the view from the field

HBR.ORG JulyAuGust 2012 reprinT r1207J

Spotlight on Smarter SaleS

The View from The Field

Six leaders offer their perspectives on sales success. by Jim Koch, James Farley, Susan Silbermann, Duncan Mac Naughton, Phil Guido, and Suresh Goklaney

The View from The Field Six leaders offer their perspectives on sales success.

artwork Chad wys, Gentleman with A Color Test, 2009, chromogenic print 22.5" x 30"

Spotlight

Julyaugust 2012Harvard Business Review3

Spotlight on SMARTER SALES


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When I started Boston Beer Company, in 1984, I had three degrees from Harvard and seven years of management consulting experience, and I saw sales as a slightly questionable act that involved separat-ing people from their money. No self- respecting Ivy League graduate aspired to be a salesman. When I left Harvard Busi-ness School, I became a consultant.

I come from a family of brewmasters, and over time I became committed to brewing great beer in America again. I knew brewing and business, but nothing about selling. When every distributor in Boston turned me down, the only way I could get my beer into bars and stores was to sell it myself. I went to a bookstore, bought the only sales book I could find, How to Master the Art of Selling, and read

Jim KOcH fOundeR And cHAiRmAn Of BOstOn BeeR cOmpAny

How One entrepreneur learned to sell (in a Barroom)

it. It offered some good ideas, but a lot of it seemed cheesy and manipulative. I read about opening, objection handling, and closing. Finally, I walked into a bar and tried to make my first sale. Im not a

natural salesman, no one had ever heard of my beer, it cost more than any other brand, and it tasted different. I was scared to death.

Early on, when I made sales calls, Id introduce myself as the owner of a new brewery that was making Samuel Adams Boston Lager, which tasted unlike any-thing bars were selling. Id end my half-minute opening with a question: Have you heard of it? When the person said no, Id pull out a couple of articles that had been written about us, because I had read that third-party recommendations give you credibility. Then I would produce

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a cold six-pack and some cups from my briefcase and ask if he wanted to taste it. I learned that if I could persuade a person to taste my beer, I had a good shot at making a sale. On that first try the owner tasted the beer and agreed to buy it for his bar. I was so excited that I left without asking how many cases he wanted. I had to go back the next day to get the actual order. Ive been walking into bars and selling my beer ever since.

Today my company is 28 years old with more than $500 million in revenues and 320 salespeople, but I still spend more time on sales calls than on any other activity except brewing. From my years at Boston Consulting Group, I know how to interpret data on a spreadsheet, but that cant com-pare with the knowledge I get from being in the market talking to customers. Most of our ideas for new products come during sales calls.

For example, a year ago I noticed that retailers were carrying more hard cider. I began asking customers who was buying it, what brands, and why. Over four or five days in a few cities, I had 40 good conversa-tions about the growing cider market. Sta-tistically, thats not a lot of data points; but in my experience, if you listen to 40 smart customers, you learn more than you would from any consultants study. On the basis of those conversations, we tasted the exist-ing ciders, improved on them, and came up with a new brand: Angry Orchard.

Ive come to see making a sales call as one of the most challenging intellectual activities there iscertainly more imme-diately challenging than anything I did at BCG. The essence of selling is figuring out how what youre offering will help cus-tomers accomplish their objectivesnot your objective, their objectives. Anything else is pointless and self-serving. When I walk into a bar, I have about 30 seconds to understand the economics of the place: What is its strategy, and who are the clien-tele? How does it make money? Whats the weakest draft line, and how would sales increase if we replaced it with one of ours? Whos the decision maker? Then you need

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to connect personally. Theres complexity and ambiguity to it, and the selling process, done right, can be lofty and engaging. You gain a much higher quality of knowledge than you can at your desk.

Being a street salesman can be very humbling. You dont get a lot of positive reinforcement, and you certainly dont get treated like a CEO. I routinely have bartend-ers tell me that the manager isnt in today

when the manager is standing 10 feet away. I was once thrown out of a New York City grocery store because the owner saw me removing competitors stickers that were blocking Sam Adams. Ive had a customer pull a gun on me. Selling isnt for sissies. But even if Ivy Leaguers prefer to talk about marketing and management, sales remains the core function of every company. With-out sales, there is no business to manage. n

T he role of the salesperson in the auto industry has changed dramatically over the 20-plus years Ive been in the indus-try, and it has reached a tipping point. Negoti-ating the price of a car used to be the primary job. Today a customer can go to a website like Edmunds or TrueCar, click a button, and receive quotes from local dealers, completely sidestep-ping negotiation. Technology has changed the process of customer education, too. Just con-sider how much car shoppers can learn about a product on their own, before they even step into

How to sell to customers Who Know everything




in the past, highly skilled salespeople could sell mediocre cars. They served to prop up weak brands. That doesnt happen today.

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How culture And Regulation demand new Ways to sell

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blessing on the vehicle before they receive the keys. In smaller cities in China, many car buyers dont know how to drivetheir only experience has been on motorbikesso salespeople often provide rudimentary driving lessons for their customers. Like other global companies, we have to be aware of these local differences and help our dealers find salespeople who can meet such varying customer needs.

The transparency behind these changes in the sales process has other effects on the business as well. In the past the auto industry had its share of highly skilled salespeople who could sell mediocre cars. They served to prop up weak brands. That doesnt happen today, because customers have better information. This helps chal-lenger brands that are taking on a domi-nant model, and in the past few years it has helped Ford a lot. When our 2009 Fusion beat the Toyota Camry for fuel efficiency, resale value, and reliability, everyone knew it right away.

The coolest thing about my job at Ford is that Im in charge of both marketing and sales. Most of our competitors have differ-ent people heading up those two functions. I think thats a big mistake. You want mar-keting to be accountable for sales. Our in-dustry is littered with marketing experts who designed memorable Super Bowl com-mercials that didnt result in sales. I know not to buy Super Bowl ads, because they are not effective for a stable, well-known brand like Ford. Because Im in charge of sales, I have that accountability and that perspective. n

a dealership. They can find information on the internet, examine the car on video, and read about previous buyers likes and dis-likes. This has forced salespeople to find a new role.

Today I see the best salespeople as a cross between problem solvers and con-cierges. Modern automobiles have so many sophisticated electronics inside themfor multimedia, navigation, syncing with smartphones and other devicesthat cus-tomers need good salespeople to help them figure out how it all works and personalize it for them, just as salespeople at Apples Genius Bar do.

Good salespeople also perform a job similar to that of the concierge at the Mayo Clinics Executive Health Program, who guides patients between appointments with various specialists, coordinates record keeping, and serves as a central point of contact. Buying a car is a complicated pro-cess that usually involves obtaining financ-ing and insurance, filing tax documents, and getting a registration and title from the state. Salespeople act as project man-agers in this process, preventing mistakes and getting busy customers in and out as quickly as possible.

The skills required of salespeople of-ten differ between our global markets. In India, for instance, buying a car is an im-portant rite of passage for families that are ascending to the middle class. Car buyers routinely bring their parents, grandparents, aunts, and uncles with them to dealerships when they take delivery of their cars, and some will ask the salesperson to perform a

6 Harvard Business ReviewJulyaugust 2012

For example, we provide free antiparasitic drugs for school-age children in many of these countries. We hope to improve their overall healthand we also hope that when parents are selecting medicines, they will recognize that Pfizer not only produces innovative products but is interested in the well-being of their community. In addition, we seek to position our brand in such a way that the emerging middle classes are open to choosing products from a recognized multinational company like ours. After all, most people want what the doctor pre-scribed rather than an alternative.

When our Latin American sales reps meet with physicians, they are able to have in-depth conversations. During one visit, they might talk about the doctors successes and challenges in treating hy-pertensive patients who are resistant to first-line medicines. A few weeks later they might discuss how patients are responding to a cholesterol medication such as Lipitor. These sales reps receive the same training as our reps in the United States, Germany, France, and other countries. If you trans-lated the conversations, you would find that they are similar whether they take place in France or in Mexico. However, in Latin America these discussions may start and end a bit differently, because many of our reps stay in their territories longer and can develop deeper relationships with doctors.

One of the most fascinating aspects of our sales efforts in Latin America is that every country varies somewhat. When I started in this role, nearly four years ago, my new colleagues told me that Spanish is spoken a bit differently in each of these markets. They were correct. And the Portu-guese spoken in Brazil, the largest market in Latin America, sounds very little like the language spoken in Portugal. Emerging markets are fast-moving placesyou have to be able to form and test hypotheses in a timely manner and, if necessary, revamp them quickly. The capacity to succeed in Latin America rests in a companys ability to build trust, adapt locally, and get close to its customers. n

Selling pharmaceuticals in Latin America is not the same as selling them in the United States or West-ern Europe. Right off the bat, I can identify four big differences.

First, much of the population lacks health insurance that covers prescription drugs for common conditions such as hy-pertension, arthritis pain, and high choles-terol. So if a doctor prescribes a medication priced at 100 pesos, that is what it will cost the patient. Second, in most Latin Ameri-can countries, pharmaceutical companies are not allowed to advertise directly to con-sumers. Third, Latin American countries offer limited protection for intellectual property, so consumers have more oppor-tunities to choose generic drugs, which are often produced locally. Finally, the culture places a higher value on face-to-face inter-actions, so sales representatives tend to be granted more time with doctors. To be

successful in Latin America, Pfizer has had to learn alternative wayswhich take into account cultural, economic, and regulatory differencesto market our products.

Latin American patients are extremely sensitive to price. As a result, we have de-voted resources to working with pharma-cists, who play an important role in helping patients choose medications. We focus on pricing and discounts or programs to help the pharmacist or pharmacy owner under-stand why it makes sense to respect doc-tors prescriptions for our products. The U.S. market is dominated by large chain drugstores, but most Latin American mar-kets have many small, independent phar-macies. It is important to build commercial relationships with them.

Because we cannot advertise directly to consumers in Latin America, we con-duct extensive brand building, much of it through community outreach programs.




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How to sell to the Worlds Biggest company

L ets face itwere a pretty big company, and our size can be daunting to potential ven-dors, who may think we want to do busi-ness only with other large companies, such as Procter & Gamble and Kraft. That isnt truewere constantly challenging our buyers to help us be relevant and local, and smaller suppliers play an important role in that. In fact, we have suppliers and local farmers who sell to us for only one store or five stores, not all 3,800. So if you think your company is too small to sell to Walmart, think again.

What does it take to get on our shelves? Its ac-tually a simple process, which is outlined on our website. Well ask you to send us some informa-tion and fill out some forms; if your product looks promising, youll meet with a buyera real live person. And dont bother with brokers or agents, who drive up costs. We prefer to deal with small- business people directly.

The most important part of making a sale to us is the product: Is it something that Walmart customers really want, and can we sell it to them at a great price? But well also ask many other questions. Well want to know what customer research youve done, what your marketing plan is, and what kind of advertising support you can offer. Well ask about the sustainability of your prod-uct and how your business can play a role in our womens economic empowerment initiative. Well also want to know about your capacity and your ability to meet our supply chain and logistical needs. But very often were willing to help with that. Youd be surprised by how many younger, smaller companies turn to us to help them find the right manufacturer, or ask us to do an en-ergy audit of their plant to help drive down costs, or rely on us to pick up their products at the plant, alleviating their need to create a distribution network. We try to be part-ners with our suppliers. If you want to get your message out to Walmarts 15 million Facebook followers, well put you in touch with our social media team.

When youre ready to meet with us, try to avoid the pitfalls that we see again and again. Because Walmart is an everyday low price retailer, some people show us only their least expensive, most basic offerings. This self-editing is generally the wrong ap-proach: Although we definitely want to of-fer customers items at opening price points, we also sell a lot of merchandise at higher price points. (For example, our fastest-sell-ing lines of televisions are over 42 inches.)

Another common mistake is trying to sell Walmart a product that has no custom-ers. Many people assume that if they can get their product on our shelves, custom-ers will automatically buy it. I wish that were true, but its not. Vendors also know that pricing is very important to us, so they sometimes make crazy offers to try to get into our stores. Im sure that some compa-nies forward invest, or lose money in the short term, to become Walmart vendors, hoping to offset those losses by producing higher volumes over time. But that can be dangerous for us as well as for them, be-


cause our goal is to create successful long-term partnerships. We usually have a good sense of vendors cost structures and mar-gins, and when we see something too crazy, we try to be up-front about it.

One of the best ways to get your product on the shelves at Walmart is to offer us an innovation our customers cant buy else-where. Im from Wisconsin, so one of my favorite examples comes from a Wisconsin-based company called Johnsonville, which makes bratwurst. In the summer of 2011 it introduced bratwurst patties (basically, hamburgers made of bratwurst) and sold them exclusively at Walmart for grilling seasonMemorial Day through Labor Day.

With our larger suppliers, we regu-larly visit their headquarters to take a look

at their latest innovations and consider whether they might work for us. We work with some vendors on flavor profiles and help them tailor products to suit our cus-tomers. We love to be involved in this up-stream innovation, and we regard selling these products as a partnership.

We understand that it can be intimidat-ing to consider scaling your business to sell to a retailer where 140 million Americans shop every week. But sometimes that scale can be deceiving. When we manage our business, we think about running one store at a time, one aisle at a timeand thats the way to think about dealing with us. Despite our size, we truly are open to buying from companies of all sizes, small or bigif they have the right products. n

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How We Got Beyond selling products

We have suppliers and local farmers who sell to us for only one store, not all 3,800.

IBM has been focused on solving our cli-ents most challenging problems since the earliest days of the company, more than 100 years ago. Thomas Watson Sr. im-printed our company with the fundamen-tal value of dedication to customer service and excellence in all we do. Ever since, we have applied innovative products and tech-nologies to help companies across a range of industries, from innovation in the era of punch cards to our iconic System/360the first family of computers for a range of commercial and scientific applicationsto a variety of offerings that now include Wat-son computer systems and other analytics-based technologies.

We had a watershed moment in 2002, when IBM acquired the consulting firm PricewaterhouseCoopers (PwC). That was the start of a cultural shift. I vividly remem-ber being in a session where one of the PwC leaders said that their vision was for IBM to start thinking of its customers as clients. Under the leadership of Sam Palmisano and Ginni Rometty, that happened. Our sales teams increasingly viewed themselves as consultants who solved clients problems. We began thinking more about industry leadership and true consultative selling, and about how to create synergies among the systems, software, and services we




our salespeople spend much more time on directed and experiential learning about how to integrate iBMs assets.

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How We Built a door-to-door selling machine

When I joined Eureka Forbes, in 1987, it had offices in only four cities, employed only 400 people, and had annual sales of just $1.6 million. The companys primary business was selling vacuum cleaners door-to-door, and I had a good background for the job. Id previously worked at Procter & Gamble and Johnson & Johnson, both of which had successfully used direct sales for mar-ket development in India, so I was familiar with this approach. In addition to vacuum cleaners, Eureka Forbes had just begun selling water purifiers in two

offered in order to better meet the needs of our clients and their industries.

Solution selling really starts with listen-ing. A consultative selling culture is increas-ingly important today, because companies need not only a package of hardware, soft-ware, and services but also the know-how to deploy it strategically. That requires our salespeople to have deeper knowledge about the technology as well as a clients strategy, goals, competitors, and industry. Today they spend much more time on di-rected and experiential learning about how to integrate IBMs assets to solve our clients most difficult challenges.

That training is crucialnot only be-cause IBM is constantly adding new tech-nology to its portfolio, but because our assets, such as the $6 billion in R&D we invest annually, can be combined in pow-erful ways for our clients. It is also very important that IBM has become a big adap-tor of new technologies. Since 2000 weve acquired 130 companies, many of them with sophisticated capabilities in analytics, cloud computing, and security. Our clients needs have driven much of our acquisi-tion strategy, and every time we add to our portfolio, the sales force is trained to incorporate these offerings into new client solutions.

Let me give you an example of a solu-tion sale. Rio de Janeiro will be hosting the World Cup in 2014 and the Summer Olympics in 2016. To get ready for those events, local officials have been looking to transform the way they manage their city, and they came to IBM for a solution. With our help, theyve created a city operation center that integrates information and communication from 30 government de-partments. The center manages Rios 911 emergency response system, aggregates input from the citys energy grid and wa-ter system, serves as a hub for transpor-tation networks such as buses and trains, and even monitors air quality. Managing information from all those sources and understanding it in real time is an enor-mous undertaking. It exemplifies how we are applying technology in nontraditional

areas as part of the Smarter Planet initia-tive we introduced in 2008. Theres no one product or service we could sell a city that would meet all its needs, but IBM has such breadth and depth of expertise that we can custom-fit a solution.

Rio de Janeiro illustrates the applica-tion of sophisticated systems thinkinghow to integrate many of the citys key municipal operations and gain insights from the data they transmit. Solutions like this require true consultative selling, and they provide differentiating value to our clients. n


markets. I saw that we had a lot of potential to grow.

To do that, we took a few important steps early on. First, we decentralized the sales operation, giving our regional offices more autonomy and more accountability. They were encouraged to look for growth opportunities in nearby cities, make scout-ing trips, rent office space, and hire and train young salespeople. Second, we began investing heavily in R&D and brought our salespeople into the innovation process, drawing on their close interactions with customers. Creative ideas for many of our accessories have come directly from them. For instance, in much of the world a vac-uum cleaner may have only two or three at-tachments; ours have 11, for cleaning vari-ous parts of the house. And our machines dont just suck in dirt; they can blow air into hard-to-reach crevices, freeing grit to be vacuumed up.

Today we have more than 8,000 sales-people working in 550 cities and small towns across India. They do all their sell-ing door-to-door. People in the Westthe United States in particularmay not like door-to-door sales, because they value their privacy. Our culture in India is differ-ent. We routinely drop by friends houses without calling first, just to visit. So in the early days we advertised the friendly man from Eureka Forbes who had something special to show you, the customerand families welcomed us into their homes. When our salespeople visit, they inter-act with the entire family. They use the vacuum cleaner to blow up balloons for the children, making the demo fun, inter-active, and engaging. We dont give price discountseverso making a sale comes down to the salespersons correctly iden-tifying the familys needs and working to solve them. On average, our salespeople sell one vacuum cleaner or water purifier for every four demonstrations, and our best people close one sale for every two demos. Our new sales recruits are usually 18 to 20 years old, and they make about eight sales a month, earning the equivalent of $225. (Thats less than what theyd make its unsustainable, but then i only have to sustain it until five oclock.cA

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working in a call center, but its not a bad living for a single guy.)

Until a few years ago I continued to make door-to-door sales calls myself. As a salesperson, I prided myself on sincerity, and on being very observant when I was inside a home about a customers special needs. For instance, if I were in your home, I might notice that you had a lot of books. Id emphasize how the tools I was selling (a demothing vaporizer, for example) would allow you to protect your investment in books from dust, dirt, and moths. If I no-ticed that your child was sneezing, Id fo-cus on how our vacuums can help alleviate allergies. Id ask the child to bring me her bed pillow, and Id use the vacuum to show how much dirt I could get out of it. If I were selling our water purifier, Id emphasize how it helps ensure the familys health and eliminates the big expense of bottled water. The payback time on our best-selling water

purifier is only nine months when you fac-tor in the cost of bottled water.

Weve adapted our selling techniques to make better use of technology. For instance, 200,000 people came to our website in 2011 and requested a sales call. Our repre-sentatives made 70,000 sales on the basis of those web leads. Were expanding our door-to-door business in other ways as well. We now have 1,400 franchises around the country whose employees will make house calls to service the machines we sell. Our sales force has recently begun to sell other home-related products and services, such as security systems.

No matter what youre selling, the key is understanding your customers needs well enough to tailor the presentation to them. And judging from my experience over the past 25 years, one of the best places to do that is in the customers living room. n

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