Contextual Selling: A New Sales Paradigm for the 21st Century

rajan@paradigm-info.com

Introduction

Why this book on sales ?

I still remember the first sales call I made while working for a company called ‘Toshniwal’ in Mumbai. In 1983, I was recruited for the oscilloscopes division. I was given the product brochure of Scientific make oscilloscope and my manager asked me to go to Khalsa College and sell a few products there. I had demurred, But, sir I do not know anything about this product He assured me and said, Don’t worry, you will come to know over a period of time. I had then called on Prof. Mohinder Singh, Head of the Physics Department, a very kind and noble gentleman. He asked me, Can you explain to me the -3 dB bandwidth of your oscilloscope? I had answered, Frankly speaking sir, I do not know. This is my first sales call. That kind man had all the energy and compassion to explain the working of the instrument. He picked up one of the instruments from his lab and explained all the basics to me. One hour later, at the end of his demonstration, he placed an order for five oscilloscopes.

In 1983, the selling environment was quite different. A salesman could afford to come back to a customer whose query could not be easily answered. But, in today’s highly competitive world, the scenario is much different. By the time a salesman returns to his customer with his clarifications, there is a possibility that the competitor might have already closed the order.

Context, (kon’tekst, n) is defined as the part of a discourse or treatise which precede and follow a special passage and fix its true meaning; associated surroundings, settings ( Chambers Twentieth Century Dictionary)

It is not only important to know about your product or service you wish to sell to your customer; what is equally important is the context in which you are operating which consists of:

a. Business Environment: This may include the competition whether domestic or overseas, pricing, delivery etc.

b. Customer: Some customers may take quick decisions, others may take time, some are price sensitive; others may be quality conscious. The customer’s context includes the organization culture and type (SME, MNC, Public Sector) which may also determine the customer’s preferences in terms of price, quality etc.

c. Your Organization: Your management does not expect you to sell to all and sundry. There needs to be a synergy between the products you are offering (whether for entry level, mid segment or premium segment) and the customer profile. At the end of a month or a quarter what is expected of you is whether you meet the targets as set by your management. And while meeting the targets are you meeting the revenue, profitability and the collection norms? You should create value not only for your customer but also for your organization. To achieve this one should know the basics of finance, the human psychology, the communication process and also a good conceptual understanding of key accounts and decision making. This book hopes to achieve the above purpose and thus create value for you too!

Is Selling a Science or an Art ?

There are two schools of thought about the profession of selling - whether it is a science which can be taught or an art that can be learned through experience? In a survey of 173 marketing executives, 46 per cent perceived selling as an art, 8 per cent as science and 46 per cent perceived selling as an art evolving into science[1]. You must have seen some dynamic and charismatic salespeople and to some extent, advertising professionals, who perform consistently well and thus, get excellent results. Such people have tremendous enthusiasm and the gift of the gab. They feel selling can be learnt only on field by making sales calls. The more calls you make, the better is your experience and thus your success rate. While speaking to some of the top performers, I was told that success comes through experience and experience comes through failures. So, stated otherwise, one has to make lot of calls and face challenging situations like facing angry and egoistic customers who make you wait endlessly. It is also about closing a good number of orders, losing some, and while doing so have an inner resolve that one has to succeed come what may. Essentially this school of thought, which says that learning ‘selling’ through years of slogging in the field rather than a systematic and fundamental body of knowledge can be dangerous as John Howard’s dictum Experiential Knowledge can be unreliable.[2]

Selling as a science looks at selling from the perspective of human psychology and may also include Hertzberg and Abraham Maslow’s theory of motivation. Some of the conceptual frameworks in selling are: AIDA theory, which stands for getting the Attention of the customer, creating Interest, arouse Desire and enable him to take an Action, the other one is Tell them what you want to tell them (Introduction) tell them (the Sales Pitch) and tell what you have told them (Summary and Order Closing).

Who can Benefit from this Book ?

I have been conducting sales/marketing programs since 1995 and this book is primarily meant for salespersons who are into industrial or B2B (Business to Business) sales, those who wish to get into the exciting career of sales or those who are into other functions like production, software, maintenance, finance and are likely to make a switchover to sales as a profession. It should be also useful to sales managers in managing their sales force.

One of our clients, B. M. Nagarajan who was the CEO of Shalimar Tar Products once said, Rajan, for quite a while we are having your training programs. The participants like your techniques and the way you give solutions. We also invest heavily in their technical training. After investing considerable amount of money by way of salaries, travel and training after a year or so; we find the executives are not delivering up to our expectations.

Where is the problem? There can be different reasons. It may vary depending on the company culture, competition etc.

Quite often sales executives are recruited on the following factors:

1. Academic Qualifications

2. Academic Performance

3. Domain Knowledge

4. Personality

5. Basic Communication

For example, in software selling, a person with an engineering degree in computer science with consistent first class is seen as a prerequisite. If he has worked with a competitor and has domain knowledge with a presentable personality, the candidate is selected. However the above aspects which correspond to IQ may only correlate to 25% chances whether the executive will perform as per the expectations. As Daniel Goleman says in his seminal work on Emotional Intelligence that a good IQ may help one to get a sales job but it is the Emotional Quotient (EQ) which can help one get promoted.

A competence is defined as a personal trait or a set of habits which leads to a superior job performance. The above parameters may indicate that a person may be having a potential in salesmanship but does not necessarily guarantee that he may deliver the results. A talent for selling may or may not be present in the parameters discussed above.

The Emotional Intelligence framework defines the competencies which are relevant to sales executives are: (Working with Emotional Intelligence Daniel Goleman, Bantam Books p26/27)

Awareness of one’s strengths and weaknesses

Self-confidence & self-esteem

Self-control – managing disruptive emotions

Trustworthiness/conscientiousness

Achievement motivation

Communication, listening and empathy

How do Customers perceive Salesmen in general?

We have come across quite a few good salesmen who are efficient and effective. They consistently achieve the targets and are respected by the customers. However majority of the salesmen do not meet the above criteria. What do the customers feel about the salesmen who call on them? In a survey carried out with our customers, the following observations were made about the salesmen:

1. They talk too much.

2. They do not listen to our needs.

3. They display an attitude of ‘know-all’.

4. They try to sell without understanding our specific requirement.

5. They do not show much concern about our business process.

6. We are bombarded with unnecessary technical jargon.

7. Their follow-up is based only on their needs and not on ours.

8. They are desperate to close the order.

9. Very rarely do they follow up after collecting the order.

10. They become defensive when pointed about product and service deficiencies.

The framework for a successful salesman can be gauged from the figure below:

The Four Sections of the Book

Section I : Emotional Intelligence (E.I.)

Section I deals with the emotional quotient of the salesperson. Chapter 1, Need for A New Sales Paradigm, discusses the impact of Globalization, Privatization & Liberalization. A paradigm shift from a sellers’ to a buyers’ market has brought fundamental changes in customer behaviour. Today’s customer having a wide choice is in the driver’s seat. Considering the same, salesmen need to change their attitude and behaviour.

Chapter 2, Trust - The Difference that makes the Difference, deals why trust is a sine qua non (an indispensable condition) for a successful salesman. Due to intense competition, the overall quality of products has improved considerably due to which the person behind the product - the salesman has assumed much more importance than the product alone. Given a choice between two identical products, a customer would prefer to buy from a friend, all other factors like price remaining the same. Even otherwise, a customer would still prefer to buy from a trustworthy salesman, even if the dice is nominally unfavourable to the latter in terms of price and technical specifications. Various facets of trust, credibility, turning up in time are covered in this chapter.

Chapter 3, Motivation - The Fire Within, deals with the various facets of motivation. Salesmanship has lot of motivating factors like freedom, job opportunities, perks and increments associated with achieving and surpassing the targets. Apart from the measurable gain in financial terms you also get recognition from your seniors and colleagues. But then there is a flip side also. There are a number of demotivating factors like you need to slog it alone, the threat of targets hanging like a Damocles’ sword, the month end-pressure, not getting the due recognition for your achievement, losing a major order for no fault of yours etc. Such agonies and ecstasies are a part of salesman’s life. A salesman should feel bad when he loses an order but not so bad that he loses confidence on himself as if to lose self-esteem. This chapter covers different types of motivation like internal and external motivation and how internal motivation will take you a long way. Power, Affiliation and Achievement motivation are also discussed. As you will note that Achievement Motivation is an essential part of Emotional Quotient.

Most of the salesmen believe selling is talking. They take this maxim literally and end up talking too much which is covered in Chapter 4, Why do Salesmen Love Talking? Good salesmen should not only be seen but should be heard clearly. In a successful sale, the customer needs to talk more than the salesman. Chapter 5, Authentic Communication and how it is different from endless chatter, deals with the importance of listening and the different stages which are critical in high-value selling. It is said that when you are talking you are not learning. In an era of information age, it is not appropriate to load the customer with too much information like your competition and unnecessary details of all the products.

Section II: Intelligence Quotient (I.Q.)

Section I is about the Emotional Quotient, how you connect with the customer on an emotional or a heart level. Section II is about the Intelligence Quotient. Once you have established rapport with the customer, he would certainly like to know about your services and products. Intelligence quotient is about the mind, your technical competence, product knowledge, and the problem solving ability. Chapter 6, How Customers Perceive Value, is about value proposition. You should have adequate technical knowledge but the purpose of a sales call is not to display your knowledge. It is said that the purpose of communication is not to impress but to express. The customer expects you to solve the problem he is having or those he is anticipating.

The job of a salesperson is to create value for his customer, his organization and himself. There are two types of value: one which is inside the product and the one perceived by the customer. Quite often both are not the same. Sometimes a great product having the best technical features may not be sold because the salesman has not been able to create value. There are two ways in which the value gets created in the customer’s mind: one is by active listening and the other by asking precise questions. In Chapter 5 you will observe that in a successful sales call, a customer talks more than the seller. It was also said that active listening can help you become an effective salesperson. But even if you listen, first of all the customer should speak. A number of purchasers will not talk in order to put the salesman in a trap. To make the customer talk more, you need to ask him questions. In this chapter you will learn the way questions should be asked: open, closed, situation, problem, attitude, leading questions etc. While asking questions, you may come across a number of hurdles. The techniques to overcome those hurdles and the care to be taken while asking tricky questions which might upset the customer are covered in this chapter.

The differences among features, advantages and benefits are also discussed. Quite often salesmen believe that excellent service, quick delivery are their benefits. You will learn that benefits are not decided by the salesman but by the customer.

Just because you ask questions; it does not mean all is hunkey dory. The customer is going to raise a number of objections like: Your price is high, your deliveries are too long, we get a better deal from competition. Some times he may even say that he does not need your product. A number of salesmen feel that one should go on asking for an order religiously and he will get the order. That is a landmine.

Chapter 7, From Objection Handling to Objection Prevention discusses the different types of objections which happen at Logical, Behaviour, Identity and Value level and how they should be attended. Using counter-examples to handle objections is also discussed. Objections are raised by customers because the need perceived may not be clear. Different stages of need development like No Need, Abstract Need, Concrete Need and Strong Need are discussed. You will appreciate that spending more time on identifying and developing needs not only help you in preventing objections but also help you get better margins.

The advent of computers has made your job easy in terms of making offers, sending mails, making Power Point presentations etc. It has also reduced the dependence a sales executive had on steno typist in yesteryears. However the freedom comes with lot of responsibility. Today’s organization expects you to be disciplined in terms of planning, reporting and sales forecasting. Chapter 8, MS Excel as a Planning Tool covers the same. For more details you can have dedicated resources or learn through self-help tutorials on the Net. Emphasis is given primarily to Excel even though Power Point and Outlook may be relevant.

Excel is an important part of Microsoft office suite. The most important aspects required for salesman productivity are discussed. Some of the applications are:

a. Planning: You will be able to make a Pending Quotation Statement on a weekly and monthly basis. It also helps you to see the backup plan to achieve the targets. A salesman having an adequate number of backup cases in his pipeline or funnel has a better chance of reaching his targets vis-à-vis the one who has less cases.

b. Market Understanding: You may get business from your customer but are you getting enough market share vis-à-vis your competitor?

c. Scenario Planning: When customers ask you for discounts, does it result in increased order quantity? In this feature the demand elasticity with price will help you maximize your order booking and thus the commission.

The topic which is dear at heart for most of the sales managers (and executives too) is on order closing. Most of them feel that if their sales executives are taught new techniques in order closing, all problems will vanish and lo behold, the magic numbers will be reached. Chapter 9, Order Closing - Myths Vs Reality, discusses the myths of order closing. In case of a small sale, more number of order closing statements can result in higher business but may be counter-productive in a large sale. It also discusses historical obsession of sales people with new techniques on order closing and also why creating value in the customer’s mind can make the order closing a smooth process.

Section III: Conceptual Skills (C.S.)

Section III is about the Conceptual Skills. Apart from Emotional Intelligence and the Intelligence Quotient which correspond to the heart and the mind, you also need to know conceptual skills from other disciplines. Understanding the concepts makes a salesman not only a well-rounded personality, but also helps him in managing the paradox between the short term and the long term goals.

Chapter 10, Financial Basics every Salesman Should Know, covers concepts like top-line, bottom line, margins, ROI etc. Collecting orders and meeting targets is necessary for you but it is not sufficient. Quite often salesmen do not realize that a sales process is incomplete by simply collecting an order. You need to take it to its logical conclusion by supplying the material in time; raising invoice and getting the payment within the stipulated period and the payment getting deposited in your company account. The supply of material and payment follow-up may be the responsibility of the production and the finance dept. However as you are the face of the organization, you are also responsible to see to it that the sales cycle is closed at its logical end.

Long overdue outstanding payment affects your profitability. Insisting on advance not only reduces the risk but enhances the profitability; is discussed in this chapter.

You do not get what you deserve, but will get what you negotiate. This is quite an apt statement for salesmen. Just because you have a great product does not mean that you may get a correspondingly a good price. Chapter 11, The Art of Negotiation covers the three stages of negotiation: the preparation prior to negotiation, guidelines during negotiation and the concluding stage. It is assumed that negotiation is winning at the others' expense. You will also discover that there are two types of negotiations, one is integrative and the other, distributive. The difference between the two and also the typical games the customers play, the tactics and the counter-tactics are covered in the chapter. Information, Time and Power happen to be the three important ingredients of a negotiation process, between the two parties which determines the negotiating leverage.

Chapter 12, Key Account Management is about selling to large or major accounts. It is more complex than selling to small accounts. Apart from the order value which is high in a key account (say around `10 lakhs or more), it also involves a number of decision makers, the preferences, the competitors etc. A framework for identifying the key decision makers, the pivotal role played by the well wisher and how getting the crucial information can tilt the balance in your favour is discussed in this chapter. In the strategic approach you will observe that your relationship with the customer can be at 4 levels:

New Enquiry

Key Account

Repeat Business

Competitor’s Account

Chapter 13, The Big Picture, covers the Sales Funnel which will help you not only improve the sales forecasting accuracy but also your confidence level while negotiating with your customers.

Salesmen need to work under deadlines to achieve their targets. However while doing so, quite often they lose sight of the big picture which comprises of overall market strategy, the predictability of numbers and developing a backup plan.

Section IV: A Tool Kit for Implementation

Chapter 14, Games Customers Play is about the different tactics played by customers to put salesmen under pressure. How the games can be tackled by perseverance, assertiveness and creativity with real life success stories are covered.

Chapter 15 covers The Frequently Asked Questions, I have encountered during our training programs. Chapter 16 is the concluding chapter on Importance of Continuous Learning which indicates how the training scenario has changed from 80s till now. In future, I feel the onus of Sales Training may shift from the organization to the individual. A paradigm shift from a focus on success to a focus on learning is also discussed.

A number of clients in general and Mr. K.R. Chandrasekar, EVP–Sales from Lapp India in particular, had indicated that salesmen should be clear of the commercial terms. A glossary of business terms is provided in the appendices. A laundry list of do’s and don’ts may help you on a day-to-day basis. The appendices also cover two reports: the first one is The Contextual Selling Plan which should help you in the effective planning, execution and analysis of a single sales call. Sales Funnel and the Big Picture on the other hand should help you plan monthly and quarterly targets.

Considering that a significant proportion of sales professionals comprises of ladies, it would have been politically correct to use the term salesperson in this book. However the term salesman has been used only for the sake of convenience and need not be misinterpreted by saleswomen. The term prospect and customer has also been used interchangeably.

SECTION - I

EMOTIONAL INTELLIGENCE

People do not care how much you know, but would like to know how much you care. - Abraham Lincoln

1

Need for a New Sales Paradigm

What got you here, won’t get you there. – Marshall Goldsmith

While introducing me to his boss, my friend Sanjiv introduced me as a salesman who can sell a refrigerator to an Eskimo. I did not know whether Sanjiv’s boss got impressed with that introduction but I was quite embarrassed. No statement has caused so much damage to the profession of selling than the one on Eskimo. In spite of my friend’s best intentions, I was thinking about the relevance of such a statement in the current times. Whether it is the selling of a fridge to an Eskimo or a comb to a bald man, I feel the comparisons are quite inappropriate.

In Tamil, there is a saying which describes a typical salesman as: Kaiyalae Pai, Kaluthialae Tie & Vaiyilae Poi which means a salesman is the one with a bag in hand, tie on the neck, and a lie on his tongue. Let us see why such a mindset will be counter productive in the 21st century.

The Changing Business Environment

1. From a Sellers’ to a Buyers’ Market: Prior to liberalization (1991), India was primarily a sellers’ market where customers had to wait for substandard products be it automobiles or electronic equipments. Whether an Ambassador or a Premier Padmini, the customer had to book the car and wait for 2-3 years before getting the delivery. Similarly for Bajaj scooters, there used to be a waiting period and a Bajaj Chetak was available only on foreign exchange.

It used to be very difficult to buy specific types of computers. Only a few selected organizations from public sector, R&D Labs or academic institutions had the privilege to import a computer, if it was necessary. To do this, one had to approach the Joint Controller of Imports and Exports (JCIE) and get Customs Duty Exemption (CDE), Not Manufactured in India (NMI) certificates etc. It used to be a long and laborious process getting such certificates, where the maximum efforts of a salesman were spent in completing paperwork.

Once, in 1988, the Aeronautical Dept., of IIT-Bombay, had planned to import a Logic Analyzer. The main