Selling in the Post-GFC world: Commercial Acumen in the salesforce

Business-to-business selling in the post-GFC has been tough. Budgets have been cut, investments postponed, entire functions down-sized out of existence. Yet some selling organisations continue to be successful, while others have stumbled. I’ve been looking at why some firms have been better able to weather the storm than others, and will be sharing some thoughts over a series of articles.

One of the key drivers of success in B2B sales currently is the amount of applied Commercial Acumen in the salesforce. Successful organisations are much better at putting together a compelling business case for the client company, clearly demonstrating the value created by the decision to move forward. What I’m calling Commercial Acumen here is a combination of financial and business smarts that allows someone to generate a business case showing the client the clear difference (in profitability, or earnings per share, or EVA or whatever key business metric is important to that client) the seller’s products or services can make.

Commercial Acumen is important in this economic environment for reasons that all come back to the same theme: budgets are tight. Purchasers (whether business-led or procurement) are coming under immense pressure to justify any spend that they make. This leads them to require harder business cases from suppliers, or to simply not spend. There’s a lot of fear out there, and significant risks to the purchaser, and organisations that don’t address this will have trouble moving forward.

On a similar note, there is much more executive intervention in spending decisions than ever before. Decisions that previously could be approved at one level of the business now have to be made two or even three levels up. We’ve seen situations where business unit head approval is even required for any interstate travel ($50 on Tiger!). Selling organisations need to recognise that their proposals are being looked at by a much more senior audience than before. This audience has completely different, and more commercially sophisticated, expectations.

From my observations, there are three levels of Commercial Acumen in a salesforce:

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1.  Price/Performance. Realistically, this is the absence of applied commercial acumen. A salesperson here focuses on lining up specifications against the performance requirements, and demonstrating price leadership. This price focus leads to the occasional win, but tends not to build a long-term relationship.
2. Tactical. Organisations at the tactical level of commercial expertise demonstrate a focus on the operational impact of their products or services. They tend to be very good at the cost-out part of the equation, showing how they can help save the client money above and beyond the price of their offering. Strong and useful relationships can be built with purchasers when operating at this level.
3. Strategic. At the top of the pile is Strategic, where salespeople integrate multiple perspectives into an overall impact statement. A notable difference from the Tactical level is being able to look across multiple functions within the client to identify impacts and savings. Another key difference is the inclusion of strategic priorities of the client, things like growth, increase in market share, customer retention and the like.

Moving from Price/Performance to Tactical is a huge and important maturation for a business. In fact, companies that have not been able to do so over the past 5 years or so are probably no longer with us (or operate in a truly commoditised space). This was true even before the GFC.

But the GFC has shown that firms with that can operate at the Strategic level of applied Commercial Acumen are much more likely to keep growing, or, in some situations, even accelerate growth. These firms are more likely to get approval to move forward with their ideas, more likely to build strategic executive partnerships, and more likely to be retained next time around. I’ve worked with companies to put together Value Proposals (a simple business case model) that emphasise this Strategic element, including a food ingredients company that emphasised the impact on the client’s customer retention, and a document automation company that focused on a client’s incremental improvement in customer acquisition. The Strategic perspective can actually change the entire conversation from a selling conversation to a business conversation.

How to get there? Jumping from Price/Performance to Strategic directly is tough, and I certainly haven’t seen it happen. The first focus needs to be on incremental movement, from one level to the next.

To get to Strategic from Tactical takes a series of concerted efforts. Having a structured Value Proposal template is one step, where the template emphasises looking beyond the obvious, and beyond the current contact, both horizontally and vertically. And, of course, you’ll need to develop some basic finance skills and a comfort level around discussing these topics within the sales team .

Oh, and you’ll need to engage with the client quite intimately to get this right. An organisation can’t reach the Strategic commercial acumen level from the outside. To succeed you’ll really need to be sitting down with the client to put together the Value Proposal with their input and active participation. But that’s a topic for another day! 

Selling in the Post-GFC world: Intertwinedness

I had an interesting discussion the other day with Brad Collins, Head of Product & Sales Capability & SMSF Sales at AXA Australia, and the topic came up of “What is new in Sales in this post-GFC world?” Now, setting aside the possibility (probability?) that we are far from post-GFC, I think it is an interesting area for discussion, and one into which I’ve been doing a bit of research myself.

Brad believes that one of the key themes for a business-to-business salesperson to emerge from the GFC is that of Intertwinedness (I’ve used this word, he summarised the idea much more eloquently). Essentially he suggests that for businesses to be successful, they need to do a better job of moving away from just the impact of the product or service to actually dealing with the success of the corporate entity itself.

Intertwinedness means looking at the client’s entire business system, value chain, strategic goals and business drivers and thinking “How can we improve this?” It requires the ability to look beyond just our products and services that we can offer, and to think more effectively about the capabilities of the business as a whole. This simple mapping of key client needs to our capabilities can create conversations that are two and three steps away from the actual products we sell.

Even beyond that Sweet Spot, Brad suggests that selling organisations looking to intertwine themselves consider not just where our capabilities overlap with our clients’ needs, but where our needs overlap. He gave the example of an industry superfund approaching a rail operator with the business idea of pooling purchases from printers, in order to decrease costs of creating publications. Some of those publications may be shared, but the business benefits would go beyond that simple overlap.

Being intertwined means it is hard to uncouple the business systems - Brad used the analogy of a weed that is so intertwined in the roots of a plant that to remove the weed would kill the plant. Maybe aspiring to weed status isn’t inspiring, but it hits home. In the GFC this can be a powerful defence strategy. Interwinedness is, of course, just as powerful when used as an offensive strategy, something I’m sure I’ll touch on in a future posting.

I like the idea and my experience and research supports it. The challenge, of course, is to get the sales organisation to be able to think strategically and holistically about their account. I believe that this is a difficult task, but not an impossible one. To achieve it, an organisation needs to break it down into smaller tasks; one can’t expect a transactional salesforce to become a strategic trusted partner overnight.

A good starting point is the number and kind of contacts that a salesperson has within an organisation. If they are only dealing with one area, or one area plus procurement, then they are unlikely to be able to see beyond the simple product impacts. Drive them to have more connections and conversations with other functions, business units, etc, to at least have a sense of what those different stakeholders care about. Then start them thinking about how your product or service might help those other areas to succeed.

It is a slow process, but thinking outside the current buying area is a good first step towards intertwinedness. Be The Weed! J