Sales Management

The future of sales (III): Insight-based selling, and the effective monetization of insight, pre-contract

OLYMPUS DIGITAL CAMERAThere are two stark and very different perspectives on the effective use of insight / thought leadership in a sales process:

One perspective is represented by an HBR article titled “The End of Solution Sales” by Brent Adamson, Matthew Dixon, and Nicholas Toman, all in Corporate Executive Board, a member-based US advisory firm.  In the article the authors claim that successful sales people succeed because they seek out prospects in agile organizations in state of flux, and that insight-based sales will replace solution sales as dominating sales paradigm.

Another perspective is represented by conventional wisdom in product organizations: Providing unsolicited thought leadership is like offering consulting services free of charge.  It will neither increase nor decrease your win probability, just prolong your sales cycle.  Your job as a sales rep is to create a winning response document to the customer’s RfP or RfQ.  Period.  Besides, by providing unsolicited thought leadership you may end up competing with your consulting colleagues.

In my opinion, neither of these perspectives are based on a sound analysis of how insight might potentially be monetized (and the HBR article is furthermore at odds with business reality in two ways: i) a large part of the revenues of most companies come from fairly rigid and stable customer organizations through formalized RfP processes and somehow such business has to be won; and ii) transforming  highly effective, but intellectually boring sales reps into insightful thought leaders seems in general like an ambitious undertaking).

I will argue that there are at least four ways in which providing unsolicited thought leadership pre-contract to a potential customer, free of charge, can potentially be monetized through increased win probability or increased contract value:

First, if the contract itself is actually for professional services, pre-contract thought leadership may be seen as sending a signal about the quality of the actual delivery.  This argument may hold also for contracts for products: If you as a person are seen as a high-quality person, your products may also be seen as high quality.

Second, certain insights may increase the relevance of the seller’s associated product offering (and may reduce the relevance of the product offerings of his or her peers in competing firms).

Third, and even if we would like to think of purchasing a product or service like a rational and fair process, providing unsolicited thought leadership to a potential customer may be seen as providing a small gift, and there may be expectations of further exchanges of gifts and possibly also pay-back time.

Fourth, demonstrating thought leadership / intellectual agility / domain knowledge may be an informal requirement for even being invited to a discussion about a possible purchase, even if the purchase itself

In conclusion, it seems like Messrs. Adamson, Dixon, and Toman may have a theoretically sound case.  The fundamental issue, assuming that pre-contract provision of thought leadership may give a potentially significant advantage over competition, is what implications such insight will have for how companies choose to organize their sales activities.  In essence, will sales of any offering with non-trivial complexity in the future be conducted not by sales reps like today, but by strategically fluent senior executives with deep industry knowledge, the way we see it in the major consulting firms?  I will return to this issue in a future blog in the series ‘The future of sales …’

Discussion

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