RackhamProf Neil Rackham
When I caught up with Professor Neil Rackham, he was locked away in his ‘writing cabin’ working on some very esoteric-sounding statistical analysis related to research on training. The professor, who is best known for his work on making major sales and developing the SPIN methodology, is author of numerous academic papers. His seminal work Spin Selling, published back in 1988, has gone on to become McGraw-Hill’s best-selling business book ever.
Nevertheless, Professor Rackham’s work is very much centred on the real world of business and he’s not stuck inside some ivory tower – so much so that more than half the Fortune 500 train their salespeople using sales models derived from his research. Now, as the winds of change blow ever more strongly through the profession, he’s maintaining a keen eye on what is happening in boardrooms and meeting rooms around the world. I asked him for some bite-sized tips on what is driving the current sales revolution, for ways in which salespeople and leaders can best respond, and for some predictions for the future.
3 key drivers in the world of sales
1 Sell smarter not harder
The world of selling is experiencing a period of unprecedented change but simply doing more of the same is not going to be a successful response. Professor Rackham emphasises the need for a new approach. ‘It used to be said in selling that, if you wanted to be successful, you had to follow the “3 Ss”:
Selection – select those people with the best skills,
Strategy – formulate the right sales strategy, and
Skills – train the right skills for your people to succeed.
‘These have been supplanted by the “3 Ms”:
In terms of metrics, he highlights a new generation of CRM (customer relationship management) systems which are both more powerful and more helpful to sales systems. ‘You can’t succeed without good sales technology behind you.’
Good management is also key, according to the professor: ‘More and more sales success comes from good management, as opposed to the compensation system.’
Finally, he recommends that organisations use an effective methodology or process, such as Challenger or SPIN.
2 The move to collaboration
‘Organisations are moving away from the “lone-ranger” sale.’ Professor Rackham points to a trend for sales to involve more collaboration and team work, with a shared strategy, plan and ambition.
3 The move away from differentiation by product
There is a move away from differentiation by product towards differentiation by salesperson, argues Professor Rackham. ‘The average customer now has twice as many choices to make compared with five years ago. Because of this, the way that you sell is becoming more important than what you sell.’
3 key predictions
1 Dramatic decline in sales force numbers
‘The number of salespeople is going to drop dramatically in the next ten years. The numbers may even be cut in half, I would predict,’ says the professor. ‘Salespeople have to create value and not just act like talking brochures – that just doesn’t work anymore.’
2 Increasing importance of sales
Whilst there may be a substantial decline in actual numbers employed as salespeople, organisations are going to attach more importance to the sales function and those who remain, according to Professor Rackham. ‘Sales is going to become important and more vital to the success of the organisation.’
He emphasises that organisations are currently focusing on organic growth rather than mergers and acquisitions. Companies will grow by taking business from the competition – by ‘outselling your competition’, he predicts.
3 Sales and marketing alignment
‘The boundary between sales and marketing will start to disappear,’ says Professor Rackham. ‘In the future, you will need to know about both.’
Top 3 sales tips
1 Less is more in sales
‘Studies of successful salespeople involved in high-value selling show that it’s a far better strategy to put more effort into fewer opportunities. Salespeople should pick the opportunities they are most able to win. A real strategy for failure is to half-sell to twice as many prospects.’
2 Don’t sell on price
‘The western economies are going to be in recession for a long time. Most salespeople believe that the biggest barrier to success during a recession is price. They want to know: “How do I handle price?” Every piece of research shows that people successfully sell “safety” in a recession, not price. In the 1980s recession, IBM increased its prices three times and also increased their market share. In contrast, for others, price declined by 40% over that period. IBM sold entirely on safety. There used to be a saying in corporate circles that “Nobody got fired for buying IBM’. And this was despite their machines being under-specified and over-priced. This approach works for individuals too. Buyers tend to go with the safe choice.’
3 Take care of your existing customers
‘If you want to increase your business, it’s much easier to increase business from your existing customers than break into new ones. And, of course, if you don’t take care of your existing customers, you start to suffer from adverse publicity. There are thousands of people out there who will take to the internet to complain about poor service or any other problems. Taking care of your existing customers is absolutely crucial in this electronic age.’
Top 3 tips for recruiting effective salespeople
1 Never recruit from a market-leader
Professor Rackham favours identifying people who have been successful despite not having all the advantages of working for a market-leadingorganisation. ‘As market-leaders provide so much support in terms of reputation, infrastructure and help, it is very easy to succeed. I always recommend recruiting people who have been successful in a mediocre company – that way you know they have made the difference.’
2 Be prepared to pay for success
Being stingy is a false economy if you want your sales organisation to perform to the best of its abilities, according to Professor Rackham. Performance should be rewarded: ‘Don’t be afraid to pay really well for top-performers. Don’t be stingy: be absolutely prepared to pay for them.’
3 Sales performance starts with the first recruitment interview
Professor Rackham recommends informing candidates: ‘We’re a high-performance organisation; we pay well.’ Remuneration ceases to be an issue under such circumstances. At the same time, candidates need to understand that with such rewards also come responsibilities. From the outset managers should also tell candidates that, once hired, ‘It’s up to you to prove to us why you should stay.’ That way, ‘they can’t coast’ and they constantly have to prove their performance matches the rewards being offered by their employer.