T he book "Consultative Selling" was written by Mack Hanan in 1970. It forever changed the way high-end sales were done; how traditional sales representatives could sell profitably to competitive accounts; the way that key accounts could be protected whilst maintaining profitable margins and how sales cycle times could be cut by 85% or more. And that was just the start of it.

Mack Hanan's Consultative Selling (CS) is by far the most effective sales strategy that a company can adopt for reasons we discuss in this article.

The legendary sales and sales management expert Don Beveridge developed a slightly different version of the concept. I learned his approach in the early 1980's from an audio tape series. Don emphasized needs-based, value-added selling and he was brilliant at explaining it. Mack Hanan went a step further in quantifying the added value. My approach fits somewhewre in between.

The CS concept was taught by some sales training organizations during the 1980's and 1990's, however it has been watered down since to the point where it is almost unrecognisable from both Hanan's and Beveridge's versions. Whilst there is a widespread lack of awareness or comprehension of the original concept, incorrect implementation causing resistance to change, remains the major issue for companies attempting to implement consultative selling.

What is "Consultative Selling"?

Simply put, consultative selling is a sales and marketing strategy that is focused on selling product and service "systems" that meet customers/clients' real needs. I use the word "customer" from here on to refer to both customers and clients.

When used correctly CS enables the seller to justify better overall margins in line with the total value delivered within the customer relationship.

Traditional, ongoing supplier/customer relationships are founded primarily on whatever value the customer recognizes within the core products and/or services supplied. The sharp customer who cannot recognize any substantial, unique values in the relationship they have with you, will usually expect lower pricing and things like volume incentives to provide that differentiation. If a clear understanding of the value you contribute is not available they may potentially seek it from a competitor. How often does this situation occur?

When you attempt to acquire a new customer, you can adopt either a product-oriented approach, or you can adopt a consultative approach. The consultative approach will win practically every time, especially if you are up against a product peddling competitor. The focus in consultative selling goes onto what the customer is trying to achieve in their business whereas the focus of the product-oriented approach goes entirely onto product requirements and "service" however that may be defined.

Customers want help to solve their problems and achieve their goals. If they can get that help cost-effectively from an organization and seller they trust, the competition does not stand a chance, even if they have a lower price.

Some call CS "solution selling" but whilst solutions may be part of a value-based plan, the focus of CS is on the financial values and other advantages that will flow from the plan, not the solutions themselves. Therefore, solutions are only part of CS systems and plans.

Total value.

"Total value" is a measure of the financial and other substantive values established within the customer relationship that are over and above the product. Financial values are in the form of cost and waste reduction, sales improvement, margin improvement, productivity and efficiency improvement and so-on that result from our system. All of these of course equate to profit gain. There can be other important values as well that go beyond immediate financial advantages.

In a competitive situation, a supplier who can point to measurable financial values and other substantial benefits that they are responsible for helping deliver, is in much more control of the customer relationship than a typical supplier who cannot point to any special value delivered.

Consider this competitor threat issue...

One of your major accounts has been targeted by a consultative seller who has proven to the client that they will gain a 12% cost reduction in one or more operational areas where you supply products. The customer calls you and informs you of this and says they will stay with you if you can match those savings.

What do you do? Discount further? Do you panic and send in your sales manager to try to renegotiate contract terms? What if the customer likes what this other organization can do for their company now and in the future? You can't match it because you have no idea what the competitor is offering or even how they got to this point.

Don Beveridge would pose the following question to sales managers and representatives after explaining CS in some depth:

"What would you do in your territory if it was your competitor who became the consultative seller?"

I have asked that same question of client representatives many times and would get a few concerned looks. Some, if not all would agree, after a bit of prompting: "We'd be in big trouble."

How IBM made CS their core approach.

The best-known example of successful CS implementation was IBM under the leadership of Lou Gerstner. In his 2002 book "Who Says Elephants Can't Dance?" Gerstner explained how he learned that customers placed more value on the services IBM provided than the computer hardware itself. So, they transformed IBM into a services organization where hardware became just one component of a multi-component, services-based system. It was easier said than done of course. Sheer, bloody-minded determination was a major ingredient.

The process of implementing CS includes development of one or more systems designed to meet identified high value needs of targeted customer groups. The aim is to tie new and existing customers more tightly to the supplier and to protect those accounts from competitor sniping based on the total value delivered as I said earlier and do so more profitably.

The system development process requires an in-depth understanding of customers' real needs. Unfortunately, most supplier company's salespeople and managers, unless they come from customer industries, know very little about the industries to which they sell. They know even less about the opportunities available to meet unmet needs profitably as part of their product and service package offering. And they know absolutely nothing about how to sell to those opportunities.

When traditional salespeople talk about customers' "needs" they are really thinking in terms of product requirements. It scares them when they consider having to focus on needs beyond requirements. They lack the confidence necessary to adopt an advisory approach when they do not have enough industry knowledge. Getting that knowledge means having the right management support which is usually not available in a typical scenario.

Management makes the difference. But even with industry knowledge and management support, most sales representatives are just not suited to CS thinking and behavior. They are happy and confident doing what they are doing and will not adopt the approach. That is why, in my opinion, it is a waste of time and money to attempt to train all reps in becoming consultative sellers.

Keys to successful CS implementation.

The traditional training and consulting approach adopted by training organizations does not work because implementing CS requires a company-wide cultural change process. Normally, "sales training" is seen as something that gets done with salespeople and sales or branch managers and is perceived to have little if anything to do with senior executives and the way the company is run.

IBM succeeded because the process was led and managed from the top by someone who fully understood the CS concept. Lou Gerstner was determined to make it work.

With a dedicated focus toward accelerating outcomes, IBM Consulting is your partner for transforming everything from business strategy and experience design to technology and operations. (IBM Consulting division overview in 2022.)

Most companies who like the idea try to implement CS as a "sales training" process coming in at middle or sales management level. I failed many times trying to implement CS at middle management level. I learned the hard way that CS implementation is an organizational change process that must start at the top of the company.

There are two main keys to successful implementation...

The first key is getting the right type of buy-in at the top of the organization and at every management level. This can only be accomplished with the use of advanced change management methods. Without effective change management, 100% of the time, managers at all levels will assume that CS is about "selling" and it has nothing to do with them. Consultative selling systems usually orchestrate many functions of an organization not just sales.

The second key is establishment of a function, sponsored by top management, that serves to support field sales representatives in managing their high potential accounts more profitably. Creating and introducing that function must be carefully planned with proper direction or it will fail.

Consultative Selling creates cumulative expertise that gives you a permanent and growing competitive advantage. Now is the right time to start.

Explore the idea more... Get in touch today. We provide services to the training and consulting industry as well as clients direct.

John Greenbury

"SELLING PROFITS NOT PRODUCTS"

This powerful video-based skill and system development program, produced by John Greenbury, is in two parts:

PART 1: Implementing Consultative Selling: Understanding the CS concept. Creating a "motivated change environment" that will allow for and support progressive implementation. Customer/client targeting. Continuous improvement strategy.

PART 2. Consultative Selling for Sales Professionals. Designed to equip selected salespeople to adopt the CS approach, prove value and expand their client base profitably.

This system gives you all the tools you need to implement CS successfully. It also provides ready access for review, retraining and training of new representatives cost-effectively.