Selling what you don't know
Telefonica has run a traditional market research tracker globally for many years. Every month it can report in detail on what its customers tell it about their level of satisfaction. Since 2012, its subsidiary O2 has taken this one step further, and compared what customers report with what they actually do, based on transaction and network data.
Telefonica has run a traditional market research tracker globally for many years. Every month it can report in detail on what its customers tell it about their level of satisfaction. Since 2012, its subsidiary O2 has taken this one step further, and compared what customers report with what they actually do, based on transaction and network data. So, O2 knows how its service level affects its revenues, as before, but it also know the channel by which that happens: how its performance influences satisfaction in detail, which customers spend less when they are unhappy; which ones buy new services when they are happy, and how each influences aggregate financial performance.
This created a simple, but surprising insight: O2, like many businesses, has spent years trying to create “fans” - service users who are pleased are often likely to buy more, and are easier to sell to. Combining its performance data, its transaction data and its satisfaction scores showed that changes of behaviour among dissatisfied customers - ones that had a purely transactional relationship with the company (or were just waiting to leave when their contracts expired) - could have a much larger effect on profitability. When service levels dipped, and revenues dipped afterwards, O2 had concentrated on winning back its most enthusiastic fans, when it would have done better to try to enthuse the millions who didn’t like the company much in the first place.
For a long time, solution sales teams have targeted familiar fans. It makes sense: the companies most likely to buy more are the ones who are buying already: your existing customers who have an established need, know what they want, and in which you have friends who can steer you through their buying process.
Yet research from a sales consultancy called Corporate Executive Board (CEB) published in the Harvard Business Review turns this on its head. It studied the sales performance of 6,000 sales reps from 83 companies (all sectors). It then surveyed the purchasing process in 600 companies. It wanted to know how the top 20% of salespeople were different and where their success came from.
There are three lessons. The first is that established business relationships, in which your trading partner has a well-defined need, are often not the best prospects: in this case, salespeople are involved late in the sales process, and the conversation is mostly about margins and delivery to match an RFP. CEB’s successful salespeople, by contrast, looked for prospects who were either in a state of flux, or valued agility over process. These salespeople found they could reframe the sales process - and were not trapped into arguments about margin based on an RFP they hadn’t influenced.
The second lesson: your friends inside an established customer aren’t always the people who get things done, especially if it is known that they are your internal advocates. CEB’s research found that top-rated salespeople tended to identify the “ideas people” who changed opinions, and who got projects off the ground, even if they were initially indifferent or hostile. Changing this person’s opinion, rather like making an impression on O2’s dissatisfied customers, was harder - but had a higher reward.
The final ability was willingness (and skill) to steer the customer through the sales process - again, a hard road to travel. But having identified customers in a state of flux, and having won over the ideas people, there’s unlikely to be an established purchasing process to slot in to. Someone has to be a trusted advisor.
Not every salesperson can be above average. This attitude relies on curiosity and the ability to think the unthinkable. This is the other parallel with O2’s consumer experience. The turning point for O2 was combining its existing data to ask a counter-intuitive question about the value of its customers.
It also relies on a desire to change established habits. I recently spoke to a group of five of a company’s top salespeople, and asked them what their marketing departments should be doing to help them sell to fast-growing, innovative companies: their response was that almost all their traditional marketing support was useless, because it was too bland and self-satisfied to change the minds of this type of customer.
It’s a reminder that customer data is powerful, but only when it is enhanced by curiosity about what you don’t know. Inertia can be self-perpetuating: you don’t have the data you need to generate this new type of sale, because there’s no sales relationship to generate the data you require.