. But think about it. Like selling mortgages to people who could not afford them, should be we marketing pharmaceuticals or health savings accounts directly to consumers that have no medical training. Watch advertisements and see if the seller is trying to educate you or overtly keep you from being “rational”.

The freedom to decide is a strength and virtue of our society and economy. However, along with such freedom comes responsibility. Do the right thing.

I recently received an email regarding the article on Solution Selling, asking me to comment on Customer Centric Selling. First, Customer Centric Selling is just the most recent and renamed version of Solution Selling, so there’s not a lot to talk about. Solution Selling was coined by Michael Bosworth in his book of the same name. He later sold his stake in the Solution Selling company he founded and subsequently repackaged “Solution Selling” into “Customer Centric Selling” (now CCS because I am tired of typing the entire thing). While I lambasted the lack of definition for Solution Selling in a previous article, CCS as a name at least contains some semantic logic. If you consider the 3 words, and acknowledge there are just two parties to a sales transaction, the seller and the buyer,;then CCS merely means that in selling you should focus on the buyer. No great revelation there. I guess the reason we need to be reminded of this is because “sales people” are too self centered and egotistical to focus on the customer. Wise advice and such reminders are always welcome and helpful, although they shouldn’t be necessary.

Other than reminding sales people to focus on the customer, CCS is just the newest revision of Solution Selling. It contains some minor refinements and additional tips, but nothing truly new. I find the book CCS incomplete regarding managing the entire sales process. The book lacks useful information on prospecting, which is the most important aspect of sales. The most successful sales people are great prospectors.

CCS assumes that “asking questions” is prospecting. While asking questions is very important and powerful in determining a buyer’s needs, pains and goals; you just can’t start pummelling an executive with questions. It’s disrespectful. You first need to present a clear and concise value proposition that is meaningful to the executiive and addresses something urgent  on the executive’s radar screen. If you do not have a compelling value proposition for the target executive that can make a substantial positive impact on his P&L or Balance Sheet, or some other item on the radar screen, you will be delegated down.

The other weakness in CCS is the lack of meaningful help in lead and account qualification. Understand that a sales person basically sells their time. They cannot afford to waste time selling to people who aren’t going to buy. Solution selling is about selling a vision of a better future against the current state of the present. The future is unknown and risky, but there is always tomorrow to make a decision. The present is known, and they know how to deal with it. Unless something really bad is going to happen if they don’t consumate the sale, then the sale is unlikely to close anytime soon. One of my favorite qualifying questions is “What will happen if you don’t do this project”? If the answer isn’t something really bad, such as “I will get fired”, “I will go to jail” or something similarily catastrophic; the sale is likely to take a nauseatingly long to close, if ever.

Also, don’t fall into the ROI trap.  ROI’s don’t sell. They are a gate to get through after the decision has been made. The ugly fact is that a company typically has 8 times more investments opportunities with acceptable ROI’s then they are capable of or desire to implement. It is not for a lack of capital, but organizational bandwidth, alignment with strategy or the executive just doesn’t care. Business investment doesn’t work like investment portfolio’s or MBA Corporate Finance. Addressing an urgent need and avoiding a painful consequence is more important than ROI.

Customer Centric and Solution Selling are power and important sales techniques. I personally use, manage and teach them. But because they are incomplete, I caution organizations adopting them to make sure they fill in the gaps regarding prospecting and qualifying.  To fill in the those gaps, I recommend “Value Forward Selling” by Paul DiModica. www.digitalhatch.com

Thank you for your comments and I look forward to your response.

One of the greatest attributes of marketing is the creation of words and phrases that sound great and instill a feeling of virtue and professionalism, yet are undefined and often meaningless. Solution Sales is one of my favorites. Ask a professional sales person to define a solution sale and he or she will define it either by exclusion, “it is not a commodity sale which is based on price”, or define it recursively, “it is when you are providing the complete solution” (obviously a solution is a solution; just as A=A) or by adjectives, qualitative or relativistic descriptions such as;
Complex
Network
Encompasses both product and services.
Difficult
Long sales cycle
Etc.
You see the problem! No one seems to be able to define a solution sale. For example, how complex does it need to be to qualify as a solution sale? It is interesting to note, that we have entire libraries of books and training classes on solution selling, yet can’t define it. This is not to say that those books and training classes are worthless, quite the contrary, as a sales management quack (oops, I mean consultant) I even teach this stuff. But it really bothers me that it is undefined…..Until now.

So here is the definition of a solution sale. “A solution sale is when the sales person has greater domain knowledge than the buyer.”

This has some profound implications. It implies the following:
1. Any sale can be a solution sale or a commodity sale based on the circumstances.
2. The type of sale, whether solution or commodity, is a sales tactic that can be determined by the sales person.

Ok you are probably scratching your head about all this. Let’s look at an example.

A 200 ohm ¼ watt resistor. Most people would say that this would be a commodity sale, since it is a commodity product. It is cheap, there are many suppliers and can be picked up off-the-shelf. Certainly to an electrical engineer designing a circuit, he knows exactly what is required. To him, it is a commodity sale, because he possess the greater domain knowledge, having designed the circuit. Now let’s consider someone holding a wire. They have a problem. Everytime they plug this wire into a device, it smokes and damages the device. They are not an electrical engineer, do not know about resistors, voltage and current. What do they need? A resistor! This is a solution sale, because the domain knowledge rests with the sales person. Ok this is a silly and possibly nonsensical example, at least to us engineers (yes I was an engineer), but it illustrates the point that the type of sale is not determined by the product or service but by the circumstances and the strategy of the sales person.

Consider a manufacturing automation sales person. He is selling automation to the engineering manager of manufacturer whose strategy is to be the lowested priced player in the market, runs on razor thin margins and whose business success depends on highspeed automated manufacturing. This conversation is likely to be very focused on specifications, features and price. Basically a commodity sale. Later this same sales person visits the manufacturing engineering manager of a pharmaceutical company that has product gross margins of 94% and whose business success depends on research and marketing. This conversation is likely to be completely different, with the sales person possessing more manufacturing automation domain knowledge than the customer. Hence a solution sale.

So a sale cannot be categorized as solution or commodity aprior. While the circumstances initially define the sale type, the sales person may elect to change the sale type in order to improve their selling position. To shift a commodity sale to a solution sale, the sales person needs to expand the scope of the conversation and deliverable to the point where they posses greater domain knowledge than the prospect. This is particularly effective when you are in a price competitive situation and cannot be the lowest priced player.

Conversely, if you are the lowest priced supplier, you might want to “commoditize” a solution sales situation if you are competitively weaker, by convincing the prospect to reduce the scope of the domain to the point where your competitor is no longer the domain expert.

OK, I hope I have convinced you that there is a definition for Solution Sales. Now throw it out the window. If a solution is the resolution to a problem, then any sale is a solution sale. Your tactics simply depend on how you and the prospect mutually agree to define the problem.