PRDV217: Introduction to Sales

It was 4:00 p.m. on Christmas Eve, and Ray Rizzo's father, in town for the annual family get-together, had forgotten to bring his suit. What made the situation even more challenging was that Ray's father is rather portly with a 48-inch waist and even broader shoulders, a build that requires a 53-short jacket. Ray and his father rushed to Mitchells, a local clothing store in Connecticut, and asked Jack Mitchell, the owner, for help.

It was hard to imagine that Ray's father would possibly be able to get a suit or even a sports jacket tailored to fit in time for the family gathering. After all, it was Christmas Eve, and the store would be closing in an hour. Jack did not hesitate and immediately enlisted Domenic, the head tailor. Before 6 o'clock that evening, the largest pair of pants and jacket in the store were tailored to fit Ray's father perfectly. Ray is a customer for life.

This situation is what Jack Mitchell calls a hug. If you shop for clothes at Mitchells or Richards in Connecticut, you will get hugged. Maybe not literally, but you will get hugged figuratively. Jack Mitchell, the CEO of Mitchells/Richards and author of Hug Your Customers: The Proven Way to Personalize Sales and Achieve Astounding Results, says, "Hugging is a way of thinking about customers. To us, hugging is a softer word for passion and relationships. It is a way of getting close to your customers and truly understanding them."

From Personal to Problem-Solving

Think about your best friend. You know them so well that you can finish each other's sentences. You know their favorite flavor and brand of ice cream, and you can sense when they are having a bad day. You text and talk to them constantly; you even go out of your way to surprise them sometimes with a gift that you know they will like. You have a great relationship with them.

Now think about the last time you went into your favorite restaurant. Was it the same kind of experience? Did the host greet you by name and seat you at your favorite table? Did the waitperson remember that you like to drink raspberry-flavored iced tea? Was your fish served with the sauce on the side, just the way you liked it? Were you delighted with a new flavor of cappuccino after dinner? When these things happen, the people at the restaurant make you feel special; after all, you are the reason they are there. When you have a relationship like this with the people at the restaurant, you are more inclined to return to the restaurant repeatedly. If these things do not happen, it is easier to choose a different restaurant the next time you go out.

The bottom line is that to be successful in selling any kind of selling; you have to make selling personal. People do business with people, not with companies. Even in the business-to-business (B2B) selling channel, it is people who are making decisions on behalf of the company for which they work.

Every sale starts with a relationship. If your relationship is strong, there is a higher likelihood of a sale and a loyal repeat customer. That means you have to get to know your customer one-to-one to understand what they want, what they need, and what resources they have. This concept is called relationship selling (or consultative selling). It is defined as working personally with your customer to understand their needs, put them first, and provide consultation to help them make the best decision for themself or their business.

You might be thinking that selling is about the product or service, not about relationships. But that is not true. You may have heard someone say, "They are just a pushy salesperson," or you may have experienced someone trying to give you the "hard sell." The fact is that selling has evolved dramatically during the past 30 years. Business is more competitive. The use of technology and the expanded number of product and service offerings have developed a need for consultative selling in more industries than ever before. It used to be that salespeople wanted to simply make a sale, meaning the sale began and ended with the transaction. But now, it is not enough to just make the sale. In today's competitive world, it is how you think about the customer that matters. It is the difference between giving the customer what they need rather than what you want to sell them. The fact is that the sale is just one small part of the relationship. The real essence of selling is in the relationship.

The salesperson has a new role in most companies. The days of the salesperson as "product pusher" are just about gone. Customers in B2B and business-to-consumer (B2C) environments want and demand more. Consider the evolution of some major industries. Many of the leading hotel chains keep your preferences in a database so that their front desk sales team can recognize you personally at check-in and provide the queen-sized bed in a nonsmoking room on the quiet side of the property that you prefer. Restaurants work hard to learn, remember, and greet you by your name, maintain your favorite table, wine, and entrée, and prepare to anticipate your every need. Airlines have tools to recognize you and that you like an aisle seat as far forward as possible in the plane.

All these tactics are steeped in the theory that customers make choices based on their relationship with brands. In each one of these situations, the salesperson is the difference that sets a brand apart at the moment of truth, the moment the customer comes in contact with the brand. Some brands understand how important each moment of truth is when creating customer relationships. For example, Southwest Airlines makes their Web site easy to use, has humans answer the phone, and has flight and ground attendants that make it a pleasure to travel with them.

Relationships are so important in selling that one study surveyed one hundred top B2B salespeople and found that they attribute 79 percent of their success to customer relationships. It is the relationship with a customer that allows you to bridge the gap between a customer's problem and the solution. The relationship is the framework for consultative selling; it is what allows you to have an open, honest dialogue, ask the right questions, understand your customer's needs, and go beyond advising to helping your customer make the decision that is right for them.

Common Ground

Selling relationships start as personal relationships. Making a personal connection is vital in the two to ten minutes of a customer encounter or meeting. Think about the last time you bought a new cell phone. If the person did not establish rapport with you from the start, you probably walked away and bought the phone from a different salesperson, maybe even at a different store. The relationship includes a sincere bond that goes beyond business and includes common interests and goals.

If you are selling medical imaging equipment to hospitals, you want to build relationships with the administrators, doctors, and nurses who will be using your equipment in each hospital. When you build a relationship with what is important to each person individually, it is easier to expand that relationship to sharing information and problem-solving from a business perspective. As Bob Fitta, a manufacturer's rep for several tool companies, said about Paul Robichaud, owner of Robi Tools, "I got to know him as a business person and a real person, and that relationship has endured."

But consultative selling is more than simply building rapport. Consultative selling goes beyond the product or service you are selling; it even goes beyond the selling process. It is the "X factor," the intangible element that makes a customer choose your product or service even when the competition is priced lower. Consultative selling is about your personal involvement and a sincere focus on problem-solving that goes beyond selling to a genuine partnership with the customer.

Consultative selling does not start and stop at specific times during the relationship. It defines the relationship before the sale, during the sale, and after the sale. Building professional relationships is apparent in this example: If you sell insurance, consider that your customer may eventually buy a home, have a family, or purchase a second property. So the relationship you develop when you sell them car insurance as a young single man could and should be nurtured and developed over time to provide solutions that answer their needs as their lifestyle changes.

Having this long-term view of customer relationships is called focusing on lifetime value. It means that you consider not just one transaction with a customer, but also the help and insight you can provide throughout the entire time frame during which you do business with them. So, although you may only provide them with basic car insurance now, over the course of more than 25 years that you do business with them, you may ultimately sell them thousands of dollars of insurance and investment products that meet their changing needs. But that will not happen if you do not continue your relationship and keep in touch, focusing on topics and events that are important to them. If you focus only on the immediate sale, you will miss a lot of business, not to mention future referrals.

There are several elements that can be included in the calculation of the lifetime value of a customer. However, a simple formula is

dollar value of purchase × gross profit percent × number of purchases.

For example, if a customer shopped at a retailer and spent $75 on one purchase that had a gross profit of 30 percent, the lifetime value of that customer would be $22.50, calculated as

$75 × 30% × 1 = $22.50.

If the customer made five purchases for $75 each over the course of the time they shopped with the retailer (let's say five years), at a gross profit of 30 percent, the lifetime value of the customer would be $112.50, calculated as

$75 × 30% × 5 = $112.50.

So you can see that retaining a customer for more than one purchase can provide financial benefits. In addition, working with the same customer over the course of time provides an opportunity to learn more about the customer's needs and provide solutions that better meet those needs.

CRM Tools Help You Manage Relationships

With so many demands on your time as a salesperson, sometimes it is easy to lose track of some customers and not follow up, which means that you may only be developing short-term relationships. Or you might unintentionally let your relationship with a customer "lapse into laziness," which means that you let the relationship run on autopilot, relying on your established relationship to keep the business going.

In this case, there is usually no pressing reason to change; you might think that as long as the customer is happy, everything is OK. But it is best to avoid complacency because the world is constantly changing. While you are enjoying a comfortable, easy relationship, there are probably new business challenges that you should be learning about from your customer. Or worse, you may open the door to a competitor because you were not bringing new and relevant ideas to your customer, and they began to think of you more as a nice person than a resource for advice and new ideas.

Many companies use customer relationship management (CRM) tools, technology solutions that organize all customer interactions with a company in one place. In other words, CRM is a customer database that holds all the information regarding a transaction (e.g., date; products purchased; salesperson who sold the products; and name, address, and contact information of the customer).

In addition, it captures all communication the customer has had with the company, including calls made to the company call center, posts and reviews made to the company Web site, and the details of each sales call made by a salesperson. Some CRM tools are extremely sophisticated and help the salesperson and the company to manage relationships with prospects and customers. Other CRM tools are simpler and are focused on helping the salesperson manage their relationship with prospects and customers.

A CRM tool works in a variety of ways. Here are a few examples. A construction contractor calls a toll-free number for a plumbing supply company after seeing an ad in a trade journal. The prospect inquiry is sent via email to the appropriate salesperson. The salesperson reviews the CRM system to see if there have been any previous contacts with the customer and if there is any information about the customer and their business. Then they return the prospect's phone call and sets a date to meet them to learn more about their business needs.

The salesperson makes a note in the CRM system about the phone call and the meeting date and sets a follow-up reminder for themself three days after the meeting. When the salesperson meets with the prospect, they learn that the prospect has five developments they manage. The salesperson makes a note in the CRM system. Hence, everyone from the company which contacts the prospect, such as other salespeople or customer service, knows this information about the prospect.

CRM tools can be extremely helpful in managing customer relationships, especially where multiple people in the company contact prospects and customers. CRM tools also make it easier to understand the lifetime value of a customer since all purchases, inquiries, and other contacts are included in the system. It is the information that is gathered in a CRM system that helps a salesperson better understand customer behavior, communication patterns, and short- as well as long-term needs.

For example, many companies offer loyalty programs as a tactic to increase sales but also to gather information about customer preferences to offer more relevant messages and offers. CRM tools are used to manage loyalty programs, such as Best Buy Rewards Zone, Southwest Airlines Rapid Rewards, and the Safeway card for their different local grocery chains. This information is then used for marketing and selling purposes. Best Buy can identify all the recent purchasers of Hewlett-Packard (HP) printers and send them an e-mail for HP ink cartridges. CRM tools are used to manage customer relationships in other ways.

For example, Starbucks uses Salesforce.com, a widely used CRM tool, to power its MyStarbucksIdea Web site. The Web site is a collaboration and feedback tool that engages customers in providing ideas to the company. To manage the relationships with customers online, Starbucks uses a CRM tool. This allows Starbucks to provide personal feedback to each customer on all the ideas they submit. Visit MyStarbucksIdea.com to see this interactive suggestion box.

Face Time

So you might think that customer relationships are easy to maintain with text messaging, e-mail, and other technology-based methods of communication. After all, that is how you communicate with your friends. But while technology can enhance an established relationship because it allows you to provide information and insight at a moment's notice, the fact is that most significant customer relationships, especially in B2B selling, require face-to-face communication.

In this world of high-tech instant communication, some relationships can easily become "low-touch" or miss the human element. Meeting with and entertaining customers is an important part of the selling process. It helps you get to know customers outside the office, in a casual or social place such as a restaurant, sporting event, or concert. These can be excellent opportunities for you and your customer to "let your hair down," relax and enjoy each other's company.

Many sales positions include an entertainment budget for this reason. Taking someone out to eat is not the only part of a selling relationship, but it is an important part of building and developing a connection. One sales manager said they could tell when one of their salespeople is struggling simply by reviewing their expense reports. they look for activities outside business hours because those are the activities that build relationships. In fact, according to one study, 71 percent of top-achieving salespeople use entertainment as a way to get closer to their customers.

R-Commerce

You have probably heard of e-commerce, selling products and services on the Internet, and m-commerce, selling products and services via mobile devices such as cell phones and smartphones. But you probably have not heard of r-commerce, a term that refers to relationship marketing, which establishes and builds mutually beneficial relationships.

Terry L. Brock, an international marketing coach and syndicated columnist says salespeople have the opportunity to make a difference in their relationships with the little things. Sending a thank-you note after a meeting, forwarding an article or video on a topic you discussed, remembering the names of your customer's children, and even providing a personal suggestion for a vacation spot are little things that can set you apart from every other salesperson.

You might think that these "little things" are not necessary when you get into the big world of business. But Harvey Mackay, renowned author, speaker, and business owner, says it best: "Little things mean a lot? Not true. Little things mean everything". Developing your own r-commerce strategy can help set you apart in sales. It is expected that you will make phone calls and follow up; it is the extra personal touch that makes your customer feel special and helps establish a strong relationship.

Trust Me

The check is in the mail. The doctor will see you in ten minutes. I will call you tomorrow. How many times have you heard these promises or ones like them? When people make promises they do not keep, you lose trust in them. It is unlikely that you will trust a person who does not deliver on what they say.

Trust is a critical element in every relationship. Think again about your best friend. Are they someone you can trust? If you tell them something in confidence, do they keep it to themself? If you need them, will they be there for you? You answered "yes," which is why they are your best friend. You believe that they will do what they say they will do, and probably more.

You can see why trust is so important in selling. If your customer does not believe that you will actually do what you say you are going to do, you do not have a future in selling. Trust is built on open and honest communication. Trust is about building partnerships. Salespeople build trust by following up on their promises. They are accessible (many times, 24/7), and they work to help their customers succeed. Customers trust you when they believe you have their best interest, not your personal motivation.

According to Tom Reilly, author of Value Added Selling, "Consultative selling is less about technique and more about trust." Trust is what gives a relationship value. It is the cornerstone of selling. Trust creates value. One B2B customer described their salesperson as saying they were like an employee of the company. Another described their salesperson in terms of problem ownership by saying, "When we have a problem, they have a problem."

Trust is equally important in B2C selling. For example, at Zen Lifestyle, a salon in Edinburgh, United Kingdom, the approach to customers is described as a soft sell focusing on educating customers and providing information. Customers are encouraged to try products in the smallest size to determine whether they like the product.

It is only after they have liked it that larger and more economical sizes are suggested. "This helps develop a relationship between customers and therapist built on trust, which in turn will generate future sales from recommendations," according to salon owner Fiona Macarthur. In every business, these are all powerful testaments to great salespeople.

People buy from people they trust. Consider that customers trust salespeople with their money and, in the case of business-to-business selling, with their business and, ultimately, their reputation. Customers become dependent on you, and their buying decisions are based on the fact that they trust you and believe what you say.

Thus, the relationship can be even more important than the product. It is said that you can give a customer the option to buy a product from a salesperson they know or buy the same product for 10 percent less from someone they do not know, and in almost every case, they will buy from the salesperson they know.

Trust is such an important topic that sales guru Jeffrey Gitomer has written a book dedicated to the topic of gaining and giving trust titled Jeffrey Gitomer's Little Teal Book of Trust: How to Earn It, Grow It, and Keep It to Become a Trusted Advisor in Sales, Business, and Life. The following video provides the highlights.

Underpromise and Overdeliver

One of the tenets of selling is establishing trust and setting expectations. The best salespeople underpromise and overdeliver. In other words, they say they will do something by a certain day, and then not only do they do it, but they deliver it one day early. Here is a way to think about the power of this approach: if you order a new pair of jeans online and the estimated delivery date is Tuesday, but you receive them on Monday, you are delighted. You are pleased that they came early.

However, if the jeans were promised for Tuesday delivery, but they arrived on Wednesday, you would be disappointed and probably would not trust that Web site for timely delivery in the future. You can imagine how this strategy builds trust with customers – not only can you rely on the salesperson to do what they said, but they never let you down and even deliver earlier than promised sometimes. That is how trust is built between salesperson and customer, and the relationship goes to the next level: partnership.

When Times Are Tough

No one likes to deliver bad news. But it is not always good news that you will have to tell a customer. The best antidote for bad news is a good relationship. If you have nurtured your relationship with the customer and built trust, it is much easier to deliver bad news. When it is time to deliver bad news, like delayed delivery, a cost increase, or a discontinued product line, do not put it off. Use the same practices to build relationships: open, honest, and timely communication.

As soon as you learn about the information that may be bad news for your customer, contact them by phone to discuss the situation: "I realize we set Thursday as the installation date for phase one, but there have been some delays in development. Can we reschedule it for next Tuesday? I am confident that everything will be complete by then. I apologize for any inconvenience. Let's talk about any challenges this may cause on your end.

I have some ideas about how we might work around them." The sincerity in your voice and your dialogue with the customer can help avoid turning bad news into a serious problem. Because you have always made a point of underpromising and overdelivering, there is a high likelihood that your customer will respond positively to your ownership of the problem and solution-based conversation. It is always best to include a realistic solution to the problem, and if you do not have a solution, let the customer know exactly when you will get back to them with an update.

Win-Win-Win: The Ultimate Relationship

If you volunteer for an organization such as Autism Speaks, you get involved because you believe in raising awareness of autism to increase funds for research for the cure. Those who have autism and their families benefit from your involvement. This is win #1. You also benefit because you gain the satisfaction of helping people. This is win #2. You help build the organization's strength, in this case, Autism Speaks. The more people involved, the more people they can reach with their message and the more money they can raise to reach their goal of curing autism. This is win #3.

The above example is an illustration of the win-win-win concept in relationships. In other words, in the ultimate relationship, all parties have something to give and something to gain. This same win-win-win occurs in successful selling relationships. Your customer wins because they get your advice and expertise to help them find a product or service that meets their needs. You win because you have enhanced your relationship and made a sale, and your company wins because the relationship, the sale, and the repeat sales help it achieve its goals.

Although the win-win-win may sound like a simple concept, it is a critical one to keep in mind in any business position, especially in selling. This art of collaboration results in more business with your existing customers because you have become a partner in solving their problems, and it brings you new business in the form of referrals. The win-win-win also plays a significant role in the negotiating process. The best business relationships and negotiations are based on the win-win-win model, not the win-lose model in which one party loses so the other can win.

A Seat at the Table

The seat at the table is given to those salespeople who deliver value, not sell products or services. They develop relationships to help customers implement their business strategies. Customers want value in the form of strategic thinking around issues important to them and their company goals. As a result, your goal as a salesperson should be to help your customers create demand, secure a competitive advantage, and identify a new niche. When you deliver this value, your customers will no longer see you as a salesperson; they will see you as a "business person who sells."

It is this kind of thinking and value creation that earn you a seat at the table. The seat at the table also helps you expand your business because you will be integrated into your customer's business. That allows you to deliver your core products or services and be a part of developing new opportunities. It helps cement the relationship and establishes a partnership that delivers value for all involved.

Every salesperson wants "a seat at the table." They want to be a part of the decision-making process. That is the epitome of consultative selling: you are included in the process from the beginning. You want to be included as a valued partner with your business-to-business customers to discuss their company's strategic questions like "How will we grow our business in the next three years while technology is driving down the average selling price of our product?" "How can we extend our relationship with our customers beyond our contract period?" or "How can we expand to new markets and minimize our risk?"

These are not traditional sales questions; they are strategic issues companies wrestle with. When you are a true partner with your customers, you will be given a seat when direction-setting issues are discussed. This allows you to participate fully as a trusted advisor and asset to the customer and to help shape the strategy of the company. It changes your relationship with the contact and the company from salesperson to partner.

Although it may seem like a lofty goal, consider this: If you want to have a seat at the table, not only will you need to solve your customer's problems and anticipate their needs, but according to Tim Conner, sales trainer, and author, you will also need to be a creative problem creator. That means that you will be in constant pursuit of identifying problems that your customer did not even know they had. In other words, it means that you have to think ahead of your customer, not just along with them.

Networking: Relationships That Work for You

You probably use Facebook frequently to keep in touch with your friends. If you want to know who took a particular course with a particular professor, you can ask your friends on Facebook. If none of your friends took the course, one of their friends may have taken it and could give you some insight about the course and the professor. Whether you realize it or not, you are networking.

Networking is the art of building alliances or mutually beneficial relationships. Networking is all about relationships and exchange. In the example above, while you are looking for feedback on a class from someone you know, someone else may be considering seeing a movie and wants to know if you have seen it and if you thought it was good. This is a value exchange.

Although networking is not exactly quid pro quo (something for something), it does include the element of exchange: if someone is looking for something, someone else can provide the information. What makes the network function is the fact that people in the network at some point have a need and at some point may be able to help someone else with their need. Said another way, networking is based on mutual generosity.

Networking is an important part of the business world and an even more vital part of sales. It is no longer a question of "if" you should network; it is a requirement to stay competitive because it is virtually impossible to do your job alone. Just as in social networking, professional networking allows you to leverage the people you know to expand your relationship with people you do not know. Building solid relationships with customers is an excellent way to build your network. Satisfied customers will refer you to other people who might become potential customers.

It is best to always be networking rather than networking only when you want something. It makes it easier to network and expand your relationships when you're not asking for something. It also allows you to help someone else first, which can go a long way when you need help in the future.

Networking Tips of the Trade

Today, networking can be done in person as well as online. Do not limit yourself to just one method. Networking is best done both in person and online to be truly effective. Here are a few tips for networking in person.

Start with People You Know

Make a list of all the people you know, starting with your current customers, family, friends, friends' family, and others. Include people such as your hair stylist, car mechanic, and others. Get to know everyone in your extended network, as each can be a lead for a potential sale or even a job.

Join and Get Involved in Professional Organizations

If you want to meet people in the same business or profession as you, professional organizations such as Sales & Marketing Executives International, Advertising Club of New York, Home Builder's Association, and so on are the best places to be. Joining is good, but getting involved in one of the committees is even better. It helps demonstrate your skills and knowledge to the other people in the organization. Since most professional organizations are made up of volunteers, it is usually easy to be invited to participate on a committee.

Attend Industry Events

Make an effort to attend industry or other professional events. Arrive early and work the room. If you come with someone, be sure to branch out to meet and mingle with other people. Set a time and a place to meet the person with whom you came so you can maximize your networking. According to Peter Handel, the CEO of Dale Carnegie & Associates, a smile can be your greatest asset when networking in person.

He suggests always asking questions of the people you meet; it helps keep the conversation going and gives you more insight into their background and how you might work together in the future. But the other side of asking questions is listening; that is how you will learn. And always have your business cards handy. Give your business card to those you talk to, and do not forget to get their business cards, too.

Keep in Touch

Many people think that networking is just about collecting business cards. Networking is so much more than that. Networking is about creating mutually beneficial relationships. It is best to use one of the basic practices for building relationships when networking: keeping in touch. That means sending an email to someone you have networked with just to find out how their big project is going, how their twins' birthday celebration went, or even just to say Hi.

Go beyond the email by inviting someone to lunch. It is the perfect way to build a relationship, share common ground, and learn more about the person. Many people are gung ho about networking and meeting people but rarely keep in touch. It almost defeats the purpose of networking if you do not keep in touch.

Online Professional Social Networking

Online professional social networking can be an equally powerful tool for building your contacts. But just like in-person networking, you cannot be passive and expect to expand your network. Consider a situation that Austin Hill, Internet entrepreneur and founder of the angel investment firm Brudder Ventures, encountered when their firm tried to access someone in a specific department at a vendor.

It was a large company, and they kept getting the runaround. But after going onto LinkedIn and getting introductions to the right people, within two days, they could start doing business with the company.

Create a Profile on the Major Professional Social Networks

LinkedIn, Ryze, ZoomInfo, and Plaxo are all online professional social networks that have a substantial number of members. You can also use Facebook MySpace, and Twitter to create profiles, peruse job boards, and join the conversation.

Be Proactive

Ask for introductions to people with whom you want to network, and ask your boss, colleagues, and customers to write recommendations for you. It is a good idea to use the features included on professional social networking sites, such as groups, discussions, and "Answers" on LinkedIn, which allows you to ask your network questions.

Mind Your Manners

Just a word of caution about professional social networking: Be professional in all of your communications. You are participating in a professional forum, so be aware that everything you "say" and do reflects on you and your company.

---

 This text was adapted by Saylor Academy under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 License without attribution as requested by the work's original creator or licensor.