“It’s
all about the deal. It’s all about the deal.” The commercial
banker repeated the comment twice. Then
he added, “When you talk about sales strategies
I think you’re missing the point. Whoever has the best price
and structure will get the business. That’s the sales strategy.”
Whether or not it’s accurate, this is a statement we
hear all the time from commercial and business bankers.
Understanding
that average-performing salespeople often use their personal
value propositions as a basis for their sales strategies is
the first step towards building more effective sales strategies.
What
is sales strategy? Does it have a place in today’s increasingly
competitive banking environment? Or, is selling really all about
price and structure? And, what about concepts like value proposition
and market strategy? How do these pieces fit together, if at
all?
The
strategies and tactics that each salesperson uses day after
day determine the success of the sales force and its ability
to help the bank meet its business objectives. This discussion
is designed to help front-line sales managers, the ones who
are responsible for the day-in and day-out coaching of the sales
force, (1) be more objective in seeing the mix of strategies
their sales team uses and (2) provide a higher level of sales-strategy
coaching for average-performing sales team members.
First,
let’s do a quick review of our assumptions and findings from
our previous discussions.
•
We’ve made the assumption that the banks we’re discussing have
a stated objective of top-line growth without sacrificing asset
quality or margins.
•
In these banks the business-to-business sales force is a major
contributor of revenue.
•
The key to sustainable revenue growth from the sales force is
the average-performing sales team member. (This group is sometimes
called the core of the sales force).
•
The key to improving sales performance in the core is by helping
each salesperson to develop his/her intrinsic attributes
and motivators, not by adding more and more extrinsic motivators
— revamping compensation schemes, continually raising sales
goals, building ever higher levels of visible accountability,
etc.
Second,
these banks have built the necessary foundation:
•
They are filling sales positions with salespeople who have appropriate
critical thinking, language, and social skills.
•
The bank’s sales management team has segmented the business
market based on appropriate criteria and then segmented the
sales force into teams that match the needs of each market segment.
•
Executive Management has built and articulated an over-arching
sales management process. The process is supported at all levels
of sales management.
•
The banks have provided adequate sales and sales management
process training for each sales team.
Market
Strategy, Sales Strategy, Product Strategy
Over
the last decade, the banking industry has clearly established
that the business market it serves is not uniform — that the
microbusiness market, the small business market, and the mid-market
are significantly different — and that a one-size-fits-all approach
to the business market will not work over the long-term. In
many banks, these market differences are captured in the market
strategy of a bank’s business development process.
Most of these banks use a sales force as one of the channels
in their market strategy. How a bank builds, manages, trains,
and deploys a sales team in each segment is one aspect of their
market strategy. In addition, to support their market strategy,
they build specific product strategies and,
in some cases, a sales strategy for each market
segment. But the market strategy drives the overall approach
to the business market.
For
the sake of our discussion, we’ll say that the banks we’re using
as examples have built and articulated a product strategy
that says: we will have competitive products
that match the needs of a specific segment; our products will
be in the middle of the pack in terms of structure and price;
and our products are designed to match our objectives for asset
quality and margins. Depending on market ups and downs, their
products may be highly competitive some days and barely competitive
other days. To the salesperson selling credit products for these
banks it might appear that when they get the pricing right,
the structure isn’t competitive; when they get the structure
right the pricing isn’t competitive. With this product strategy,
the way a salesperson has to sell is more complicated — the
product won’t sell itself.
On
the other hand, a bank might build a product strategy to be
a market leader. Now the salesperson’s job is more straightforward,
get the word out about our great rates and flexible structure.
In this example (a salesperson’s dream come true we would add),
the product strategy may very well be the sales strategy, especially
for the average-performers on the sales team. The product sells
itself.
When
the bank adjusts price and structure to achieve certain business
objectives we’ll call it a product strategy. But sometimes,
when the product doesn’t sell itself, the salesperson will try
to change the product to make it “better.” Now, he has used
a product structure (product strategy) to make a sale. Where’s
the sales strategy?
What
is a Sales Strategy?
“It’s
all about the deal,” the commercial banker said. What he meant
was it’s all about price and structure. So what’s his role as
a salesperson? To sell. And selling means to win the business
when he doesn’t have the best price and structure. Selling is
influencing the decision making process. (At a socio-psychological
level, selling is a form of social influence.)
So
what is a sales strategy? In its best definition, it’s the strategy
and tactics that a salesperson uses when his product
is not the best in the competition. Unfortunately,
there is no one sales strategy that will be successful in all
competitions. High-performing sales people adjust their sales
strategy based on the situation. They know that each situation
is different and they have their eyes wide-open to the way the
buyer makes decisions. Average-performing salespeople often
sell the same way in each sales interaction. They seem to have
a default sales strategy. Sometimes it works, sometimes it doesn’t.
As
a sales manager, how do we know when to adjust the sales strategies
of our sales team or a sales team member? Here are some recommendations:
•
Be familiar with the market research about buying decision criteria,
not just the anecdotal comments from your sales team.
•
Understand the “defaults” of your average-performers.
•
Over time, identify the salespeople who always sell the same
way.
What
the Research Says
We
have a number of clients who have done primary market research
in the small business/middle-market segments to understand why
business decision-makers select one financial service provider
over another. In all cases the research points in a similar
direction.
Effective
market strategies are based on research and so it follows that
product strategy and sales strategy may be guided by the same
research. To help understand the role of sales strategy vs.
product strategy, we’ll look at one element of the market research
that has a day-to-day effect on sales teams: the criteria
(the values) that a business owner or decision-maker
uses to select a provider for specific financial services.
One
element of this research focuses on relationship/service vs.
price. Here it is. When asked whether they would prefer to use
a bank that provides better fees and interest rates versus
one with a higher level of relationship and service ,
50% said fees and rates, 20% said relationship/service, and
30% were in the middle.
In
focus groups that accompanied one of these studies, there were
additional insights:
•
The “price-shopper” group made comments such as: “I’m a
dyed-in-the-wool price shopper. It’s in my DNA. It doesn’t matter
what I’m buying, I haven’t done my job if I haven’t gotten the
lowest possible price (or the best possible structure).”
•
The “relationship-shopper” group made comments like “It’s
not that I’m price insensitive, I want to make sure I’m paying
a fair price. But, I realize that to get more expertise, more
know-how, and better service, I may have to pay a little more.”
•
The group in the middle was neutral — they had no clear preference.
Experience indicates that buyers in this group are affected
by the sales strategies and value propositions of the salespeople
who call on them.
Value
Systems and Value Propositions Affect Sales Strategy
These
studies show that many business owners/decision-makers have
clearly defined value systems that affect their buying criteria.
We also know that all salespeople have value propositions that
are a part of the way they sell. How these value systems and
value propositions interact create sales strategies during a
sales process.
Before
we compare these two further, let’s define value propositions
. All salespeople have a value proposition that they
use in their selling. The proposition expresses, “Here’s
what’s in it for you to do business with me.” The salesperson’s
value proposition may be conscious or unconscious and may be
expressed verbally or nonverbally. And, the expressed value
proposition may or may not be the same value proposition that
their bank has articulated.
Our
experience with banking sales teams indicates that each salesperson
has a unique value proposition, but collectively they tend to
cluster around three primary propositions.
•
Low-Cost/Low-Structure Provider
“Tell
me what you have at your current bank and I'll beat it,” is
a common expression of this value proposition. With this approach
you are really selling a product, something tangible. You are
going to adjust product features. When using this approach the
salesperson almost always asks for an adjustment of price, structure,
or fees.
•
Customer Service
“You'll
be like my only client. I'll be accessible and responsive 24/7/365,”
is an expression of this value proposition. You’re no
longer selling a product, now you’re selling a concept. Unfortunately,
most average-performing salespeople never learned how to sell
at a conceptual level, so they over-commit; they promise the
moon. But the moon is hard to deliver for a salesperson that
manages many relationships.
•
Expertise
“I'll
understand your business, help you anticipate future issues
and needs, and guide you through complex financial choices —
better than any other banker,” is an expression of this
value proposition. It is a proposition that is easier to deliver
on because it’s based on the salesperson’s personal experience
and expertise — which he or she has ultimate control over. Of
course, this requires that the salesperson has a significant
level of expertise in banking and in the customer/prospect’s
industry — or that he does a lot of homework.
So,
in each sales interaction the customer or prospect is presenting
a value system to the salesperson and the salesperson is presenting
a value proposition to the customer/prospect. Ideally, the
value system and the value proposition match. However, in
many cases they don't. Let's take a look at some of these
mismatches and their potential outcomes.
The
table below shows the value systems and value propositions side-by-side.
| Customer/Prospect
Value System |
Banker
Value Proposition |
| Price/Product
Shopper |
Low-Cost/Low-Structure
|
| Service/Relationship
Shopper |
Customer
Service |
| Undecided/Neutral
|
Expertise
|
Value
Propositions and Sales Strategies
Here
are two seemingly similar comments that represent two different
selling situations.
“I’ve
been calling on this prospect for the last six months and finally
it paid off. I have an opportunity to look at a commercial mortgage.
There’s only one hitch: the owner is very price sensitive and
wants to make sure that he gets a good deal. But, if we can
get our foot in the door with this mortgage, we’ll eventually
get the whole relationship.”
“I
brought this company in by offering a very low rate on a loan,
then through great service I brought over the rest of the relationship.”
In
response to the first comment, we have seen many bank customer
lists that are filled with “relationships” that have a thinly
priced loan and a demand account with less than $1,000 in balances.
And, these are not new customers; in most cases the relationship
has been on the books for several years. Here’s the question:
As a salesperson can you change a customer or prospect’s
value system? Can you turn a price-shopper into a
relationship-shopper through great sales skills, a good sales
strategy, extraordinary customer service, or industry expertise?
The answer is no. Price shoppers look at relationships as a
series of transactions. Their definition of a relationship is
having you on their short list — ready to compete for the next
transaction. The $1,000 DDA was the result of a condition in
the note that they would maintain a deposit relationship. They
opened a DDA but they never brought over the rest of deposit
balances.
In
response to the second comment, can you take the 30%
who are undecided and move them toward the price-shopper side
or the relationship shopper side? Yes, demonstrated
service excellence or expertise can move the undecided/neutral
buyer more to the relationship service side. There is a high
probability that’s what happened here; this buyer was not a
price-shopper, he was undecided/neutral.
Experience
shows . . .
•
Very few Price/Product Shoppers ever change their value system;
it seems too deeply rooted.
•
Service/Relationship Shoppers seem convinced that a relationship
is important to their business and will keep looking for vendors
who will build a relationship.
•
The Undecided/Neutral group responds differently — over time
a salesperson can move decision-makers from this group toward
the price-shopper side OR toward the relationship-shopper
side.
Ideally,
salespeople adjust their value proposition based on the value
system that is presented by the customer or prospect. The problems
begin when salespeople use the same value proposition in all
sales situations. Many average-performing salespeople seem to
get stuck in the value proposition they are most comfortable
with, and that value proposition becomes the default
sales strategy. Here are some typical examples and some predictable
outcomes:
•
A salesperson who is comfortable with the low-cost provider
value proposition will try to win by beating the competitor’s
product — by selling at a product comparison level. They usually
sell price to the relationship-shopper and undecided groups
too (which gives away margins and asset quality).
•
A salesperson who is comfortable with the customer service
value proposition will try to sell a price-shopper
on the value of customer service (which won’t work) or a relationship
shopper on the value of service (which will work).
•
A salesperson who is comfortable with the expert value
proposition will try to sell a price-shopper on the value of
their expertise (which won’t work) or an undecided or relationship-shopper
on the value of expertise (which will work).
The
high-performing salesperson behaves differently. They consciously
or intuitively read the value system of the buyer and adjust
their value proposition accordingly.
•
They sell price and structure to a price-shopper.
•
They sell expertise/service to a relationship/service-shopper
or an undecided.
Does
that mean that they won’t deal with price-shoppers? No, half
the market is price-shoppers. They have to deal with them. But
they don’t waste their time trying to sell based on service
or expertise and after the sale they don’t waste time and energy
trying to build a relationship with someone who only wants to
do transactions.
But
when working with relationship/service shoppers they’ll use
a sales strategy that matches the value systems of the buyer
— and not leave credit quality, margins, or wallet share on
the table.
In
Summary
As
a sales manager, guiding and directing the sales strategies
of sales team members is a key responsibility. Understanding
that average-performing salespeople often use their personal
value propositions as a basis for their sales strategies is
the first step toward building more effective sales strategies.
But it’s only the beginning of improving the strategies we use
in competitive situations. Next we need to be sure that we understand
the decision-making process within a business and strategize
the sale through each of the decision-makers, influencers, users,
and gatekeepers. And that’s where we’ll pick up in Part Two.
Suggested
Action Steps for Sales Managers
•
Get to know your team’s value propositions/sales strategies.
•
Select 2 average-performers from your sales team.
•
Review their calendars and look for an upcoming prospect call
on a targeted prospect.
•
Do some pre-call/post-call coaching with them and ask specifically
about their strategy for differentiating themselves from the
current bank. Don’t critique them, just listen.
•
When an average-performer has a deal that they want to compete
for, get an idea of their sales strategy early on. When he tells
you that he’s about to start on the deal ask:
•
What’s the deal?
•
Who are the competitors?
•
What do you think are strengths and weaknesses of the competitors
in this situation?
•
How would you describe the values of this buyer? What has made
him successful?
•
What is your strategy for winning?
•
Then, before he delivers a term sheet or a proposal meet with
him again and ask what his strategy is. See if he is using the
term sheet as the sales strategy. Coach him toward an appropriate
sales strategy.
Getting
to know the strategic thinking skills of your average performers
is a step closer to improving their sales strategies and sales
performance.
We’ll
see you for Part Two of Sales Strategies
in the spring. For related information, we invite
you to visit our website.
