Harvard Business Review (COR) - HBRs 10 Must Reads on Sales with Bonus Interview of Andris Zoltners

HBRs 10 Must Reads series is the definitive collection of ideas and best practices for aspiring and experienced leaders alike. These books offer essential reading selected from the pages of Harvard Business Review on topics critical to the success of every manager.

Titles include:

HBRs 10 Must Reads 2015

HBRs 10 Must Reads 2016

HBRs 10 Must Reads 2017

HBRs 10 Must Reads for New Managers

HBRs 10 Must Reads on Change Management

HBRs 10 Must Reads on Collaboration

HBRs 10 Must Reads on Communication

HBRs 10 Must Reads on Emotional Intelligence

HBRs 10 Must Reads on Innovation

HBRs 10 Must Reads on Leadership

HBRs 10 Must Reads on Making Smart Decisions

HBRs 10 Must Reads on Managing Across Cultures

HBRs 10 Must Reads on Managing People

HBRs 10 Must Reads on Managing Yourself

HBRs 10 Must Reads on Sales

HBRs 10 Must Reads on Strategic Marketing

HBRs 10 Must Reads on Strategy

HBRs 10 Must Reads on Teams

HBRs 10 Must Reads: The Essentials

Copyright 2017 Harvard Business Publishing Corporation

All rights reserved

No part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or otherwise), without the prior permission of the publisher. Requests for permission should be directed to , or mailed to Permissions, Harvard Business School Publishing, 60 Harvard Way, Boston, Massachusetts 02163.

First eBook Edition: May 2017

ISBN: 978-1-63369-327-2
eISBN: 978-1-63369-328-9

by Thomas V. Bonoma

You dont understand: Willy was a salesman. He dont put a bolt to a nut. He dont tell you the law or give you medicine. Hes a man way out there in the blue, riding on a smile and a shoeshine. And when they start not smiling backthats an earthquake.

Arthur Miller, Death of a Salesman

MANY COMPANIES SELLING EFFORTS are models of marketing efficiency. Account plans are carefully drawn, key accounts receive special management attention, and substantial resources are devoted to the sales process, from prospect identification to postsale service. Even such well-planned and well-executed selling strategies often fail, though, because management has an incomplete understanding of buying psychologythe human side of selling. Consider the following two examples:

• A fast-growing maker and seller of sophisticated graphics computers had trouble selling to potentially major customers. Contrary to the industry practice of quoting high list prices and giving large discounts to users who bought in quantity, this company priced 10% to 15% lower than competitors and gave smaller quantity discounts. Even though its net price was often the lowest, the company met resistance from buyers. The reason, management later learned, was that purchasing agents measured themselves and were measured by their superiors less by the net price of the sophisticated computers they bought than by the amount deducted from the price during negotiations. The discount had a significance to buyers that sound pricing logic could not predict.

• Several years ago, at AT&Ts Long Lines division, an account manager was competing against a vendor with possibly better technology who threatened to lure away a key account. Among the customers executives who might make the final decision about whether to switch from Bell were a telecommunications manager who had once been a Bell employee, a vice president of data processing who was known as a big-name system buster in his previous job because he had replaced all the IBM computers with other vendors machines, and an aggressive telecommunications division manager who seemed to be unreachable by the AT&T team.

  AT&Ts young national account manager was nearly paralyzed by the threat. His team had never seriously considered the power, motivations, or perceptions of the various executives in the customer company, which had been buying from AT&T for many years. Without such analysis, effective and coordinated action on short noticethe usual time available for response to sales threatswas impossible.

How can psychology be used to improve sales effectiveness? My contention is that seller awareness of and attention to the human factors in purchasing will produce higher percentages of completed sales and fewer unpleasant surprises in the selling process.

It would be inaccurate to call the human side of selling an emerging sales concern; only the most advanced companies recognize the psychology of buying as a major factor in improving account selection and selling results. Yet in most industries, the bulk of a companys business comes from a small minority of its customers. Retaining these key accounts is getting increasingly difficult as buyers constantly look not only for the best deal but also for the vendor that best understands them and their needs. It is this understanding and the targeted selling that results from it that can most benefit marketing managers.

The personal aspects and their complexities become apparent when one looks closely at an example of the buying process: the purchase of a business jet, which carries a price tag in excess of $3 million. The business-jet market splits obviously into two segments: those companies that already own or operate a corporate aircraft and those that do not.

In the owner market, the purchase process may be initiated by the chief executive officer, a board member (wishing to increase efficiency or security), the companys chief pilot, or through vendor efforts like advertising or a sales visit. The CEO will be central in deciding whether to buy the jet, but he or she will be heavily influenced by the companys pilot, financial officer, and perhaps by the board itself.