Creativity is thinking up new things. Innovation is doing new things.

—Theodore Levitt

We need more room in the cabin,” said one customer circling a large construction machine. “I agree. I’d also make the windshield bigger,” added another. Employees of the heavy-equipment company took notes. The visitors continued to walk around the prototype, making more suggestions and more notes.

Sounds like a typical focus group, right? Yes and no. Some of the company employees were from product development, but half were from sales. And the customers were not a randomly selected cross-section of consumers. These were major fleet buyers, invited to codevelop the products they would be buying. Before the design was finished, these customers would get a chance to operate prototypes and see some of their ideas come to life in the final product. Sales executives not only cemented relationships with some of their best customers—who developed a strong commitment to the new model—they helped bring forth a product that cost less to build, yet commanded a 4 percent price premium and helped grow market share.

This is part of the new face of direct selling. Mastering traditional direct-selling models—whether it’s in B2B or B2C—is no longer enough for the world’s leading sellers. As in the example above, top sellers constantly seek new and creative ways to boost sales and innovate. The approaches vary, but the common theme is an overinvestment in the right customers. This chapter delves into how some of the world’s top sellers are innovating in their direct channels on three fronts:

1. Engage customers early. Involving customers long before the actual sale benefits the vendor and the customer alike, and can take a variety of forms.
2. Unlock growth in key accounts. Buyers’ expectations and sophistication have risen, and they expect their relationships with sellers to be smooth. Preparation ahead of time can ensure deal success, and explicitly aligning account teams will ensure these accounts deliver sustained growth.
3. Pursue new prospects relentlessly. Meaningful sales growth comes only by converting prospects into customers, but this is easier said than done. Traditional hunter/farmer models are not always the best approach. Sales executives we talked to have tuned their prospecting efforts to the big opportunities they see.

Engage Customers Early

It is hard to overstate the importance of understanding what customers want from the sales experience. As we interviewed leading sales executives, we found that, like the heavy-equipment company, they went beyond simply asking customers questions or analyzing how customers behaved, when it came to crafting the customer experience. They engaged customers early on in a discussion of how to solve business problems and adapt products and services to provide better solutions. All this effort leads to sales—eventually—but the focus is on a collaborative problem-solving experience.

The notion shouldn’t be confused with the marketing activity of collecting insights in order to better understand customer needs or design better products. This is about sales: creatively extending the sales experience in a way that benefits the customer, drives revenue, and deepens loyalty.

For years, an office-products company had understood the merits of engaging with customers before actively selling to them. It had strong products and higher prices than competitors. So its sales department had trouble with standard requests for proposals (RFPs), which did not help convey the advantages of the company’s products. This problem led to price pressure to stay alive in competitive bids.

Sales leaders at the company had already tried flying in prospective customers to tour the plant and learn about the products, which had helped a little. To really break through, however, they decided to take the tour to the next level. They not only changed the format to shift the focus to customer needs; they also made sure all the customer’s decision makers were on the trip—from corporate facilities to finance, purchasing, and human resources. They also hired trained facilitators to host the groups. These facilitators understood the products, but their real skill was identifying customer needs. They would start the program by asking the customers what they hoped to get out of the day. Often, each function would have a different objective, which created an opportunity for the sales teams to help align the executives on what they wanted and, in turn, find which of their own solutions best matched the customer’s needs.

This approach proved so successful that the company has re-engineered the customer visit down to the tiniest detail. The “what do you hope to get out of the day” session determines the day’s agenda: if customers want to understand about innovation and technology, they are whisked off to the R&D lab; if they want to see the products in action, then they are shown how the company uses its own wares. Customers even preorder lunch so waiters won’t interrupt mealtime conversation. Even the way the company’s executives join in is tightly choreographed. With Disneyland-like precision, a senior executive bumps into a group at a certain point on the facilities tour.

This may sound like an awful lot of effort, but it is justifiable: more than half the prospects that visit end up as customers—more than double the win rate for bids that do not include a visit.

A maker of agricultural products found another creative way to involve its customers early in the sales process. It studied the buying patterns of farmers and realized that word of mouth played a major role in their buying decisions. But of course, you need the right words out of the right mouths. It became clear that the biggest farmers set the trends and heavily influenced the buying habits of other farmers in the area. So the company developed its “lead user” program, selling its newest products to a few important farmers in each community. This provided early feedback on the products and created a loyal set of customers who would happily talk about their benefits, essentially preselling for the supplier.

To emphasize that its value proposition is solving the customer’s business problem, a leading chemicals company trains sales reps not to mention the company’s products in initial discussions. This goes against the grain—most salespeople want to move quickly to making an offer and closing—but it changes the dynamic and improves the outcome. “Advocating your product prematurely always leads to a price discussion later on,” notes the head of sales. Starting with what the customer needs gives the sales rep an opportunity to learn directly from the customers about their pain points and what they value in a solution, before putting on the table the products and services the company has to offer. A more aggressive sales pitch focused on specific products limits the scope of potential sales.

These examples all show that engaging the customer very early in the sales process allows companies to focus on customer needs as much as their own. This gives customers a sense of ownership of products, which makes selling much easier. When a customer feels involved with a vendor’s products or services, it improves loyalty, which in turn increases the vendor’s share of wallet. For many companies, the next step is to develop into solution sales, where the focus shifts from meeting customers’ immediate product or service needs to solving their broader business challenges (see Sidebar “Don’t sell, solve problems”).

Unlock Growth in Key Accounts

For a B2B company, the largest, most strategic accounts can be double-edged swords. These key accounts typically represent a significant portion of a company’s revenue and margin, but they also represent a source of risk—losing an important customer or making a bad deal—which can prove extremely costly.

To add to the potential headache, the pressure on these key accounts is increasing. Our 2015 survey of more than 1,000 large buyers highlighted that procurement is getting increasingly sophisticated in its quest to lower costs, and it is focusing on its largest suppliers. For example, 60 percent of large buyers increased purchasing centralization in the past three years, with the aim of improving their negotiating position. Suppliers, therefore, must assess their strategies with these major customers. Fortunately, the research also shows that there is a way to win without eroding margins.

Although buyers claim that price is the most important buying factor, when we observe how supplier ratings affect share of wallet we find that service and sales experience are the most important buying criteria. In other words, suppliers want to work with companies that are easy to buy from, especially in relationships that span geographies, business units, and products.

Price still matters, of course but the best key account programs identify the hardcore price buyers vs. those who are willing to partner together. For buyers focused on price, sales leaders need to develop a low-cost approach; but most large buyers across all industries see the value in partnering with suppliers, especially when suppliers can demonstrate the incremental value of collaboration.

Sales leaders who excel at key account management do two things particularly well to deal with increasing buyer sophistication while building partnerships with customers. They prepare for deals ahead of time, and they make themselves easy to work with. Despite sounding simple, these practices can deliver 7 to 12 percent average revenue growth with same or improved margins.

Procurement teams prepare for deals ahead of time. Sales organizations should do the same. Three-quarters of large buyers spend at least ten days preparing for every large-contract negotiation, and nearly half spend a month or more. Buyers are also changing their approach to large deals, relying increasingly on RFPs, using sourcing consultants, and “clean sheeting” to increase cost transparency. Sales leaders who understand key account management are just as rigorous. They standardize the deal processes to minimize the burden large deals place on the organization and steer clear of a “win at all costs” mentality.

A basic-materials manufacturer recognized that its large customers were increasingly well prepared for important contract negotiations, and the company was struggling to maintain its margins as a result. It was doing well at winning deals—the bad deals—and doing badly at identifying opportunities to improve pricing.

The sales leaders established a “big deal team” to develop negotiation strategies for its most important deals. The team developed a standard set of tools to analyze each deal it supported, such as industry cost curves, market intelligence, and scenario modeling to understand its best alternative to a negotiated agreement (BATNA) and the BATNA for the customer. These tools increased the company’s ability to go toe-to-toe with sophisticated procurement organizations and allowed them to price deals with confidence. It worked. The margin on large deals increased by 500 basis points without affecting win rate.

The best “big deal teams” obey a consistent set of principles. They are selective in which deals they support. Large deals are expensive to pursue, so they target only the most important, based on margin thresholds, likelihood of success, and the customer’s willingness to partner. They standardize the process, including “go/no go” stage gates (the best companies are willing to walk away from deals that are unattractive). They develop a deal analytics package comprising price/margin sensitivities, competitive insights, and historic account performance. Finally, they conduct rigorous post-mortems. Companies learn the most about their customers and themselves in the aftermath of deals.

The second best practice is being easy to work with. Sales organizations that fumble customer concerns because of a lack of coordination will rapidly antagonize their key accounts—it’s the number-one pain point for buyers. For example, if a sales rep proposes a significant price increase to a customer in one region without coordinating with her colleagues in other regions, the customer will understandably be annoyed. Suppliers often lose deals precisely because they can’t get this alignment, and as account complexity grows, so do the challenges of cross-team coordination.

Ensuring alignment requires getting a combination of actions right. First, there must be a clear account leader, either a dedicated person or a “first among equals” from the account’s relationship managers. Second, the sales team must be structured to support the designated leader with representation in relevant core regions and/or business units. Third, this cross-functional account team needs to focus on bringing the best thinking from across the supplier to identify opportunities for the customer (e.g., marketing, finance, supply chain, R&D, manufacturing). The best account teams manage a shared account action plan, with clear owners and deadlines. They review the action plans regularly and with a focus on individual accountability. It is particularly important to provide transparency on the pipeline and performance and to incentivize all team members (in particular, presales and sales operations) on aligned account targets.

Even if you get this alignment right, staffing can still be a challenge if the level of customer demand varies so much across the life cycle. A credit-card issuer solved this problem by creating a flexible account-management model that allowed it to temporarily add staff from a shared resources pool to boost capacity at critical times.

This redesign not only allowed the company to meet its top customers’ needs cost-effectively; it actually made it possible to give key accounts a higher level of service using fewer resources. This led to increases in key account sales of 30 percent and invigorated the entire key account organization.

Here’s how it works: Each key account is assigned a permanent small core team that takes care of day-to-day account planning and support. When there is a specific need for expertise, such as during a contract renegotiation, the core team requests specialist support. These specialists come from a shared resources group and consist of high performers drawn from key accounts (account executives, contract negotiators, business analysts) and from functions (loyalty, legal, technology, market research, etc.). Once the tasks have been completed, they return to the pool to be redeployed elsewhere.

The core team may be supported by roving teams also staffed from the specialist shared resources pool. These roving teams spend several months (or sometimes up to a year) rolling out new products or ideas sequentially across accounts. When the rollout is complete, the team disbands again.

Pursue New Prospects Relentlessly

Sales organizations pursue growth by identifying and winning new customers, yet it is a perennial challenge for sales executives to keep their people in the hunt. Most sales models eventually turn hunters into farmers: a sales rep lands a big account and is paid a commission on that account. Then, happy with the ongoing income, the rep loses the hunger that motivates true hunters. Most compensation models enforce this behavior, as reps fail to get enough reward from a second hunting effort to justify the time it takes. Some companies try to make up for the hunter-to-farmer evolution by deploying dedicated hunters. That has its own challenges, such as getting compensation right and keeping dedicated hunters motivated.

Our interviews highlighted a number of examples where companies have overcome these hurdles and deployed effective hunting models. One European manufacturer was already a market leader thanks to its strong brand, a broad product line, and a large sales force. But it was finding it hard to grow further.

The company started with incentives for prospecting and asked staff to spend a certain percentage of their time on acquiring customers. Unfortunately, the demands of managing existing clients overwhelmed the orders and incentives. Then the company tried a dedicated hunting group, but this too proved unproductive.

After reflecting on what had gone wrong with these approaches, sales leaders tried a model built around “hunting days.” Once a quarter, the entire sales force stepped away from their existing accounts and spent the whole day calling eight to ten new accounts per rep. The results were dramatic. In just a single day, the sales force generated two months’ worth of leads. The model was also sustainable, given that it used the existing sales force, so that there was no additional fixed investment.

Our interviews highlighted a number of other innovative ways in which companies are prospecting. A high-tech company carefully monitored changes of chief information officers in large corporations it did not serve and then aggressively pursued the new CIOs. It knew from experience that a change of management in an IT operation often leads to new selling opportunities.

A healthcare provider had success with the dedicated-hunter model by requiring hunters to hand their new accounts over to farmer colleagues immediately. Many companies that try the dedicated-hunter approach move the hunting rep off the account gradually, which causes confusion for the customer and, inevitably, poor morale among hunters. The healthcare company instead pitched the idea of bringing the account rep in at the end of the sales process as a positive thing. It assured customers that a dedicated account rep offered a better level of service than other suppliers could deliver, and indeed, customers reacted very positively. This meant that hunters could get on with what they did best: finding new business.

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As all these stories highlight, world-class sellers bring an innovative mind-set to their direct channels. The customer is at the center of many of these examples, as illustrated by both Vodafone’s Jan Geldmacher and Cargill’s Sabine Sagaert in the interviews at the end of this chapter. Indeed, many great companies have found a way to link an excellent customer experience with sales opportunities. The office sales company reaped tremendous rewards by engaging with potential customers well before anyone talked price. The basic-materials player realized it needed to reflect its customers’ growing sophistication. Even the high-tech company that tracked CIOs who were hired and fired realized that an intense focus on the customer is what distinguishes the winners from the rest. In the next chapter, we’ll highlight how such companies take similarly innovative approaches with their indirect channels.