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September 18, 2006

New Perspectives

The Need for Speed

by Larry Chonko and Buddy LaForge


Buddy: Hi Eli, it’s good to see you. I am so impressed with the work you do as the Executive Director of the Sales Excellence Institute at the University of Houston.

Eli:Thanks Buddy. It’s a lot of work, but I am proud of what we have accomplished.

Buddy: Also, congratulations to you and Larry. I was at the American Marketing Association Educators’ Conference last month, when your co-authored article on agility selling won a prestigious award. Let’s talk about agility selling and how it might apply to direct selling companies.

Larry: Let’s let Eli answer that.

Eli: Today’s selling environment is a growing challenge. Technology provides much more information to customers. Customers no longer want salespeople to merely provide information. Customer preferences change rapidly, as they are bombarded with more product and service alternatives. This means that direct selling companies and their salespeople are more challenged today to anticipate what customers want. they must also work hard to keep the customers they have.

Eli: The unlearning part is where salespeople become proficient at change. Some salespeople lack the knowledge of change processes and their successes may be very sporadic.

Buddy: If that’s the case, a lot of mistakes are made.

Eli: And organizations that have a history of success with product customization, providing ranges of solutions that salespeople can use in the face of the unexpected, with strong R&D, are positioned to help salespeople become agile. 
The opening quote in our article is from Paul Sarvadi, CEO of Administaff, who states that salespeople must be able to change on the fly. at rapid speed. Our ongoing research highlights the urgent need for salespeople to stay alert and be adept at identifying changing customer preferences. We also argue that sales companies must have more agile structures and processes to support their salespeople. And they must be quick to offer workable solutions to customers whose circumstances have changed. No matter how well product/service changes are conceived, the salesperson must understand customer needs and wants, both current and anticipated, and be able to fit offerings to those needs and wants quickly.

Buddy: That sounds like adaptability. What’s the difference?

Larry: Adaptive salespeople make reactionary adjustments. Agile salespeople make anticipatory adjustments, like the folks at Taste of Home Entertaining who are focusing on entertaining as a lifestyle. They have anticipated changes in the marketplace, and created solutions and strategies that will provide customer value, sometimes even ahead of those changes occurring.

Eli: The two concepts do have some things in common. Both require salespeople to have a core set of strategies ready to deal with change. However, there are some real differences. For example, adaptive selling emphasizes the changes salespeople make during a face-to-face encounter with a customer. Agility selling is broader, requiring the appropriate organizational structure, processes, culture and, of course, the right people- those who are more proactive than reactive. Agile salespeople can read the tea leaves, so to speak. They have the aptitude and skills needed along with the company resources to succeed in a turbulent business environment.
Buddy: So salespeople who have a better set of strategies are able to move faster?

Larry: That’s part of it. Agile salespeople know when conventional approaches will work and when something more radical is needed to meet customer requirements.

Buddy: It sounds like the agile salesperson is continuously changing the mix of strategies he or she uses.

Eli: Yes and no. Salespeople should always do what works. That includes using traditionally successful strategies. Agile salespeople may make minor adjustments in traditional strategies, like shortening customer-contact time. But they also may have to engage in more radical change tactics to improve communication with customers. Podcasting, for example, is becoming more popular among some agile companies. An agile salesperson mines customer data seeking clues about changing buying patterns and crafting contact methodologies to fit those habits.

Larry: One thing that creates a lot of confusion is our understanding of change. For example, adaptable salespeople are good at adjusting when change can be anticipated. We know, for example, customers will continue to buy from the Web.

Buddy: Good salespeople have always had contingency plans.

Eli: That’s right, but good salespeople also create change. In other words, they are good at seeing where a customer is headed, and they are adept at using their organization’s capabilities to lead customers through change. Apple is a good example of a company that “created” change in customers. Look at iPod. Apple re-energized its brand by tapping into the life habits of “on-the-go” people. Similarly, direct sellers can feed information about their customers to selling organizations in ways that dramatically affect product and service design.

Larry: That’s how Bank of America’s “Keep the Change” program was started, listening to customers.

Buddy: What happens if change cannot be predicted?

Larry: Unpredicted change causes disconnects, to be sure.

Buddy: But salespeople still have to respond.

Eli: Yes they do, but their ability to respond purposefully and quickly is essential to maintain competitive advantage.

Larry: That means that agile salespeople need considerable knowledge, and they rely on their companies to provide knowledge.

Buddy: Yes, but that has always been true.

Eli: It has, but companies and their salespeople have become more sophisticated in how they use customer information. CRM analytics, for example, enable selling companies to detect buying-behavior patterns that help salespeople be more efficient and effective. Refined customer segmentation provides salespeople the knowledge they need to change and manage the change successfully.

Larry: Historically, salespeople have been successful by establishing scripts or routines.

Buddy: That’s right. A good salesperson was, well, a good salesperson. That sounds like something from the Department of Redundancy Department.

Larry: Selling know-how is still important but, with the explosion of knowledge, salespeople must wrestle with knowledge growth and knowledge decay. They must continuously learn and unlearn.
 
Larry: That’s true. Salespeople may offer many solutions, but work overtime, use fads, fight fires and expedite.
 
Buddy: Sales organizations cannot really afford to have many salespeople acting that way. However, most sales organizations do not include managing change in training programs.
 
Larry: And managing change is harder to measure than revenue and profitability. Yet, poor change management represents a cost, and that does show up directly in the bottom line.
 
Eli: Some salespeople are a little better than what you both have just described. For example, research on how people organize information shows that top performers organize information differently than lower performers. Top salespeople have a clearer view of current customer needs, and future needs and wants, and can be used to draw mental linkages about how their company can solve customer problems. Agility is more than experience, though. Some salespeople are naturally gifted with the ability to organize information in the way I described. The trick is, companies must look for this kind of mental dexterity then find ways to build it into their business process. Perhaps this kind of agility thinking can be taught to others through lots of practice.
 
Larry: It’s like baseball. An all-star can show you how to hit the ball, but none of us could hit the ball as well as the all-star without a great deal of practice and know-how.

Buddy: It sounds like the salespeople you talked about can move more quickly.

Eli: To some degree. But, as Larry said, they often have not taken time to study the changes they made. Change worked. The customer is happy. The firm is happy. Eureka! Truly agile salespeople must understand the basis of change-why customers change, how to help them change and the role value plays in the change process….

Larry: To the point where change ceases to be an event and takes on a fluidity of motion for the salesperson.

Buddy: Let’s dissect all this. Are there some strategies that can be suggested to salespeople?

Eli: At a minimum, agile salespeople must be proactive. They must constantly create new value propositions based on current developments. And they must seek improvements. For example, customers might realize cost reductions as a result of accepting a new value proposition.

Larry: In other words, salespeople must do more than adapt to circumstances, like replacing a defective product.

Buddy: So what strategies really make a salesperson agile?

Larry: Agile salespeople develop pre-emptive capabilities.

Eli: They prepare in advance to manage change as a non-event, like adding or eliminating sales practices seamlessly. They prepare so well before meeting a prospect that they are able to shorten the sales cycle. Part of that preparation can stem from mining existing data about similar customers and detecting patterns in the data.

Larry: This type of analysis is what placed Wildtree Herbs in the proactive position to recognize allergy issues and provide products that help reduce incidences of allergic food reactions in children.

Buddy: How does a salesperson learn to anticipate change?

Larry: Part of the answer is that they have to be spot-on with what the customer is thinking.

Buddy: That doesn’t seem very newsworthy.

Eli: Stated that way, you’re right. Agile salespeople pay attention to customer signals that come by way of different media.

Larry: The skill is understanding how these signals may have been the result of change. Too often, customers abandon salespeople during the sales process, or they stop buying or buy less. Salespeople bemoan “churn rates,” but feel they can do little about them.

Buddy: What are some of those signals?

Eli: One is recency of purchase. For many customers, how much time has elapsed since their last order is a critical signal. Recency is an indicator of the future, the longer the time since a customer’s last purchase, the lower the likelihood of future purchases. Something has changed. Monetary value is another indicator. Buying patterns can indicate that something has changed in the customer’s life. These signals can lead an agile salesperson to intervene at the appropriate time. Many banks do a decent job of using customer data in a way that adds value. Have you ever had a bank or credit card company contact you when you bought something in another country, wanting to insure your credit card was not stolen? This kind of contact adds a sense of security to the relationship.


Buddy: It seems that there might also be information in signals related to frequency of purchase.

Larry: Long-standing customers develop predictable patterns of purchasing. Changes in their buying frequency may signal that a change has occurred, like they are now buying some of their products from another vendor, or they are considering another vendor.

Eli: And these frequent customers are the ones most likely to be candidates to cross-sell or up-sell. So, changes in the monetary value of their purchases may also signal a change with these customers.

Buddy: Is agility a trainable skill?

Larry: Yes. Salespeople can learn about different types of change, like anticipated or unprecedented. They can build a knowledge base of sales strategies-those that have worked or not worked in certain situations and why.

Eli: And they can ask “What if?” questions-“What if happens? Am I ready to respond? How will I respond?”

Buddy: So agility is based on knowledge and the salesperson’s willingness to learn.

Larry: Yes, and it is helped by companies who support agility by responding to change quickly in other areas. An agile company helps salespeople respond to change more quickly. For example, Arbonne International has people with a passion for product development who stay ahead of customers with creative and innovative products.

Buddy: That means the salesperson’s ability to capture, manage and share information with customers enhances their agility.

Buddy: What final words can we offer about agility?

Larry: Agility is about adaptability, competency, response effectiveness and response speed. I use Wayne Gretzky, arguably the best hockey player ever, as an analogy. His goal was to never lose sight of the puck. For salespeople, that would be the customer. While many might view hockey as kind of a random game with players moving haphazardly up and down the rink, a little knowledge can change that perspective. Gretzky could see the game’s ebb and flow. Agile salespeople see customers’ opinions ebbing and flowing. Gretzky could sense change in direction and could anticipate what would happen based on where players were positioned on the ice. To Gretzky, everything was in slow motion. His forte was to skate to where the puck would be, not to where it was. Like chess masters, Gretzky was always two or three puck passes ahead. He was agile. He anticipated.

Buddy: Eli, I’m going to give you the last word. Getting the last word from Larry will be a first!

Eli: I’ll finish with Paul Sarvadi’s statement on agility: “Customers having increasing expectations means a faster response is needed for selling companies, and sellers must provide increasing value over time. Companies must incorporate changes (e.g. technology, more sophisticated selling, etc.) on the fly-at rapid speed.” I think we’ll see more companies adopt sales cultures that emphasize the need for speed-not for the sake of speed, but for the customer’s sake, just faster.

Buddy: It’s been great talking with both of you. I think the agility selling concept has important implications for direct sellers. But, Larry, we forgot to be funny during our conversation.

Larry: Let’s try to be funny next month!

Raymond (Buddy) LaForge is the Brown-Forman Professor of Marketing at the University of Louisville. Larry Chonko is the Holloway Professor of Marketing at Baylor University. E-mail your questions and comments to professors@directsellingnews.com.