sales management that works · 2021. 2. 10. · approach, ongoing account management selling style...

SALES MANAGEMENT THAT WORKS

HOW TO SELL IN A WORLD

THAT NEVER STOPS CHANGING

BY FRANK V. CESPEDES

Contents

FIGURE 1-1: The Most Influential B2B Marketing Activities 4 FIGURE 1-2: Salespeople Require Different Competencies Than in

The Past 4

TABLE 2-1: Hiring in Sales: Many View the World Like This 5 TABLE 2-2: A Sales Hiring Diagnostic 5 FIGURE 3-1: Generic Options in Growing A Business 6 FIGURE 3-2: A Process for Customer Visits and Interviews 6 FIGURE 3-3: Structuring Sales Conversations: A Road Map 7 FIGURE 3-4: Some Behavioral Protocols for Active Listening 7 TABLE 3-1: A Sales Training Diagnostic 8 FIGURE 4-1: Data analysis: Hypotheses vs. answers 9 FIGURE 4-2: Prospecting Issues 10 FIGURE 4-3: Opportunity-Creation Issues 10 FIGURE 4-4: Closing Issues 11 TABLE 4-1: A Performance Management Diagnostic 11 FIGURE 5-1: What Tends to Happen During the Product/Market Life

Cycle 12

FIGURE 5-2: Examples of Buyer Personae 13 FIGURE 5-3: A Generic Buyer Journey Framework 17 FIGURE 5-4: Sample Questions for Buyer Journey Development 17 TABLE 5-1: Importance of Stage Varies by Category 18 FIGURE 5-5: The Buying Center: Key Dimensions and Roles 18 TABLE 5-2: Assessing Your Sales Model 19 FIGURE 6-1: Showpad Customer Conversion Activities 20 FIGURE 6-2: Showpad Customer Conversion Data 20 TABLE 6-1: Managing, Maintaining, and Reconstructing Your Sales Model

21

TABLE 7-1: A Sales Compensation Diagnostic 22 FIGURE 8-1: Pricing a Piece of Business 23 FIGURE 8-2: Identifying Total Value (Illustrative Example) 23 FIGURE 8-3: Value Delivery and Customers’ Economics 24 FIGURE 8-4: Bumpy Performance Curves: Pots of gold 24 TABLE 8-1: Zolam Offering Tracking System 25 TABLE 8-2: A Pricing Diagnostic 27 TABLE 9-1: First Movers and Later Entrants, 1980–2020 28 FIGURE 9-1: Basecamp Price Survey 28 FIGURE 9-2: Price Sensitivity Meter: Method 29 TABLE 9-2: Linking Price and Selling Behaviors: A Diagnostic 29 FIGURE 10-1: Aligning Company, Customers, and Channels 30 FIGURE 10-2: Inverse Relationship Between Control and Resources 30

FIGURE 10-3: Resources and Channel Design 31 FIGURE 10-4: Successful Channel Partnerships: Reciprocity 31 FIGURE 10-5: A Channels Diagnostic: Key Questions to Consider 32 FIGURE 11-1: How Well Do Companies’ Sales Processes Align with Their Business Objectives?

33

FIGURE 11-2: Orthogonal Requirements 33 TABLE 11-1: A Leadership Diagnostic 34

F IGURE 1-1

The most infl uential B2B marketing activities

On average, business buyers say direct interactions with providers infl uence their purchasing decisions more than anything else.

Average likelihood of influencing a purchasing decision

Direct interaction with the provider

References

Events (in person and virtual)

White papers

Sales presentations

Work-related communities

Provider websites

Brochures and marketing literature

Press publications

Advertising

Social media

Not at alllikely

Extremelylikely

1 2 3 4 5 6 7

Source: Frank V. Cespedes and Tiff ani Bova, “What Salespeople Need to Know About the New B2B Landscape,” HBR.org, August 5, 2015.

F IGURE 1-2

Salespeople require diff erent competencies than in the past

Top competenciesin the past

Top competenciestoday

Percent appearancein job profiles

30%10% 15 17

13

10

8

8

2

3

0

0

5

20

45

20

12

12

9

7

8

6

7

3

Pre-2000

Develops sales leadsPrioritizes tasks through

logical analysis

Embraces strategic vision/implements corporate direction

Able to learnthe business

Has a controlled workapproach

Commits time and effortto ensure success

Qualifies prospects withstandard probes

Willing to deal withmultiple tasks

2000–2009

2010–2014

Percent appearancein job profiles

Pre-2000

2000–2009

2010–2014

Source: “The Best Ways to Hire Salespeople,” HBR.org, November 2, 2015.

4

TABLE 2-1

Hiring in sales: Many view the world like this

The hunter vs. The farmer

Motivation Develop new clients, new opportunities

Nurture relationships

Sales approach Shortest path to close; then move on to the next opportunity

Consultative sales approach, ongoing account management

Selling style High energy, competitive, much activity

Interpersonal and follow-up skills

Sales impact Immediate, account entry, short term

Longer-term repeat business, loyalty

Company context Hunters thrive in early-stage businesses and emerging markets where the brand, product, or company is not well known

Ideally suited to a more mature market or organiza-tion with longer sales cycles and established brand and sales process

TABLE 2-2

A sales hiring diagnostic

In our company, how well do we . . .

1 2 3 4 5 6 7

1 2 3 4 5 6 7

1 2 3 4 5 6 7

1 2 3 4 5 6 7

1 2 3 4 5 6 7

1 2 3 4 5 6 7

1 2 3 4 5 6 7

Know and specify key sales tasks, by role and by segment, in our recruiting eff orts?

Train sales hiring managers in interviewing skills and the use of assessments?

Complement interviews with role-plays, task assignments, or job trials?

Broaden our hiring pool by linking our understanding of tasks to criteria beyond education?

Systematically gather multiple perspectives in our sales recruit-ment and selection practices?

Clarify what we mean by “experience” in establishing our hiring pool and selection criteria?

Understand the limits of any hiring algorithms or automated screening activities in our hiring process?

Place the people we hire where they can have the most impact on our selling activities?

1 2 3 4 5 6 7

5

F IGURE 3-1

Generic options in growing a business

Issues: Why? How? Resources?

Products/services

Mar

kets

/cus

tom

ers

Same

Sam

eN

ew

New

Expand into new markets

Enhance the core

Explore new types ofcustomers

Expand into new products

F IGURE 3-2

A process for customer visits and interviews

Step 1: Set objectives and the visit team• Specify the kind of information you want to collect and identify who should participate

Step 2: Develop a discussion guide• Organize the topics and questions into a sequence and set priorities

Step 3: Conduct the interviews• Specify roles for team members

Step 4: Debrief and follow up• Begin a process of analysis and next steps

6

F IGURE 3-3

Structuring sales conversations: A road map

How you framethe call, theissues, and thedesiredoutcome(s)

Context

How yousupport yourargument,insights, andpoint of view

Content

How you ask,tell, and connectwith keydecision makersand influencers

Contact+ +

F IGURE 3-4

Some behavioral protocols for active listening

Keep mouth shut, ears open

Affirm nonverbally

Acknowledge their issues

Paraphrase/clarify yourunderstanding of what youheard―explicitly, implicitly

Ask questions, and learn touse words like “and” (vs. “but”),“you/we” (vs. “I/they”)

•

•

•

•

•

Interrupt constantly

Tune out or shut down

Shift conversation to self

Present “the solution” beforeyou clarify their perception(s)of “the problem”/opportunity

Evaluate too fast or critiquethe idea (or the person)

•

•

•

•

•

Dos Don’ts

7

TABLE 3-1

A sales training diagnostic


Train for key sales tasks as refl ected in buying pro-cesses at our target customers, by segment?

1 2 3 4 5 6 7

Know and use learning research in our training and development eff orts?

1 2 3 4 5 6 7

Link training to our account planning process, win/loss analyses, and performance reviews?

1 2 3 4 5 6 7

Make sure we develop and maintain core interview, questioning, and listening skills in sales training?

1 2 3 4 5 6 7

Understand the impact of any changes in our prod-uct, target buyers, or growth initiatives for selling skills?

1 2 3 4 5 6 7

Use technology to provide training and coaching when it matters most to our salespeople?

1 2 3 4 5 6 7

Understand the limits of any selling methodology we use and monitor its relevance to changing objec-tives?

1 2 3 4 5 6 7

Refl ect what we know about relevant training and development in our sales hiring criteria?

1 2 3 4 5 6 7

8

F IGURE 4-1

Data analysis: Hypotheses vs. answers

How much is the person? The market? Incentives?

Penetration: Sales or ARR per account

Clo

se r

ate

Low

Low

Hig

h

High

Too few leads or demos?Not enough proposals?Pricing?

Ineffective salesperson?Unmotivated salesperson?Unfocused salesperson: toomany leads, calls, etc.?

Good salesperson?Great leads?Market conditions?

Selective salesperson?Nature of the leads?A few windfall accounts?

9

F IGURE 4-2

Prospecting issues

Not enough contacts C

onta

cted

0 50 100 150 200 250

Causes of prospecting issues•

•••

Over-investment in unqualifiedopportunities?Time management issues?Lack of cadence/process?Call reluctance?

Adina

Erin

Brian

Fred

Carlos

Greg

Daria

Helen

FIGURE 4-3

Opportunity-creation issues

Many contacts and demos but low conversion from demo to trial

Dis

cove

ry c

alls

0 10 20 30 40 50 60 70

Causes of opportunity issues•••

Building trust on the connect?Quality of discovery call?Selection criteria?

Adina

Erin

Brian

Fred

Carlos

Greg

Daria

Helen

10

F IGURE 4-4

Closing issues

0

50%

100%Causes of closing issues•

•

•

Developing a sense ofurgency?Getting beyond surfacepain?Reaching the buyingauthority?

Adina

Erin

Brian

Fred

Carlos

Greg

Daria

Helen

CustomersProposals

TABLE 4-1

A performance management diagnostic


1 2 3 4 5 6 7

1 2 3 4 5 6 7

1 2 3 4 5 6 7

1 2 3 4 5 6 7

1 2 3 4 5 6 7

1 2 3 4 5 6 7

1 2 3 4 5 6 7

Know how much time our frontline sales managers actually spend on performance appraisals of their people?

Make sure our frontline managers take seriously the perfor-mance appraisal process and provide feedback?

Approach performance appraisals not only as reviews of past performance but as developmental discussions?

Have data about sales activities at each stage of our selling cycle?

Understand the limits and uses of data in evaluating sales out-comes, putting that data in context?

Have in place metrics that track and align KPIs with what our managers emphasize in performance reviews?

Tailor our coaching to the individual’s needs (e.g., prospecting and/or closing issues)?

Use technology to provide opportunities for peer coaching and advice when it matters most to our salespeople?

1 2 3 4 5 6 7

11

FIGURE 5-1

What tends to happen during the product/market life cycle

Standardization ofproduct/service design

Saturation of individualaccount/market segments

Sophistication of customersre usage, alternatives, etc.

Time

•

•

•

12

FIG

UR

E 5

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FIG

UR

E 5

-2 (

con

tin

ued

)

Exa

mp

les

of

buy

er p

erso

nae

15

“I en

sure

that

em

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expe

nditu

res m

eet r

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tor

and

corp

orat

e po

licies

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erso

na –

Car

la

• • • • • • • •

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le: A

ssist

ant c

ontro

ller;

cost

con

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rR

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: Ove

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T&E

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with

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orat

e st

anda

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.

16

F IGURE 5-3

A generic buyer journey framework

• Awareness stage– Prospect is experiencing a problem or opportunity and may be doing research

to understand, frame, or give a name to that problem or opportunity

• Consideration stage– Prospect has defined the problem or opportunity (rightly or wrongly) and is

researching methods, solutions, or suppliers to address it

• Decision stage– Prospect decides on a solution method or approach, is evaluating available

suppliers, and ultimately making a purchase decision

F IGURE 5-4

Sample questions for buyer journey development

Awareness stage• How do buyers typically describe the challenges or opportunities your company addresses?• How do buyers educate themselves on these challenges or goals?• How do buyers decide whether the challenge or goal should be prioritized?

Consideration stage• What categories of solutions do buyers investigate to address the challenge or goal?• How do buyers educate themselves on these solution categories?• What do buyers perceive as the strengths and weaknesses of the solution category your

offering is in?

Decision stage• What criteria do buyers use to evaluate the different offerings in that solution category?• What do buyers perceive as the differentiator of your offering relative to competitors?• What do buyers perceive as your competitors’ strengths versus your offering?• Who needs to be involved in the decision? Do their criteria for the solution differ?• When does the decision need to be made?

17

F IGURE 5-5

The buying center: Key dimensions and roles

• Initiators:

• Gatekeepers:

• Influencers:

• Deciders:

• Controllers:

• Buyers:

• Users:

Perceive the existence of a problem or opportunityControl access and flow of informationProvide information for evaluating alternativesHave final authority to make or break the purchase decisionSet the budget for the purchasePlace the order and sign the checkLive with the purchase; may also be influencers

TABLE 5-1

Importance of stage varies by category

% Share of purchases Number of brands

Initial consideration

Active evaluation

Repurchase from initial

set In initial

set Added in

evaluation

Autos 63% 30% 7% 3.8 2.2

PCs 49% 24% 27% 1.7 1.0

Skin care 38% 37% 25% 1.5 1.8

Telcom 38% 20% 42% 1.5 0.9

Auto ins. 13% 9% 78% 3.2 1.4

Source: Adapted from data in David Court et al., “The Consumer Decision Journey,” McKinsey Quarterly , no. 3 (2009).

18

TABLE 5-2

Assessing your sales model


Clarify our customer selection criteria and then communicate those criteria to our salespeople?

1 2 3 4 5 6 7

Have in place lead-qualifi cation processes that our sales managers and sales reps know and use?

1 2 3 4 5 6 7

Discuss and disseminate a deal profi le in our training and performance reviews?

1 2 3 4 5 6 7

Develop and use buyer personae in our account or territory assignments and prospecting eff orts?

1 2 3 4 5 6 7

Understand the limits of buyer persona constructs and complement them with market research?

1 2 3 4 5 6 7

Track relevant buying journey(s) at our target accounts and align marketing and sales eff orts accordingly?

1 2 3 4 5 6 7

Update our assumptions about who buys and how with ongoing information from a variety of sources?

1 2 3 4 5 6 7

Use that information for continuous improvement in our value proposition?

1 2 3 4 5 6 7

19

F IGURE 6-1

Showpad customer conversion activities

1. Lead generation via content marketing, blogs, emails, webinars, other

2. Qualified leads (QL) SDRs Sales accepted lead (SAL)

3. Sales qualified lead (SQL) Demo with AE

4. “DIPS” criteria to evaluate a sales qualified opportunity (SQO)

5. Booking and close Postsale customer support (CS)

F IGURE 6-2

Showpad customer conversion data

Qualified leadsfrom marketing

QL SAL: 73%

CS team

SAL SQL: 10%

SQL SQO: 84%

SQOBooking: 76%

20

TABLE 6-1

Managing, maintaining, and reconstructing your sales model


Understand and track the customer-conversion activities inherent in our sales model?

1 2 3 4 5 6 7

Have in place and communicate leading indicators of customer behavior, not only outcome metrics like wins?

1 2 3 4 5 6 7

Use conversion analytics to increase customer-contact time in our sales force?

1 2 3 4 5 6 7

Examine established account assignments to identify under-served customers and segments?

1 2 3 4 5 6 7

Track interactions between our online and in-person eff orts and place reps where they have the most impact?

1 2 3 4 5 6 7

Enable better coordination within sales and across functions with systems that provide a single view of the customer?

1 2 3 4 5 6 7

Make use of available tools that support and sustain the kind of ongoing cadence required in our sales model?

1 2 3 4 5 6 7

Clarify the role of service in the customer acquisition and retention activities required in our sales model?

1 2 3 4 5 6 7

21

TABLE 7-1

A sales compensation diagnostic


Understand and update the role of our sales compensation plan in our business model?

1 2 3 4 5 6 7

Link incentives to activities in the customer conversion pro-cess where salespeople have the most impact?

1 2 3 4 5 6 7

Manage compensation and incentives so they align with our current growth plans?

1 2 3 4 5 6 7

Examine our process of rewarding salespeople in terms of transparency and fairness?

1 2 3 4 5 6 7

Augment compensation with visible recognition events, activities, and awards?

1 2 3 4 5 6 7

Clarify the type(s) of sales eff orts that our compensation plan is intended to motivate and support?

1 2 3 4 5 6 7

Have in place metrics to track the desired eff orts? 1 2 3 4 5 6 7

Complement monetary incentives with relevant performance reviews by our sales managers?

1 2 3 4 5 6 7

22

F IGURE 8-1

Pricing a piece of business

Customer value (or willingness to pay)

Driving force for customer to buy

Driving force for supplier to sell

Price

Cost (including cost of capital)

Zone ofpossibleagreement

Customerbenefits

Supplierprofit

Source: Frank V. Cespedes, Benson P. Shapiro, and Elliot B. Ross, “Pricing, Profi ts, and Customer Value,” Case 9-811-016 (Boston: Harvard Business School, August 2011).

F IGURE 8-2

Identifying total value (illustrative example)


Acquisition costs

1. Price2. Paperwork cost3. Shopping time4. Expediting cost5. Cost of mistakes

in order6. Prepurchase product

evaluation costs

+ Possession costs

7. Interest cost8. Storage cost9. Quality control

10. Taxes and insurance11. Shrinkage and

obsolescence12. General internal

handling costs

+ Usage costs =Total customer cost

13. Field defects14. Training cost15. User labor cost16. Product longevity17. Replacement costs18. Disposal costs

23

F IGURE 8-3

Value delivery and customers’ economics


• Value: Helping customers improve their margins– Cost reduction in category acquisition, possession, usage costs– Differentiation and price premiums due to your product/brand– Process improvements via their relationship with your organization

• Value: Helping customers improve asset turnover– Working capital management– Reduction (or elimination) of assets required– Process outsourcing and/or balance sheet benefits

ROE

(Margins) ( )Assetturnover ( )Financial

leverage

= × ×

× ×

ProfitSales

SalesAssets

AssetsEquity

F IGURE 8-4

Bumpy performance curves: Pots of gold

Find discontinuities in the spread between customer value and cost

Customer value curve

Cost curve

$

Performance


24

TA

BL

E 8

-1

Zo

lam

off

erin

g t

rack

ing

sys

tem

Pot

entia

l val

ue p

rop

ositi

on e

lem

ents

per

mar

ket/

app

licat

ion

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ego

ry

Val

ue p

rop

osi

tio

n el

emen

t B

enefi

t t

ype

Exp

lana

tio

n A

re t

hey

elig

ible

? W

ill w

e ch

arg

e se

par

ate

for

it?

A1

A2

A3

B1

B2

B3

C1

C2

C3

Com

mer

cial

M

inor

pro

duct

m

odifi

catio

ns

Hig

her r

even

ue

Poss

ibilit

y of

slig

htly

m

odify

ing

our p

rodu

cts

to

fi t th

e cu

stom

er

Y/N

Y/

Y N

Y/

N

Y/Y

N

Y/Y

N

N

Com

mer

cial

To

ll m

anuf

actu

ring

Low

er R

M c

ost

Avai

labl

e bu

t pot

entia

l and

co

sts

to b

e di

scus

sed

with

th

e cu

stom

er

XX

X X

X X

Y/Y

Y/Y

N

Com

mer

cial

Ex

clus

ive

prod

uct c

odes

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sier

, low

er ri

sk

Spec

ial n

ame

only

for t

hat

cust

omer

. Can

be

sim

ilar t

o re

labe

ling.

Y/N

Y/

Y N

Y/

Y Y/

Y N

N

N

N

Com

mer

cial

Su

pply

agr

eem

ent—

chan

ge n

otifi

catio

n re

quire

men

t

Low

risk

Th

is c

an b

e di

scus

sed

with

cus

tom

er. R

ejec

tion

is

alw

ays

poss

ible

Y/N

Y/

N

N

Y/N

Y/

N

N

N

N

N

Cus

tom

er s

ervi

ce

Out

of h

ours

con

tact

Ea

sier

Ex

tra p

hone

num

ber

Y/N

N

N

Y/

N

N

N

Y/N

N

N

Cus

tom

er s

ervi

ce

Pre-

sam

plin

g Lo

w ri

sk

Yes—

Usu

ally

org

anize

d by

cus

tom

er s

ervi

ce. N

o ch

arge

s

Y/N

Y/

Y N

Y/

Y Y/

Y N

Y/

Y N

N

Supp

ly c

hain

Le

ad ti

mes

Fa

ster

Sh

orte

r tha

n st

anda

rd le

ad

times

Y/

N

Y/N

N

Y/

N

Y/N

N

Y/

N

N

N

25

Supp

ly c

hain

Ru

sh o

rder

s (in

clud

es

airfr

eigh

ts)

Fast

er

Deliv

erin

g fa

ster

than

agr

eed-

in

clud

es b

oth

freig

ht c

ost

and

eff o

rt

Y/Y

Y/Y

N

Y/Y

Y/Y

N

Y/Y

N

N

Supp

ly c

hain

Sp

ecia

l man

ufac

turin

g (fi

ltrat

ion,

mac

hine

, raw

m

ats)

Low

risk

, low

er

oper

atin

g co

sts

Are

we

willi

ng to

mod

ify o

ur

man

ufac

turin

g pr

oces

s Y/

N

Y/N

N

Y/

N

Y/N

N

Y/

N

N

N

Supp

ly c

hain

Sp

ecia

l pac

kagi

ng

Easi

er

Yes

Y/N

Y/

Y N

Y/

Y Y/

Y N

Y/

Y N

N

Supp

ly c

hain

Sa

fety

sto

ck

Easi

er, f

aste

r and

lo

w ri

sk

Defi n

ed w

ith c

usto

mer

Y/

N

Y/Y

N

Y/Y

Y/Y

N

Y/Y

N

N

Tech

nica

l Di

rect

acc

ess

to te

chni

cal

supp

ort

Low

er o

pera

ting

cost

s, h

ighe

r re

venu

e

Dedi

cate

d re

sour

ce

Y/N

N

N

Y/

N

N

N

Y/N

N

N

Tech

nica

l Pr

iorit

y ac

cess

to n

ew

tech

nolo

gies

H

ighe

r rev

enue

T e

chno

logy

Sho

wca

se

Y/N

N

N

Y/

N

N

N

N

N

N

Tech

nica

l Te

chni

cal s

emin

ars

Easi

er, f

aste

r, hi

gher

Re

venu

e Y/

N

N

N

Y/N

N

N

N

N

N

Tech

nica

l Pr

oduc

t saf

ety

and

com

-pl

ianc

e su

ppor

t Ea

sier

, fas

ter,

high

er

reve

nue,

low

risk

Ac

cess

to o

ur H

SE

reso

urce

s gl

obal

ly

Y/Y

Y/Y

N

Y/Y

Y/Y

N

Y/Y

N

N

Sou

rce:

Fra

nk V

. Ces

pede

s, B

enso

n P.

Sha

piro

, and

Ellio

t B. R

oss,

“Pric

ing,

Profi t

s, a

nd C

usto

mer

Val

ue,”

Cas

e N

o. 9

-811

-016

(Bos

ton:

Har

vard

Bus

ines

s Sc

hool

, Aug

ust 2

011)

.

26

TABLE 8-2

A pricing diagnostic


Understand the basis for our pricing: Is it primarily cost-plus or value-based pricing? Why?

1 2 3 4 5 6 7

Have processes in place to track how the value of our products or services varies across customers and contexts?

1 2 3 4 5 6 7

Have and use software that can provide dynamic pricing abilities by customer, product, or order?

1 2 3 4 5 6 7

Track and analyze the relevant piece of business in evalu-ating willingness to pay?

1 2 3 4 5 6 7

Focus on increasing the relevant zone of possible agree-ment in our sales training and account reviews?

1 2 3 4 5 6 7

Work with customers to understand the acquisition, possession, and usage costs that are incurred in our category?

1 2 3 4 5 6 7

Have in place an off ering tracking system that helps us to clarify target price and reservation price?

1 2 3 4 5 6 7

Have a cross-functional team to help identify price versus cost opportunities in delivery, fi nancing, product design, or other areas?

1 2 3 4 5 6 7

27

TABLE 9-1

First movers and later entrants, 1980–2020

Product category First mover Later entrant

Social networks MySpace Facebook

Ride sharing Sidecar Uber/Lyft

Laser printing Xerox HP

Hybrid car (US market) Honda Insight Toyota Prius

Smartphone Nokia Apple/Samsung

Web search Infoseek/AltaVista Google

High-end electric cars Fisker Tesla

CRM Siebel Salesforce.com

Music downloads Diamond Rio/Apple Spotify

F IGURE 9-1

Basecamp price survey

Help us make Basecamp even better. Thanks for taking a few minutes to share your feedback about Basecamp.

Source: Frank Cespedes and Robb Fitzsimmons, “Basecamp: Pricing,” Case 9-817-067 (Boston: Har-vard Business School, April 2017).

We’d like to ask you a few questions about the price you might pay for Basecamp.This will not affect the price of your current account.

At what total monthly price would you consider Basecamp to be priced so lowthat you feel that the quality can’t be very good?

Your selection:$0 $500

Submit

At what total monthly price would you consider Basecamp to be a bargain—a greatbuy for the money?


At what total monthly price would you say Basecamp is starting to get expensive—it’s not out of the question, but you’d have to give some thought to buying it?


At what total monthly price would you consider Basecamp to be so expensivethat you would not consider buying it?


28

F IGURE 9-2

Price Sensitivity Meter: Method

Price

Lowestacceptableprice point

Highestacceptableprice point

Acceptableprice range

Indifferentprice point

% o

f res

pond

ents

Van Westendorp PriceSensitivity Meter (PSM) asksfour price-related questions toidentify upper, lower, andoptimal price points.

1. At what price would youconsider Basecamp to bepriced so low that you feel thatthe quality can’t be very good?

2. At what price would youconsider Basecamp to be abargain—a great buy forthe money?

3. At what price would you sayBasecamp is starting to getexpensive? It’s not out of thequestion, but you’d have togive some thought to buying it?

4. At what price would youconsider Basecamp to be soexpensive that you would notconsider buying it?

Optimalprice point

Too cheap Cheap Expensive Too expensive

Source: Frank Cespedes and Robb Fitzsimmons, “Basecamp: Pricing,” Case 9-817-067 (Boston: Har-vard Business School, April 2017).

TABLE 9-2

Linking price and selling behaviors: A diagnostic


1 2 3 4 5 6 7

1 2 3 4 5 6 7

1 2 3 4 5 6 7

1 2 3 4 5 6 7

1 2 3 4 5 6 7

1 2 3 4 5 6 7

1 2 3 4 5 6 7

Understand how our pricing approach aff ects sales prospecting, orders, and working capital requirements?

Have processes in place to update assumptions about the role of price in our customer acquisition and retention eff orts?

Align pricing with what we know about willingness to pay by product or market segment?

Track and analyze whether our pricing is meant primarily to drive volume and gain share or maximize profi ts or margins?

Focus on educating our salespeople about how to frame our value proposition and justify price?

Understand the links between our pricing approach and customer-segment selection criteria?

Test prices on an ongoing basis?

Use new tools and a cross-functional team to conduct and interpret test results and generate options?

1 2 3 4 5 6 7

29

F IGURE 10-1

Aligning company, customers, and channels

CompanyProduct,price, valueproposition

ChannelsGo-to-market,distribution

Saleseffectiveness

requires successat this intersection

CustomersTarget marketsand accounts

F IGURE 10-2

Inverse relationship between control and resources

Source: Frank Cespedes, “Channel Management,” Case 9-590-045 (Boston: Harvard Business School, revised November 2006).

Financialresources

Supplier’s controlover distribution flow

High

Low

Businessunit

financialresources

FewMore financial resources

required and more control

Less financial resourcesrequired and less control

Many

Number ofchannel

intermediaries

30

F IGURE 10-3

Resources and channel design

Business unit financial resources

Nee

d f

or

cont

rol o

fch

anne

l fun

ctio

ns

Low

Low

Hig

h

High

Resources as limiting factorin channel design

Control as minimal factor inchannel design

Control as determining factorin channel design

Cost efficiencies or accessas determining factor in

channel design

F IGURE 10-4

Successful channel partnerships: Reciprocity

We give to channel partners• Product knowledge

• Responsive product changes

• Ongoing attention/support

• Pricing and presentation support

• Market research data

• Emerging best practicesabout the above

We get from channel partners• Customer access/information

• Responsive promotions

• Sales attention and incentives

• Sales forecasts and results

• Account information

• Emerging best practicesabout the above

31

F IGURE 10-5

A channels diagnostic: Key questions to consider

• What is a given channel’s role in your growth strategy and sales initiatives? - Cost effi ciency? Market access? Supplement to scarce resources? Necessary part of the

solution package? • What levels of quality control are required for each major channel function?

- Do terms and conditions refl ect the required levels? • What are the options for shifting a function to a diff erent, more cost-eff ective channel?

- Are purchase or usage criteria changing and does our current go-to-market system re-fl ect buyer criteria as they exist today, not yesterday?

• How many target market segments and go-to-market partners can you realistically manage and support? - Trade-off s between focus/depth and access/breadth? - Trade-off s between control and resources?

32

F IGURE 11-1

How well do companies’ sales processes align with their business objectives?

TrainingSales tasks

Salespersonnel

Average rating (1 = very poor, 7 = very well)

Executives4.22

4.02

4.64

4.56

4.23

4.01

3.88

4.52

4.48

Salespeople

Performance reviews

Compensation

Coaching and development

Sales support tools

4.80

4.75

4.57

4.67

4.97

5.31

4.91

5.53

5.40

Recruiting and hiring

Onboarding and training

Match of salespeople to role

Match of sales managers to role

Source: Frank Cespedes and Christopher Wallace, “Executives and Salespeople Are Misaligned—and the Eff ects Are Costly,” HBR.org, January 2017.

F IGURE 11-2

Orthogonal requirements

“Make it new”

New products, channels,skills, and capabilities

“Be predictableand consistent”

Focus on current goalsand sources of revenues

33

TABLE 11-1

A leadership diagnostic


Articulate our strategy in ways that our customer contact people understand?

1 2 3 4 5 6 7

Specify in our strategy or planning discussions the markets and segments where we do and don’t play?

1 2 3 4 5 6 7

Understand across functions how our go-to-market activities aff ect drivers of enterprise value?

1 2 3 4 5 6 7

Make clear the implications of our business priorities for selling objectives, behaviors, and metrics?

1 2 3 4 5 6 7

Understand what our target customers do (and do not) value: in product? in service? in support?

1 2 3 4 5 6 7

Continuously update our understanding of customer value by segment?

1 2 3 4 5 6 7

Discuss and manage our total value proposition: internally? with the right people at customers?

1 2 3 4 5 6 7

Refl ect and manage the relevant components of customer value in our product, marketing, and pricing activities?

1 2 3 4 5 6 7

Focus our go-to-market training on the high-impact tasks? 1 2 3 4 5 6 7

Put the right people in the right jobs with the right metrics? 1 2 3 4 5 6 7

Design and improve core account management and account sup-port processes?

1 2 3 4 5 6 7

Utilize technology and/or channel partners to improve capacity, market access, or close rates?

1 2 3 4 5 6 7

Manage the strategy sales performance management cycle on an ongoing basis?

1 2 3 4 5 6 7

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sales management that works · 2021. 2. 10. · approach, ongoing account management selling style...

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