Harvard professor and admired author Frank V. Cespedes explains in detail how selling is changing and how salespeople and sales managers must change with it.
Sales executives cling to the AIDA formula. They believe moving sales prospects through “awareness, interest, desire and action” constitutes a workable overview of the sales process. Frank V. Cespedes, a senior lecturer in business administration at Harvard Business School, explains why you should put that sacred cow out to pasture, along with the obsolete sales funnel.
In this must-read manual – longlisted for Porchlight’s Business Book Award and shortlisted for an Outstanding Works of Literature (OWL) Award – Cespedes explains how sales managers and representatives should conceptualize their work and plan and implement their sales activities. Non-sales executives, particularly CEOs and CFOs, will also benefit from his wisdom.
Cause and Effect
Cespedes warns that sales success requires a mix of complex elements, including intelligent strategy, smart hiring, proper incentives and astute management.
As a negative example, Cespedes offers how then-CEO of Home Depot Robert Nardelli, concerned about web-based competitors, cut expenses in 2000 by getting rid of the chain’s experienced customer-facing staff members – people who understood plumbing, electrical work, carpentry, masonry and gardening. Shoppers promptly switched to Home Depot’s rivals. By 2006, Nardelli’s cuts had crippled the bottom line. Foot traffic fell for four years; the company’s market value dropped 55%.
Managers must move beyond platitudes and develop an accurate view of their current situation and how it might evolve.Frank Cespedes
Cespedes explains that Nardelli lost track of cause and effect. He never grasped how much his customers valued reliable advice. New CEO Frank Blake immediately brought back expert salespeople. Foot traffic and sales rebounded and so did Home Depot’s market value.
Cespedes is adamant that the AIDA formula and the sales funnel – sales’ sacred cows – don’t help sales.
The AIDA strategy posits that salespeople should lead prospects through four stages – awareness, interest, desire and action – to make a sale. Salespeople and managers regard AIDA as a linear process that enables customer relationship management (CRM) systems to track prospects through the sales funnel.
Telling people what we think of their performance doesn’t help them thrive and excel, and telling people how we think they should improve actually hinders learning.Marcus Buckingham and Ashley Goodall, “The Feedback Fallacy,” Harvard Business Review
Sales has never been linear, Cespedes argues. Selling is a continual and dynamic process. Buyers explore their needs and investigate and evaluate their options. They engage vendors or, in B2B transactions, often they request a proposal. They weigh their options, make a purchase, experience it and determine its value.
As selling continues to change rapidly, Cespedes cautions, sales management becomes more challenging. In the past, handling referrals meant you cited satisfied customers, provided their phone numbers and had them endorse you to further prospective clients. Now, prospects go online to see hundreds, even thousands, of reviews – from great to terrible – of your offerings.
In many firms, sales is still treated as a mysterious black box.Frank Cespedes
In the past, marketing departments may have managed sales generation. Now, due to the internet and related technology, sales and marketing departments may handle leads jointly, thus putting extra pressure on salespeople.
Additional sales-management challenges include diffused buyer paths, as purchases come from on- and offline customers and marketing. Each channel demands a different sales effort and specific sales management.
When buyers have trouble with purchased items, contracts, billing or repairs, they don’t care about your company’s various departments; they blame their salesperson for any flaws.
It’s not the responsibility of the customer to tell you when you are barking up the wrong tree. Frank Cespedes
Sales reps must get the responsible department to fix the problem before it ruins the client relationship and undermines any related referrals or repeat sales.
Because sales staff turnover often runs up to 30% annually, sales managers must handle hiring in search of promising reps who will stick around. You must train people to fulfill specific sales tasks and skills. You also must detail your firm’s sales criteria and communicate them to your salespeople. As part of encouraging longer tenures, support a performance review process focused on personal development.
The number of salespeople listed by the [US] Bureau of Labor Statistics is more than 10% of the country’s labor force and has increased during the 21st century.Frank Cespedes
Sales managers keep track of customer activities – including indicators of buyer behavior – and review account placements and activities to make sure their customer services and support functions are helping them acquire and retain clients. Cespedes believes managers must link sales incentives to customer conversion and sales growth goals, while offering salespeople recognition as well as financial incentives.
Develop an accurate picture of how the value of your products or services varies depending on specific clients and market environments, clients and sales orders. Align your pricing to fit your sales strategies and to obtain and retain customers.Plan pricing structures that help you increase volume or margins.
Cespedes urges sales managers to work closely with their channel partners and their supply and distribution chains. He suggests assigning a manager to handle third-party distribution arrangements.
Executives must understand sales, the lifeblood of every company. Cespedes finds that salespeople are street-smart, but most senior executives are not. They’re often limited by an ivory-tower perspective and a lack of face-to-face client experience. Even worse, he maintains, many regard sales as a “tactical tool” and may not feature it sufficiently in their overall strategy.
Overconfident, underinformed senior executives may believe they’re generating effective marketing and sales strategies, but their salespeople often disagree.
I’m from corporate, and I’m here to help you’ is a perennial punch line in many organizations.Frank Cespedes
Executives who are trying to develop relevant marketing and sales strategies and address buying behavior must understand the nature of selling and how to motivate prospects to buy. They must make sure their sales function aligns with their overall corporate goals. Non-sales executives should connect with their firm’s sales professionals to gain a better understanding of the sales elements of their corporate strategy.
Renowned author and lecturer Frank Cespedes harnesses his decades of experience and knowledge in this no-nonsense, pragmatic, detailed guide to intelligent, aware, successful sales management and representation. He relishes attacking outmoded – though popular – processes and mind-sets and offers new, workable alternatives with equal, understated glee. His tone, logic and wisdom inspire great trust.
Cespedes’s other books include Organizing and Implementing the Marketing Effort, Managing Marketing Linkages, Concurrent Marketing and Aligning Strategy and Sales.