The document discusses rethinking the sales force and focusing on value creation rather than just product promotion. It outlines three types of customers - transactional, consultative, and strategic - that require different types of sales approaches. Transactional customers want lower costs, consultative need help understanding products, and strategic seek partnerships. To shift to value creation, companies should develop a value vision, restructure sales around customer types, improve value-enabling capabilities, and align metrics and compensation with value strategies. Differentiating customers and maximizing efforts for consultative sales is also recommended.

1. ReThinking The Sales Force Daniel Schwartz RethinkingSalesForce.ppt(28)

2. Selling Nothing Happens Until Something is Sold! Focus on the Customer What is in it for Me! That is what the Customer is thinking Some Practical Techniques

3. Two Fundamental Concepts: From ReThinking the Sales Force by Neil Rakham The purpose of the sales force has changed Three types of customers cause three types of sales

4. Interesting Opening Question for the Group What is the purpose of the sales force? _________________________________________________ _________________________________________________ _________________________________________________ _________________________________________________ _________________________________________________ _________________________________________________

5. The purpose of the sales force has changed Not value communication, but value creation Value Creation: Must directly benefit the customer: “ You may have differentiated your product, but the differentiation doesn’t create value because it doesn’t matter to the customer.” “ There’s a strong argument to be made that value migrates from the product itself to how the product is acquired: The sales process itself plays an increasing role in creating customer value “ A sales force that adds real value can justify higher prices and can also create strong competitive advantage.”

6. What is happening in the marketplace? Products and services becoming commoditized rapidly Sales force must increase perceived benefits or increased value only possible through reduced cost The idea that a sales force can exist solely to communicate product value is no longer supportable when customers already have all the information they need to make a confident decision. Increasing price sensitivity also puts pressure on suppliers to really understand consumer tradeoffs Successful players will focus on developing measurable hard differentiators that provide objective advantages over competing products

7. Three types of customers cause three types of sales Type customer Type sale Characteristics Intrinsic value Transactional Value with product itself Extrinsic Consultative Understand product use & features Strategic Enterprise Strategic partnering Unless your value creation effort is closely coupled to your customers’ value creation needs, your selling will fail…it’s fatal to adopt one value-selling mode if your customers want another

8. Strategies for Creating Value Type Selling Strategies Transactional 1. Create new value exceed cost to provide 2. Adapt by stripping costs 3. “Make the market” - manage transaction (C. Schwab gets fee for transaction) Consultative 1. Uncover problems and clarify needs 2. Suggest new or improved solutions 3. Act as customer’s advocate inside supplier organization Enterprise 1. Pinpoint performance gaps & opportunities 2. Create value at the boundaries

9. Supplier segmentation matrix: selling guidelines Strategic or cost importance of supplier’s product Difficulty of substitution or or obtaining alternatives High High Low Leverage size Partner Shop for price Manage risk ENTERPRISE SELLING CONSULTATIVE SELLING TRANSACTIONAL SELLING

10. To Shift to Value Creation Develop a clear vision of where and how company will create value within the marketplace Restructure sales force organization along buying types to enhance value creation strategies (i.e., transactional sales will lower costs, while consultative sales will spend much more time developing productive relationships) Improve capabilities to enable value creation Align metrics and compensation to value creation strategies (transactional metrics quite different from consultative)

11. Some ideas to consider Differentiate customer by selling type: transactional vs. consultative Maximize effort for consultative type sales Reasons Higher margin potential Can’t sell high value technical services or systems in transactional mode

12. SUMMARY: Final Thinking Exercise: What are specific ways to: 1. Help customers understand their problems, issues and opportunities? 2. Show customers new or better solutions to their problems? 3. Act as advocates for customers within your Company?