Sales management strategies and their organizational impact

¶ … Sales Management Strategies

Three of the most common sales strategies used in organizations include consultative, enterprise, and transactional types of selling. These strategies are primarily driven from the way customers want to buy, and for many companies this dynamic changes significantly year to year. The purpose of this document is to describe the consultative, enterprise, and transactional types of selling, their strengths and weaknesses, and provide examples of where each strategy can be best used.

Consultative selling is a strategy used for higher-end business and consumer products and services, where the person selling works to position themselves as a potential source of knowledge for the prospect. Consultative selling focuses more on providing guidance and value from knowledge than relying purely on price for example. The American Marketing Association on their website MarketingPower.com (2006) defines solution selling as follows:

customized sales approach in which the salesperson is viewed as an expert and serves as a consultant to the customer. The salesperson identifies the prospects' needs and recommends the best solution even if the best solution does not require the salesperson's products or services."

When companies adopt the strategy of consultative selling there's also gaining a prospects' and customers' trust. The fact that selling using this strategy puts the problems of prospects and customers, some very complex, leads to the expert salesperson becoming highly trusted. For this reason solution selling is also called a trusted advisor strategy, which is commonly found in the financial services industry for example. A trusted advisor is in reality best practices in consultative selling, in that the salesperson has become an ongoing information and consultative resource to the prospect or customer. The best example of the consultative sell is in financial services and insurance, where individuals are rolling over their 401Ks for retirement, and a person trusts a financial advisor with their life savings.

Enterprise selling is used most often when selling larger, more complex solutions to customers. Industries where enterprise selling is most often used include high-end enterprise software where company-wide Customer Relationship Management (CRM) or Enterprise Resource Planning (ERP) systems are being sold and integrated into customers' companies, or complex HVAC or electrical systems in commercial buildings for example. Enterprise selling differs from consultative selling in the former focuses on an integrating all possible knowledge about the problem customers are trying to solve into a tool or application that can lead to greater sales. Through the managing of information more effectively, enterprise selling is more about knowing more about the prospect or customer relative to competitors, according to Yankee Group (2005). The best example of this approach is in the selling of large enterprise application suites including the SAP AG ERP system.

Transactional selling is a strategy most often used for selling commodity-like or highly price-sensitive products. This approach focuses less on relationships and trust, and more on having the product in stock and a competitive price. Transactional selling is done through multiple channels, as websites, telemarketers, direct sales forces, and indirect channels including distributors, channel partners, and retailers all sell the most commonly requested products more on price and availability than features. The challenge for sales professionals is to sense when their customers want to buy using the transactional approach vs. The consultative sale. Generally transaction selling works best when the customer wants little or no information on the product, and their need for sales support is low, according to Benfield, 2001.

Examples of this include the selling of pocket radios both through retailers and over the Internet.

Analysis of Strengths and Weaknesses

The strengths and weaknesses of each approach are defined in bullet form below:

Consultative Selling

Strengths

Focus is on the customer and their problem areas first, not on just making the sale

Salesperson becomes the expert and eventually trusted advisor to the prospect or customer

Value delivered to the customer is greater than the price paid; there is in other words a very strong ROI for the customer

Weaknesses

Can result in long sales cycles that often do not yield any sold products

At times prospects will enlist the help of a trusted advisor to learn how to drive down the price of competing products

Costs of salespeople who are experts in fields is quite high