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Mastering the Complex Sale

John Wiley & Sons

Chapter One

Converging Forces of Rapid Commoditization and
Increasing Complexity

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Survival in today's sophisticated marketplace requires us
to overcome two opposing forces: (1)increasing complexity
and (2)rapid commoditization, the pressure from buyers
to devalue the differences between goods and services and
reduce their decision to the lowest common denominator-the
selling price (see Figure 1.1). Let's be direct: The world
in which we sell is being pulled apart by these two opposing
forces. Even our most complex solutions are at the mercy of
commoditization as our customers, swimming in a haze of
confusion and performance pressure, grapple with tough decisions
impacting their responsibilities. The net effect is a
deadly spiral of shrinking profit margins.

Seeking competitive differentiation through increasing
uniqueness and complexity is a deadly double-edged
sword. These competitive advantages rapidly erode as they
surpass the customers' level of comprehension. . As this occurs,
the overwhelming tendency of the customer is to treat
all solutions the same-as a commodity.

With a true commodity, price and total transaction
cost are the driving forces in the marketplace. As commoditization
occurs, sales skills become less and less effective
and transactional efficiency becomes the critical edge. The
professional salesforce itself soon becomes a luxury that is
too expensive to maintain. If your company has chosen to
embrace commoditization as a dedicated strategy, it is-or
soon will be-pursuing the lowest transactional cost it can
achieve, and a book on sales process and skills will not be of
much value.

When there is increasing complexity, sophistication, innovation,
and value realized are the driving forces in the
marketplace. To survive, a company is required to recruit
and equip sales professionals who are capable of understanding
the complex situations their customers face, configuring
the complex solutions offered by their companies, and managing
the complex relationships that are required to bring
them both together. In short, the ability to create value for
customers and capture value for companies is the key. Thus,
the good news is that the future of the sales profession is secure
in the complex environment. The bad news is that as
your company brings increasingly complex offerings to the
marketplace, your customers are being left confused. They
are less and less able to understand the situations they face
and evaluate these complex solutions, which tends to limit
their decision-making criteria to the simplest elements of
your offering, the lowest common denominators-price and
specifications. If complexity accurately characterizes your
selling environment, this book is for you.

We see the impact of the complexity challenge every
day. My colleagues and I spend thousands of hours each
year teaching and coaching salespeople internationally. We
meet the cream of the crop, the people who sell complex
and costly solutions in a wide range of industries, including,
but not limited to, professional and financial services, software,
medical devices and equipment, IT solutions, industrial
chemicals, and manufacturing systems. The value of
the individual sales they undertake ranges from tens of
thousands of dollars to tens of millions of dollars. These
sales professionals are highly educated, very sophisticated,
and definitely street-smart. And they are well paid. They
are levels above the stereotypic image of salespeople that is
imprinted on the public imagination.

Even though these professionals are masters of their
crafts, we hear them express their frustration about the
outcome of their efforts on a regular basis. The most common
lament we hear is one that we've labeled the Dry Run.
The generic version goes like this:

A prospective customer contacts your company with a problem
that your solutions are expressly designed to address. A
salesperson or team is assigned the account. The customer is
qualified, appointments are set, and your sales team interviews
the customer's team to determine what they want,
what their requirements are, and what they plan to invest.
A well-crafted, multimedia presentation is created, a complete
solution within the customer's budget is proposed, and
all the customer's likely questions are answered. Everyone
on the customer's side of the table smiles and nods at the conclusion
of the formal proposal. Everything makes good business
sense. Your solution fills the customer's needs. You
believe the sale is "in the bag," but the decision to move forward
never comes. The result after weeks, months, and,
sometimes, years of work: no sale. The customer doesn't buy
from your company and often doesn't buy from your competitors.
The worst-case scenario ends in what we refer to as
unpaid consulting. The customer takes your solution design,
shops it down the street, and does the work themselves
or buys from a competitor. Many times, the customer simply
doesn't take action on a solution that it needs and can afford.
This, with a twist here and there, is the Dry Run. Sure,
it's great practice and it's great experience, but this isn't a
training exercise. This is the real world of selling, and, in
this world, it's your job to bring in the business.

What's going on in this story? The sales team is doing
everything it has been taught, but the result is not what is
expected. In fact, our experiences with more than 10, 000
salespeople each year suggest that, in the complex environment,
the outcome of the conventional sales process is
increasingly random and unpredictable. We have already
hinted at some of the reasons behind this dilemma, but to
truly understand the situation, we examine the nature of
the complex sale itself.

The Mother of All Procurements

Complex sales are primarily business-to-business and
business-to-government transactions. They involve multiple
people, with multiple perspectives, often multiple companies,
and frequently cross multiple cultural and country
borders. The complex sales cycle can run from days to
years. Undertaking this level of sale requires significant
investment in time and resources.

The $200 billion defense contract that Lockheed
Martin won in 2001 may well be the largest complex sale in
history. Granted, few companies will ever compete for a
sale of this magnitude. However, even though this is an extreme
example of a complex sale, it does share common
characteristics with all complex sales.

This contract grew out of the U. S. Defense Department's
Joint Strike Fighter (JSF) program, which was
conceived in the early 1990s. The Pentagon decided to replace
the aging fighter fleets in all branches of the nation's
military with a next-generation jet that could be built on a
standardized product platform and that combined the features
of a stealth aircraft with state-of-the-art supersonic
capabilities. In 1995, the United Kingdom jumped into the
project when it decided that the fighters in the Royal
Air Force and Navy also needed replacing and that the JSF
program would be the most economical way to accomplish
that task. Today, at least six other countries, including
the Netherlands, Italy, Denmark, Norway, Canada, and
Turkey, are considering participation.

The contract to design and manufacture jets for the
JSF program was so large that it caused a fundamental reconfiguration
in the aerospace industry. In fact, the winner of
the contract would become the nation's only fighter jet manufacturer.
Now-retired Lockheed aeronautics executive
James "Micky" Blackwell called it "the mother of all procurements"
and suggested that the JSF program would eventually
be worth $1 trillion to whichever company won it. In
1996, when the Pentagon announced that Lockheed Martin
and Boeing had each won a $660 million prototype development
contract and would be the only companies allowed to
compete for the program's final contract, one competitor,
McDonnell Douglas Corporation, sold itself to Boeing.
Northrop Grumman, another spurned competitor, tried to
merge with Lockheed Martin; after the government blocked
that deal, Northrop Grumman declared it would no longer
compete as a prime contractor in the military aerospace
market and joined the Lockheed team as a partner.

In October 2001, the final contract, the largest single
defense deal ever, was awarded to Lockheed. It called for
the eventual delivery of more than 3, 000 aircraft to the
U.S. military alone, and the Congressional Budget Office
valued it at $219 billion over 25 years. That seems to be the
tip of the iceberg: The company will easily export another
3,000 planes, and the life of the contract could extend into
the middle of this century. Revenue generated by this sale
may not hit the trillion-dollar mark that Micky Blackwell
targeted, but based on sales of past generations of fighter
jets, industry analysts think that it could easily reach three-quarters
of that figure.

We've already mentioned the first two characteristics
that all complex sales share with the JSF contract. Complex
sales involve large financial investments and long sales cycles.
Case in point: JSF's several hundred billion dollar price
tag and the years that it took to award the final contract.

Another common characteristic of the complex sale is
that it requires multiple decisions at multiple levels in the
customer's organization. It frequently involves multiple organizations
working with the customer. In the purchase of
many products and services, the buying decision is clear and
entails little risk. The customer clearly understands the
problem, clearly understands the solution, and can easily sort
through the pros and cons of each alternative. There really is
not much that can go wrong that would not be anticipated.

In the complex sale, there is no single buying decision or
single decision maker. The buying process is actually a long
chain of interrelated decisions, impacting multiple departments
and multiple disciplines that can ripple throughout a
customer's organization. In the JSF program, this chain of
decisions stretched beyond the horizon. It included a huge
number of decisions with serious implications for the future,
such as the decision to pursue a single platform fighter that
can be modified for vastly different uses and the decision to
award t he entire contract to a single prime contractor.

The difficulty of coping with the long decision chain is
compounded by another common characteristic of the complex
sale: multiple decision makers. Shelves of books are
devoted to helping salespeople find and close the decision
maker, that one person who can make the decision to buy on
the spot. In the case of a commodity sale, there often is just
such a person-a purchasing agent or a department head
with a budget or senior executive who can simply sign a deal.

In the complex sale, however, the search for this mythical
buyer is fruitless. There is no single decision maker;
often, even the CEO cannot make a unilateral decision and
must defer to the board of directors. Certainly, there is always
a person who can say yes when everyone else says
no, and, conversely, there is always someone who can say no
when everyone else says yes. Today, the majority of decisions,
quality decisions, are the result of a consensus-building
effort-an effort that the best of sales professionals
orchestrates. Therefore, the complex sale has multiple decision
makers, each seeing the issues of the transaction from
his or her own perspective and each operating in the context
of his or her job responsibilities and their own self-interest.
The decision makers in a complex sale may be spread
throughout an organization and represent different functions
and frequently will have conflicting objectives. They
can be spread throughout the world, as in the case of a multinational
corporation, buying products and services that will
be used throughout its organization. They may also represent
multiple organizations, as in the JSF contract, where the
different sectors of the military, the executive branch, and
the Congress were all involved in the sale, as well as the governments
and military forces of other nations.

The complex sale, however, is not a run-of-the-mill
transaction. The customer's situation is often a rarely encountered
or a unique occurrence. The advent of e-commerce
brought about just such a situation. Suddenly, an entirely new
distribution channel became available to corporations, institutions,
and governments. Many organizations floundered as
they tried in vain to understand this new world. Should
they go online or not? What would happen if they did? What
would happen if they didn't?

Organizations that did make a decision to expand online
were faced with a second set of critical decisions. The
solutions themselves were based on newly developed technology,
and customers had few guidelines for judging between
them. The results, as anyone who watched the rise
and subsequent fall of the e-commerce revolution knows,
were widely varied. But one thing is certain: For each successful
online expansion, there were hundreds of equally
spectacular failures.

If you examine the JSF program, you find that
the Pentagon invested years in exploring and defining the
problems of its existing fighter fleets. It determined the
two companies most likely to create the best solutions to
those problems and paid them $1.32 billion to develop prototypes.
Only then did they make a final decision.

A final characteristic of the complex sale and major
consideration for sales success is that customers require
outside assistance or outside expertise to guide them
through complex decisions. They cannot do this by themselves.
You should begin to consider this question: To what
degree do you and your team provide this expertise? To
help organize your thoughts, consider that your customers
need this expertise in one or more of three major areas.

First, they may require outside expertise to help Diagnose
the situation. They may not have the ability to define the
problem they are experiencing or the opportunity they are
missing. In many cases, they may not even recognize there is
a problem. So consider: To what degree do you and your team
assist the customer in completing a more thorough Diagnosis?

Second, even if your customers could accurately diagnose
their situations, they may not be able to Design the
optimal solution. They may not know what options exist,
how they would interact, how they might integrate into
their current systems, and other such considerations.

Continues...

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Excerpted from Mastering the Complex Sale
by Jeff Thull
Copyright © 2003 by Jeff Thull.
Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

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