Following is an interview with Andreas Folkvord, Managing Partner in TrueNorth Consulting (TNC), Oslo Norway, see www.truenorth.no. Andreas has advised engineering organisations on sales effectiveness since 2001, including some stints in VP-level and director-level sales positions in multiple industries.
The background for the interview was that numerous studies have put the failure-rate of R&D start-ups at 80 percent, with a lack of early focus on sales as a major cause. Furthermore, there is generally significant variability of order intake performance across knowledge-based organisations, whether traditional research organisations, thought leadership-based advisory firms, engineering firms, or IP-based high-tech companies.
Regular readers of the Crisp Ideas Sales Consulting blog know our hypotheses about the underlying issues:
- Norwegian knowledge-based organisations fail or underperform relative to potential or expectations because they lack a proper sales culture;
- Sales paradigms or best practices that result in materially better sales performance can be identified;
- Such paradigms or practices, if properly implemented, will deliver significant extra topline growth.
In the interview, Andreas explored these hypotheses, and discussed actionable remedies. The following is an edited transcript of our conversation. After the interview, Andreas and I continued our dialogue about the differences in selling services and selling products. I will present my perspective on this issue in a later blog post.
Crisp Ideas: True North Consulting’s sales performance has historically been excellent. Can you share with our readers some of the reasons why?
Andreas: In the beginning, it was essentially “sink or swim.” Cold-calling was tough for us, as it is for most people, but we needed revenue. So we built a list of 200 friends, business acquaintances, and former clients, and started to call. We got meetings with 15-25% of the people on the list, got a sale from 10-20% of those, and then built from there. This is typical of most successful early-phase companies. It’s probably the only way for a small company to build order intake, reference customers, and word of mouth effects.
Crisp Ideas: Let’s move to the general case: How do knowledge-based organisations consistently deliver superior order intake performance?
Andreas: Over the years, we’ve worked with three particular clients, one supplier of radar equipment, one of industrial paint, and one of process systems for the oil and gas industry. What they all have in common, in addition to consistently solid sales performance, is: an engineer-to-engineer sales model; a high sales activity level; and exposure to harsh competitive pressures in the global markets.
For example, sales people in such organisations generally do multiple meetings per day, rather than the one per week typical in Norwegian industry. The companies underline the importance of “sales activity level” by using it as a key performance metric.
Crisp Ideas: Have you seen any consistent patterns of ineffectiveness in the way Norwegian knowledge-based organisations organise sales processes?
Andreas: First, there seems to be a cultural belief that one sales meeting per week is enough to succeed in international markets. This is not true. Second, some Scandinavian engineers seem to lack commercial “antennas”; they do not see a sales opportunity even when it’s presented on a plate. Of course, these antennas can be developed through training.
Crisp Ideas: Does this suggest any simple tactics or strategies for making improvements?
Andreas: Given that sales does not come naturally to many Norwegian engineers, the key message is: “We don’t want you to be a hard-core sales person, but we think you can develop into a highly valued contributor to the company’s sales success.” Getting this message across to front-line staff requires a lot of time in 1-to-1 meetings to establish comfort, trust, and motivation.
Crisp Ideas: What’s the improvement potential in terms of increased order intake?
Andreas: Our experience at TNC is that most sales organisations can increase order intake 15-20 percent, even if starting from an OK level. However, the company must: allocate enough time (typically one year) to permanently change individual and organisational behavior; focus on quantity, quality, and prioritisation, with quantity (sales activity level) being the most important.
Crisp Ideas: You have had clients across a fair number of industries in Norway. Are there specific industries that have created successful sales cultures?
Andreas: The Norwegian insurance industry has done well. In oil and gas, the picture is mixed. I am also uncertain regarding the Norwegian IT industry, though the Norwegian subsidiaries of US companies like Oracle, IBM, and Microsoft have clearly had very impressive sales organisations.
Crisp Ideas: Are there specific industries with good potential for improved sales effectiveness?
Andreas: Two come to mind. Consumer banking in Norway is an example of an industry that has historically underperformed in sales, probably due to lack of competitive pressures. Engineering is a sector where a small change could yield big results. Simply increasing the number of sales meetings—from one to two per week, to two to three per day—would dramatically increase the building of order book.
Crisp Ideas: Are there specific ways a knowledge-intensive organisation should configure its sales function and processes to deliver solid or superior performance?
Andreas: Let us look at this issue from the particular perspective of implementing a dedicated sales organisation vs. selling engineer-to-engineer or specialist-to-specialist. While the hard-core software industry, as exemplified by Oracle and Microsoft, has traditionally leveraged a dedicated sales force, my experience is that for most knowledge-based companies the specialist-to-specialist model is more effective. This is independent of industry.
Crisp Ideas: It may be argued that selling services and selling products are two very different endeavours, and that grouping together knowledge-based services companies and knowledge-based product companies may “average out” important differences between the two, resulting in less effective prescriptions. In your opinion, what are the main differences between selling services and selling products?
Andreas: In my opinion, there is fundamentally no difference between the two. All sales processes boil down to a four-stage process: Establishing rapport and credibility, understanding customer needs, proposing a solution, and closing the deal.
Crisp Ideas: Are there specific countries or industries that can serve as models for sales organisations in knowledge-based firms in Norway?
Andreas: It would be easy to say the US, and there are indeed many extremely impressive US-based sales organisations. However, my experience is that typical US sales approaches may work less well when selling to typical engineering organisations. I have started to think there is a uniquely Scandinavian approach to selling in the B2B space—based on technical insight and acumen, commercial reasonableness, and personal integrity—that is effective globally.
Crisp Ideas: How will the sales culture in Norway’s technology industry develop over the next 10 years, and what will drive these changes?
Andreas: I believe that competitive forces will compel Norwegian industry to professionalise in the area of sales, especially in the area of understanding and responding to customer needs. I also think that early phase companies will be forced to start early to invest in proper sales functions, not least because of pressure from the investment community.
Crisp Ideas: How do you envision TNC’s contribution to these changes?
Andreas: In TNC, we believe sales is a profession, with best practices, that can be learned. We want to contribute to the dissemination and general acceptance of this perspective in industry. We also think sales and salespeople in engineering organisations are often given less respect than they deserve. We’d like to expand the public discourse about sales that will help businesses understand the importance of this profession.