Sell solutions, experiences not just products
You go shopping for a pair running shoes. An hour later you step out of a brand shop with eco-friendly paper bags stuffed with shoes, socks with heel pads, a water sipper, a fitness wrist band, a branded jersey, running shorts and surprise, the local running club membership. What’s happening?
Businesses selling products are passe now. Selling shoes is no longer considered good enough. Shoppers today look for a total experience. That explains the running club membership you bought with your shoes. Also, in demand are solutions, which is why the brand shop offered you a wrist band to help you watch calorie burn every day. Plus, a whole range of whistles and bells like padded socks, a jersey to make a fashion statement and a cool sipper.
Antonio Nieto-Rodriguez, writing for Harvard Business Review (Selling Products Is Good. Selling Projects Can Be Even Better – HBR Oct 2017) makes a compelling case for taking sales beyond products. Selling only products is proving increasingly limiting to businesses. Limitations could include:
- Plateauing revenues held back by limits to the range of offerings on sale
- Higher Customer attrition rates as buyers move away to sellers with a bigger, better range
- Eroded buyer loyalty as there are no intangibles to tie buyers to the brand
- Increased competition entity as competing on mass-produced products is easier for competition than copying unique experiences and solutions
The Mercuri View
When one takes an outside-in approach to selling, one cannot but come up with a project approach. For, no product is an end in itself. It is always a means to fulfil a larger purpose.
Proponents of the inside-out approach are transactional, in the sense their vision is limited to what their products can help achieve. It goes beyond them to connect the dots… prospectively, to see synergies, to see the value inherent in the possible bigger picture.
The reactive is subservient to the proactive.
Sales People who limit themselves to such reactive approaches are subject to the same consequences that await their Organizations.
To miss the forest for the trees is a common handicap of those who fail to see beyond the tip of their nose… irrespective of their position in the organizational pyramid.
Averting this demands the ability to ask questions that help the prospect scratch the surface, to reveal those deep unarticulated needs. The deeper one can scratch, the more insightful the conversation gets, for the buyer and the seller. To make such conversations happen is the role of a Sales Person.
“To make a sale happen when there would have been none without him or her” is how Heinz Goldmann defined the role of a Sales Person. He did this more than 60 years ago! Simple truths are profound and timeless!
In essence this means that even product companies now gravitate towards selling projects. If finishing a 10k marathon is your cherished goal, the shoe brand can make a project out of it. The shoe brand, will not only equip you, with its traditional sports gear, says Nieto-Rodriguez, “but in addition it could include a training program, a dietary plan, a coach, and a monitoring system to help you achieve your dream. The project would have a clear goal (finish the marathon) and a clear start and end date”. The possibilities are endless he points out.
Projects to the rescue – The Philips Story
Born more than a century ago, in 1891, Philips is a highly respected brand internationally. Setting out to make carbon filament lamps in Netherlands, Philips grew rapidly in size and complexity with its penchant for innovation and its ability to shrink the time to market on new product launches. Philips’ footprint today is visible in such diverse products such as external defibrillators through smart-sensor enabled toothbrushes to energy efficient lighting of entire cities.
While the cornucopia of products built the cash chest for Philips, recent decades have seen sales languish. Products were easily copied within months of launch and soon reduced to commodities. To address this challenge, Philips reorganized itself into three separate companies dedicated to Consumer Health, Lighting and Healthcare and implemented an accelerated growth program in all three companies. Eponymously named ‘Accelerate’ the program sought to step on the growth pedal, putting projects on the centre stage. Doing this helped Philips simplify and streamline its organisational structure. “Projects were identified as the best management structure to break up silos and encourage teams to work transversally (end-to-end) in the organization” says the author. As opposed to selling products to individual Customers in silos, working together cross-functionally on projects, created engaged teams. “Philips now seeks out the projects in which its products are being considered”.
The coming project revolution
Philips’ isn’t the only story heralding the arrival of a veritable project revolution. Some equally powerful examples include:
- Microsoft’s Cloud Services is offered as operating projects numbering close to 10000
- The multi-billion-dollar aggregator AirBnB, considers selling ‘experiences, a euphemism for small tourism projects
- Biopharmaceutical industry is now foraying into focused treatment programs, instead of serving up individual drugs
Watch out for these challenges, though
Morphing into a project driven organisation selling projects in place of products is a journey fraught with challenges. The author, himself a career project specialist, flags off the following likely challenges:
- Revenue streams – Unlike a product, revenue realisation from projects doesn’t follow immediately after the sale goes through. This would call for an organisation wide planning rethink.
- Pricing model – The simple pricing model of a product won’t work with projects that call for adoption of new pricing models.
- Quality control – Monitoring and assurance of service quality at implementation and post implementation stages is a lot tougher with projects than ensuring quality in product selling.
- Branding and marketing – The focus of product campaigns is on short term, immediate benefits which has to be reinvented to spotlight the typically long-term gains from projects.
- Sales force – Retooling the sales teams with competencies in project management and strategy becomes necessary. The sales team that was mostly dealing with procurement while selling products would now be meeting and pitching to business leaders at CXO levels.
Nieto-Rodriguez sums it up this way – “Stop for a moment and consider what your organization is selling. Is it a project? Increasingly, the answer is clear and affirmative. If not, beware, your products might soon become part of a project sold by someone else”.
The project selling revolution is here. You cannot claim you weren’t given a fair warning.
It is a settled axiom that ‘Knowledge moves from the known to the unknown’. So too, does vision move from the seen to the unseen. In an age of AI and VR this progression is here to accelerate. Those who cope, will train their eyes to see the forest and not just the trees.