For many organizations, competition—both domestic and international—has become more fierce, necessitating explicit strategies for differentiating and remaining competitive. As an outcome of several trends, including globalization, competition grows when organizations become more similar, regardless of how many players there are. Organizations know they are in a seriously competitive environment, whether there is only one other competitor or a thousand competitors, if they cannot differentiate themselves—that is, by adding more value, a different value, or the same value at a lower cost than the other guy(s). According to one company, “The only way to grow is to take something away from a competitor. . . . Today, more people are after less business and we need a bigger piece of a smaller pie.”
Today, all players, prospective customers, and true competitors alike have access to much of the same knowledge and many of the same resources. Furthermore, yesterday’s competitive differentiators, such as price or securing a presence on the Internet and the ability to deliver via the Web, are no longer unique points of difference. This has leveled the playing field in many industries.
Competition no longer comes only in the form of other organizations that do the same thing and sell to the same markets. Increasingly, organizations are competing against their distributors or agents, against companies providing “substitute” products and services, and internally across their own channels to market in the form of channel conflict. There was no sales organization or salesperson in our study that did not feel competitive pressures on a daily basis. Competition may come in different forms, but identifying competitive sources and managing their impact through the strategies discussed in this book will help organizations to differentiate themselves in the marketplace.
Changes in Customers’ Buying Behaviors
Customers aren’t necessarily buying different products and services, but they are buying in different ways—by leveraging their knowledge of pricing and product, by expecting more from their vendor and salesperson, and by placing value on different factors that drive decisions to buy. Customers have become more critical and often times less willing to entertain high salesperson involvement. This means that while sales organizations are striving to become consultants to their customers, customers themselves are moving toward reverse auctions, procurement committees, and other arm’s-length buying models that make it more challenging for the salesperson to add value, and resulting in a need for new sales approaches.
Every organization we spoke with reported some degree of change in their primary purchasers’ behaviors and attitudes. Those shifts represented a range of themes from increased expectations of their vendors and salespeople to an exclusive focus on price. In Chapter 9 we discuss in more detail how customers have changed the way they buy and what they value, and present data from our own examination of buying behaviors from the customers’ points of view.
Across the globe, customers and prospects expect faster delivery of higher-quality products and services with far less tolerance for a misstep or error—yet all for less money. Customers are more sophisticated today and their demands are escalating with no apparent end in sight. Sales organizations are having to continuously reinvent themselves to keep up, and are constantly pressured to provide more at a lower price. Customers have also grown intensely price focused, even at the expense of their relationship with their salesperson. To that end, customers and prospective customers have abandoned the conversation on features, benefits, and value and have redirected attention toward gaining an immediate price concession. According to one manager, “Requests for price reductions are relentless, just relentless.” Further complicating matters, some customers have become accustomed to receiving lower price points, which may have been provided out of desperation during tough times “to secure the business.” Now, any attempt to increase price leads customers to look at competitive alternatives.
Finally, the growing phenomenon of reverse auctions is putting the customer in the driver’s seat in terms of dictating product, delivery, price, and terms. In a reverse auction, a buyer will send an electronic proposal of sorts stipulating the specifications and the delivery of the products they wish to buy. Vendors then log on to the auction to submit their bids with the lowest price generally winning (see Chapter 9 for a more indepth discussion of electronic auctions). Buyers typically make no guarantees to buy and suppliers are left to a bidding war. As one sales manager told us, “I have nightmares over these reverse auctions.”
Customers are also “commoditizing” products and services or reducing products and services to discrete units, be it ATM machines, paper, or hotel rooms. This is occurring in many of the industries we studied despite the type of product or service offering. Therefore, understanding the customer’s business and building professional relationships are more critical than ever but, at the same time, even harder to achieve. While salespeople commonly want to be a strategic or trusted business advisor to their customers, purchasers have a tendency to see the salesperson’s product or service as merely “another good.” This arm’s-length or more hands-off approach to the sales process by the customer is presenting clear challenges to contemporary sales techniques and tactics.
There’s no doubt that customer satisfaction is important, and as the old adages go, the customer is always right, the customer comes first, etc. But giving away the store won’t necessarily result in satisfied and loyal customers. One manager told us, “If you want loyalty, buy a dog. You won’t get loyalty from customers.” Probably a bit cynical, but not far from the truth, especially when sales organizations don’t have customer strategies in place. Successful sales organizations know that meeting and exceeding the expectations of customers and providing the value they are shopping for requires smart strategies that will involve sales skills, technology, and a culture of service among other things. Top organizations also know that always meeting the demands of customers, regardless of what those demands are, can be detrimental to both parties. Taking this into account, knowing when to bend over backward and when to say no when developing sales-related strategies is essential.