The insidious erosion of commoditisation is evident wherever you look. Frontline salespeople find themselves in a constant war of attrition, in which they strive to communicate the value their offering delivers, and many customers are becoming very accomplished at negotiating these products, services and solutions back down the value chain.
The first rule is senior leadership understanding, involvement and support. Clear and unequivocal support from senior management ranks number one among the factors that determine a company's ability to bring about the necessary change.
The second rule is to understand that sales organisations are difficult to change, requiring cross-functional collaboration. Hence, successful innovators adopt a structured and formal process to encourage change and test innovation.
The third rule is to give a high priority to building flexibility into business processes and in the workforce, and a willingness to use all available resources, to help them adapt to a greatly changed sales environment.
The fourth rule is to develop a deep understanding of customers' business drivers, business processes and strategic imperatives. Innovative sales organisations frequently develop innovative solutions to problems and opportunities that customers were not aware of.
The fifth rule is a willingness to reconfigure assets - people, infrastructure, technology and intellectual capital to adjust rapidly to new market conditions.
In the sales environment, creative approaches to delivering and earning increased value are almost invariably driven by increased competition and the resulting margin squeeze. Boise Cascade no longer sell office supplies; it applies its skills in activity-based costing, supply chain management and procurement to effecting substantial savings for large corporations and becoming their sole source supplier.
Southern Energy Marketing no longer sell kilowatt-hours: it utilises its expertise in risk management to assist major clients in pulp and paper, and employs instruments such as asset swaps and futures, to insure and stabilise pulp prices. This benefits both the paper mills and downstream clients, such as printers and publishers. Southern Energy benefits by entering into long-term contracts.
It is difficult to sustain competitive advantage through product features and benefits, and innovation is largely focused on finding creative new ways of selling. Sadly, few local sales forces have got the message.
