Customers have changed.
In the past, sales reps would be tasked with “solution selling“—i.e. being adept at discovering customers’ needs and selling them solutions to those problems. In other words, the sales rep would ask the customer questions to diagnose their problem (need diagnosis) and would “sell” them a product that their company produces which provides a solution to the customer’s problem (need fulfilment).
But in recent times, customers require less help from salespeople to find solutions to their problems. This is likely because:
- the wealth of information available to customers has multiplied exponentially;
- the access to such information has become ubiquitous [in Western nations] (predominantly due to the internet); and
- customers have become increasingly dexterous at researching, curating and analysing information.
The result of these developments is that customers are able to self-diagnose problems and research solutions themselves.
Why does this matter?
Under the conventional “solution selling” method, salespeople are trained to align their company’s solution with an acknowledged customer need and then demonstrate their company’s value over a competitor’s offering. But when customers can self-diagnose and do their own research before they interact with a sales rep, they come to the conversation with a deep understanding of their problem and leave little room for the sales rep to offer value. Research discussed in a recent Harvard Business Review [HBR] article found that customers completed nearly 60% of a typical purchasing decision—researching the problem, finding solutions, ranking options, benchmarking pricing, etc.—before even speaking with a supplier (note that this was in a B2B context, but the idea is certainly applicable and possibly even more pronounced in a B2C context!). Customers come to the (metaphoric) negotiation table armed with all of the options and specifications they require, essentially relegating the sales team to a fulfilment team.
Because customers have such a wealth of information, it has forced many companies to compete on price instead of competing on other elements of an offering. Customers know what they want, how they want it and what they should expect to pay for it. Furthermore, if companies cannot meet these demands at the specified price, the customer will opt for a competitor who is willing to slash their prices. The wealth of information available has shifted even more power to the consumer and has forced companies into enduring price wars. There are plenty of recent examples to illustrate this.
What can marketers do?
Since marketing is all about delivering value to customers, companies need to find new ways to generate and deliver value beyond just “being the cheapest”. Because, price—per se—is not an element of the marketing mix which is indefinitely defensible.
My initial thoughts are that companies need to invest more in their brand; in particular the product and promotion Ps of their marketing mix. In terms of Keller’s Brand Knowledge framework, the benefits a customer attaches to a particular brand are based on the functional, symbolic and experiential aspects of that brand. Companies need to make better products (functional benefit), that are perceived as more cool and valuable (symbolic benefit), that are more enjoyable to use (experiential benefit) than a competitor’s offering. Customers recognise, attribute and attach value to these kinds of benefits. Additionally, differentiating on these brand associations—instead of differentiating by being the lowest priced provider—will allow companies to generate competitive advantages that are maintainable and operate business with healthy financial margins.
Do you agree? How else can companies fight this trend?
This post was inspired by the HBR article The End of Solution Sales—by Brent Adamson, Matthew Dixon, and Nicholas Toman—which featured in the July–August 2012 edition of Harvard Business Review.