Leon Wei and Samuel Yeung co-wrote this blog post with John DeSarbo.
This post is the fifth in a seven-part series examining top trends that are reshaping the high-tech industry.
The concept of selling outcomes is anything but new. Some of the first recognized “salesmen” in the U.S. were peddlers who traveled from town to town offering a variety of goods to frontier families. Many of these early traveling sales reps offered cure-all elixirs that promised to remove the aches and pains of rural life. The most successful hucksters focused on selling the benefits of their potions and spent little time discussing the unnamed ingredients in their products, which, unfortunately, were often harmful substances such as lead and mercury.
While comparing today’s high-tech sales reps to early American drug dealers might be a bit unseemly, it’s clear that high-tech companies have been directing their sales teams to stop selling “speeds and feeds” and focus on selling solutions that will address customers’ key use cases for years to come. Millions of dollars have been invested in sales training that promoted the practice of offering bundles of products and services to drive higher transaction sizes and stickier customer relationships. Unfortunately for many high-tech sales teams, while these training programs were well-intentioned and delivered with gusto, they failed to yield the intended impact on productivity. These days, the beginning of yet another PowerPoint presentation on the benefits of solution selling is often met with snickering and exaggerated eye-rolling.
Many industry leaders have come to realize that to capture their target customers’ attention (and budget), it’s not enough to talk about how the combination of multiple technology products or services meets their business requirements. Sales teams need to communicate the tangible, economic outcomes that a technology enables. In other words, successful sales reps need to be able to not only prove that an offering solves a business problem, they need to articulate why solving that business problem matters. True outcome-based selling requires an intimate understanding of a customer’s most important business issues and drivers of financial performance. Sales reps apply this understanding to first explain how a solution addresses the customer’s most critical challenges, and then collaborate with the customers to develop a compelling business case to justify investment.
Outcome-based selling is especially critical in a time when vendors not only have to sell to new customers but also maintain and grow existing accounts. As we all know, the typical IT decision maker is changing in many companies. As technology becomes the core of many companies’ operations, line-of-business leaders have becoming increasingly involved in the sales process. Unlike their counterparts in the IT department, they are less concerned about technical specifications than they are about the financial results that will be realized when a technology is implemented. Once a purchase is made, outcome-based selling requires a focus on value realization. Customers need to see that their investments are paying off and yielding the intended impact. This second step is particularly true for cloud service providers for whom driving adoption and utilization—and minimizing customer churn—is paramount.
These trends have profound implications for talent management. Effective outcome-based selling requires an overhaul of the technology sales rep’s frame of mind and skill set. From a ZS perspective, industry leaders who successfully enable outcome-based selling in their sales organizations focus on five aspects of talent management:
- Sales roles and responsibilities: Many firms need to redefine the role of the sales rep to include proactive identification of business problems, communication of business impact, and post-sale engagement to ensure value realization.
- Competency model: High-tech leaders must establish clear expectations for sales personnel to be able to identify business drivers and articulate how technology yields financial results.
- Recruiting and hiring: Often, enablement of outcome-based selling requires an overhaul of the hiring profile for both sales reps and sales managers with an understanding that the two roles require a different skill set.
- Sales enablement: To sell business outcomes, sales reps need access to content and tools (such as ROI calculators and business case templates) that help the rep effectively communicate the value proposition of the offering to justify investment.
- Motivation: It’s critical that incentives and compensation support outcome-based selling and reward reps for developing deeper, collaborative customer relationships versus closing large one-time, episodic sales.
Outcome-based selling is hard. It’s a journey that requires a willingness to challenge norms that are ingrained in the DNA of many sales organizations, and it requires patience to support sales reps’ development of new expertise and skill sets. The key is to get started with an understanding of how today’s influencers and buyers evaluate and decide to purchase new technologies, and an assessment of how well your current sales team address these preferences. The goal is to transition your team from being perceived as brokers of information that is easily gleaned online to indispensable enablers in the customers’ decision-making process.
Currently, ZS is collecting insights from business leaders regarding the evolving nature of the sales organization. Please share your opinions in this brief survey regarding emerging sales trends as well as your teams’ capabilities and performances.