2. Making the Leap I From Reactive to Proactive Sales
Businesses can no longer sit back passively and hope customers come a
knocking. The proactive pursuit of potential clients must be made a part of any
companies’ day to day sales strategy, and reflect in its activities.
In today’s competitive marketplace, in practically every sector, obtaining new
business is more difficult than it has ever been. Numerous factors are behind
this:
Number of Alternatives
Potential clients have more alternatives in terms of where they want to take
their business to than ever before. The number of competitors, the channels
they can be accessed by, and the products and services they provide have all
contributed towards giving the potential client a wealth of options.
Example – Booksellers like Waldenbooks have faced an extreme growth in
competition through the proliferation of the internet channel, where companies
like Amazon.com and Wal-Mart have thrived in winning clients. This shift in
channel usage has resulted in the closing of hundreds of Waldenbooks
bookstores (2oo to close this coming month alone), and countless thousands of
smaller shops across the United States.
Pricing
Winning on price has become extremely difficult, as competitors are now more
than ever able to match any price offering. Companies must look to differentiate
their offerings in alternative ways, as pricing advantages can no longer easily be
conveyed to the potential client.
Example – Computer maker Dell used to enjoy a significant pricing advantage
against its premium PC OEM competitors, particularly benefiting from its supply
chain efficiencies and direct sales channels. This advantage, however, has since
been stripped away by the likes of other premium brands like HP and Lenovo,
who have copies some of Dell’s efficiency-driving tactics, and introduced some of
their own.
Product / Service Features
Similar to pricing, competitors are able to rather easily replicate the features of
any given competitors’ product or service. Unless a specific patent and its
relevant protection is in place, very few companies can ensure their given
product or service will not be duplicated by a competitor, thus killing its
marketplace advantage.
Example – Splenda, the artificial sweetener, has recently lost considerable
market share to a Chinese rival who copied every aspect of its own product. The
company falsely believed no competitor could produce the sweetener’s core
3. chemical sucralose on a commercial scale, a belief that was dispelled when they
found the rival’s product available in Wal-Mart stores across the United States.
In light of these market dynamics, companies can no longer rest on their laurels –
a passive approach to sales and customer acquisition simply will not work in
most cases (surely not in a way that will allow companies to hit their aggressive
sales targets). To succeed in such a competitive, consumer-empowered
atmosphere, companies must take to the streets, literally.
Proactive vs. Reactive Sales in a Given Store in a Given Sector
Reactive Sales World
In a reactive sales world, a given company’s sales rep waits for the customer to
come in through the door, and then tries to sell to that customer (who is likely
going to buy something anyway, regardless of the sales rep’s support / service).
In this reactive sales world, the customer drives the relationship, dictating what
he or she may buy, determining the rules of the game. The sales rep is ultimately
a passive bystander in most cases, and adds little value besides being an
information provider.
Sales reps in a reactive sales world come and go, with very high turnover
associated with the position. Minimal training is provided to such reps, and thus,
they understand little about the needs of their potential customers. In this store,
the sales rep can do little to win over potential customers who show resistance
to a possible purchase – their ability and motivation to make the sale happen are
limited.
In such a reactive sales world, a company’s ability to drive people to the store
determines the overall possible success of the store, and as such, requires
extensive reliance on advertising, word-of-mouth, promotions, etc. That is, no
matter how proficient and savvy the sales reps are, there is a constraint, and that
is total number of visitors to the store.
The measure of success of this store in a reactive sales world is total sales per
square foot, and for the employee, number of sales registered to him or her (in
more advanced worlds, their mystery shopping service score). In such an
environment, a store can only go so far as increasing their conversion rate – the
percentage of potential customers walking through the door that make a
purchase.
With such an approach in place, the location of a store dictates the overall
success of the store to a very strong degree. As goes the neighborhood, so goes
the store – high foot traffic spells success, the reverse, failure. In a reactive sales
world, companies open and close stores on a constant basis, assessing
performance quarterly to determine which stores to keep open and which ones
to close.
4. Proactive Sales World
In a proactive sales world, the employee spends a great deal of time pursuing
customers, in the most efficient manner possible relative to their specific
situation (via emails, phone calls, door-to-door visits, etc.). In this proactive
world, leads are given to the employee, and he or she is responsible for pursuing
these leads. The store and its employees are not limited to the business they can
drum up from customers that visit their store, but rather, by the additional
number of potential clients they can get in touch with in a given amount of time.
In this proactive sales world, the store is very well educated about potential
clients in the area. They know at any given time their market share, what their
competitors are doing and which customer segments they are succeeding with,
and which potential clients they have the highest probability of winning over if
visited.
In this approach, products and services are matched to potential clients before a
visit is made, and pitches to win them over are also ready. Sales reps are no
longer turnover prone, but rather, well trained and motivated through financial
and other means. These sales reps know the products and services inside out,
know the needs of their potential customers, and can convert resistors much
more effectively.
Sales per square foot are still a measure of success, but are complemented by
targets around potential clients visited, leads generated, leaflets distributed, etc.
The store is no longer exclusively reliant on advertising, promotions, and word-
of-mouth for new business, their location also no longer limits their potential
sales.
Stores that succeed in the company now do so because of their sales reps’
abilities to win over customers, not just inside, but outside the store. Reliance
on location, advertising, and promotions becomes secondary to the ability of the
sales force.
Proactive Sales Applicability
A proactive sales model is not applicable in every sector – sending out sales reps
from a clothing store to visit potential clients, for example, will yield minimal
results. Looking at this issue from the potential client’s perspective will point to
the sectors that can benefit from this model.
For example, a small business opens up shop in a given neighborhood. The
business is visited by an electronics store sales rep to discuss their computing
needs. They then get a visit from a local bookstore that offers to bring a given set
of business magazines and newspapers on a regular basis to their door. Then the
local telecommunications dealer stops by to discuss their fixed, mobile, and
internet service needs. A bank sales rep also comes by to open up their business
checking account. Finally, an insurance sales rep comes by to discuss the
businesses overall insurance needs.
5. This is only a scenario centered around a new business that only gives some
examples of sectors than can benefit from using a proactive sales approach,
similar scenarios can be built around new residents, existing residents, existing
businesses, etc.
Leads
Leads are not always required to visit a potential customer, but they go a long
way towards driving efficiency in the proactive sales effort. Leads can be
obtained in numerous ways:
Through a listing of newly opened businesses published by city / government
entities
Through realtors who can provide this information for a fee
Through searching on the internet for directories
Through using actual phone directories
At a minimum, companies in sectors that can benefit from such a proactive sales
approach deserve to try it out as a pilot. This requires minimal training, with a
focus on just one store, to see if the benefits derived are of a sufficient level to
scale out the approach to the entire sales network. Companies ignoring
considering the utilization of such an approach are doing so at their own peril, as
their competitors likely will not.
6. About Forte Consultancy Group
Forte Consultancy Group delivers fact-based solutions, balancing short and long term
impact as well as benefits for stakeholders. Forte Consultancy Group provides a variety
of service offerings for numerous sectors, approached in three general phases -
intelligence, design, and implementation.
For more information, please contact
info@forteconsultancy.com
Forte Consultancy Group | Istanbul Office
www.forteconsultancy.com
